Agency-Trust-Partnership  Form – may be oral, written, express, or implied

1st Semester 2020 Reviewer/Notes EXCEPTION:

Atty. Michael Danganan 1. Article 1771. A partnership may be constituted
in any form, except where immovable property
GENERAL PROVISIONS or real rights are contributed thereto, in which
Article 1767. By the contract of partnership two or more case a public instrument shall be necessary.
persons bind themselves to contribute money, property,
or industry to a common fund, with the intention of 2. Article 1772. Every contract of partnership
dividing the profits among themselves. having a capital of three thousand pesos or
more, in money or property, shall appear in a
Two or more persons may also form a partnership for the public instrument, which must be recorded in
exercise of a profession. the Office of the Securities and Exchange
Commission.
NOTES:
Partnership for exercise of Profession (2nd Par.) – A 3. Article 1773. A contract of partnership is void,
partnership for the exercise of a profession is not a whenever immovable property is contributed
business or enterprise solely for profit. thereto, if an inventory of said property is not
made, signed by the parties, and attached to
Partnership for the Practice of Law – a mere privilege, the public instrument.
therefore the use of trade name is improper. It is for the
purpose of administration of justice, has fiduciary 4. Statute of Frauds – it must be in writing to be
relationship with clients, and emolument is only a by- enforceable.
product.
 Articles of Partnership – Although partnership may
Profession – A group of men pursuing a learned art as a be informally created, It is customary to embody the
common calling in the spirit of Public Service. The terms of the association in a written document
principal goal is public service and profit is only known as the Articles of Partnership.
incidental.
 Partnership is a Contract – under the law the
Acebedo Optical V. CA (Dissenting Opinion of Justice following requisites of a valid contract must be
Kapunan) – Professionals exercising their profession by present: 1. Consent and Capacity of the contracting
means of a Corporation is against Public Policy, because parties 2. Object which is the subject matter 3.
they can hide behind the separate personality of a Cause which is established
Corporation; A Professional must follow their own Code
of Ethics, because ethics is based on personal  Fiduciary nature of Partnership – it involves trust and
accountability (ex. Doctor is always personally liable to confidence between the partners; Doctrine of
his negligence) DELECTUS PERSONAE – is the power of any
partner to dissolve the partnership at will, he must
Characteristic elements of a Contract of Partnership however act in good faith
(CNBC-OPPA)
1. Consensual – perfected by mere consent  Principle of Estoppel – A person holds himself out,
2. Nominate – has designation in the Civil Code or permits himself to be held out as a partner to an
3. Bilateral – entered by 2 or more where rights and enterprise; in such case there is no actual or legal
obligation is reciprocal relationship but merely a partnership liability. The
4. Commutative – undertaking is equivalent with other existence of a partnership is determined from the
partners conduct of the parties, although the designation
5. Onerous – benefits by giving something adopted by the parties should be considered as
6. Principal – does not depend with other contracts indicative of their intentions.
7. Preparatory – means to an end
8. Agency – it is a contract of agency o Lim V. Phil, Fishing Gear Industries Inc. – those
acting on behalf of a corporation and those
Essential Features: (VLC-LP) benefited by it, knowing it to be without valid
1. There must be a valid contract existence, are held liable as general partners.
2. Parties must have legal capacity to enter into a
contract Legal Capacity – parties may either be Natural Persons
3. There must be a common fund and/or Juridical entities (partnership, corporation, JVA);
4. Object must be lawful/legality of the object any person may be a partner who is capable of entering
5. The primary purpose is to carry on business for into a contractual relations.
profits and divide the same among the parties.
EXCEPTION: (MIDPI-P(1782/87/73)C)
Valid Contract – partnership relation is not the contract 1. Minors
itself, it is the result of the contract. 2. Insane or Demented persons
3. Deaf-mutes who do not know how to write Common Law View - Partnership has no separate legal
4. Persons suffering from civil interdictions personality.
5. Incompetents who are under guardianship
6. Article 1782. Persons who are prohibited from  1772 - Failure to Comply with the execution of a
giving each other any donation or advantage cannot public instrument and registration with SEC in cases
enter into universal partnership. when the partnership capital exceeds P3,000, such
7. Article 87 (FC) every donation or grant of gratuitous partnership still acquires Juridical Personality.
advantage, direct or indirect, between the spouses
during the marriage shall be void, except for  1773 – In case of failure to provide an inventory of
moderate gifts which the spouses may give each contributed immovable property and attachment of
other on occasion of any family rejoicing. The such in a public instrument, shall not acquire
prohibition shall also apply to living persons living juridical personality.
together as husband and wife without valid marriage.
8. Article 73 (FC) Either spouse may exercise any  1775 – In cases of secret associations or society,
legitimate profession, occupation, business, or shall not acquire juridical personality.
activity without the consent of the other. The
latter may object only on valid, serious, or moral Article 1769. In determining whether a partnership
grounds exists, these rules shall apply: (MEMORIZE)
9. Corporations
General Rule: A corporation is without capacity or 1. Except as provided by article 1825, persons who
power to enter into a contract of partnership (33CC) are not partners as to each other are not
Exception: Joint Venture Partnership with another partners as to third persons;
where the nature of the venture is in line with the 2. Co-ownership or co-possession does not of
business authorized by its charter. itself establish a partnership, whether such-co-
owners or co-possessors do or do not share any
 Joint Venture Agreement (JVA) - is an profits made by the use of the property;
organization formed for some temporary 3. The sharing of gross returns does not of itself
purpose, executed for a single transaction establish a partnership, whether or not the persons
(Aurbach V Sanitary wares) sharing them have a joint or common right or interest
 JVA is for temporary purpose and Partnership is in any property from which the returns are derived;
continuous is NOT wholly true because there is 4. The receipt by a person of a share of the profits
a Particular Partnership (1723) of a business is prima facie evidence that he is a
partner in the business, but no such inference
Contribution of Money, Property, or Industry – there shall be drawn if such profits were received in
must be a mutual contribution to a common fund, which payment:
may either in the form of Money, Property, or Industry. A. As a debt by installments or otherwise;
 Industry – it is the work of the party B. As wages of an employee or rent to a
associated, which may be either personal, landlord;
manual effort, or intellectual…(Manresa) C. As an annuity to a widow or
representative of a deceased partner;
Legality of the Object – The object is unlawful when it D. As interest on a loan, though the amount of
is contrary to law, morals, good customs, public order, or payment vary with the profits of the
public policy; no partnership may arise in such case, as business;
the contract is deemed inexistent and void ab initio. E. As the consideration for the sale of a
goodwill of a business or other property
Purpose is to Obtain Profit and dividing the same by installments or otherwise.
among the parties – a partnership is essentially a
business enterprise established for profits and that there Article 1770. A partnership must have a lawful object
be an intention to divide the profits among the members, or purpose, and must be established for the
although not necessarily in equal shares. (sharing of common benefit or interest of the partners.
losses is also implied in such case) (Principle of Community of Interest)

Article 1768. The partnership has a juridical personality When an unlawful partnership is dissolved by a
separate and distinct from that of each of the partners, judicial decree, the profits shall be confiscated in
even in case of failure to comply with the requirements of favor of the State, without prejudice to the provisions of
article 1772, first paragraph. the Penal Code governing the confiscation of the
instruments and effects of a crime.
NOTES:
Mercantile View – Partnership has a separate juridical Article 1771. A partnership may be constituted in any
personality (Philippines is subscribed to this view) form, except where immovable property or real rights are
(basis: Article 1774 and article 46) contributed thereto, in which case a public instrument
shall be necessary.
Article 1772. Every contract of partnership having a  Partnership with a fixed term
capital of three thousand pesos or more, in money or  the term for which the partnership is to exist
property, shall appear in a public instrument, which must is fixed or agreed upon or one formed for a
be recorded in the Office of the Securities and Exchange particular undertaking, and upon the
Commission. expiration of the term or particular
undertaking without express agreement.
Failure to comply with the requirements of the preceding As to the Legality of its existence:
paragraph shall not affect the liability of the partnership  De Jure – complied with all legal requirements
and the members thereof to third persons.  De Facto – failed to comply with all the legal req.
As to Representation to others:
Article 1773. A contract of partnership is void,  Ordinary Partnership
whenever immovable property is contributed thereto, if  Ostensible Partnership/Partnership by Estoppel
an inventory of said property is not made, signed by the As to Publicity:
parties, and attached to the public instrument.  Secret partnership – existence of certain
(Rationale: to determine the actual value of the persons as partners is not avowed or made
partnership and the respective part of the partners) known to the public by any of the partners
 Open/Notorious Partnership – one that is
Article 1774. Any immovable property or an interest avowed or made known to the public by the
therein may be acquired in the partnership name. Title members of the firm.
so acquired can be conveyed only in the partnership As to Purpose:
name. (Proof of separate personality of the Partnership)  Commercial/trading Partnership – one formed
for the transaction of business
Article 1775. Associations and societies, whose articles  Professional/Non-Trading Partnership – one
are kept secret among the members, and wherein any formed for the exercise of a profession.
one of the members may contract in his own name with
third persons, shall have no juridical personality, and Kinds of Partners:
shall be governed by the provisions relating to co-  Capitalist Partner - contributes money or property
ownership.  Industrial Partner -contributes only personal services
 General Partner - liability extends to his separate
Article 1776. As to its object, a partnership is either property; may either be capitalist or industrial
universal or particular. As regards the liability of the  Limited Partner – liability to third persons is limited to
partners, a partnership may be general or limited. his capital contribution.
 Managing Partner – manages the affairs or business
Classifications of Partnership: of the partnership; may be appointed in the articles
As to Subject Matter: or after the constitution of the partnership
 Universal Partnership (1777)  Liquidating Partner – one in charge of the winding up
 Universal Partnership of all present property of partnership affairs upon dissolution
(1778)  Partner by Estoppel – not really a partner but liable
 Universal Partnership of profits (1780) as a partner for protection of innocent 3rd persons
 Particular Partnership (1783)  Continuing Partner – one continues the business of
As to Liability: partnership after it has been dissolved by reason of
 General Partnership – general partners are admission of a new partner, retirement, death, or
liable pro rata and subsidiarily and sometimes expulsion of one or more partners.
solidarily  Surviving Partner – one who remains after a
 Limited Partnership – one formed by two or partnership has been dissolved by the death of any
more persons having as members one or more partner.
general partners and one or more limited  Subpartner - One not being a partner in the
partners, the latter not being liable for the partnership, contracts with a partner with reference
obligations of the partnership. to the latter’s share in the partnership. (1804)
As to Duration: Other classifications:
 Partnership at Will (2 Instances)  Ostensible Partner – takes active part and is known
 No time is specified and is not formed for a to the public as a partner
specific undertaking or venture and which  Secret Partner - takes active part but is not known to
may be terminated at any time by mutual the public as a partner
agreement of the partners, or by will of  Silent Partner – does not take active part but is
anyone of the partners alone known to the public as a partner
 Dormant Partner - does not take active part and is
 One for a fixed term or particular not known to the public as a partner
undertaking which is continued by the  Original Partner – member of the partnership from
partners after the termination of such term or the time of its organization
particular undertaking without express  Incoming Partner – about to be taken as a partner
agreement. (1785)  Retiring Partner – a withdrawing partner
Article 1777. A universal partnership may refer to all of present properties belong to the partnership as a
the present property or to all the profits. matter of right.

Article 1778. A partnership of all present property is Article 1781. Articles of universal partnership, entered
that in which the partners contribute all the property into without specification of its nature, only constitute a
which actually belongs to them to a common fund, with universal partnership of profits.
the intention of dividing the same among themselves, as  Where articles of partnership do not specify the
well as all the profits which they may acquire therewith. nature of the partnership whether present or of
profits – it will be presumed that the parties intended
Article 1779. In a universal partnership of all present a partnership of profits.
property, the property which belonged to each of the
partners at the time of the constitution of the partnership, Article 1782. Persons who are prohibited from giving
becomes the common property of all the partners, as each other any donation or advantage cannot enter into
well as all the profits which they may acquire therewith. universal partnership.
 A partnership formed in violation of this article is null
A stipulation for the common enjoyment of any other and void.
profits may also be made; but the property which the  A husband and his wife, however, may enter into a
partners may acquire subsequently by inheritance, particular partnership or be members thereof.
legacy, or donation cannot be included in such
stipulation, except the fruits thereof. Article 1783. A particular partnership has for its
object determinate things, their use or fruits, or a
NOTES: specific undertaking, or the exercise of a profession
Rationale (2nd Paragraph): As a general rule, future or vocation. (MEMORIZE)
properties cannot be contributed, because the position of  Example: buy and sell
a partner, is like that of donor, and donations cannot ****************************************************************
comprehend future property; thus, subsequently OBLIGATIONS OF THE PARTNERS;
acquired by inheritance, legacy, or donation cannot be OBLIGATION OF PARTNERS AMONG THEMSELVES
included in such stipulation, except the fruits thereof.
Hence, ANY STIPULATION INCLUDING PROPERTY Article 1784. A partnership begins from the moment of
SO ACQUIRED IS VOID. the execution of the contract, unless it is otherwise
stipulated.
The following become the common property of all the
partners (1st Paragraph): Article 1785. When a partnership for a fixed term or
1. Property which belonged to each of the partners at particular undertaking is continued after the termination
the time of the constitution of the partnership of such term or particular undertaking without any
2. All the profits which they may acquire therewith. express agreement, the rights and duties of the partners
remain the same as they were at such termination, so far
Article 1780. A universal partnership of profits as is consistent with a partnership at will.
comprises all that the partners may acquire by their
industry or work during the existence of the A continuation of the business by the partners or such of
partnership. them as habitually acted therein during the term, without
any settlement or liquidation of the partnership affairs, is
Movable or immovable property which each of the prima facie evidence of a continuation of the partnership.
partners may possess at the time of the celebration of
the contract shall continue to pertain exclusively to each, Article 1786. Every partner is a debtor of the partnership
only the usufruct passing to the partnership. for whatever he may have promised to contribute
thereto.
NOTES:
 Ownership of present and future property – partners He shall also be bound for warranty in case of eviction
retain their ownership over their present and future with regard to specific and determinate things which he
property only the profits/income/usufruct passes to may have contributed to the partnership, in the same
the partnership. cases and in the same manner as the vendor is bound
 Profits acquired through chance – profits acquired with respect to the vendee. He shall also be liable for the
through chance such as lottery or by lucrative title fruits thereof from the time they should have been
without employment of any physical or intellectual delivered, without the need of any demand.
efforts are not included.
 Fruits of Property subsequently acquired – do not Article 1787. When the capital or a part thereof which a
belong to the partnership, such profits may however partner is bound to contribute consists of goods, their
be included by express stipulation but profits appraisal must be made in the manner prescribed in the
acquired by partners by industry or work during the contract of partnership, and in the absence of stipulation,
existence of the partnership as well as the usufruct it shall be made by experts chosen by the partners, and
according to current prices, the subsequent changes Article 1795. The risk of specific and determinate things,
thereof being for account of the partnership. which are not fungible, contributed to the partnership so
that only their use and fruits may be for the common
Article 1788. A partner who has undertaken to benefit, shall be borne by the partner who owns them.
contribute a sum of money and fails to do so becomes a
debtor for the interest and damages from the time he If the things contribute are fungible, or cannot be kept
should have complied with his obligation. without deteriorating, or if they were contributed to be
sold, the risk shall be borne by the partnership. In the
The same rule applies to any amount he may have absence of stipulation, the risk of the things brought and
taken from the partnership coffers, and his liability appraised in the inventory, shall also be borne by the
shall begin from the time he converted the amount to partnership, and in such case the claim shall be limited
his own use. to the value at which they were appraised.

Article 1789. An industrial partner cannot engage in Article 1796. The partnership shall be responsible to
business for himself, unless the partnership expressly every partner for the amounts he may have disbursed on
permits him to do so; and if he should do so, the behalf of the partnership and for the corresponding
capitalist partners may either exclude him from the firm interest, from the time the expense are made; it shall
or avail themselves of the benefits which he may have also answer to each partner for the obligations he may
obtained in violation of this provision, with a right to have contracted in good faith in the interest of the
damages in either case. partnership business, and for risks in consequence of its
management.
Article 1790. Unless there is a stipulation to the
contrary, the partners shall contribute equal shares to Article 1797. The losses and profits shall be distributed
the capital of the partnership. (n) in conformity with the agreement. If only the share of
each partner in the profits has been agreed upon, the
Article 1791. If there is no agreement to the contrary, in share of each in the losses shall be in the same
case of an imminent loss of the business of the proportion.
partnership, any partner who refuses to contribute
an additional share to the capital, except an In the absence of stipulation, the share of each
industrial partner, to save the venture, shall he partner in the profits and losses shall be in
obliged to sell his interest to the other partners. (n) proportion to what he may have contributed, but the
industrial partner shall not be liable for the losses.
Article 1792. If a partner authorized to manage collects As for the profits, the industrial partner shall receive such
a demandable sum which was owed to him in his own share as may be just and equitable under the
name, from a person who owed the partnership another circumstances. If besides his services he has
sum also demandable, the sum thus collected shall be contributed capital, he shall also receive a share in
applied to the two credits in proportion to their the profits in proportion to his capital.
amounts, even though he may have given a receipt
for his own credit only; but should he have given it Article 1798. If the partners have agreed to intrust to a
for the account of the partnership credit, the amount third person the designation of the share of each one in
shall be fully applied to the latter. the profits and losses, such designation may be
impugned only when it is manifestly inequitable. In no
The provisions of this article are understood to be case may a partner who has begun to execute the
without prejudice to the right granted to the other debtor decision of the third person, or who has not impugned
by article 1252, but only if the personal credit of the the same within a period of three months from the time
partner should be more onerous to him. (1684) he had knowledge thereof, complain of such decision.
The designation of losses and profits cannot be intrusted
Article 1793. A partner who has received, in whole or in to one of the partners. (1690)
part, his share of a partnership credit, when the other
partners have not collected theirs, shall be obliged, if the Article 1799. A stipulation which excludes one or
debtor should thereafter become insolvent, to bring to more partners from any share in the profits or losses
the partnership capital what he received even though he is void.
may have given receipt for his share only. (1685a)
Article 1800. The partner who has been appointed
Article 1794. Every partner is responsible to the manager in the articles of partnership may execute all
partnership for damages suffered by it through his fault, acts of administration despite the opposition of his
and he cannot compensate them with the profits and partners, unless he should act in bad faith; and his
benefits which he may have earned for the partnership power is irrevocable without just or lawful cause. The
by his industry. However, the courts may equitably vote of the partners representing the controlling interest
lessen this responsibility if through the partner's shall be necessary for such revocation of power.
extraordinary efforts in other activities of the partnership,
unusual profits have been realized.
A power granted after the partnership has been Article 1808. The capitalist partners cannot engage
constituted may be revoked at any time. (1692a) for their own account in any operation which is of
the kind of business in which the partnership is
Article 1801. If two or more partners have been engaged, unless there is a stipulation to the contrary.
intrusted with the management of the partnership
without specification of their respective duties, or Any capitalist partner violating this prohibition shall
without a stipulation that one of them shall not act bring to the common funds any profits accruing to
without the consent of all the others, each one may him from his transactions, and shall personally bear
separately execute all acts of administration, but if all the losses.
any of them should oppose the acts of the others,
the decision of the majority shall prevail. In case of a Article 1809. Any partner shall have the right to a
tie, the matter shall be decided by the partners owning formal account as to partnership affairs:
the controlling interest. 1. If he is wrongfully excluded from the partnership
business or possession of its property by his co-
Article 1802. In case it should have been stipulated partners;
that none of the managing partners shall act without 2. If the right exists under the terms of any agreement;
the consent of the others, the concurrence of all 3. As provided by article 1807;
shall be necessary for the validity of the acts, and 4. Whenever other circumstances render it just and
the absence or disability of any one of them cannot reasonable. (n)
be alleged, unless there is imminent danger of grave or ****************************************************************
irreparable injury to the partnership. OBLIGATION OF THE PARTNERS;
PROPERTY RIGHTS OF A PARTNER
Article 1803. When the manner of management has
not been agreed upon , the following rules shall be Article 1810. The property rights of a partner are:
observed: (MEMORIZE)
1. All the partners shall be considered agents and
whatever any one of them may do alone shall 1. His rights in specific partnership property;
bind the partnership, without prejudice to the
provisions of article 1801.
2. His interest in the partnership; and
2. None of the partners may, without the consent of
the others, make any important alteration in the 3. His right to participate in the management
immovable property of the partnership, even if it
may be useful to the partnership. But if the refusal Article 1811. A partner is co-owner with his partners of
of consent by the other partners is manifestly specific partnership property.
prejudicial to the interest of the partnership, the
court's intervention may be sought. The incidents of this co-ownership are such that:
Article 1804. Every partner may associate another
1. A partner, subject to the provisions of this Title and
person with him in his share, but the associate shall
to any agreement between the partners, has an
not be admitted into the partnership without the
equal right with his partners to possess specific
consent of all the other partners, even if the partner
partnership property for partnership purposes;
having an associate should be a manager.
but he has no right to possess such property for any
other purpose without the consent of his partners;
Article 1805. The partnership books shall be kept,
subject to any agreement between the partners, at
the principal place of business of the partnership, and 2. A partner's right in specific partnership property
every partner shall at any reasonable hour have access is not assignable except in connection with the
to and may inspect and copy any of them. (n) assignment of rights of all the partners in the
same property;
Article 1806. Partners shall render on demand true
and full information of all things affecting the 3. A partner's right in specific partnership property
partnership to any partner or the legal representative of is not subject to attachment or execution, except
any deceased partner or of any partner under legal on a claim against the partnership. When
disability. (n) partnership property is attached for a partnership
debt the partners, or any of them, or the
Article 1807. Every partner must account to the representatives of a deceased partner, cannot claim
partnership for any benefit, and hold as trustee for it any right under the homestead or exemption laws;
any profits derived by him without the consent of the
other partners from any transaction connected with the 4. A partner's right in specific partnership property
formation, conduct, or liquidation of the partnership or is not subject to legal support under article 291.
from any use by him of its property. (n)
Article 1812. A partner's interest in the partnership is Article 1815. Every partnership shall operate under a
his share of the profits and surplus. firm name, which may or may not include the name of
one or more of the partners.
Article 1813. A conveyance by a partner of his whole
interest in the partnership does not of itself dissolve Those who, not being members of the partnership,
the partnership, or, as against the other partners in the include their names in the firm name, shall be subject to
absence of agreement, entitle the assignee, during the the liability of a partner
continuance of the partnership, to interfere in the Article 1816. All partners, including industrial ones, shall
management or administration of the partnership be liable pro rata with all their property and after all the
business or affairs, or to require any information or partnership assets have been exhausted, for the
account of partnership transactions, or to inspect the contracts which may be entered into in the name and for
partnership books; but it merely entitles the assignee the account of the partnership, under its signature and
to receive in accordance with his contract the profits by a person authorized to act for the partnership.
to which the assigning partner would otherwise be However, any partner may enter into a separate
entitled. However, in case of fraud in the management obligation to perform a partnership contract. (Partnership
of the partnership, the assignee may avail himself of the Credits/Obligation not losses)
usual remedies.
Article 1817. Any stipulation against the liability laid
down in the preceding article shall be void, except as
In case of a dissolution of the partnership, the assignee
among the partners. (n)
is entitled to receive his assignor's interest and may
require an account from the date only of the last account
Article 1818. Every partner is an agent of the
agreed to by all the partners.
partnership for the purpose of its business, and the
act of every partner, including the execution in the
Article 1814. Without prejudice to the preferred rights of partnership name of any instrument, for apparently
partnership creditors under article 1827, on due carrying on in the usual way the business of the
application to a competent court by any judgment partnership of which he is a member binds the
creditor of a partner, the court which entered the partnership, unless the partner so acting has in fact no
judgment, or any other court, may charge the authority to act for the partnership in the particular
interest of the debtor partner with payment of the matter, and the person with whom he is dealing has
unsatisfied amount of such judgment debt with knowledge of the fact that he has no such authority.
interest thereon; and may then or later appoint a
receiver of his share of the profits, and of any other An act of a partner which is not apparently for the
money due or to fall due to him in respect of the carrying on of business of the partnership in the usual
partnership, and make all other orders, directions, way does not bind the partnership unless authorized by
accounts and inquiries which the debtor partner might the other partners.
have made, or which the circumstances of the case may
require. (Charging Order) Except when authorized by the other partners or
unless they have abandoned the business, one or
The interest charged may be redeemed at any time more but less than all the partners have no authority
before foreclosure, or in case of a sale being to:
directed by the court, may be purchased without 1. Assign the partnership property in trust for creditors
thereby causing a dissolution: or on the assignee's promise to pay the debts of the
partnership;
1. With separate property, by any one or more of the 2. Dispose of the good-will of the business;
partners; or 3. Do any other act which would make it impossible to
carry on the ordinary business of a partnership;
2. With partnership property, by any one or more of 4. Confess a judgment;
the partners with the consent of all the partners 5. Enter into a compromise concerning a partnership
whose interests are not so charged or sold. claim or liability;
6. Submit a partnership claim or liability to arbitration ;
7. Renounce a claim of the partnership.
Nothing in this Title shall be held to deprive a partner of
his right, if any, under the exemption laws, as regards his
No act of a partner in contravention of a restriction on
interest in the partnership. (n)
authority shall bind the partnership to persons having
knowledge of the restriction. (n)
****************************************************************
OBLIGATION OF THE PARTNERS; Article 1819. Where title to real property is in the
partnership name, any partner may convey title to such
OBLIGATION OF THE PARTNERS WITH REGARD TO property by a conveyance executed in the partnership
THIRD PERSONS name; but the partnership may recover such property
unless the partner's act binds the partnership under the
provisions of the first paragraph of article 1818, or unless 2. Where the partnership in the course of its business
such property has been conveyed by the grantee or a receives money or property of a third person and the
person claiming through such grantee to a holder for money or property so received is misapplied by any
value without knowledge that the partner, in making the partner while it is in the custody of the partnership.
conveyance, has exceeded his authority.
Article 1824. All partners are liable solidarily with the
Where title to real property is in the name of the partnership for everything chargeable to the partnership
partnership, a conveyance executed by a partner, in his under articles 1822 and 1823. (n)
own name, passes the equitable interest of the
partnership, provided the act is one within the authority Article 1825. When a person, by words spoken or
of the partner under the provisions of the first paragraph written or by conduct, represents himself, or
of article 1818. consents to another representing him to anyone, as
a partner in an existing partnership or with one or
Where title to real property is in the name of one or more more persons not actual partners, he is liable to any
but not all the partners, and the record does not disclose such persons to whom such representation has
the right of the partnership, the partners in whose name been made, who has, on the faith of such
the title stands may convey title to such property, but the representation, given credit to the actual or apparent
partnership may recover such property if the partners' partnership, and if he has made such representation
act does not bind the partnership under the provisions of or consented to its being made in a public manner
the first paragraph of article 1818, unless the purchaser he is liable to such person, whether the representation
or his assignee, is a holder for value, without knowledge. has or has not been made or communicated to such
person so giving credit by or with the knowledge of the
Where the title to real property is in the name of one or apparent partner making the representation or
more or all the partners, or in a third person in trust for consenting to its being made:
the partnership, a conveyance executed by a partner in
the partnership name, or in his own name, passes the 1. When a partnership liability results, he is liable as
equitable interest of the partnership, provided the act is though he were an actual member of the
one within the authority of the partner under the partnership;
provisions of the first paragraph of article 1818. 2. When no partnership liability results, he is liable pro
rata with the other persons, if any, so consenting to
Where the title to real property is in the name of all the the contract or representation as to incur liability,
partners a conveyance executed by all the partners otherwise separately.
passes all their rights in such property. (n)
When a person has been thus represented to be a
Article 1820. An admission or representation made by partner in an existing partnership, or with one or more
any partner concerning partnership affairs within the persons not actual partners, he is an agent of the
scope of his authority in accordance with this Title is persons consenting to such representation to bind them
evidence against the partnership. (n) to the same extent and in the same manner as though
he were a partner in fact, with respect to persons who
Article 1821. Notice to any partner of any matter relating rely upon the representation. When all the members of
to partnership affairs, and the knowledge of the partner the existing partnership consent to the representation, a
acting in the particular matter, acquired while a partner partnership act or obligation results; but in all other
or then present to his mind, and the knowledge of any cases it is the joint act or obligation of the person acting
other partner who reasonably could and should have and the persons consenting to the representation. (n)
communicated it to the acting partner, operate as notice
to or knowledge of the partnership, except in the case of Article 1826. A person admitted as a partner into an
fraud on the partnership, committed by or with the existing partnership is liable for all the obligations of
consent of that partner. (n) the partnership arising before his admission as
though he had been a partner when such obligations
Article 1822. Where, by any wrongful act or omission of were incurred, except that this liability shall be
any partner acting in the ordinary course of the business satisfied only out of partnership property, unless
of the partnership or with the authority of his co-partners, there is a stipulation to the contrary. (n)
loss or injury is caused to any person, not being a
partner in the partnership, or any penalty is incurred, the Article 1827. The creditors of the partnership shall
partnership is liable therefor to the same extent as the be preferred to those of each partner as regards the
partner so acting or omitting to act. (n) partnership property. Without prejudice to this right, the
private creditors of each partner may ask the attachment
Article 1823. The partnership is bound to make good and public sale of the share of the latter in the
the loss: partnership assets. (Marshalling of Assets)
1. Where one partner acting within the scope of his ****************************************************************
apparent authority receives money or property of a DISSOLUTION AND WINDING UP
third person and misapplies it; and
Article 1828. The dissolution of a partnership is the 5. The business of the partnership can only be carried
change in the relation of the partners caused by any on at a loss;
partner ceasing to be associated in the carrying on 6. Other circumstances render a dissolution equitable.
as distinguished from the winding up of the
business. On the application of the purchaser of a partner's interest
Article 1829. On dissolution the partnership is not under article 1813 or 1814:
terminated, but continues until the winding up of 1. After the termination of the specified term or
partnership affairs is completed. (n) particular undertaking;
2. At any time if the partnership was a partnership at
Article 1830. Dissolution is caused: will when the interest was assigned or when the
a) Without violation of the agreement between the charging order was issued. (n)
partners:
a) By the termination of the definite term or Article 1832. Except so far as may be necessary to wind
particular undertaking specified in the up partnership affairs or to complete transactions begun
agreement; but not then finished, dissolution terminates all authority
b) By the express will of any partner, who must act of any partner to act for the partnership:
in good faith, when no definite term or particular 1. With respect to the partners,
is specified; A. When the dissolution is not by the act,
c) By the express will of all the partners who have insolvency or death of a partner; or
not assigned their interests or suffered them to B. When the dissolution is by such act,
be charged for their separate debts, either insolvency or death of a partner, in cases
before or after the termination of any specified where article 1833 so requires;
term or particular undertaking; 2. With respect to persons not partners, as declared in
d) By the expulsion of any partner from the article 1834. (n)
business bona fide in accordance with such a
power conferred by the agreement between the Article 1833. Where the dissolution is caused by the act,
partners; death or insolvency of a partner, each partner is liable to
b) In contravention of the agreement between the his co-partners for his share of any liability created by
partners, where the circumstances do not permit a any partner acting for the partnership as if the
dissolution under any other provision of this article, partnership had not been dissolved unless:
by the express will of any partner at any time; 1. The dissolution being by act of any partner, the
c) By any event which makes it unlawful for the partner acting for the partnership had knowledge of
business of the partnership to be carried on or for the dissolution; or
the members to carry it on in partnership; 2. The dissolution being by the death or insolvency of a
d) When a specific thing which a partner had promised partner, the partner acting for the partnership had
to contribute to the partnership, perishes before the knowledge or notice of the death or insolvency.
delivery; in any case by the loss of the thing, when
the partner who contributed it having reserved the Article 1834. After dissolution, a partner can bind the
ownership thereof, has only transferred to the partnership, except as provided in the third paragraph of
partnership the use or enjoyment of the same; but this article:
the partnership shall not be dissolved by the loss of 1. By any act appropriate for winding up partnership
the thing when it occurs after the partnership has affairs or completing transactions unfinished at
acquired the ownership thereof; dissolution;
e) By the death of any partner; 2. By any transaction which would bind the partnership
f) By the insolvency of any partner or of the if dissolution had not taken place, provided the other
partnership; party to the transaction:
g) By the civil interdiction of any partner; a) Had extended credit to the partnership prior to
h) By decree of court under the following article dissolution and had no knowledge or notice of
the dissolution; or
Article 1831. On application by or for a partner the b) Though he had not so extended credit, had
court shall decree a dissolution whenever: nevertheless known of the partnership prior to
1. A partner has been declared insane in any judicial dissolution, and, having no knowledge or notice
proceeding or is shown to be of unsound mind; of dissolution, the fact of dissolution had not
2. A partner becomes in any other way incapable of been advertised in a newspaper of general
performing his part of the partnership contract; circulation in the place (or in each place if more
3. A partner has been guilty of such conduct as tends than one) at which the partnership business was
to affect prejudicially the carrying on of the business; regularly carried on.
4. A partner wilfully or persistently commits a breach of
the partnership agreement, or otherwise so conducts The liability of a partner under the first paragraph, No. 2,
himself in matters relating to the partnership shall be satisfied out of partnership assets alone when
business that it is not reasonably practicable to carry such partner had been prior to dissolution:
on the business in partnership with him;
1. Unknown as a partner to the person with whom the partnership property applied to discharge its liabilities,
contract is made; and and the surplus applied to pay in cash the net amount
2. So far unknown and inactive in partnership affairs owing to the respective partners. But if dissolution is
that the business reputation of the partnership could caused by expulsion of a partner, bona fide under the
not be said to have been in any degree due to his partnership agreement and if the expelled partner is
connection with it. discharged from all partnership liabilities, either by
payment or agreement under the second paragraph of
The partnership is in no case bound by any act of a article 1835, he shall receive in cash only the net amount
partner after dissolution: due him from the partnership.
1. Where the partnership is dissolved because it is
unlawful to carry on the business, unless the act is When dissolution is caused in contravention of the
appropriate for winding up partnership affairs; or partnership agreement the rights of the partners shall be
2. Where the partner has become insolvent; or as follows:
3. Where the partner has no authority to wind up (1) Each partner who has not caused dissolution
partnership affairs; except by a transaction with one wrongfully shall have:
who –
a) Had extended credit to the partnership prior (a) All the rights specified in the first paragraph
to dissolution and had no knowledge or of this article, and
notice of his want of authority; or (b) The right, as against each partner who has
b) Had not extended credit to the partnership caused the dissolution wrongfully, to damages
prior to dissolution, and, having no breach of the agreement.
knowledge or notice of his want of authority,
the fact of his want of authority has not been (2) The partners who have not caused the dissolution
advertised in the manner provided for wrongfully, if they all desire to continue the business in
advertising the fact of dissolution in the first the same name either by themselves or jointly with
paragraph, No. 2 (b). others, may do so, during the agreed term for the
partnership and for that purpose may possess the
Nothing in this article shall affect the liability under article partnership property, provided they secure the payment
1825 of any person who after dissolution represents by bond approved by the court, or pay any partner who
himself or consents to another representing him as a has caused the dissolution wrongfully, the value of his
partner in a partnership engaged in carrying on interest in the partnership at the dissolution, less any
business. (n) damages recoverable under the second paragraph, No.
1 (b) of this article, and in like manner indemnify him
Article 1835. The dissolution of the partnership does not against all present or future partnership liabilities.
of itself discharge the existing liability of any partner.
(3) A partner who has caused the dissolution wrongfully
A partner is discharged from any existing liability upon shall have:
dissolution of the partnership by an agreement to that (a) If the business is not continued under the
effect between himself, the partnership creditor and the provisions of the second paragraph, No. 2, all
person or partnership continuing the business; and such the rights of a partner under the first paragraph,
agreement may be inferred from the course of dealing subject to liability for damages in the second
between the creditor having knowledge of the dissolution paragraph, No. 1 (b), of this article.
and the person or partnership continuing the business. (b) If the business is continued under the second
paragraph, No. 2, of this article, the right as
The individual property of a deceased partner shall be against his co-partners and all claiming through
liable for all obligations of the partnership incurred while them in respect of their interests in the
he was a partner, but subject to the prior payment of his partnership, to have the value of his interest in
separate debts. (n) the partnership, less any damage caused to his
co-partners by the dissolution, ascertained and
Article 1836. Unless otherwise agreed, the partners who paid to him in cash, or the payment secured by a
have not wrongfully dissolved the partnership or the legal bond approved by the court, and to be released
representative of the last surviving partner, not insolvent, from all existing liabilities of the partnership; but
has the right to wind up the partnership affairs, provided, in ascertaining the value of the partner's interest
however, that any partner, his legal representative or his the value of the good-will of the business shall
assignee, upon cause shown, may obtain winding up by not be considered. (n)
the court. (n)
Article 1838. Where a partnership contract is rescinded
Article 1837. When dissolution is caused in any way, on the ground of the fraud or misrepresentation of one of
except in contravention of the partnership agreement, the parties thereto, the party entitled to rescind is,
each partner, as against his co-partners and all persons without prejudice to any other right, entitled:
claiming through them in respect of their interests in the
partnership, unless otherwise agreed, may have the
(1) To a lien on, or right of retention of, the surplus of the (a) Those owing to separate creditors;
partnership property after satisfying the partnership (b) Those owing to partnership creditors;
liabilities to third persons for any sum of money paid by (c) Those owing to partners by way of contribution. (n)
him for the purchase of an interest in the partnership and
for any capital or advances contributed by him; Article 1840. In the following cases creditors of the
(2) To stand, after all liabilities to third persons have dissolved partnership are also creditors of the person or
been satisfied, in the place of the creditors of the partnership continuing the business:
partnership for any payments made by him in respect of
the partnership liabilities; and (1) When any new partner is admitted into an existing
partnership, or when any partner retires and assigns (or
(3) To be indemnified by the person guilty of the fraud or the representative of the deceased partner assigns) his
making the representation against all debts and liabilities rights in partnership property to two or more of the
of the partnership. (n) partners, or to one or more of the partners and one or
more third persons, if the business is continued without
Article 1839. In settling accounts between the partners liquidation of the partnership affairs;
after dissolution, the following rules shall be observed,
subject to any agreement to the contrary: (2) When all but one partner retire and assign (or the
representative of a deceased partner assigns) their
(1) The assets of the partnership are: rights in partnership property to the remaining partner,
who continues the business without liquidation of
(a) The partnership property, partnership affairs, either alone or with others;
(b) The contributions of the partners necessary for the
payment of all the liabilities specified in No. 2. (3) When any partner retires or dies and the business of
the dissolved partnership is continued as set forth in
(2) The liabilities of the partnership shall rank in order of Nos. 1 and 2 of this article, with the consent of the retired
payment, as follows: partners or the representative of the deceased partner,
but without any assignment of his right in partnership
(a) Those owing to creditors other than partners, property;
(b) Those owing to partners other than for capital and
profits, (4) When all the partners or their representatives assign
(c) Those owing to partners in respect of capital, their rights in partnership property to one or more third
(d) Those owing to partners in respect of profits. persons who promise to pay the debts and who continue
the business of the dissolved partnership;
(3) The assets shall be applied in the order of their
declaration in No. 1 of this article to the satisfaction of (5) When any partner wrongfully causes a dissolution
the liabilities. and the remaining partners continue the business under
the provisions of article 1837, second paragraph, No. 2,
(4) The partners shall contribute, as provided by article either alone or with others, and without liquidation of the
1797, the amount necessary to satisfy the liabilities. partnership affairs;

(5) An assignee for the benefit of creditors or any person (6) When a partner is expelled and the remaining
appointed by the court shall have the right to enforce the partners continue the business either alone or with
contributions specified in the preceding number. others without liquidation of the partnership affairs.

(6) Any partner or his legal representative shall have the The liability of a third person becoming a partner in the
right to enforce the contributions specified in No. 4, to partnership continuing the business, under this article, to
the extent of the amount which he has paid in excess of the creditors of the dissolved partnership shall be
his share of the liability. satisfied out of the partnership property only, unless
there is a stipulation to the contrary.
(7) The individual property of a deceased partner shall
be liable for the contributions specified in No. 4. When the business of a partnership after dissolution is
continued under any conditions set forth in this article the
(8) When partnership property and the individual creditors of the dissolved partnership, as against the
properties of the partners are in possession of a court for separate creditors of the retiring or deceased partner or
distribution, partnership creditors shall have priority on the representative of the deceased partner, have a prior
partnership property and separate creditors on individual right to any claim of the retired partner or the
property, saving the rights of lien or secured creditors. representative of the deceased partner against the
person or partnership continuing the business, on
(9) Where a partner has become insolvent or his estate account of the retired or deceased partner's interest in
is insolvent, the claims against his separate property the dissolved partnership or on account of any
shall rank in the following order: consideration promised for such interest or for his right in
partnership property.
 (d) The name and place of residence of each
Nothing in this article shall be held to modify any right of member, general and limited partners being
creditors to set aside any assignment on the ground of respectively designated;
fraud.
The use by the person or partnership continuing the (e) The term for which the partnership is to exist;
business of the partnership name, or the name of a
deceased partner as part thereof, shall not of itself make ( f ) The amount of cash and a description of and the
the individual property of the deceased partner liable for agreed value of the other property contributed by
any debts contracted by such person or partnership. (n) each limited partner;

Article 1841. When any partner retires or dies, and the (g) The additional contributions, if any, to be made
business is continued under any of the conditions set by each limited partner and the times at which or
forth in the preceding article, or in article 1837, second events on the happening of which they shall be
paragraph, No. 2, without any settlement of accounts as made;
between him or his estate and the person or partnership
continuing the business, unless otherwise agreed, he or (h) The time, if agreed upon, when the contribution
his legal representative as against such person or of each limited partner is to be returned;
partnership may have the value of his interest at the date
of dissolution ascertained, and shall receive as an (i) The share of the profits or the other compensation
ordinary creditor an amount equal to the value of his by way of income which each limited partner shall
interest in the dissolved partnership with interest, or, at receive by reason of his contribution;
his option or at the option of his legal representative, in
lieu of interest, the profits attributable to the use of his (j) The right, if given, of a limited partner to
right in the property of the dissolved partnership; substitute an assignee as contributor in his place,
provided that the creditors of the dissolved partnership and the terms and conditions of the substitution;
as against the separate creditors, or the representative
of the retired or deceased partner, shall have priority on (k) The right, if given, of the partners to admit
any claim arising under this article, as provided article additional limited partners;
1840, third paragraph. (n)
(l) The right, if given, of one or more of the limited
Article 1842. The right to an account of his interest shall partners to priority over other limited partners, as to
accrue to any partner, or his legal representative as contributions or as to compensation by way of
against the winding up partners or the surviving partners income, and the nature of such priority;
or the person or partnership continuing the business, at
the date of dissolution, in the absence of any agreement (m) The right, if given, of the remaining general
to the contrary. (n) partner or partners to continue the business on the
death, retirement, civil interdiction, insanity or
**************************************************************** insolvency of a general partner; and
CHAPTER 4
Limited Partnership (n) The right, if given, of a limited partner to demand
and receive property other than cash in return for his
Article 1843. A limited partnership is one formed by contribution.
two or more persons under the provisions of the
following article, having as members one or more (2) File for record the certificate in the Office of the
general partners and one or more limited partners. Securities and Exchange Commission.
The limited partners as such shall not be bound by
the obligations of the partnership. A limited partnership is formed if there has been
substantial compliance in good faith with the
Article 1844. Two or more persons desiring to form a foregoing requirements.
limited partnership shall:
Article 1845. The contributions of a limited partner may
(1) Sign and swear to a certificate, which shall state - be cash or property, but not services.

(a) The name of the partnership, adding thereto the Article 1846. The surname of a limited partner shall not
word "Limited"; appear in the partnership name unless:

(b) The character of the business; (1) It is also the surname of a general partner, or

(c) The location of the principal place of business; (2) Prior to the time when the limited partner became
such, the business has been carried on under a name in
which his surname appeared.
A limited partner whose surname appears in a (1) Have the partnership books kept at the principal
partnership name contrary to the provisions of the first place of business of the partnership, and at a reasonable
paragraph is liable as a general partner to partnership hour to inspect and copy any of them;
creditors who extend credit to the partnership without
actual knowledge that he is not a general partner. (2) Have on demand true and full information of all things
affecting the partnership, and a formal account of
Article 1847. If the certificate contains a false statement, partnership affairs whenever circumstances render it just
one who suffers loss by reliance on such statement may and reasonable; and
hold liable any party to the certificate who knew the (3) Have dissolution and winding up by decree of court.
statement to be false:
A limited partner shall have the right to receive a share
(1) At the time he signed the certificate, or of the profits or other compensation by way of income,
and to the return of his contribution as provided in
(2) Subsequently, but within a sufficient time before the articles 1856 and 1857.
statement was relied upon to enable him to cancel or
amend the certificate, or to file a petition for its Article 1852. Without prejudice to the provisions of
cancellation or amendment as provided in article 1865. article 1848, a person who has contributed to the capital
of a business conducted by a person or partnership
Article 1848. A limited partner shall not become liable as erroneously believing that he has become a limited
a general partner unless, in addition to the exercise of partner in a limited partnership, is not, by reason of his
his rights and powers as a limited partner, he takes part exercise of the rights of a limited partner, a general
in the control of the business. partner with the person or in the partnership carrying on
the business, or bound by the obligations of such person
Article 1849. After the formation of a lifted partnership, or partnership, provided that on ascertaining the mistake
additional limited partners may be admitted upon filing he promptly renounces his interest in the profits of the
an amendment to the original certificate in accordance business, or other compensation by way of income.
with the requirements of article 1865.
Article 1853. A person may be a general partner and a
Article 1850. A general partner shall have all the rights limited partner in the same partnership at the same time,
and powers and be subject to all the restrictions and provided that this fact shall be stated in the certificate
liabilities of a partner in a partnership without limited provided for in article 1844.
partners. However, without the written consent or
ratification of the specific act by all the limited partners, a A person who is a general, and also at the same time a
general partner or all of the general partners have no limited partner, shall have all the rights and powers and
authority to: be subject to all the restrictions of a general partner;
except that, in respect to his contribution, he shall have
(1) Do any act in contravention of the certificate; the rights against the other members which he would
have had if he were not also a general partner.
(2) Do any act which would make it impossible to carry
on the ordinary business of the partnership; Article 1854. A limited partner also may loan money to
and transact other business with the partnership, and,
(3) Confess a judgment against the partnership; unless he is also a general partner, receive on account
of resulting claims against the partnership, with general
(4) Possess partnership property, or assign their rights in creditors, a pro rata share of the assets. No limited
specific partnership property, for other than a partnership partner shall in respect to any such claim:
purpose;
(1) Receive or hold as collateral security any partnership
(5) Admit a person as a general partner; property, or

(6) Admit a person as a limited partner, unless the right (2) Receive from a general partner or the partnership
so to do is given in the certificate; any payment, conveyance, or release from liability if at
the time the assets of the partnership are not sufficient to
(7) Continue the business with partnership property on discharge partnership liabilities to persons not claiming
the death, retirement, insanity, civil interdiction or as general or limited partners.
insolvency of a general partner, unless the right so to do
is given in the certificate. The receiving of collateral security, or payment,
conveyance, or release in violation of the foregoing
Article 1851. A limited partner shall have the same provisions is a fraud on the creditors of the partnership.
rights as a general partner to:
Article 1855. Where there are several limited partners
the members may agree that one or more of the limited
partners shall have a priority over other limited partners
as to the return of their contributions, as to their
compensation by way of income, or as to any other Article 1858. A limited partner is liable to the
matter. If such an agreement is made it shall be stated in partnership:
the certificate, and in the absence of such a statement all
the limited partners shall stand upon equal footing. (1) For the difference between his contribution as
actually made and that stated in the certificate as having
Article 1856. A limited partner may receive from the been made, and
partnership the share of the profits or the compensation
by way of income stipulated for in the certificate; (2) For any unpaid contribution which he agreed in the
provided, that after such payment is made, whether from certificate to make in the future at the time and on the
property of the partnership or that of a general partner, conditions stated in the certificate.
the partnership assets are in excess of all liabilities of the
partnership except liabilities to limited partners on A limited partner holds as trustee for the partnership:
account of their contributions and to general partners.
(1) Specific property stated in the certificate as
Article 1857. A limited partner shall not receive from a contributed by him, but which was not contributed or
general partner or out of partnership property any part of which has been wrongfully returned, and
his contributions until:
(2) Money or other property wrongfully paid or conveyed
(1) All liabilities of the partnership, except liabilities to to him on account of his contribution.
general partners and to limited partners on account of
their contributions, have been paid or there remains The liabilities of a limited partner as set forth in this
property of the partnership sufficient to pay them; article can be waived or compromised only by the
consent of all members; but a waiver or compromise
(2) The consent of all members is had, unless the return shall not affect the right of a creditor of a partnership who
of the contribution may be rightfully demanded under the extended credit or whose claim arose after the filing and
provisions of the second paragraph; and before a cancellation or amendment of the certificate, to
enforce such liabilities.
(3) The certificate is cancelled or so amended as to set
forth the withdrawal or reduction. When a contributor has rightfully received the return in
whole or in part of the capital of his contribution, he is
Subject to the provisions of the first paragraph, a limited nevertheless liable to the partnership for any sum, not in
partner may rightfully demand the return of his excess of such return with interest, necessary to
contribution: discharge its liabilities to all creditors who extended
credit or whose claims arose before such return.
(1) On the dissolution of a partnership; or
Article 1859. A limited partner's interest is assignable.
(2) When the date specified in the certificate for its return
has arrived, or A substituted limited partner is a person admitted to all
the rights of a limited partner who has died or has
(3) After he has six months' notice in writing to all other assigned his interest in a partnership.
members, if no time is specified in the certificate, either
for the return of the contribution or for the dissolution of An assignee, who does not become a substituted limited
the partnership. partner, has no right to require any information or
account of the partnership transactions or to inspect the
In the absence of any statement in the certificate to the partnership books; he is only entitled to receive the
contrary or the consent of all members, a limited partner, share of the profits or other compensation by way of
irrespective of the nature of his contribution, has only the income, or the return of his contribution, to which his
right to demand and receive cash in return for his assignor would otherwise be entitled.
contribution.
An assignee shall have the right to become a substituted
A limited partner may have the partnership dissolved and limited partner if all the members consent thereto or if
its affairs wound up when: the assignor, being thereunto empowered by the
certificate, gives the assignee that right.
(1) He rightfully but unsuccessfully demands the return
of his contribution, or An assignee becomes a substituted limited partner when
the certificate is appropriately amended in accordance
(2) The other liabilities of the partnership have not been with article 1865.
paid, or the partnership property is insufficient for their
payment as required by the first paragraph, No. 1, and The substituted limited partner has all the rights and
the limited partner would otherwise be entitled to the powers, and is subject to all the restrictions and liabilities
return of his contribution. of his assignor, except those liabilities of which he was
ignorant at the time he became a limited partner and
which could not be ascertained from the certificate. (6) Those to general partners in respect to capital.

The substitution of the assignee as a limited partner Subject to any statement in the certificate or to
does not release the assignor from liability to the subsequent agreement, limited partners share in the
partnership under articles 1847 and 1858. partnership assets in respect to their claims for capital,
and in respect to their claims for profits or for
Article 1860. The retirement, death, insolvency, insanity compensation by way of income on their contribution
or civil interdiction of a general partner dissolves the respectively, in proportion to the respective amounts of
partnership, unless the business is continued by the such claims.
remaining general partners:
Article 1864. The certificate shall be cancelled when the
(1) Under a right so to do stated in the certificate, or partnership is dissolved or all limited partners cease to
be such.
(2) With the consent of all members.
A certificate shall be amended when:
Article 1861. On the death of a limited partner his
executor or administrator shall have all the rights of a (1) There is a change in the name of the partnership or
limited partner for the purpose of setting his estate, and in the amount or character of the contribution of any
such power as the deceased had to constitute his limited partner;
assignee a substituted limited partner.
(2) A person is substituted as a limited partner;
The estate of a deceased limited partner shall be liable
for all his liabilities as a limited partner. (3) An additional limited partner is admitted;

Article 1862. On due application to a court of competent (4) A person is admitted as a general partner;
jurisdiction by any creditor of a limited partner, the court
may charge the interest of the indebted limited partner (5) A general partner retires, dies, becomes insolvent or
with payment of the unsatisfied amount of such claim, insane, or is sentenced to civil interdiction and the
and may appoint a receiver, and make all other orders, business is continued under article 1860;
directions and inquiries which the circumstances of the
case may require. (6) There is a change in the character of the business of
the partnership;
The interest may be redeemed with the separate
property of any general partner, but may not be (7) There is a false or erroneous statement in the
redeemed with partnership property. certificate;

The remedies conferred by the first paragraph shall not (8) There is a change in the time as stated in the
be deemed exclusive of others which may exist. certificate for the dissolution of the partnership or for the
return of a contribution;
Nothing in this Chapter shall be held to deprive a limited
partner of his statutory exemption. (9) A time is fixed for the dissolution of the partnership,
or the return of a contribution, no time having been
Article 1863. In settling accounts after dissolution the specified in the certificate, or
liabilities of the partnership shall be entitled to payment
in the following order: (10) The members desire to make a change in any other
statement in the certificate in order that it shall accurately
(1) Those to creditors, in the order of priority as provided represent the agreement among them.
by law, except those to limited partners on account of
their contributions, and to general partners; Article 1865. The writing to amend a certificate shall:

(2) Those to limited partners in respect to their share of (1) Conform to the requirements of article 1844 as far as
the profits and other compensation by way of income on necessary to set forth clearly the change in the certificate
their contributions; which it is desired to make; and

(3) Those to limited partners in respect to the capital of (2) Be signed and sworn to by all members, and an
their contributions; amendment substituting a limited partner or adding a
limited or general partner shall be signed also by the
(4) Those to general partners other than for capital and member to be substituted or added, and when a limited
profits; partner is to be substituted, the amendment shall also be
signed by the assigning limited partner.
(5) Those to general partners in respect to profits;
The writing to cancel a certificate shall be signed by all
members.

A person desiring the cancellation or amendment of a

certificate, if any person designated in the first and
second paragraphs as a person who must execute the
writing refuses to do so, may petition the court to order a
cancellation or amendment thereof.

If the court finds that the petitioner has a right to have

the writing executed by a person who refuses to do so, it
shall order the Office of the Securities and Exchange
Commission where the certificate is recorded, to record
the cancellation or amendment of the certificate; and
when the certificate is to be amended, the court shall
also cause to be filed for record in said office a certified
copy of its decree setting forth the amendment.

A certificate is amended or cancelled when there is filed

for record in the Office of the Securities and Exchange
Commission, where the certificate is recorded:

(1) A writing in accordance with the provisions of the first

or second paragraph, or

(2) A certified copy of the order of the court in

accordance with the provisions of the fourth paragraph;

(3) After the certificate is duly amended in accordance

with this article, the amended certified shall thereafter be
for all purposes the certificate provided for in this
Chapter.

Article 1866. A contributor, unless he is a general

partner, is not a proper party to proceedings by or
against a partnership, except where the object is to
enforce a limited partner's right against or liability to the
partnership.

Article 1867. A limited partnership formed under the law

prior to the effectivity of this Code, may become a limited
partnership under this Chapter by complying with the
provisions of article 1844, provided the certificate sets
forth:

(1) The amount of the original contribution of each

limited partner, and the time when the contribution was
made; and

(2) That the property of the partnership exceeds the

amount sufficient to discharge its liabilities to persons not
claiming as general or limited partners by an amount
greater than the sum of the contributions of its limited
partners.

A limited partnership formed under the law prior to the

effectivity of this Code, until or unless it becomes a
limited partnership under this Chapter, shall continue to
be governed by the provisions of the old law.