PARTNERSHIP indeed formed a partnership. (Lim Tong Lim vs. Phil.

Fishing Gear Industries Inc., 317 SCRA 728)

ART. 1767 – Definition of Partnership

By the contract of partnership two or more persons bind

themselves to contribute money, property, or industry to ART. 1768 – Is a partnership considered a person?
a common fund, with the intention of dividing the
profits among themselves. The partnership has a judicial personality separate and
distinct from that of each of the partners, even in case of
Two or more persons may also form a partnership for the failure to comply with the requirements of Article 1772,
exercise of a profession. first paragraph.

^ It is not necessary that there is a contribution of money

or property. E.g.: Law Firms, Doctors
ART. 1769 – Rules in determining whether a partnership
exists

Characteristics of a Partnership (1) Except as provided by Article 1825, persons who

are not partners as to each other are not partners
(1) Fiduciary – based on trust and confidence as to third persons;
(2) Nominate – it has specific name XPN: Partnership by estoppel
(3) Consensual – perfected by mere consent, but (2) Co-ownership or co-possession does not of itself
formalities are sometimes required establish a partnership, whether such-co-owners
(4) Bilateral or Multilateral – entered into between or co-possessors do or do not share any profits
two or more persons made by the use of the property;
(5) Principal – its life does not depend on the life of (3) The sharing of gross returns does not of itself
another contract establish a partnership, whether or not the
(6) Onerous – it requires consideration consisting in persons sharing them have a joint or common
the contribution of money, property, or industry right or interest in any property from which the
(7) Preparatory – because after its constitution, returns are derived;
another contract/s are essential in the (4) The receipt by a person of a share of the profits
accomplishment of its purposes may be entered of a business is prima facie evidence that he is a
into by the parties partner in the business, but no such inference
(8) Capable of suit – with legal personality shall be drawn if such profits were received in
(9) Profit-oriented – for the common interest of the payment:
partners, purpose must be for profit, and not just (a) As a debt by installments or otherwise;
for the enjoyment of money, property, or (b) As wages of an employee or rent to a
industry (will become co-ownership) landlord;
(c) As an annuity to a widow or
representative of a deceased partner;
Partnership can form a corporation except those organized (d) As interest on a loan, though the
for the purpose of practicing a profession (Sec. 10, RA amount of payment vary with the profits
232, Revised Corporation Code of the Philippines) of the business;
(e) As the consideration for the sale of a
goodwill of a business or other property
Principle of Delectus Personae – No one can become a by installments or otherwise.
member of a partnership without the consent of all ^ There can be no prima facie evidence
partners. that he is a partner to the business.

Common fund – The contribution to such fund need not

be cash or fixed assets; it could be an intangible like
ART. 1770 – Required object or purpose of a partnership
credit or industry. That the parties agreed that any loss or
profit from the sale and operation of the boats would be
divided equally among them also shows that they had
A partnership must have a lawful object or purpose, and Every contract of partnership having a capital of three
must be established for the common benefit or interest of thousand pesos or more, in money or property, shall
the partners. appear in a public instrument, which must be recorded in
the Office of the Securities and Exchange Commission.
^ If not lawful, the partnership will be void (Art. 1409,
NCC) ^ Failure to comply with the requirements of the
preceding paragraph shall not affect the liability of the
partnership and the members thereof to third persons.
Effect of unlawful partnership is judicially dissolved Effect of non-registration
When an unlawful partnership is dissolved by a judicial ^ Even if the contract of partnership is not registered, it
decree, the profits shall be confiscated in favor of the remains valid if the essential elements of the contract.
State, without prejudice to the provisions of the Penal
Code governing the confiscation of the instruments and The partnership has legal personality even if it is not
effects of a crime. registered as long as it is not an unlawful partnership.

ART. 1771 – Form of partnerships ART. 1773 – Effect when there is no inventory of the
immovables contributed into the partnership
GR: A partnership may be constituted in any form
regardless of the value of the contributions A contract of partnership is void, whenever immovable
property is contributed thereto, if an inventory of said
XPN: Except where immovable property or real rights are property is not made, signed by the parties, and attached
contributed thereto, regardless of the value thereof, in to the public instrument.
which case a public instrument shall be necessary.

^ There must be an inventory of the immovables

contributed. The inventory must be signed by the parties
and it must be attached to the public instrument creating
the partnership. ART. 1774 – In whose name may immovable property or
an interest therein acquired by the partnership be named?
^ If personal property or money is contributed, the
partnership is valid even if it is orally agreed, or orally Any immovable property or an interest therein may be
organized. acquired in the partnership name. Title so acquired can be
conveyed only in the partnership name.
^ To bind third persons, where immovable had been
contributed, and the inventory properly made, the contract ^ Personal property need not be conveyed in the name of
of partnership must be registered with the Registry of the partnership. Title refers to real property.
Property, where the immovable is located. (Borja vs.
Adelison et. al, 49 PHL Reports, 895)
ART. 1775 – Are associations or societies whose articles
Art. 1356 – Contracts shall be obligatory, in whatever are kept secret among themselves a partnership? NO. It is
form they may have been entered into, provided all the considered a co-ownership.
essential requisites for their validity are present. However,
when the law requires that a contract be in some form in ^ Not considered as a partnership
order that it may be valid or enforceable, or that a contract
be proved in a certain way, that requirement is absolute
and indispensable. In such cases, the right of the parties ART. 1776 – How are partnerships classified
stated in the following article cannot be exercised.
As to its object – A partnership is either universal or
particular.
ART. 1772 – When is registration of partnership As regards the liability of the partners – a partnership
required? may be general or limited.
 ART. 1782 – Persons disqualified from entering into
universal partnership
ART. 1777 – Universal partnership
Persons who are prohibited from giving each other any
Refers to all the present property or to all the profits. donation or advantage.

Examples:
ART. 1778 – Partnership of all present property (1) Legally married spouse, however, they may enter
In which the partners contribute all the property which a partnership in the exercise of profession
actually belongs to them to a common fund, with the (2) Common law spouses
intention of dividing the same among themselves, as well (3) Partners guilty of adultery or concubinage
as all the profits which they may acquire therewith. (4) Criminals convicted for the same offense in
consideration of the same
(5) A person and a public officer, or his wife,
ascendant or descendant, by reason of his office
ART. 1779 – Universal partnership of all present property
ART. 1783 – Particular partnership
The property which belongs to each of the partners at the
time of the constitution of the partnership, becomes the A particular partnership has for its object determinate
common property of all the partners, as well as all the things, their use or fruits, or specific undertaking, or the
profits which they may acquire therewith. exercise of a profession or vocation.
GR: A stipulation for the common enjoyment of any other
profits may also be made;
Obligations of the Partners Among Themselves
XPN: But the property which the partners may acquire
subsequently by inheritance, legacy, or donation cannot ART. 1784 – Commencement of existence of a
be included in such stipulation, except the fruits thereof. partnership

GR: A partnership begins from the moment of the

execution of the contract
ART. 1780 – A universal partnership of profits
XPN: Unless it is otherwise stipulated
Comprises all that the partners may acquire by their
industry or work during the existence of the partnership. ^ They do not become partners until the appointment time
has arrived
Movable or immovable property which each of the
partners may possess at the time of the celebration of the ^ Must be evidenced by some writing or document,
contract shall continue to pertain exclusively to each, only pursuant to the Statute of Frauds
the usufruct passing to the partnership. ^ If not in writing, the contract becomes unenforceable
^ Immovable property belonging to its partner or he ^ If in the meantime, one the contracting parties died, or
possess at the time of the celebration of the contract shall became insane, or incompetent, the partnership will no
continue to belong to its partners. Only the use may pass longer be established
through the partnership

ART. 1785 – Rule when the partnership has a fixed term,

ART. 1781 – Effect of non-specific articles of universal but is continued by the partners after the termination of
partnership such term and when the partners had undertaken a
Articles of universal partnership, entered into without particular business that is continued after the termination
specification of its nature, only constitute a universal or the accomplishment of such business
partnership of profits. When a partnership for a fixed term or particular
undertaking is continued after the termination of such
term or particular undertaking without any express
agreement, the rights and duties of the partners remain the ^ Criteria is the current prices, the subsequent changes
same as they were at such termination, so far as is thereof being for account of the partnership.
consistent with a partnership at will.
^ Appraisal is necessary to determine how much in terms
A continuation of the business by the partners or such of of money had been contributed, any subsequent increase
them as habitually acted therein during the term, without or decrease in value of the property contributed will be for
any settlement or liquidation of the partnership affairs, is the account of the firm.
prima facie evidence of a continuation of the partnership.

^ A partnership at will is the resulting partnership as

continued when there is actual continuation of the affairs ART. 1788 – Effect of failure of a partner to contribute a
of the partnership after the termination of its period or sum of money which he had undertaken to do
accomplishment of its purpose, because its existence Partner becomes a debtor for the interest and damages
depends upon the partners, or the will of anyone of them. from the time he should have complied with his
obligation.

ART. 1786 – When a partner becomes a debtor of the ^ When partner failed to contribute sum of money which
partnership he had undertaken to do

^ Every partner is a debtor of the partnership for whatever ^ Is the partner still required to contribute such money?
he may have promised to contribute thereto. YES, refer to Art. 1786.

The same rule applies to any amount he may have taken

from the partnership coffers, and his liability shall begin
When a partner becomes a warrantor from the time he converted the amount to his own use.

^ He shall also be bound for warranty in case of eviction ^ Conversion of money taken from partnership coffers to
with regard to specific and determinate things which he personal use
may have contributed to the partnership, in the same cases
and in the same manner as the vendor is bound with ^ Can a converting partner of the money of the
respect to the vendee. He shall also be liable for the fruits partnership be criminally liable for his actions? YES,
thereof from the time they should have been delivered, refer to Art. 315, 1 (B), RPC.
without the need of any demand.

^ The situation is akin to a lease agreement, and must be ART. 1789 – Restriction when it comes to an industrial
bound for warranty in case of eviction partner
^ Law on Sales GR: An industrial partner cannot engage in business for
himself

ART. 1787 – Rule when contribution is in goods XPN: Unless the partnership expressly permits him to do
so; and if he should do so, the capitalist partners may
Their appraisal must be made in the manner prescribed in either exclude him from the firm or avail themselves of
the contract of partnership. the benefits which he may have obtained in violation of
this provision, with a right to damages in either case.
^ Amount of goods contributed by the partner as capital
must be determined by the proper appraisal of the value ^ Prohibition is absolute. It covers all kinds of business
thereof at the time of the contribution outside of the partnership.

^ If there is a mode of appraisal agreed upon, the same ^ Sanction: exclude the industrial partner from the
must be complied with partnership with damages to recover the benefits which
the industrial partner has gained from the business he
^ If there is none, appraisal shall be made by experts engaged by himself without the express consent of the
chosen by the partners. partners/firm
ART. 1790 – Rule of the contribution to the capital of the ART. 1793 – Rule when a partner has received his share
partnership of the partnership credit without the other partners
receiving the same
GR: The partners shall contribute equal shares to the
capital of the partnership. The receiving partner shall be obliged, if the debtor
should thereafter become insolvent, to bring to the
XPN: Unless there is a stipulation to the contrary partnership capital what he received even though he may
^ Rule applies only to capitalist partners have given receipt for his share only.

^ Applies only when the debtor becomes insolvent

ART. 1791 – Obligation of the partners in case of

imminent loss ART. 1794 – When partner committed fault
GR: Even if there is no agreement to the contrary, the Every partner is responsible to the partnership for
general partners are obliged to make additional damages suffered by it through his fault.
contribution to save the business. If the general partner
deliberately refuses for no valid reason, he must sell his He cannot compensate them with the profits and benefits
interest in the partnership to other partners. which he may have earned for the partnership by his
industry.
^ It is not fair for him to stay in the firm and reap benefits
when he does not extend any help. However, the courts may equitably lessen this
responsibility if through the partner's extraordinary efforts
XPN: Industrial partners, because he already contributed in other activities of the partnership, unusual profits have
his whole industry or labor. been realized.

ART. 1792 – Rule when there are two separate credits ART. 1795 – Who bears the loss where only the use and
which are both demandable owing to the partnership to fruits of specific determinate things had been contributed
the other to the managing partner to the partnership?
The sum thus collected shall be applied to the two credits If not fungible – The risk of specific and determinate
in proportion to their amounts, even though he may have things shall be borne by the partner who owns them.
given a receipt for his own credit only;
If fungible – The risk shall be borne by the partnership.
But should he have given it for the account of the In the absence of stipulation, the risk of the things brought
partnership credit, the amount shall be fully applied to the and appraised in the inventory, shall also be borne by the
latter. partnership, and in such case the claim shall be limited to
^ If the collecting partner is not the managing partner, the the value at which they were appraised.
law will not apply.

The provisions of this article are understood to be without ART. 1796 – Responsibility of the partnership to every
prejudice to the right granted to the other debtor by partner
Article 1252, but only if the personal credit of the partner
should be more onerous to him. (1) For the amounts he may have disbursed on
behalf of the partnership and for the
^ The debtor of several debts may specify which corresponding interest, from the time the
particular debts he is paying. (Art. 1252, NCC) expense are made;
^ If the debtor stated he is paying the debt owed to the (2) It shall also answer to each partner for the
collecting managing partner, then that is allowed, obligations he may have contracted in good faith
provided that said debt is more onerous to him compared in the interest of the partnership business, and for
to his debt owing to the partnership. risks in consequence of its management.
^ The term “amounts reimbursed” refers to loans or ^ However, the law does not prohibit any stipulation
advances made on behalf of the partnership. where the shares of the partners in the profits or losses
will not be improportion to their contribution.
^ It does not refer to the original capital contributed to the
partnership. ^ What the law prohibits is the EXCLUSION of a partner
from the profits or losses
^ Payment shall be made to the paying partner as long as
he is not at fault and provided there is good faith on his
part.
ART. 1800 – Extent of exercise of authority of a
managing partner

ART. 1797 – Rule on distribution of profits and losses GR: The partner who has been appointed manager in the
articles of partnership may execute all acts of
The losses and profits shall be distributed in conformity administration despite the opposition of his partners
with the agreement.
XPN: Unless he should act in bad faith; and his power is
If only the share of each partner in the profits has been irrevocable without just or lawful cause.
agreed upon, the share of each in the losses shall be in the
same proportion. ^ The vote of the partners representing the controlling
interest shall be necessary for such revocation of power.
In the absence of stipulation, the share of each partner in
the profits and losses shall be in proportion to what he ^ A power granted after the partnership has been
may have contributed, but the industrial partner shall not constituted may be revoked at any time.
be liable for the losses.

As for the profits, the industrial partner shall receive such

share as may be just and equitable under the ART. 1801 – How should two or more partners appointed
circumstances. If besides his services he has contributed to manage the partnership perform their duties
capital, he shall also receive a share in the profits in If appointed without specification of their respective
proportion to his capital. duties, or without a stipulation that one of them shall not
^ “Profits” refers to net profits act without the consent of all the others – Each one may
separately execute all acts of administration, but if any of
them should oppose the acts of the others, the decision of
the majority shall prevail.
ART. 1798 – Effect of designation of shares in the profits
of losses to a third person In case of a tie, the matter shall be decided by the partners
owning the controlling interest.
Such designation may be impugned only when it is
manifestly inequitable.

In no case may a partner who has begun to execute the

decision of the third person, or who has not impugned the
same within a period of three months from the time he
had knowledge thereof, complain of such decision. ART. 1802 – Rule on joint management of the
^ The designation of losses and profits cannot be partnership
intrusted to one of the partners. In case it should have been stipulated that none of the
managing partners shall act without the consent of the
others, the concurrence of all shall be necessary for the
ART. 1799 – Effect of stipulation excluding one or more validity of the acts.
partners from any share in the profits and losses. VOID.
GR: The absence or incapacity of the manager is no
Such stipulation shall be VOID. excuse
XPN: Unless there is imminent danger of grave or Partners shall render on demand true and full information
irreparable injury to the partnership. of all things affecting the partnership to any partner or the
legal representative of any deceased partner or of any
If unanimity is not obtained, the act is not binding upon partner under legal disability.
the partnership.

ART. 1807 – Duty of the partner for any benefits and

ART. 1803 – Rule where the articles of partnership made profits
no provision for the management of the business of the
partnership Every partner must account to the partnership for any
benefit, and hold as trustee for it any profits derived by
(1) All the partners shall be considered agents and him without the consent of the other partners from any
whatever any one of them may do alone shall transaction connected with the formation, conduct, or
bind the partnership, without prejudice to the liquidation of the partnership or from any use by him of
provisions of Article 1801. its property.
(2) None of the partners may, without the consent of
the others, make any important alteration in the ^ Partner becomes a trustee of the partners
immovable property of the partnership, even if it
may be useful to the partnership. But if the
refusal of consent by the other partners is ART. 1808 – Restriction on capitalist partners with
manifestly prejudicial to the interest of the regard to engagement of business
partnership, the court's intervention may be
sought. GR: The capitalist partners cannot engage for their own
account in any operation which is of the kind of business
in which the partnership is engaged
ART. 1804 – Requirements before an associate or sub- XPN: Unless there is a stipulation to the contrary.
contractor may become a partner
^ Any capitalist partner violating this prohibition shall
Every partner may associate another person with him in bring to the common funds any profits accruing to him
his share, but the associate shall not be admitted into the from his transactions, and shall personally bear all the
partnership without the consent of all the other partners, losses.
even if the partner having an associate should be a
manager. ^ Business to be engaged by the capitalist partner is
limited only to the same kind of business wherein the
partnership is engaged with similarly.

ART. 1809 – Instances where the right to accounting

arises in favor of the partner

(1) If he is wrongfully excluded from the

partnership business or possession of its
ART 1805 – Rule on keeping and inspection of property by his co-partners;
partnership books (2) If the right exists under the terms of any
agreement;
(1) The partnership books shall be kept, subject to (3) As provided by article 1807 (trustee);
any agreement between the partners, at the (4) Whenever other circumstances render it just and
principal place of business of the partnership reasonable.
(2) Every partner shall at any reasonable hour have
access to and may inspect and copy any of them.

Property Rights of a Partner

ART. 1806 – Rule on disclosure of matters affecting the ART. 1810 – Property rights of a partner
partnership
 (1) His rights in specific partnership property; ART. 1812 – Partner’s interest in the partnership
(2) His interest in the partnership; and
(3) His right to participate in the management. Partner’s interest are profits and surpluses derived from
the partnership.
^ Principal rights

^ There are non-principal rights

ART. 1813 – Effect when a partner conveys his whole
interest in the partnership

ART. 1811 – A partner is co-owner with his partners of (1) It does not dissolve the partnership
specific partnership property. automatically.
(2) The assignee shall not be entitled to interfere in
Incidents of co-ownership the management or administration of the
(1) The law allows an equal right of the partners to partnership business or affairs, or to require any
possess specific partnership property, but such equality information or account of partnership
applies only for partnership purposes. transactions, or to inspect the partnership books
(3) The assignee is merely entitled to receive in
^ The rule on possession does not apply where the accordance with his contract, the profits which
purpose is not within the partnership purposes. the assigning partners would otherwise be
entitled.
^ He may be allowed only to possess such property if
there is consent of his partners. ^ However, in case of fraud in the management of the
partnership, the assignee may avail himself of the usual
remedies.
(2) GR: A partner's right in specific partnership property
^ Usual remedies refers to those that has already been
is not assignable
stated as “he is no entitled to” makes him already entitled.
XPN: Except in connection with the assignment of rights
of all the partners in the same property;

^ A partner has the right to assign specific partnership

property only in connection with the assignment of rights
of all the partners in the same property.
In case of a dissolution of the partnership

(1) The assignee is entitled to receive his assignor's

(3) GR: A partner's right in specific partnership property interest and
is not subject to attachment or execution (2) The assignee may require an account from the
date only of the last account agreed to by all the
XPN: Except on a claim against the partnership
partners.
^ When partnership property is attached for a partnership
debt the partners, or any of them, or the representatives of
a deceased partner, cannot claim any right under the ART. 1814 – Right of a judgment creditor of a partner
homestead or exemption laws with respect to the latter’s interest to the partnership

The court which entered the judgment, or any other court,

(4) A partner's right in specific partnership property is not (1) May charge the interest of the debtor partner
subject to legal support under Article 291. with payment of the unsatisfied amount of such
judgment debt with interest thereon; and
^ The specific partnership property cannot be the subject
(2) May then or later appoint a receiver of his share
of legal support
of the profits, and of any other money due or to
fall due to him in respect of the partnership, and
 (3) Make all other orders, directions, accounts and However, any partner may enter into a separate obligation
inquiries which the debtor partner might have to perform a partnership contract.
made, or which the circumstances of the case
may require. ^ An industrial partner shall be liable while under Art.
1797, it states industrial partners are exempted from
losses, however, he is not exempted from liability to third
persons for the debts of the partnership.
Can the interest charged be redeemed?
^ The exemption of the industrial partner to pay losses
The interest charged may be redeemed at any time before relates exclusively to the settlement of the partnership
foreclosure, or in case of a sale being directed by the affairs among the partners themselves.
court, may be purchased without thereby causing a
dissolution:

(1) With separate property, by any one or more of ART. 1817 – Effect against stipulation on pro rata
the partners; or liability. VOID.
(2) With partnership property, by any one or more of
the partners with the consent of all the partners Any stipulation against the liability laid down in the
whose interests are not so charged or sold. preceding article shall be void, except as among the
partners.
Nothing in this Title shall be held to deprive a partner of
his right, if any, under the exemption laws, as regards his Such stipulation is valid by and among the partners
interest in the partnership. themselves.

^ Under Art. 1799, the partners can’t exclude by

stipulation a partner from sharing profits or losses,
because the stipulation shall be void.

^ However, under Art. 1817, the partners may, by

implication, stipulate among themselves that a partner
Obligations of the Partners with Regards to Third shall be exempt from liability.
Persons

ART. 1815 – Necessity of the name of the partnership

ART. 1818 – Effect of a partner’s action for purposes of
Every partnership shall operate under a firm name, which the partnership business
may or may not include the name of one or more of the
partners. GR: The act of every partner for apparently carrying on in
the usual way the business of the partnership binds the
^ Use of the firm name is required partnership
^ Non-members who include their names in the firm do XPN: Unless the partner so acting has in fact no authority
not have the rights as partners, but they are liable to third to act for the partnership in the particular matter, and the
persons without notice as partners. person with whom he is dealing has knowledge of the fact
^ They become partners by estoppel that he has no such authority.

ART. 1816 – Liability of partnership and partners for the Effect of an act of a partner which is not apparently
contract of the partnership for the carrying on of business of the partnership

All partners, including industrial ones, shall be liable pro GR: These acts do not bind the partnership
rata with all their property and after all the partnership XPN: Unless authorized by the other partners.
assets have been exhausted, for the contracts which may
be entered into in the name and for the account of the
partnership, under its signature and by a person
authorized to act for the partnership. Prohibited acts of partners:
GR: One or more but less than all the partners have no
authority to:
(3) Where title to real property is in the name of one
(1) Assign the partnership property in trust for or more but not all the partners, and the record
creditors or on the assignee's promise to pay the does not disclose the right of the partnership, the
debts of the partnership; partners in whose name the title stands may
(2) Dispose of the good-will of the business; convey title to such property, but the partnership
(3) Do any other act which would make it may recover such property if the partners' act
impossible to carry on the ordinary business of a does not bind the partnership under the
partnership; provisions of the first paragraph of Article 1818,
(4) Confess a judgment; unless the purchaser or his assignee, is a holder
(5) Enter into a compromise concerning a for value, without knowledge.
partnership claim or liability;
(6) Submit a partnership claim or liability to
arbitration; (4) Where the title to real property is in the name of
(7) Renounce a claim of the partnership. one or more or all the partners, or in a third
XPN: Except when authorized by the other partners or person in trust for the partnership, a conveyance
unless they have abandoned the business. executed by a partner in the partnership name, or
in his own name, passes the equitable interest of
^ If all partners agreed, they can do these acts. the partnership, provided the act is one within
the authority of the partner under the provisions
Effects of a partner’s action done in contravention of a of the first paragraph of Article 1818.
restriction on his authority

No act of a partner in contravention of a restriction on

authority shall bind the partnership to persons having (5) Where the title to real property is in the name of
knowledge of the restriction. all the partners a conveyance executed by all the
partners passes all their rights in such property.

ART. 1819 – Effects of conveyances of real property

made by a partner in excess of his authority ART. 1820 – When may an admission or representation
of a particular partner be taken against the partnership
(1) Where title to real property is in the partnership
name, any partner may convey title to such Becomes evidence against the partnership if within the
property by a conveyance executed in the scope of his authority in accordance with this Title
partnership name; but the partnership may
recover such property unless the partner's act
binds the partnership under the provisions of the ART. 1821 – Effect of notice to a partner regarding
first paragraph of article 1818, or unless such partnership affairs
property has been conveyed by the grantee or a
person claiming through such grantee to a holder GR: Notice to a partner regarding partnership affairs
for value without knowledge that the partner, in operates as notice to or knowledge of the partnership
making the conveyance, has exceeded his
XPN: Except in the case of fraud on the partnership,
authority.
committed by or with the consent of that partner.

(2) Where title to real property is in the name of the

ART. 1822 – Rule when a partner incurs any wrongful
partnership, a conveyance executed by a partner,
act or omission resulting in injury or loss to third person
in his own name, passes the equitable interest of
the partnership, provided the act is one within The partnership is liable therefor to the same extent as the
the authority of the partner under the provisions partner so acting or omitting to act if loss or injury is
of the first paragraph of Article 1818.
caused to any person, not being a partner in the (1) When a partnership liability results, he is liable
partnership, or any penalty is incurred. as though he were an actual member of the
partnership;
(2) When no partnership liability results, he is liable
ART. 1823 – When partnership is bound to make good of pro rata with the other persons, if any, so
the loss consenting to the contract or representation as to
incur liability, otherwise separately.
(1) Where one partner acting within the scope of his
apparent authority receives money or property of When a person has been thus represented to be a partner
a third person and misapplies it; and in an existing partnership, or with one or more persons
(2) Where the partnership in the course of its not actual partners, he is an agent of the persons
business receives money or property of a third consenting to such representation to bind them to the
person and the money or property so received is same extent and in the same manner as though he were a
misapplied by any partner while it is in the partner in fact, with respect to persons who rely upon the
custody of the partnership. representation. When all the members of the existing
partnership consent to the representation, a partnership act
or obligation results; but in all other cases it is the joint
act or obligation of the person acting and the persons
ART. 1824 – Nature of the partner’s liability under Art.
consenting to the representation.
1822 and 1823
^ In these instances, a partnership by estoppel or a partner
All partners are liable solidarily with the partnership for
by estoppel may be created
everything chargeable to the partnership under Articles
1822 and 1823.

^ XPN to Art. 1816 ART. 1826 – Extent of liability of newly-admitted partner

^ The liability of all partners in solidary in cases under GR: He is liable for all the obligations of the partnership
Art. 1822 and 1823 arising before his admission as though he had been a
partner when such obligations were incurred, except that
^ The violation of these two articles constitutes torts,
this liability shall be satisfied only out of partnership
hence the solidary liability, under Art. 2194 of the NCC,
property
which states that “the responsibility of two or more
persons who are liable for a quasi-delict is solidary.” ^ His liability his only up to his share in the partnership
property. Therefore, his personal property cannot be held
accountable for partnership debts
ART. 1825 – When is there a partner by estoppel and
XPN: Unless there is a stipulation to the contrary.
partnership by estoppel

When a person, by words spoken or written or by

conduct, represents himself, or consents to another ART. 1827 – Who are preferred creditors with respect to
representing him to anyone, as a partner in an existing partnership property
partnership or with one or more persons not actual
partners, he is liable to any such persons to whom such The creditors of the partnership shall be preferred to those
representation has been made, who has, on the faith of of each partner as regards the partnership property.
such representation, given credit to the actual or apparent Without prejudice to this right, the private creditors of
partnership, and if he has made such representation or each partner may ask the attachment and public sale of the
consented to its being made in a public manner he is share of the latter in the partnership assets.
liable to such person, whether the representation has or
has not been made or communicated to such person so Dissolution of Partnership
giving credit by or with the knowledge of the apparent
partner making the representation or consenting to its ART. 1828 – Definition of dissolution of partnership
being made:
Dissolution - Change in the relation of the partners caused (2) In contravention of the agreement between the
by any partner ceasing to be associated in the carrying on partners, where the circumstances do not permit a
in the business of the partnership. dissolution under any other provision of this article, by
the express will of any partner at any time;
Winding up – Process of settling the business affairs of
the partnership after its dissolution. E.g.: Settling of (3) By any event which makes it unlawful for the business
obligations, collection of demandable claims, etc. of the partnership to be carried on or for the members to
carry it on in partnership;
Termination – State which follows when all of the
partnership affairs have been wound up or concluded. (4) When a specific thing which a partner had promised to
Officially, it is the end of the partnership. contribute to the partnership, perishes before the delivery;
in any case by the loss of the thing, when the partner who
^ The dissolution of the partnership does not necessarily contributed it having reserved the ownership thereof, has
mean that a partner can evade previous obligations only transferred to the partnership the use or enjoyment of
entered into by the partnership, but spares the former the same; but the partnership shall not be dissolved by the
partners from new obligations entered into by the loss of the thing when it occurs after the partnership has
partnership to which they did not consent whether acquired the ownership thereof;
expressly or impliedly, unless this new obligation is
essential for winding up the partnership affairs. (5) By the death of any partner;

(6) By the insolvency of any partner or of the partnership;

ART. 1829 – Effect of dissolution (7) By the civil interdiction of any partner;

On dissolution the partnership is not terminated, but (8) By decree of court under the following article.
continues until the winding up of partnership affairs is
completed.
ART. 1831 – Judicial dissolution of partnership

ART. 1830 – Causes of dissolution The court shall decree a dissolution whenever:

^ Extra-judicial dissolution of partnership (1) A partner has been declared insane in any judicial
proceeding or is shown to be of unsound mind;
1) Without violation of the agreement between the
partners: (2) A partner becomes in any other way incapable of
performing his part of the partnership contract;
(a) By the termination of the definite term or
particular undertaking specified in the (3) A partner has been guilty of such conduct as tends to
agreement; affect prejudicially the carrying on of the business;
(b) By the express will of any partner, who must act (4) A partner wilfully or persistently commits a breach of
in good faith, when no definite term or particular the partnership agreement, or otherwise so conducts
is specified; himself in matters relating to the partnership business that
(c) By the express will of all the partners who have it is not reasonably practicable to carry on the business in
not assigned their interests or suffered them to partnership with him;
be charged for their separate debts, either before
or after the termination of any specified term or (5) The business of the partnership can only be carried on
particular undertaking; at a loss;
(d) By the expulsion of any partner from the
(6) Other circumstances render a dissolution equitable.
business bona fide in accordance with such a
power conferred by the agreement between the
partners;
On the application of the purchaser of a partner's
interest under Article 1813 or 1814:
(1) After the termination of the specified term or (1) By any act appropriate for winding up partnership
particular undertaking; affairs or completing transactions unfinished at
dissolution;
(2) At any time if the partnership was a partnership at will
when the interest was assigned or when the charging (2) By any transaction which would bind the partnership
order was issued. if dissolution had not taken place, provided the other party
to the transaction:

(a) Had extended credit to the partnership prior to

ART. 1832 – Effect of dissolution with respect to the dissolution and had no knowledge or notice of
authority of any partner the dissolution; or
GR: Dissolution terminates all authority of any partner to (b) Though he had not so extended credit, had
act for the partnership: nevertheless known of the partnership prior to
dissolution, and, having no knowledge or notice
(1) With respect to the partners: of dissolution, the fact of dissolution had not
been advertised in a newspaper of general
(a) When the dissolution is not by the act,
circulation in the place (or in each place if more
insolvency or death of a partner; or
than one) at which the partnership business was
(b) When the dissolution is by such act, insolvency
regularly carried on.
or death of a partner, in cases where article 1833
so requires;

(2) With respect to persons not partners, as declared in XPN: A partnership exempt from any act of a partner after
article 1834. dissolution:
XPN: Except so far as may be necessary to wind up (1) Where the partnership is dissolved because it is
partnership affairs or to complete transactions begun but unlawful to carry on the business, unless the act is
not then finished. appropriate for winding up partnership affairs; or

(2) Where the partner has become insolvent; or

ART. 1833 – When is a partner liable to his co-partners (3) Where the partner has no authority to wind up
upon the dissolution of the partnership partnership affairs; except by a transaction with one who:
GR: Where the dissolution is caused by the act, death or (a) Had extended credit to the partnership prior to
insolvency of a partner, each partner is liable to his co- dissolution and had no knowledge or notice of
partners for his share of any liability created by any his want of authority; or
partner acting for the partnership as if the partnership had (b) Had not extended credit to the partnership prior
not been dissolved to dissolution, and, having no knowledge or
notice of his want of authority, the fact of his
want of authority has not been advertised in the
XPN: Unless (1) The dissolution being by act of any manner provided for advertising the fact of
partner, the partner acting for the partnership had dissolution in the first paragraph, No. 2 (b).
knowledge of the dissolution; or

(2) The dissolution being by the death or insolvency of a

When can the liability of a partner under the first
partner, the partner acting for the partnership had
paragraph, No. 2, be satisfied?
knowledge or notice of the death or insolvency.
When such partner had been prior to dissolution:

(1) Unknown as a partner to the person with whom the

ART. 1834 – When is the partnership bound by the act of
contract is made; and
a partner after dissolution
(2) So far unknown and inactive in partnership affairs that
GR: After dissolution, a partner can bind the partnership
the business reputation of the partnership could not be
said to have been in any degree due to his connection with ART. 1837 – How can a partner have the partnership
it. property applied to discharge his liabilities in case of
dissolution
^ Nothing in this article shall affect the liability under
Article 1825 of any person who, after dissolution, GR: When dissolution is caused in any way, except in
represents himself or consents to another representing him contravention of the partnership agreement, each partner,
as a partner in a partnership engaged in carrying business. as against his co-partners and all persons claiming
through them in respect of their interests in the
partnership
ART. 1835 – Is the partnership discharged from any XPN: Unless otherwise agreed
existing liability upon dissolution? NO.
But if dissolution is caused by expulsion of a partner,
The dissolution of the partnership does not of itself bona fide under the partnership agreement and if the
discharge the existing liability of any partner. expelled partner is discharged from all partnership
The individual property of a deceased partner shall be liabilities, either by payment or agreement under the
liable for all obligations of the partnership incurred while second paragraph of Article 1835, he shall receive in cash
he was a partner, but subject to the prior payment of his only the net amount due him from the partnership.
separate debts.

Rights of partners in case of dissolution of the

When is a partner discharged from any existing partnership contrary to the partnership agreement
liability? (1) Each partner who has not caused dissolution
A partner is discharged from any existing liability upon wrongfully shall have:
dissolution of the partnership by an agreement to that (a) All the rights specified in the first paragraph of
effect between himself, the partnership creditor and the this article, and
person or partnership continuing the business; and such (b) The right, as against each partner who has
agreement may be inferred from the course of dealing caused the dissolution wrongfully, to damages
between the creditor having knowledge of the dissolution breach of the agreement.
and the person or partnership continuing the business.

(2) The partners who have not caused the dissolution

ART. 1836 – Who may initiate winding up of a wrongfully, if they all desire to continue the business in
partnership the same name either by themselves or jointly with others,
GR: The partners who have not wrongfully dissolved the may do so, during the agreed term for the partnership and
partnership or the legal representative of the last surviving for that purpose may possess the partnership property,
partner, not insolvent, has the right to wind up the provided they secure the payment by bond approved by
partnership affairs, provided, however, that any partner, the court, or pay any partner who has caused the
his legal representative or his assignee, upon cause dissolution wrongfully, the value of his interest in the
shown, may obtain winding up by the court. partnership at the dissolution, less any damages
recoverable under the second paragraph, No. 1 (b) of this
XPN: Unless otherwise agreed article, and in like manner indemnify him against all
present or future partnership liabilities.
^ Kinds of winding up:

(1) Extra-judicial
(2) Judicial (3) A partner who has caused the dissolution wrongfully
shall have:

(a) If the business is not continued under the

provisions of the second paragraph, No. 2, all the
rights of a partner under the first paragraph,
 subject to liability for damages in the second (a) Those owing to creditors other than partners,
paragraph, No. 1 (b), of this article. (b) Those owing to partners other than for capital
(b) If the business is continued under the second and profits,
paragraph, No. 2, of this article, the right as (c) Those owing to partners in respect of capital,
against his co-partners and all claiming through (d) Those owing to partners in respect of profits.
them in respect of their interests in the
partnership, to have the value of his interest in (3) The assets shall be applied in the order of their
the partnership, less any damage caused to his declaration in No. 1 of this article to the satisfaction of the
co-partners by the dissolution, ascertained and liabilities.
paid to him in cash, or the payment secured by a (4) The partners shall contribute, as provided by article
bond approved by the court, and to be released 1797, the amount necessary to satisfy the liabilities.
from all existing liabilities of the partnership; but
in ascertaining the value of the partner's interest (5) An assignee for the benefit of creditors or any person
the value of the good-will of the business shall appointed by the court shall have the right to enforce the
not be considered. contributions specified in the preceding number.

(6) Any partner or his legal representative shall have the

right to enforce the contributions specified in No. 4, to the
extent of the amount which he has paid in excess of his
share of the liability.

ART. 1838 – Rights of persons in case of rescission of (7) The individual property of a deceased partner shall be
partnership contract for fraud or misrepresentation liable for the contributions specified in No. 4.

(1) To a lien on, or right of retention of, the surplus (8) When partnership property and the individual
of the partnership property after satisfying the properties of the partners are in possession of a court for
partnership liabilities to third persons for any distribution, partnership creditors shall have priority on
sum of money paid by him for the purchase of an partnership property and separate creditors on individual
interest in the partnership and for any capital or property, saving the rights of lien or secured creditors.
advances contributed by him; (9) Where a partner has become insolvent or his estate is
(2) To stand, after all liabilities to third persons have insolvent, the claims against his separate property shall
been satisfied, in the place of the creditors of the rank in the following order:
partnership for any payments made by him in
respect of the partnership liabilities; and (a) Those owing to separate creditors;
(3) To be indemnified by the person guilty of the (b) Those owing to partnership creditors;
fraud or making the representation against all (c) Those owing to partners by way of contribution.
debts and liabilities of the partnership.

ART. 1840 – Rule when a partnership is dissolved, but

ART. 1839 – Rules in settling accounts between the the remaining partners continue the business without
partners after dissolution liquidation or settling its account first

The following rules shall be observed, subject to any (1) When any new partner is admitted into an existing
agreement to the contrary: partnership, or when any partner retires and assigns (or
the representative of the deceased partner assigns) his
(1) The assets of the partnership are: rights in partnership property to two or more of the
(a) The partnership property, partners, or to one or more of the partners and one or
(b) The contributions of the partners necessary for more third persons, if the business is continued without
the payment of all the liabilities specified in No. liquidation of the partnership affairs;
2. (2) When all but one partner retire and assign (or the
(2) The liabilities of the partnership shall rank in order of representative of a deceased partner assigns) their rights
payment, as follows: in partnership property to the remaining partner, who
continues the business without liquidation of partnership ART. 1841 – Rule when a partner retires or dies and the
affairs, either alone or with others; partnership business is continued without any settlement
of accounts
(3) When any partner retires or dies and the business of
the dissolved partnership is continued as set forth in Nos. GR: He or his legal representative as against such person
1 and 2 of this article, with the consent of the retired or partnership may have the value of his interest at the
partners or the representative of the deceased partner, but date of dissolution ascertained, and shall receive as an
without any assignment of his right in partnership ordinary creditor an amount equal to the value of his
property; interest in the dissolved partnership with interest, or, at
his option or at the option of his legal representative, in
(4) When all the partners or their representatives assign lieu of interest, the profits attributable to the use of his
their rights in partnership property to one or more third right in the property of the dissolved partnership;
persons who promise to pay the debts and who continue provided that the creditors of the dissolved partnership as
the business of the dissolved partnership; against the separate creditors, or the representative of the
(5) When any partner wrongfully causes a dissolution and retired or deceased partner, shall have priority on any
the remaining partners continue the business under the claim arising under this article, as provided Article 1840,
provisions of article 1837, second paragraph, No. 2, either third paragraph.
alone or with others, and without liquidation of the XPN: Unless otherwise agreed
partnership affairs;

(6) When a partner is expelled and the remaining partners

continue the business either alone or with others without ART. 1842 – When shall the right to any account accrues
liquidation of the partnership affairs. to any partner in case of dissolution

GR: At the date of dissolution

The liability of a third person becoming a partner in the XPN: When there is agreement to the contrary.
partnership continuing the business, under this article, to
the creditors of the dissolved partnership shall be satisfied ^ Must be distinguished from Art. 1809
out of the partnership property only, unless there is a ^ Art. 1842 speaks of the right to an account upon
stipulation to the contrary. dissolution of partnership while Art. 1809 refers to a
When the business of a partnership after dissolution is demand for accounting before dissolution on the grounds
continued under any conditions set forth in this article the stated in the said article.
creditors of the dissolved partnership, as against the
separate creditors of the retiring or deceased partner or the
representative of the deceased partner, have a prior right Limited Partnership
to any claim of the retired partner or the representative of
ART. 1843 – Definition of Limited Partnership
the deceased partner against the person or partnership
continuing the business, on account of the retired or Limited partnership is one formed by two or more persons
deceased partner's interest in the dissolved partnership or under the provisions of the following article, having as
on account of any consideration promised for such members one or more general partners and one or more
interest or for his right in partnership property. limited partners.
Nothing in this article shall be held to modify any right of The limited partners as such shall not be bound by the
creditors to set aside any assignment on the ground of obligations of the partnership.
fraud.

The use by the person or partnership continuing the

business of the partnership name, or the name of a
deceased partner as part thereof, shall not of itself make
the individual property of the deceased partner liable for
any debts contracted by such person or partnership. ART. 1844 – Documents to process to form a limited
partnership
(1) Sign and swear to a certificate, which shall state: any party to the certificate who knew the statement to be
false:
(2) File for record the certificate in the Office of the
Securities and Exchange Commission. (1) At the time he signed the certificate, or

^ A limited partnership is formed if there has been (2) Subsequently, but within a sufficient time before the
substantial compliance in good faith with the foregoing statement was relied upon to enable him to cancel or
requirements. amend the certificate, or to file a petition for its
cancellation or amendment as provided in Article 1865.
^ If there is no substantial compliance, the partnership
becomes a general partnership as far as third persons are
concerned, hence all members are liable as general
partners. ART. 1848 – Rule on the liability of a limited partner

GR: A limited partner shall not become liable as a general

partner
ART. 1845 – Contributions of limited partners
^ His liability is limited to the extent of his contribution to
The contributions of a limited partner may be cash or the partnership
property, but not services.
XPN: Unless he takes part in the control of the business.
^ He is not allowed to contribute services.
^ He becomes liable as a general partner but he does not
^ If he contributed services, he shall be considered an acquire the right of a general partner.
industrial and general partner at the same time, and
therefore he becomes liable beyond his contribution to the
capital of the partnership and shall not be exempted from ART. 1849 – Rule on the admission of additional limited
personal liability partners

Additional limited partners may be admitted upon filing

ART. 1846 – Can a surname of a limited partner appear an amendment to the original certificate in accordance
in the partnership name? with the requirements of Article 1865.

GR: The surname of a limited partner shall not appear in

the partnership name unless: ART. 1850 – Rights and powers of a general partner and
XPN: (1) It is also the surname of a general partner, or acts he cannot do without the written consent and
certification of all limited partners
(2) Prior to the time when the limited partner became
such, the business has been carried on under a name in A general partner shall have all the rights and powers and
which his surname appeared. be subject to all the restrictions and liabilities of a partner
in a partnership without limited partners. However,
Effects when a surname of a limited partner appear in without the written consent or ratification of the specific
the partnership name act by all the limited partners, a general partner or all of
the general partners have no authority to:
A limited partner whose surname appears in a partnership
name contrary to the provisions of the first paragraph is (1) Do any act in contravention of the certificate;
liable as a general partner to partnership creditors who (2) Do any act which would make it impossible to
extend credit to the partnership without actual knowledge carry on the ordinary business of the partnership;
that he is not a general partner. (3) Confess a judgment against the partnership;
(4) Possess partnership property, or assign their
ART. 1847 – Liability of partners for false statement in rights in specific partnership property, for other
the certificate than a partnership purpose;
If the certificate contains a false statement, one who (5) Admit a person as a general partner;
suffers loss by reliance on such statement may hold liable (6) Admit a person as a limited partner, unless the
right so to do is given in the certificate;
 (7) Continue the business with partnership property (2) Receive from a general partner or the partnership
on the death, retirement, insanity, civil any payment, conveyance, or release from
interdiction or insolvency of a general partner, liability if at the time the assets of the partnership
unless the right so to do is given in the are not sufficient to discharge partnership
certificate. liabilities to persons not claiming as general or
limited partners.

The receiving of collateral security, or payment,

ART. 1851 – Rights in common of general and limited conveyance, or release in violation of the foregoing
partner provisions is a fraud on the creditors of the partnership.
(1) Have the partnership books kept at the principal ^ The relationship between a limited partner and a
place of business of the partnership, and at a partnership is not based on trust and confidence. The
reasonable hour to inspect and copy any of them; limited partner, unless he is also a general partner, is
(2) Have on demand true and full information of all entitled to a pro-rata share of partnership assets together
things affecting the partnership, and a formal with the creditors of the partnership
account of partnership affairs whenever
circumstances render it just and reasonable; and
(3) Have dissolution and winding up by decree of
court. ART. 1855 – Priority of return of contributions

A limited partner shall have the right to receive a share of Where there are several limited partners the members may
the profits or other compensation by way of income, and agree that one or more of the limited partners shall have a
to the return of his contribution as provided in Articles priority over other limited partners as to the return of their
1856 and 1857. contributions, as to their compensation by way of income,
or as to any other matter. If such an agreement is made it
shall be stated in the certificate, and in the absence of
such a statement all the limited partners shall stand upon
ART. 1852 – Effect of erroneous belief of a contributor equal footing.
that he is a limited partner

A person who has contributed to the capital of a business

conducted by a person or partnership erroneously ART. 1856 – Right of a limited partner to share the
believing that he has become a limited partner in a limited profits
partnership, is not, by reason of his exercise of the rights
of a limited partner, a general partner with the person or GR: A limited partner may receive from the partnership
in the partnership carrying on the business, or bound by the share of the profits or the compensation by way of
the obligations of such person or partnership, provided income stipulated for in the certificate; provided that after
that on ascertaining the mistake he promptly renounces such payment is made, whether from property of the
his interest in the profits of the business, or other partnership or that of a general partner, the partnership
compensation by way of income. assets are in excess of all liabilities of the partnership

XPN: Except liabilities to limited partners on account of

their contributions and to general partners
ART. 1854 – Can a limited partner allow to loan money
and to transact business to the partnership

A limited partner also may loan money to and transact ART. 1857 – Return of limited partner’s contribution
other business with the partnership, and, unless he is also GR: A limited partner shall not receive from a general
a general partner, receive on account of resulting claims partner or out of partnership property any part of his
against the partnership, with general creditors, a pro rata contributions until:
share of the assets. No limited partner shall in respect to
any such claim: (1) All liabilities of the partnership, except liabilities to
general partners and to limited partners on account of
(1) Receive or hold as collateral security and
partnership property, or
their contributions, have been paid or there remains ^ A limited partner is not relieved of all liabilities of the
property of the partnership sufficient to pay them; partnership despite the fact that the assignee becomes a
substituted limited partner.
(2) The consent of all members is had, unless the return of
the contribution may be rightfully demanded under the
provisions of the second paragraph; and
Rights of an assignee who did not become a
(3) The certificate is cancelled or so amended as to set substituted limited partner
forth the withdrawal or reduction.
An assignee, who does not become a substituted limited
XPN: A limited partner may rightfully demand the return partner, has no right to require any information or account
of his contribution on the dissolution of a partnership of the partnership transactions or to inspect the
partnership books; he is only entitled to receive the share
of the profits or other compensation by way of income, or
ART. 1858 – Liabilities of a limited partner to the the return of his contribution, to which his assignor would
partnership otherwise be entitled.

(1) For the difference between his contribution as actually

made and that stated in the certificate as having been
made; and

(2) For any unpaid contribution which he agreed in the

certificate to make in the future at the time and on the ART. 1860 – Instances of dissolution of a limited
conditions stated in the certificate. partnership

^ The liability may be waived, but subject to restrictions GR: The retirement, death, insolvency, insanity or civil
interdiction of a general partner dissolves the partnership
Return of contribution rightfully received but with
limitations XPN: Unless the business is continued by the remaining
general partners:
He is nevertheless liable to the partnership for any sum,
not in excess of such return with interest, necessary to (1) Under a right so to do stated in the certificate, or
discharge its liabilities to all creditors who extended credit
or whose claims arose before such return. (2) With the consent of all members.

ART. 1859 – Limited partners’ interest is assignable ART. 1861 – Effects of death of a limited partner

A substituted limited partner is a person admitted to all His executor or administrator shall have all the rights of a
the rights of a limited partner who has died or has limited partner for the purpose of setting his estate, and
assigned his interest in a partnership. such power as the deceased had to constitute his assignee
a substituted limited partner.
An assignee may or may not become a substituted partner.
^ The estate of a deceased limited partner shall be liable
for all his liabilities as a limited partner.

Rights of a substituted partner and his liability

GR: The substituted limited partner has all the rights and ART. 1862 – Rights of creditors of limited partners to
powers, and is subject to all the restrictions and liabilities charge the interest of the indebtedness
of his assignor,
The court may charge the interest of the indebted limited
XPN: Except those liabilities of which he was ignorant at partner with payment of the unsatisfied amount of such
the time he became a limited partner and which could not claim, and may appoint a receiver, and make all other
be ascertained from the certificate. orders, directions and inquiries which the circumstances
of the case may require.
 (4) A person is admitted as a general partner;
(5) A general partner retires, dies, becomes insolvent
Redemption of charge interests from separate or insane, or is sentenced to civil interdiction and
property of any general partner the business is continued under Article 1860;
The interest may be redeemed with the separate property (6) There is a change in the character of the business
of any general partner, but may not be redeemed with of the partnership;
partnership property. (7) There is a false or erroneous statement in the
certificate;
^ Charging of interest is not an exclusive remedy (8) There is a change in the time as stated in the
certificate for the dissolution of the partnership
or for the return of a contribution;
ART. 1863 – Liquidation of limited partnership (9) A time is fixed for the dissolution of the
partnership, or the return of a contribution, no
Applies only when the limited partnership had been time having been specified in the certificate, or
dissolved (10) The members desire to make a change in any
other statement in the certificate in order that it
shall accurately represent the agreement among
Settling of accounts them.

In setting accounts after dissolution the liabilities of the

partnership shall be entitled to payment in the following
Manner of cancellation of certificate of a limited
order:
partnership
(1) Those to creditors, in the order of priority as
The certificate shall be cancelled when the partnership is
provided by law, except those to limited partners
dissolved or all limited partners cease to be such.
on account of their contributions, and to general
partners;
(2) Those to limited partners in respect to their share
of the profits and other compensation by way of ART. 1866 – Limited partner is mere contributor
income on their contributions;
GR: Limited partner is mere contributor and does not
(3) Those to limited partners in respect to the capital
become a proper party by or against the partnership.
of their contributions;
(4) Those to general partners other than for capital ^ Not a real party of interest
and profits;
(5) Those to general partners in respect to profits; XPN: When the object is to enforce his right against or
(6) Those to general partners in respect to capital. liability to the partnership

ART. 1864 – Instances when the certificate of limited ART. 1867 – How a limited partnership under the old law
partnership may be cancelled or amended may become a partnership under the new Civil Code

When an old partnership does not comply with the

requirements under this article, it shall not be governed by
ART. 1865 – Requirements for amending certificate of a the law on partnership. It continues to be governed by the
limited partnership law on commerce
A certificate shall be amended when:

(1) There is a change in the name of the partnership

or in the amount or character of the contribution
of any limited partner;
(2) A person is substituted as a limited partner;
(3) An additional limited partner is admitted;