Page 1 of 32

PARTNERSHIP
> It is a CONTRACT whereby two or more persons (1) bind themselves to
CONTRIBUTE money, property, or industry to a COMMON UN! (2) with the intention
o" dividin# the $ROIT% amon# themselves or in order to E&ERCI%E a $ROE%%ION

> a %TATU% and a I!UCIAR' RE(ATION subsistin# between persons
)arryin# on a business in )ommon with a view on pro"it
CHARACTERISTICS OF THE CONTRACT OF PARTNERSHIP
[C, C, L, I, AS, NP]
*+ CON%EN%UA(
> per"e)ted by mere )onsent
,+ CONTRIBUTION o" money, property or industry to a COMMON UN!
-+ ob.e)t must be a (A/U( one
0+ INTENTION o" !I1I!IN2 the $ROIT amon# the $ARTNER%
3+ 4AECTIO %OCIETATI%5
> the desire to "ormulate an ACTI1E UNION, with people amon# whom there
e6ist a mutual CONI!ENCE and TRU%T%
7+ NE/ $ER%ONA(IT'
> the ob.e)t must be "or pro"it and not merely "or the )ommon en.oyment
otherwise only a )o8ownership has been "ormed+ 9O/E1ER, pe)uniary pro"it
need not be the only aim, it is enou#h that it is the prin)ipal purpose
BUSINESS TRUSTS
> when )ertain persons entrust their property or money to others who will
mana#e the same "or the "ormer
RULES ON CAPACITY TO BECOME A PARTNER
*+ a person )apa)itated to enter into )ontra)tual relations may be)ome a partner
,+ an UNEMANCI$ATE! MINOR CANNOT be)ome a partner UN(E%% his parent
or #uardian )onsents
-+ a MARRIE! /OMAN, )annot )ontribute )on.u#al "unds as her )ontribution to the
partnership UN(E%% she is permitted to do so by her husband OR UN(E%% she
is the administrator o" the )on.u#al partnership, in whi)h the COURT must #ive
its )onsent authority
0+ a $ARTNER%9I$ bein# a .uridi)al person by itsel" )an "orm another partnership
3+ a COR$ORATION )annot be)ome a partner on #rounds o" publi) poli)y
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> a partner shares not only in pro"its but also in the losses o" the "irm
RULE:
> the partnership has a $ER%ONA(IT' %E$ARATE and !I%TINCT "rom that o"
ea)h partner
CONSEQUENCES OF THE PARTNERSHIP BEING A JURIDICAL ENTITY
*+ its .uridi)al personality is %E$ARATE and !I%TINCT "rom that o" ea)h partner
,+ the partnership CAN in 2ENERA(:
A; a)<uire and possess property o" all =inds
B; in)ur obli#ations
C; brin# )ivil and )riminal a)tions
!; )an be ad.ud#ed insolvent even i" the individual members be ea)h
"inan)ially solvent
-+ unless he is #enerally sued, a partner has no ri#ht to ma=e a separate
appearan)e in )ourt, i" the partnership bein# sued is already represented
LIMITATIONS ON ALIEN PARTNERSHIP
*; i" 7>? )apital is not owned by ilipinos
> the "irm )annot a)<uire by pur)hase or otherwise A2RICU(TURA( $hilippine
lands
,; "orei#n partnership may 4lease5 lands provided the period does not e6)eed @@ years
-; "orei#n partnership may be 4MORT2A2EE%5 o" land
> period o" 3 years, renewable "or another 3 years
> they )annot pur)hase it in a "ore)losure sale
RULES IN CASE OF ASSOCIATIONS NOT LAWFULLY ORGANIED AS
PARTNERSHIP
*+ it possesses NO (E2A( $ER%ONA(IT'
> it )annot sue as su)h 9O/E1ER, the partners in their individual )apa)ity CAN
,+ one who enters into a )ontra)t with a partnership as su)h )annot when sued later
on "or re)overy o" the debt, alle#e the la)= o" le#al personality on the part o" the
"irm, even i" indeed it had no personality
> E%TO$$E(
> whether a partnership has a .uridi)al personality or not depends on its
$ER%ONA( (A/ o" the partnership or the law o" the pla)e where the partnership was
or#aniAed
REQUISITES FOR E!ISTENCE OF PARTNERSHIP [I, CF, JI]
*+ INTENTION to )reate a partnership
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,+ COMMON UN! obtained "rom )ontributions
-+ BOINT INTERE%T% in the $ROIT%
WHAT DO NOT ESTABLISH A PARTNERSHIP
*+ mere )o8ownership or )o8possession
> even with pro"it sharin#
,+ mere sharin# o" 2RO%% returns
> even with .oint ownership o" the properties involved
RULES TO DETERMINE THE E!ISTENCE OF A PARTNERSHIP
*+ persons who are not partners to ea)h other are not partners as to third persons
EXCEPTION:
> $ARTNER%9I$ B' E%TO$$E(
,+ CO8O/NER%9I$ o" a property does not itsel" establish a partnership, even
thou#h the )o8owners share in the pro"its derived "rom the in)ident o" .oint
ownership
-+ %9ARIN2 O 2RO%% RETURN% A(ONE does not indi)ate a partnership
whether or not the persons sharin# them have a .oint or )ommon ri#ht or interest
in any property "rom whi)h the returns are derived
0+ the re)eipt o" the share in the pro"its is a stron# presumptive eviden)e o"
partnership 9O/E1ER, no su)h in"eren)e will be drawn i" su)h pro"its were
re)eived in payment
A; as a !EBT by installments or otherwise
B; as /A2E% o" an employee
C; as RENT to a landlord
!; as an ANNUIT' to a widow or representative o" a de)eased partner
E; as INTERE%T on a (OAN, thou#h the amount o" payment vary with the
pro"its o" the business
; as the CON%I!ERATION "or the sale o" a 2OO! /I(( o" a business or
other property or otherwise
> )reditors are not partners, "or their only interest in the sharin# o" pro"its is
the re)eipt or payment o" their )redits
> in a partnership, the partners are supposed to trust and have )on"iden)e in
all the partners
PARTNERSHIP BY ESTOPPEL
> I , persons not partners represent themselves as partners to stran#ers, a
partnership by estoppel results
> /9EN , persons, who are partners, in )onnivan)e with a "riend who is not a
partner in"orm a stran#er that said "riend is their partner, a partnership by estoppel also
result to the end that the stran#er should not be pre.udi)ed
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RULE: LAWFUL OBJECT "# PURPOSE
> a partnership must have (A/U( OBBECT or $UR$O%E, and must be
established "or the )ommon bene"it or interest o" the partners
> it must be within the )ommen)e o" man, possible and not )ontrary to law,
morals, #ood )ustoms, publi) order or publi) poli)y
> I a partnership has %E1ERA( $UR$O%E%, one o" whi)h is UN(A/U(, the
partnership )an still validly e6ist so lon# as the ille#al purpose )an be separated "rom
the le#al purposes
> NO need "or BU!ICIA( !ECREE to dissolve an unlaw"ul partnership
> 1OI! AB INITIO
> one o" the )auses "or the dissolution o" a partnership is 4any event which
makes it unlawful for the business of the partnership to be carried on
RULE:
> when an UN(A/U( $ARTNER%9I$ is dissolved by a .udi)ial de)ree, the $ROIT%
shall be CONI%CATE! in A1OR o" the %TATE
G$ R$
> a partnership may be )onstituted in any "orm
E!CEPTION: $UB(IC IN%TRUMENT
*+ IMMO1AB(E $RO$ERT' is )ontributed
,+ REA( RI29T% are )ontributed
C need "or IN1ENTOR' o" IMMO1AB(E%
CC "or EECTI1IT' o" the partnership )ontra)t inso"ar as inno)ent third
persons are )on)erned the same must be RE2I%TERE! i" REA(
$RO$ERTIE% are IN1O(1E!
> a partnership )ontra)t is NOT CON1ERE! by the %TATUTE o" RAU!%
> an A2REEMENT TO ORM a partnership does not itsel" )reate a partnership
> when there are )onditions to be "ul"illed or when a )ertain period is to lapse, the
partnership is not )reated till a"ter the "ul"illment o" the )onditions or the arrival o" the
term and this is true even i" one o" the parties has already advan)ed his a#reed share o"
the )apital
RULE: i" CA$ITA( is $-,>>> or more
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REQUIRED:
*+ $UB(IC IN%TRUMENT
,+ RECOR!E! D %+E+C+
C > AI(URE TO COM$(' D shall not e""e)t the liability o" the partnership and its
members to third persons
CC > I REA( $RO$ERTIE% have been )ontributed, RE2AR!(E%% o" the 1A(UE, a
publi) instrument is needed "or the attainment o" le#al personality
REQUIREMENTS WHERE IMMO%ABLE & REAL PROPERTY IS CONTRIBUTED
*+ $UB(IC IN%TRUMENT
,+ IN1ENTOR' D si#ned and atta)hed to the $+I+
C > applies re#ardless o" the value o" the real property
C > applies even i" only real ri#hts over the real property are
)ontributed
C > applies i" aside "rom real property, )ash or personal property is
)ontributed
> TRAN%ER o" land to the partnership must be duly 4re)orded5 in the RO! to ma=e
the trans"er e""e)tive inso"ar as third persons are )on)erned
RULE:
> any immovable property or an interest therein maybe a)<uired in the partnership
name
> title so a)<uired )an be )onveyed only in the partnership name
>I the partnership has A(IEN%, it CANNOT O/N (AN!%, whether publi) or private or
whether a#ri)ultural or )ommer)ial E&CE$T throu#h 9ERE!ITAR' %UCCE%%ION
LIMITATIONS ON ACQUISITION
*+ A2RICU(TURA( (AN!% D *>,0 9ECTARE%
,+ lease o" publi) lands E2RAFIN2; D ,>>> 9A%+
RULES IF !" articles are kept secret amon# the members
$" any one of the members may contract in his %own name with third
persons
*+ NOT a partnership D NOT a (E2A( $ER%ON
,+ it may be sued by third person under the )ommon name it uses
-+ it )annot sue as su)h and )annot be ordinarily be a party to a )ivil a)tion
0+ inso"ar as inno)ent third parties are )on)erned
> the parities )an be )onsidered as members o" a partnership
3+ as between themselves or inso"ar as third persons are pre.udi)ed
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> only the rules o" )o8ownership must apply
EFFECT OF CERTAIN TRANSACTIONS
*+ )ontra)ts entered into by a 4partner5 in his own name may be sued upon still by
him in his individual )apa)ity, not withstandin# the absen)e o" a partnership
,+ when two or more individuals, havin# a )ommon interests in a business brin# a
)ourt a)tion, it should be presumed that they prose)ute the same in their
individual )apa)ity as )o8owners and not in behal" o" a partnership whi)h does
not e6ist in le#al )ontemplation
CLASSIFICATION OF PARTNERSHIPS
A; !CCO&'IN( TO )!NNE& O* C&E!TION
*+ ORA((' )onstituted
,+ )onstituted in a $RI1ATE IN%TRUMENT
-+ )onstituted in a $UB(IC IN%TRUMENT
0+ RE2I%TERE! D %+E+C+
B; !CCO&'IN( TO O$+ECT
*+ UNI1ER%A(
,+ $ARTICU(AR
C; !CCO&'IN( TO ,I!$I,IT-
*+ (IMITE! $ARTNER%9I$
,+ 2ENERA( $ARTNER%9I$
!; !CCO&'IN( TO ,E(!,IT-
*+ (A/U( OR (E2A(
,+ UN(A/U( OR I((E2A(
E; !CCO&'IN( TO '.&!TION
*+ "or a %$ECIIC $EIO! or I&E! $ERIO!
,+ $ARTNER%9I$ AT /I((
; !CCO&'IN( TO &EP&E/ENT!TION TO OT0E&/
*+ OR!INAR' $ARTNER%9I$
,+ $ARTNER%9I$ B' ETO$$E(
2; !/ TO ,E(!,IT- O* EXI/TENCE
*+ !E BURE $ARTNER%9I$
,+ !E ACTO $ARTNER%9I$
9" !/ TO P.$,ICIT-
*+ %ECRET $ARTNER%9I$
,+ NOTORIOU% G O$EN $ARTNER%9I$
I" !/ TO P.&P/E
*+ COMMERCIA( G TRA!IN2
,+ $ROE%%IONA( G NON8TRA!IN2
GENERAL PARTNERSHIP
> one where all the partners are #eneral partners
> they are (IAB(E even with respe)t to their individual properties, a"ter the assets o" the
partnership has been e6hausted
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LIMITED PATNERSHIP
> one where at least one partner is a #eneral partner and the others are limited partners
> one whose liability is limited only up to the e6tent o" his )ontribution
> a partnership where all the partners are limited partners cannot e1ist as a limited
partnership
> REU%E! RE2I%TRATION
> I it )ontinuous as su)h, it will be )onsidered as a #eneral partnership and all the
partners will be #eneral partners
'INDS OF UNI%ERSAL PARTNERSHIP
*+ $ARTNER%9I$ O A(( $RE%ENT $RO$ERT'
,+ $ARTNER%9I$ O A(( $ROIT%
(UNI%ERSAL PARTNERSHIP OF ALL PRESENT PROPERTY
> CONTRIBUTION o"
*+ A(( the properties a)tually belon#in# to the partners
,+ the $ROIT% a)<uired with said property
> BECOME% COMMON $RO$ERT'
> E&CE$T all UTURE $RO$ERT'
> RUIT% o" UTURE $RO$ERT' D INC(U!E! I %TI$U(ATE! U$ON
(UNI%ERSAL PARTNERSHIP OF PROFITS
> )omprises all that the partners may a)<uire by the IN!U%TR' or /ORH o" the
partners be)ome )ommon property re#ardless o" within said pro"its were obtained
throu#h the usu"ru)t )ontributed
> EXCEPT $RIFE% and 2IT%
RULE:
> arti)les o" universal partnership, entered without spe)i"i)ation o" its nature, only
)onstitute a universal partnership o" $ROIT%
RULE:
> persons who are prohibited "rom #ivin# ea)h other any donation or advanta#e )annot
enter into universal partnership
20O:
*+ 9U%BAN! and /IE
,+ those #uilty o" A!U(TER' or CONCUBINA2E
-+ those #uilty o" the same )riminal o""ense i" the partnership was entered into in
)onsideration o" the same
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> while spouses )annot enter into a universal partnership, they )an enter into a
parti)ular partnership or be members thereo"
> a universal partnership is virtually a donation to ea)h other o" the partners properties
or at least their usu"ru)t
PARTICULAR PARTNERSHIP
> a parti)ular partnership has "or its OBBECT:
*+ !ETERNMINATE T9IN2% D their use or "ruits
,+ %$ECIIC UN!ERTAHIN2
-+ E&ERCI%E o" a $ROE%%ION or 1OCATION
OBLIGATIONS OF THE PARTNERS
RULE:
> a $ARTNER%9I$ BE2IN% "rom the moment o" the E&ECUTION o" the CONTRACT
C > even i" )ontributions have not yet been made the "irm already e6ists, "or partnership
is a )onsensual )ontra)t
DURATION OF PARTNERSHIP
> UN(IMITE!
C > MA' BE A2REE! U$ON
*+ E&$RE%%(' D de"inite period
,+ IM$(IE!(' D upon a)hievement o" its purpose
PARTNERSHIP AT WILL
> a partnership wherein its )ontinued e6isten)e really depends upon the will o" the
partners or even on the will o" any o" them
3 4IN'/:
*+ when there is no term, e6press or implied
,+ when it is )ontinued by the habitual mana#ers althou#h the period has ended or
the purpose has been a))omplished
) IMPORTANT DUTIES OF E%ERY PARTNER [C, D*F, W]
*+ duty to CONTRIBUTE what had been promised
,+ duty to !E(I1ER the RUIT% o" what should have been delivered
-+ duty to /ARRANT
RIULES ON THE DUTY TO CONTRIBUTE
*+ the )ontribution must be made at the time the partnership is entered into
UN(E%% a di""erent period is stipulated
,+ no demand is needed to put the partner in de"ault
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-+ the partner must e6er)ise due dili#en)e in preservin# the property to be
)ontributed be"ore he a)tually )ontributes the same
0+ a partner who promises to )ontribute to the partnership be)omes a promissory
debtor o" the partnership
RULES ON THE DUTY TO DELI%ER THE FRUITS
*+ I property has been promised, the "ruits thereo" should also be #iven
,+ the "ruits re"erred to are those arisin# "rom the time they should have been
delivered, without a need o" any demand
-+ I the partner is in BA! AIT9, he is liable not only "or the "ruits a)tually
produ)ed, BUT also "or those that )ould have been produ)ed
0+ I MONE' 9A% BEEN $ROMI%E!, INTERE%T and !AMA2E% "rom the time
he should have )omplied with his obli#ation should be #iven
3+ NO !EMAN! is needed to put the partner in de"ault
7+ it is !E(I1ER', a)tual or )onstru)tive that TRAN%ER% O/NER%9I$
RULES ON THE DUTY TO WARRANT
*+ the warranty in )ase o" evi)tion re"ers to spe)i"i) and determinate thin#s already
)ontributed
,+ there is E1ICTION whenever by a "inal .ud#ment based on a ri#ht prior to the
sale or an a)t imputable to the partner, the partnership is deprived o" the whole
or a part o" the thin# pur)hased
RULE WHEN CONTRIBUTION CONSISTS OF GOODS
> A$$RAI%A( o" 1A(UE is needed to determine how mu)h was )ontributed
0O2 !PP&!I/!, )!'E
*+ as $RE%CRIBE! in the CONTRACT
,+ in de"ault, by E&$ERT% )hosen by the partners, and at CURRENT $RICE%
C> ne)essity o" the IN1ENTOR' D A$$RAI%A(
RULE "+ RIS' ", LOSS
> a"ter #oods have been )ontributed, the partnership bears the ris= o" subse<uent
)han#es in the value
RULE:
> a partner who has underta=en to )ontribute a sum o" money and "ails to do so
be)omes a debtor "or the interest and dama#es "rom the time he should have
)omplied with his obli#ation
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CAPITALIST PARTNER
> one who URNI%9E% CA$ITA(
C> NOT E&EM$TE! "rom (O%%E%
C> he )an en#a#e in other business $RO1I!E! there is no )ompetition between
the partnership and his business
C> share in the pro"its a))ordin# to a#reements
INDUSTRIAL PARTNER
> one who URNI%9E% IN!U%TR' or (ABOR
C> he is E&EM$TE! "rom (O%%E% as between the partner BUT liable to
stran#ers without pre.udi)e to reimbursement "rom the )apitalist partner
C> he CANNOT en#a#e in any other BU%INE%% /IT9OUT the e6press
CON%ENT o" the other partners, OT9ER/I%E
*+ he )an be E&C(U!E! "rom the "irm
8 plus dama#es OR
,+ the BENEIT% he obtains "rom the other businesses CAN BE A1AI(E! o" by the
other partners
- plus dama#es
> whether or not there is COM$ETITION
C> in )omputin# always loo= "or 88888> NET $ROIT%
88888> NET (O%%E%
CAPITALIST - INDUSTRIALIST PARTNER
> one who )ontributes BOT9 CA$ITA( and IN!U%TR'
GENERAL PARTNER
> one who is liable 4beyond5 the e6tent o" his )ontribution
LIMITED PARTNER
> one who is liable 4only5 to the e6tent o" his )ontribution
CCC> an industrial partner )an only be a #eneral partner, never a limited partner
MANAGING PARTNER
> one who mana#es a)tively the "irms a""airs
SILENT PARTNER
> one who does not parti)ipate in the mana#ement, thou#h he shares in the $ROIT%
or (O%%E%
LIQUIDATING PARTNER
> one who winds up or li<uidates the a""airs o" the "irm a"ter it has been dissolved
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OSTENSIBLE PARTNER
> one whose )onne)tion with the "irm is publi) and open
SECRET PARTNER
> one whose )onne)tion with the "irm is )on)ealed or =ept se)ret
DORMANT PARTNER
> one who is both a se)ret Ehidden; and silent Enot mana#in#; partner
NOMINAL PARTNER
> one who is not really a partner BUT who may be)ome liable as su)h inso"ar as third
persons are )on)erned
RULE:
> partners shall CONTRIBUTE EIUA( %9ARE% to the )apital o" the partnership
C> it is permissible to )ontribute UNEIUA( %9ARE% I there is a stipulation to this
e""e)t
C> in the absen)e o" proo", the shares are presumed to be e<ual
CONDITIONS before a capitalist partner is obliged to sell his shares / interest to
the other partners [IL, RC, NA]
*+ i" there is IMMINENT (O%% o" the BU%INE%% o" the partnership
,+ he REU%E% to CONTRIBUTE an A!!ITIONA( %9ARE to the CA$ITA(
-+ there is no a#reement to the )ontrary
C> IN!U%TRIA( $ARTNER I% E&EM$TE!
(RULE ., MANAGING PARTNER COLLECTS A CREDIT
REQUISITES:
1. e6isten)e o" at least , debts 8888> $ARTNER%9I$
8888> $ARTNER
,+ both sums are demandable
-+ the )olle)tin# partner is the mana#in# partner
C> the sum thus )olle)ted shall be applied to the two )redits in
proportion to their amounts
RULE:
Page 12 of 32
C> where a partner receives his share in the partnership credit
CONDITIONS:
*+ a partner has re)eived his share in the partnership )redit D in whole or in part
,+ the other partners have not )olle)ted their part o" the )redit
-+ the debtor subse<uently be)omes IN%O(1ENT
RULE: 8 the partner shall be obli#ed to brin# to the partnership
)apital what he re)eived even thou#h he may have #iven re)eipt "or
his share only
C> !OE% NOT A$$(' when debt was )olle)ted a"ter dissolution o" the partnership
RULE:
C> every partner is responsible to the partnership "or dama#es su""ered by it throu#h his
"ault
C> he )annot )ompensate them with the pro"its and bene"its, whi)h he may have
earned "or the partnership by his industry

C> the )ourts may e<uitably lessen his responsibility
/RES PERIT DOMINO0
(RULES ON WHO BEARS THE RIS' OF LOSS
*+ i" %$ECIIC and !ETERMINATE T9IN2% NOT UN2IB(E whose U%URUCT
is en.oyed by a "irm
> the $ARTNER who O/N% it bears the loss "or ownership was never
trans"erred to the "irm
,+ UN2IB(E or !ETERIORAB(E
> IRM bears the loss "or it is evident ownership was trans"erred
-+ T9IN2% CONTRIBUTE! to be %O(!
>IRM bears the loss "or evidently the "irm was intended to be the owner
0+ CONTRIBUTE! under A$$RAI%A(
> IRM bears the loss be)ause this has the e""e)t o" an implied sale
RULE "+ RESPONSIBILITY ", 123 FIRM
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*+ to REUN! amounts disbursed on behal" o" the "irm plus le#al interest "rom the
time e6penses where made
,+ to AN%/ER to ea)h partner "or OB(I2ATION% he may have entered into in
#ood "aith in the interest o" the partnership, as well as the ris=s in )onse<uen)e
o" its mana#ement
C> REUN! must be made even in )ase o" "ailure o" the enterprise entered into,
provided the partner is not at "ault
C> AMOUNT !I%BUR%E! D does not re"er to the ORI2INA( CA$ITA(
(HOW PROFITS ARE DISTRIBUTED
*+ a))ordin# to A2REEMENT
,+ I NONE, a))ordin# to amount o" CONTRIBUTION
(HOW LOSSES 4#3 DISTRIBUTED
*+ a))ordin# to A2REEMENT as to losses
,+ I NONE, a))ordin# to a#reement as to $ROIT%
-+ I NONE, a))ordin# to amount o" CONTRIBUTION
C> an IN!U%TRIA( $ARTNER shall re)eive a BU%T and EIUITAB(E share in the
pro"its
(RULE "+ INDUSTRIAL PARTNERS5 LIABILITIES
8 may be held liable by third persons BUT he may re)over what he has paid "rom the
other )apitalist partners
CRULE "+ DESIGNATION 67 THIRD PERSON ", SHARES .+ PROFITS 4+8 LOSSES
C> third person is NOT a P!&TNE& 88> appointed to only distribute shares
C> the desi#nation o" shares by third persons may be IM$U2NE!, I it is MANIE%T('
INEIUITAB(E
C> the desi#nation o" shares by third persons CANNOT be IM$U2NE! E1EN I
MANIE%T(' INEIUITAB(E I:
*+ the a##rieved partner has already BE2UN to E&ECUTE the de)ision
,+ the a##rieved partner has not IM$U2NE! the distribution within - months he
had =nowled#e
(RULE IF APPOINTMENT OTHER THAN .+ 123 ARTICLES ", PARTNERSHIP
*+ power to a)t may be RE1OHE! at AN' TIME with or without .ust )ause
> REMO1A( should be done by the )ontrollin# interest
,+ E&TENT o" $O/ER
> as lon# as he remains mana#er, he )an per"orm all a)ts o" administration
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BUT D i" others oppose and he persists, he )an be removed
(RULE WHEN 123#3 4#3 2 "# MORE MANAGERS
CONDITIONS:
*+ , or more partners are mana#ers
,+ there is no spe)i"i)ation o" respe)tive duties
-+ there is no stipulation re<uirin# UNANIMIT'
SPECIFIC RULES:
*+ ea)h may separately e6e)ute all a)ts o" administration
> UN(IMITE! $O/ER to A!MINI%TER
,+ I any o" the mana#ers O$$O%E
> MABORIT' RU(E
> IN CA%E O A TIE
8 persons ownin# )ontrollin# interest prevail provided they are also mana#ers
C> ri#ht to oppose is not #iven to NON8MANA2ER%
C> O$$O%ITION should be done BEORE the a)ts produ)e le#al e""e)ts inso"ar as
third persons are )on)erned
RULE WHEN UNANIMITY .9 REQUIRED
*+ the CONCURRENCE o" all shall be ne)essary "or the validity o" the a)ts
,+ the AB%ENCE or !I%ABI(IT' o" AN'ONE o" them CANNOT BE A((E2E!
UN(E%% there is imminent dan#er o" #rave or irreparable in.ury to the
partnership
RULE ON DUTY ", THIRD PERSONS
> third persons are not re<uired to in<uire as to whether or not a partner with whom he
transa)ts has the )onsent o" all the mana#ers
*RULES to be observed when the manner of management has not been agreed
upon:
*+ all the partners are )onsidered A2ENT%
> whatever any one o" them may do alone shall not bind the partnership
,+ I the a)ts o" one are opposed by the rest, the ma.ority shall prevail
-+ when a partner a)ts in his O/N NAME, he does not bind the partnership
0+ authority to bind the "irm does not apply i" somebody else has been #iven
authority to mana#e in the arti)les o" or#aniAation or throu#h some other means
3+ A(TERATION% REIUIRE UNANIMIT'
8 IMMO1AB(E partnership property
Page 15 of 32
8 BUT i" the re"usal to )onsent by the others is pre.udi)ial to the interest o" the
partnership
8 COURT% INTER1ENTION may be sou#ht
RULES "+ ASSOCIATE ", PARTNER
*+ every partner may asso)iate another person with him in his share
,+ "or a partner to have an asso)iate in his share
> )onsent o" all the other partners is NOT REIUIRE!
-+ "or the asso)iate to be)ome a partner
> A(( MU%T CON%ENT
RULES "+ PARTNERSHIP BOO'S
*+ =ept at the prin)ipal pla)e o" business o" the partnership
,+ at any reasonable hour, every partner shall have a))ess to and may inspe)t and
)opy any o" them
DUTY ", PARTNERS TO GI%E INFORMATION
> #ood "aith not only re<uires that a partner should not ma=e any A(%E
CONCEA(MENT, BUT he should abstain "rom all )on)ealment
DUTY 1" ACCOUNT [B, P, U*PJ
> every partner must account to the partnership
*+ any bene"it a)<uired
,+ any pro"its re)eived
-+ any use o" partnership property
RIGHT TO DEMAND 4 FORMAL ACCOUNT
> any partner shall have the ri#ht to a formal account as to partnership affairs
*+ i" wron#"ully e6)luded "rom partnership BU%INE%%
,+ i" wron#"ully e6)luded "rom partnership $RO$ERT' by his )o8partners
-+ i" the ri#ht e6ists under the terms o" a#reement
0+ i" the other partner re)eives other bene"its, pro"its or uses partnership property
3+ whenever other )ir)umstan)es render it .ust and reasonable
C> the ri#ht to demand an a))ountin# e6ists as lon# as the partnership e6ists
C> pres)ription be#ins to run only upon the dissolution o" the partnership when the "inal
a))ountin# is done
PROPERTY RIGHTS OF PARTNERS [P, I, M]
*+ ri#hts in spe)i"i) $ARTNER%9I$ $RO$ERTIE%
,+ INTERE%T% in the $ARTNER%9I$
Page 16 of 32
-+ ri#ht to $ARTICI$ATE in the MANA2EMENT
RULE:
C> a partner is CO8O/NER with his partners o" %$ECIIC $ARTNER%9I$ $RO$ERT'
(> RIGHTS ", 4 PARTNER .+ SPECIFIC PARTNERSHIP PROPERTY
*+ he has e<ual ri#hts with his partners to $O%%E%% the property BUT only "or
$ARTNER%9I$ $UR$O%E%
> he may possess su)h property "or other purposes $RO1I!E! the other
partners e6pressly or impliedly #ives their CON%ENT
,+ he CANNOT A%%I2N his ri#ht to the property E&CE$T i" all the other partners
assi#n their ri#hts in the same property
-+ his ri#ht to the property is NOT %UBBECT to ATTAC9MENT or E&ECUTION,
E&CE$T on a )laim a#ainst partnership
0+ his ri#ht to the property is NOT %UBBECT to (E2A( %U$$ORT
C> i" there is $ARTNER%9I$ !EBT, the spe)i"i) property )an be atta)hed
RULE:
C> a $ARTNER% INTERE%T in the partnership is his %9ARE o" the $ROIT% and
%UR$(U%
IT C!N $E: [A, A, LS]
*+ A%%I2NE!
,+ ATTAC9E!
-+ be sub.e)t to (E2A( %U$$ORT
(EFFECTS ", CON%EYANCE 67 PARTNER ", 2.9 INTEREST .+ 123 PARTNERSHIP
*+ I he )onveys his /9O(E INTERE%T
A; partnership may still remain
B; partnership may be dissolved
C> mere )onveyan)e does not dissolve the partnership
,+ the A%%I2NEE does not ne)essarily be)ome a partner
> the A%%I2NOR is still the partner, with a ri#ht to demand a))ountin# and
settlement
-+ the A%%I2NEE CANNOT inter"ere in the MANA2EMENT or A!MINI%TRATION
o" the "irm
> the !//I(NEE C!NNOT also 'E)!N' [I, A, I]
A; INORMATION
Page 17 of 32
B; ACCOUNTIN2
C; IN%$ECTION o" partnership boo=s
CCC> while a partners INTERE%T in the "irm may be C9AR2E! or (E1IE! upon, his
INTERE%T in a spe)i"i) "irm $RO$ERT' CANNOT be atta)hed+
RIGHTS ", 123 ASSIGNEE
*+ to #et whatever pro"its the assi#nor8partner would have obtained
,+ to avail himsel" o" the usual remedies in )ase o" "raud in the mana#ement
-+ to as= "or ANNU(MENT o" the )ontra)t o" assi#nment I:
A; he was indu)ed to enter into it throu#h any o" the vi)es o" )onsent OR
B; he himsel" was in)apa)itated to #ive )onsent
0+ to demand an a))ountin# BUT only i" the partnership is dissolved
PREFERENTIAL RIGHTS ", PARTNERSHIP CREDITORS
C> partnership )reditors are entitled to $RIORIT' over partnership assets, in)ludin# the
partners interest in the pro"its
CC> %E$ARATE or IN!I1I!UA( )reditors have $REERENCE in separate or individual
properties
C> when the C9AR2IN2 OR!ER is applied "or and #ranted, the )ourt may appoint a
re)eiver o" the partners share in the pro"its
> the re)eiver appointed is entitled to any relie" ne)essary to )onserve the
partnership assets "or partnership purposes
C> interest )har#ed may be redeemed at any time be"ore "ore)losure
C> !*TE& *O&EC,O/.&E the interest may still be redeemed by 5without causin#
dissolution"
*+ with separate property, by any one or more o" the partners OR
,+ with partnership property, by any one or more partners with the )onsent o" all the
partners whose interests are not so )har#ed or sold
C> )onsent o" the delin<uent partner not needed
RULE:
> every partnership shall operate under a IRM NAME
C> the "irm name may or may not in)lude the name o" one or more o" the partners
CC> %TRAN2ER% who in)lude their names in the "irm are liable as partners be)ause o"
E%TO$$E(, BUT do NOT have the RI29T% o" partners
Page 18 of 32
CC> I a (IMITE! $ARTNER in)ludes his name in the "irm name, he has obli#ations
BUT not the ri#hts o" a #eneral partner
RULE "+ LIABILITY ,"# CONTRACTUAL OBLIGATIONS
C> all partners, in)ludin# industrial ones, shall be liable pro8rata with all their property
and a"ter all the partnership assets have been e6hausted
C> NOT A$$(ICAB(E "or TORT% or CRIME% 88888> (O%%
88888> INBUR'
88888> MI%A$$RO$RIATION
CC> while an IN!U%TRIA( $ARTNER is e6empted by law "rom (O%%E% as between the
partners, he is NOT E&EM$TE! "rom liability inso"ar as third persons are )on)erned
> he may re)over what he has paid "rom the CA$ITA(I%T partners
C> under the law the liability o" the partners is subsidiary and .oint NOT prin)ipal and
solidary
(RULE "+ LIABILITY ", 4 PARTNER :2" 249 WITHDRAWN
*+ a partner who withdraws is not liable "or liabilities )ontra)ted a"ter he has
withdrawn
,+ i" his interest has not yet been paid him
> his ri#ht to the same is that o" a mere )reditor
CC> a stipulation e6emptin# liability to third persons is 1OI!
C> any partner may enter into a separate obli#ation to per"orm a partnership )ontra)t
RULE:
C> every partner is an 4a#ent5 o" the partnership "or the purpose o" its business
G$R$* the a)t o" every partner "or apparently )arryin# on in the U%UA( /A' the
business o" the partnership o" whi)h he is member binds the partnership
E!CEPT:
*+ i" he has NO AUT9ORIT' and
,+ the person with whom he was dealin# with 9A% HNO/(E!2E o" the "a)t that he has
no su)h authority
RULE:
> an a)t o" a partner whi)h is not apparently "or the )arryin# on o" business o" the
partnership in the usual way does not bind the partnership UN(E%% authoriAed by the
other partners
Page 19 of 32
C> a partnership is a CONTARCT o" MUTUA( A2ENC', ea)h partner a)tin# as a
prin)ipal on his own behal" and as an a#ent "or his )o8partners or the "irm
REQUISITES "+ WHEN ;4+ 4 <4#1+3# BIND 123 <4#1+3#92.<
*+ e6pressly or impliedly AUT9ORIFE!
,+ when he a)ts in BE9A( AN! IN T9E NAME o" the partnership
INSTANCES ", IMPLIED AUTHORIATION
*+ when the other partners !O NOT OBBECT, althou#h they have =nowled#e o" the
a)t
,+ when the a)t is "or 4apparently )arryin# on in the usual way the business o" the
partnership
C> this is bindin# on the "irm even i" the partner was not really authoriAed
$RO1I!E! that the third party is in 2OO! AIT9
RULE "+ UNUSUAL ACTS
> one or more but less than all the partners 0!6E NO !.T0O&IT- TO:
[AP, DG, AI, CJ, EC, SA, RC]
*+ A%%I2N the $ARTNER% $RO$ERT'
,+ !I%$O%E o" 2OO!/I((
-+ do any other a)t whi)h would ma=e it impossible to )arry on the ordinary
business o" the partnership
0+ CONE%% a .ud#ment
3+ ENTER into a COM$ROMI%E
7+ %UBMIT to ARBITRATION
K+ RENOUNCE to C(AIM
(RULES "+ CON%EYANCE ", REAL PROPERTY
78 where title to real property is in the partnership name
> any partner may )onvey title to su)h property by a )onveyan)e e6e)uted in the
partnership name
9> P!&TNE&/0IP )!- &ECO6E& /.C0 P&OPE&T-
EXCEPT:
*+ i" the "irm is en#a#ed in the buyin# and sellin# o" land EU%UA(
BU%INE%%;
,+ i" property was )onveyed to a 9O(!ER "or 1A(UE and who had NO
HNO/(E!2E o" the partners (ACH o" AUT9ORIT'
,+ where title is in the name of the partnership and partner sold in his O2N N!)E

> I !ONE IN U%UA( BU%INE%%
> buyer does not be)ome owner BUT ACIUIRE% EIUITAB(E INTERE%T
Page 20 of 32
> I NOT !ONE IN U%UA( BU%INE%%
> buyer does not be)ome owner and is not even entitled to e<uitable interest
-8 where title is in the name of one or more $.T not all the partners

> partners in whose name the title is named MA' CON1E' BUT the
$ARTNER%9I$ may RECO1ER su)h property I done not in its U%UA(
BU%INE%% E&CE$T i" he had trans"erred it to a 9older "or value
0+ when property %held in trust by partner

> a sale only )onveys EIUITAB(E INTERE%T
:8 when title is in the name of all partners
> )onveyan)e e6e)uted by all partners possess all ri#hts o" su)h property
EQUITABLE INTEREST
8BENEICIA( INTERE%T, BUT NOT NAHE! O/NER%9I$
(RULE "+ ADMISSION "# REPRESENTATION MADE 67 4 PARTNER
> an admission by a partner is an admission a#ainst the partnersip;under the followin#
conditions:
*+ the admissions must )on)ern partnership a""airs
,+ must be within the s)ope o" his authority
RESTRICTIONS ON THE RULE:
*+ admissions made BEORE !I%%O(UTION are bindin# only when the partner
has authority to a)t on the parti)ular matter
,+ admissions made ATER !I%%O(UTION are bindin# only i" the admissions were
ne)essary to /IN! U$ the business
-+ an admission made by a "ormer partner made a"ter he has RETIRE! "rom the
partnership is not eviden)e a#ainst the "irm
EFFECT ", NOTICE 1" 4 PARTNER
noti)e to a partner is noti)e to the partnership
Cnoti)e to a partner, #iven while already a partner is a noti)e to the partnership
$RO1I!E! it relates to partnership a""airs
EFFECT ", 'NOWLEDGE ALTHOUGH NO NOTICE WAS GI%EN:
Page 21 of 32
C knowled#e of the partner is also knowled#e of the firm P&O6I'E' T0!T:
*+ the =nowled#e was a)<uired by a partner who is a)tin# in the parti)ular matter
involvedLand
,+ the partner havin# =nowled#e, had reason to believe that the "a)t related to a
matter whi)h had some possibility o" bein# the sub.e)t o" the partnership
business AN! he was so situated that he )ould )ommuni)ate it to the partner
a)tin# on that parti)ular matter
C %ER1ICE o" $(EA!IN2% on the partner in a law "irm is also servi)e on the whole
"irm and the other partners
LOSS OR INJURY
RULE "+ WRONGFUL ACT "# OMISSION ", 4 PARTNER (SOLIDARY LIABILITY)
C the partnership is solidarily liable with the partner i" the wron#"ul a)t or omission
*+ the partner is a)tin# in the ordinary )ourse o" business o" the partnership
OR
,+ with authority o" his )o8partners
C innocent partners have ri#ht to re)over "rom the #uilty partner
* When the firm and other partners not liable:
*+ i" the wron#"ul a)t or omission was NOT !ONE
A; within s)ope o" partnership business
B; with authority o" the other )o8partners
,+ i" the a)t or omission is NOT /RON2U(
-+ i" the a)t or omission, althou#h wron#"ul did not ma=e the partner )on)ern liable
8 !AMNUN AB%IUE IN%URIA
0+ i" the wron#"ul a)t or omission was )ommitted a"ter the "irm had been dissolved
and the same was not in )onne)tion with the pro)ess o" windin# up+
LIABILITY ", PARTNERSHIP ,"# MISAPPROPRIATION - (SOLIDARY LIABILITY)
*+ RECEI1IN2 $ART' MI%A$$RO$RIATE%
,+ AN' $ARTNER MI%A$$$RO$RIATE%
- money or property in )ustody o" partnership
PARTNER BY ESTOPPEL
a person who represents himsel" or )onsents to another G others representin# him to
anyone as a partner either in an e6istin# partnership or in one that is "i)titious or
apparent
Page 22 of 32
PARTNERSHIP BY ESTOPPEL
when all the members o" the e6istin# partnership )onsent to su)h representation o" a
partner by estoppel
RULES AND SITUATIONS:
78 if a third person is misled and acts because of such misrepresentation
the de)eiver is a partner by estoppel
38 if the partnership consented to such misrepresentation
partnership liability results
<8 if the firm had not consented
no partnership liability results BUT the de)eiver is )onsidered still as a
4partner by estoppel5 with all the obli#ations but not the ri#hts o" a partner
=8 when a person represents himself as a partner of a NON>EXI/TENT partnership
NO partnership liability results BUT the de)eiver and all persons who may
have aided him in the misrepresentation are still liable
liability would be BOINT or $RO8RATA
C when althou#h there is misrepresentation, i" the third party is not de)eived, the
do)trine o" estoppel does not apply
BURDEN ", PROOF
the )reditor or whoever alle#es the e6isten)e o" a partner or partnership by estoppel
has the burden o" provin# the e6isten)e o" the MI%RE$RE%ENTATION AN!
INNOCENT RE(IANCE on it
ENTRY OF A NEW PARTNER .+1" 4+ E!ISTING PARTNERSHIP
RULE:
C he shall be liable "or all the obli#ations o" the partnership BUT his liability will e6tend
only to his share in the partnership property
C his own individual property shall be e6)luded
C same liability o" a limited partner
PREFERENCE ", PARTNERSHIP CREDITORS
RULE:
C the )reditors o" the partnership shall be pre"erred to those o" su)h partner as
re#ards the partnership property
without prejudice to this right
Page 23 of 32
the private )reditors o" ea)h partner may as= the atta)hment and publi) sale o" the
share o" the latter in the partnership assets
CCI a partner sells his share to a third party, BUT the "irm itsel" still remains
%O(1ENT, partnership )reditors CANNOT assail the validity o" the sale by alle#in# that
it is made in "raud o" them, sin)e they have not really been pre.udi)ed
DISSOLUTION AND WINDING UP
the )han#e in the relation o" the partners )aused by any partner )ausin# to be
asso)iated in the )arryin# on o" the business
it is the point o" time the partners )ease to )arry on the business to#ether
WINDING UP
the pro)ess settlin# business a""airs a"ter dissolution
TERMINATION
the point in time a"ter all the partnership a""airs have been wound up
RULE ON DISSOLUTION
C on dissolution the partnership is not terminated BUT )ontinues until the windin# up
o" partnership a""airs is )ompleted
(EFFECT "+ OBLIGATIONS
*+ .ust be)ause a partnership is dissolved this does not ne)essarily mean that a
partner )an evade previous obli#ations entered into by the partnership
,+ dissolution saves the "ormer partners "rom new obli#ations to whi)h they have
not e6pressly or impliedly )onsented UN(E%% the same be essential "or windin#
up
(CAUSES OF DISSOLUTION
*+ without 1IO(ATION o" the A2REEMENT between the partners
A; TERMINATION o" the !EINITE TERM or $ARTICU(AR UN!ERTAHIN2
B; E&$RE%% /I(( or AN' $ART' in 2OO! AIT9 E$ARTNER%9I$ by
/I((;
C; E&$RE%% /I(( o" A(( o" the $ARTNER% e6)ept those who have
Einterests; A%%I2NE! or whose interests have been Eseparate debts;
C9AR2E!
!; E&$U(%ION in #ood "aith o" a member
,+ in CONTRA1ENTION o" the a#reement between the partners
by the E&$RE%% /I(( o" AN' $ARTNER at any time
-+ UN(A/U(NE%% o" the BU%INE%%
0+ (O%% D thin# promised
A; %$ECIIC T9IN2 D $ERI%9E% be"ore delivery
Page 24 of 32
B; U%URUCT is lost E&CE$T i" ownership had been trans"erred to the
partnership
3+ !EAT9 o" AN' partner
7+ IN%O(1ENC' o" any partner or o" the partnership
K+ CI1I( INTER!ICTION o" any partner
M+ !ECREE o" COURT
CCC i" the )ause is not .usti"ied or no )ause was #iven, the withdrawin# partner is liable
"or !AMA2E% BUT in no )ase )an he be )ompelled to remain in the "irm
C the insolven)y need not be .udi)ially de)lared, it is enou#h that the assets be less
than the liabilities
DISSOLUTION 67 JUDICIAL DECREE WHEN ALOWED:
(I, UM, I*PP, C, PB, BL, OC)
*+ partner de)lared 4insane5 in any .udi)ial pro)eedin# or is shown to be o"
UN%OUN! MIN!
,+ partner be)omes INCA$AB(E o" per"ormin# his part o" the partnership )ontra)t
-+ partner has been #uilty o" su)h CON!UCT as tends to a""e)t pre.udi)ially the
business
0+ partners $ER%I%TENT BREAC9 o" a#reement
3+ the business o" the partnership )an only be denied on at a loss
7+ other )ir)umstan)es whi)h render dissolution e<uitable
IN CASE OF PURCHASER ", PARTNERS INTEREST
*+ a"ter the termination o" the spe)i"ied term or parti)ular underta=in#
,+ AT AN' TIME, i" the partnership was a 4partnership at will5 when the interest was
assi#ned or when the )har#in# ordered was issued
C proo" as to the e6isten)e o" the "irm must "irst be #iven
C even i" a partner has not yet been previously de)lared insane by the )ourt,
dissolution may be as=ed, as lon# as the insanity is duly proved in )ourt
C in a suit "or dissolution, the )ourt may appoint a RECEI1ER at its dis)retion
EFFECTS OF DISSOLUTION
RULE:
C when the "irm is dissolved, a partner )an no lon#er bind the partnership
C a dissolved partnership still has the personality for the windin# up of its affairs
the "irm is still allowed to )olle)t previously a)<uired )redits
the "irm is still bound to pay o" its debts
Page 25 of 32
DISSOLUTION CAUSED 67 A*I*D
RULE: E%TI(( BOUN!; - as to ea)h partners
G$R$ where the dissolution is )aused by the ACT, IN%O(1ENC' or !EAT9 o" a
partner, ea)h partner is liable to his )o8partners "or his share o" any liability )reated by
any partner a)tin# "or the partnership
E!CEPTION: 8 individual liabilities
*+ i" dissolution by ACT
the partner a)tin# "or the partnership 9A! HNO/(E!2E o" the dissolution
OR
,+ i" dissolution by !EAT9 or IN%O(1ENC'
the partner a)tin# "or the partnership 9A! 4=nowled#e or noti)e5 o" the death or
insolven)y
C only the partner a)tin# assumes liability
CAFTER DISSOLUTION, 4 <4#1+3# ;4+ 91.== /6.+80 123 PARTNERSHIP
(WU, UT, TB)
*+ By any ACT appropriate "or /IN!IN2 U$ partnership a""airs
,+ By COM$(ETIN2 transa)tions UNINI%9E! at dissolution
-+ By any TRAN%ACTION whi)h )ould bind the partnership I dissolution had not
ta=en pla)e $RO1I!E! the other party is:
A; $RE1IOU% CRE!ITOR and had NO HNO/(E!2E or NOTICE o" the
dissolution OR
B; NOT a $RE1IOU% CRE!ITOR, had NO HNO/(E!2E or NOTICE and
dissolution was NOT $UB(I%9E!
C i" there was publi)ation o" the dissolution it is presumed he already =nows,
re#ardless o" a)tual =nowled#e on non =nowled#e
WHEN .9 123 PARTNERSHIP NOT BOUND
*+ new business with third parties who are in bad "aith
,+ "irm dissolved be)ause UN(A/U( e6)ept "or a)ts o" windin# up
-+ partner who a)ted be)ame IN%O(1ENT
0+ partner not authoriAed to wind up E&CE$T i" )ustomer in #ood "aith
C i" a"ter dissolution, i" a stran#er will represent himsel" as a partner althou#h he is not
one he will be a partner by estoppel
RULE:
C the dissolution o" the partnership does not itsel" dis)har#e the 4e6istin# liability5 o"
any partner
NEE' for an !(&EE)ENT $ET2EEN
Page 26 of 32
*+ partner )on)erned
,+ other partners
-+ )reditors
RULE:
C the IN!I1I!UA( $RO$ERT' o" a !ECEA%E! $ARTNER shall be liable "or all
obli#ations o" the partnership in)urred while he was a partner BUT sub.e)t to prior
payments o" his separate debts
C I there be a NO1ATION o" the O(! $ARTNER%9I$ !EBT% and su)h novation is
done a"ter one o" the partners has 4retired5 and without the )onsent o" su)h partner
said partner )annot be held liable by )reditors who made the novation with
=nowled#e o" the "irms dissolution
E!TRAJUDUCIAL AND JUDICIAL WINDING*UP
E!TRAJUDICIAL:
*+ by the partners who have not wron#"ully dissolved the partnership
,+ by the le#al representative o" the last survivin# partners
JUDICIAL:
under the )ontrol and dire)tion o" the )ourt, upon proper )ause that is shown to the
)ourt
C pro"its that will a)tually enter the "irm a"ter dissolution as a )onse<uen)e o"
transa)tions already made be"ore dissolution are in)luded be)ause they are )onsidered
as pro"its e6istin# at the time o" dissolution
C any other in)ome earned a"ter the time, li=e interest or dividends on sto)= owned by
the partners or partnership at the time o" dissolution should not be distributed as pro"its
BUT as merely additional in)ome to the )apital
BETTER RIGHTS ", INNOCENT PARTNERS
inno)ent partners have better ri#hts than #uilty partners and that the #uilty partners
are re<uired to indemni"y "or the dama#es )aused
C RIGHT ", INOCENT PARTNERS TO CONTINUE 123 BUSINESS
in essen)e this is a new partnership
)an use the same "irm name
)an as= new members to .oin
$.T shall: for protection of #uilty partners
*+ #ive a BON! approved by the )ourt
,+ to $A' #uilty partners his interests at the time o" dissolution MINU% !AMA2E%
Page 27 of 32
C a #uilty partner who is E&C(U!E! will be indemni"ied a#ainst all present or "uture
partnership liabilities
RIGHT TO GET CASH
in )ase on non8)ontinuan)e o" the business, the interest o" the partner should i" he
desires be #iven in )ash
assets may be sold
a #uilty partner, in as)ertainin# the value o" his interest is not entitled to a
proportional share o" the value o" 2OO! /I(

RIGHTS OF INNOCENT PARTNERS IN CASE ", RESCISSION 64938 "+ FRAUD
AND MISREPRESENTATION
*+ Ri#ht to (IEN or RETENTION %UR$(U%
CA$ITA(
A!1ANCE%
,+ Ri#ht o" %UBRO2ATION D as )reditor
-+ Ri#ht o" IN!EMNIICATION
(ORDER ", PAYMENT .+ WINDING*UP ", PARTNERSHIP LIABILITIES
GENERAL PARTNERSHIP: [C, R, C, P]
*+ those owin# to 4)reditors5 other than partners
,+ those owin# to 4partners5 other than "or )apital or pro"its D REIMBUR%EMENT%
-+ those owin# to partners in respe)t to CA$ITA(
0+ those owin# to partners in respe)t to $ROIT%
C I the partnership assets are insu""i)ient, the other partners must )ontribute more
money or property
PREFERENCE :.12 RESPECT 1" 123 ASSETS
78 re#ardin# partnership property
partnership )reditors have pre"eren)e
38 re#ardin# individual properties of partners
individual )reditors are pre"erred
RULE ., PARTNER .9 INSOL%ENT
8 9ow IN!I1I!UA( $RO$ERT' is !I%TRIBUTE!
ORDER OF PREFERENCE:
*+ IN!I1I!UA( or %E$ARATE CRE!ITOR%
,+ $ARTNER%9I$ CRE!ITOR%
Page 28 of 32
-+ those owin# to other partners by way o" )ontribution
CWhen creditors of the dissolved partnership are also creditors of the partnership
continuing business:
*+ new partner is admitted without li<uidation
,+ a partner retires and assi#ns his ri#hts I the business is )ontinued without
li<uidation o" the partnership a""airs
-+ all but one partner retire without li<uidation
0+ when all partner assi#n their ri#ht to a person who will assume their debt
3+ a"ter wron#"ul dissolution, remainin# partners )ontinue the business without
li<uidation
7+ when partner e6pelled and remainin# partners )ontinue the business without
li<uidation
C liability o" third person be)omin# a partner in the partnership )ontinuin# the business
to the )reditors o" the dissolved partnership shall be satis"ied out o" the partnership
property ON('
2+R+ D when a partner retires, he is entitled what is due him a"ter li<uidation BUT no
li<uidation is needed i" there is already a settlement at the date o" dissolution
JURISPRUDENCE
$!/TI'! vs8 )EN?I
C arti)les o" asso)iation by whi)h , or more persons obli#ate themselves to pla)e in a
)ommon "und any property, industry, or any o" these thin#s, in order to obtain pro"it,
shall be COMMERCIA(
$O&+! vs8 !''I/ON
C a survivin# husband may "orm a partnership with the heirs o" the de)eased wi"e "or
the mana#ement and )ontrol o" the )ommunity property
BUT in the absen)e o" the "ormalities pres)ribed by the Civil Code, =nowled#e o" the
e6isten)e o" the new partnership or )ommunity o" property must at least be brou#ht
home to third persons dealin# with the survivin# husband in re#ard to the )ommunity
real property in order to bind them by the )ommunity a#reement
4IE, vs8 /!$E&T
C the de)larations o" one partner, not made in the presen)e o" his )o8partner, are not
)ompetent to prove the e6isten)e o" a partnership between them as a#ainst su)h
partner
C the e6isten)e o" a partnership )annot be established by #eneral reputation, rumor or
hearsay
E6EN(E,I/T! vs8 C8I8&8
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C By the )ontra)t o" partnership , or more persons bind themselves to )ontribute
money, property, or industry to a )ommon "und, with the intention o" dividin# the pro"its
amon# themselves
ESSENTIAL ELEMENTS ", 4 PARTNERSHIP
*+ an a#reement to CONTRIBUTE money, property, or industry to a COMMON
UN!
,+ intent to divide the pro"its amon# the )ontra)tin# parties
C when our internal Revenue Code in)ludes 4partnerships5 amon# the entities sub.e)t
to the ta6 on 4)orporations5, said )ode whi)h are not ne)essarily 4partnerships5 in the
te)hni)al sense o" the term
C PARTNERSHIPS - in)ludes a %'N!ICATE, 2ROU$, $OO(, BOINT 1ENTURE, or
other unin)orporated or#aniAation, throu#h or by the means o" whi)h any business,
"inan)ial operation, or venture is )arried on
C a .oint venture need not be underta=en in any o" the standard "orms,
or in )on"ormity with the usual re<uirements o" the law on partnerships, in order that one
)ould be deemed )onstituted "or purposes o" the TA& on )orporations
P!/C.!, vs8 C8I8&8
C )o8ownership or )o8possession does not itsel" establish a partnership, whether su)h
)o8owners or )o8possessors do or do not share any pro"its made by the use o" the
property
C the sharin# o" #ross returns does not itsel" establish a partnership, within the
persons sharin# them have a .oint or )ommon ri#ht or interest in any property "rom
whi)h the returns are derived
C aside from the circumstances of profit; the presence of other elements constitutin#
partnership is necessary; such as:
*+ the )lear intent to "orm a partnership
,+ the e6isten)e o" a .uridi)al personality di""erent "rom that o" the individual partners
AN!
-+ the "reedom to trans"er or assi#n any interest in the property by one with the
)onsent o" the others
C an isolated transa)tion whereby , or more persons )ontribute "unds to buy )ertain
real estate "or pro"it in the absen)e o" other )ir)umstan)es showin# a )ontrary intention
)annot be )onsidered a partnership
C persons who )ontribute property or "unds "or a )ommon enterprise and a#ree to
share the #ross returns o" that enterprise in proportion to their )ontribution, BUT who
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severally retain the title to their respe)tive )ontribution, are not thereby rendered
partners
they have no )ommon sto)= or )apital and no )ommunity o" interest as prin)ipal
proprietors in the business itsel" whi)h the pro)eeds derived
C a .oint pur)hase o" land, by two does not )onstitute a )o8partnership in respe)t
thereto, NOR does an a#reement to share the pro"its and losses on the sale o" land
)reate a partnership
C .+ "#83# 1" ;"+91.1>13 4 PARTNERSHIP INTER SESE 123#3 ?>91 63:
A; an intent to "orm the same
B; #enerally parti)ipatin# in both pro"its and losses AN!
C; su)h a )ommunity o" interest, as "ar as third persons are )on)erned as
enables ea)h party to ma=e a )ontra)t, mana#e the business, and dispose
o" the whole property
C the )ommon ownership o" property does not itsel" )reate a partnership between the
owners, thou#h they may use it "or the purpose o" ma=in# #ains AN! they may without
be)omin# partners, a#ree amon# themselves as to the mana#ement and use o" su)h
property and the appli)ation o" the pro)eeds there"rom
C the sharin# o" returns does not in itsel" establish a partnership within the persons
sharin# therein have a .oint or )ommon ri#ht or interest in the property
123#3 ?>91 63:
*+ )lear intent to "orm a partnership
,+ the e6isten)e o" a .uridi)al personality di""erent "rom the individual partners
AN!
-+ the "reedom o" ea)h party to trans"er or assi#n the whole property
'.TE&TE vs8 &!,,O/
C an a#reement between , persons to operate a )o)=pit, by whi)h one is to )ontribute
his servi)es and the other to provide the )apital, the pro"its to be divided between them,
)onstitutes a partnership
'E,.!O vs8 C!/TEE,
C a )ontra)t o" partnership to e6ploit a "ishpond pendin# its award to any <uali"ied
party or appli)ant is 1A(I! BUT a )ontra)t o" partnership to divide the "ishpond a"ter
su)h award is I((E2A(
C one o" the )auses o" dissolution is D any event whi)h ma=e it unlaw"ul "or the
business o" the partnership to be )arried on or "or the members to )arry it on in
partnership
Page 31 of 32
C8I8&8 vs8 /.TE&
C a UNI1ER%A( $ARTNER%9I$ re<uires either that the ob.e)t o" the asso)iation be:
*+ all the present property o" the partners as )ontributed by them to the )ommon
"und OR
,+ all that the partners may a)<uire by their industry or wor= durin# the e6isten)e o"
the partnership
C the subse<uent marria#e o" the partners )ould not operate to dissolve the
partnership be)ause it is not one o" the )auses provided "or dissolution by law with
re#ards to limited partnerships
C partnership has distin)t and separate personality "rom that o" its partners
C a husband and wi"e may not enter into a )ontra)t o" #eneral )o8partnershipG
UNI1ER%A( partnership
!CO!' vs8 )!$!TO
C a partnership may be )onstituted in any "orm E&CE$T where immovable property or
real ri#hts are )ontributed thereto, in whi)h )ase a publi) instrument shall be ne)essary
C A CONTRACT ", PARTNERSHIP .9 %OID
whenever immovable property is )ontributed thereto, i" 4inventory5 o" said
property is not made, si#ned by the parties and atta)hed to the publi) instrument
E6!N(E,I/T! vs8 !$!' /!NTO/
C an IN!U%TRIA( $ARTNER )annot en#a#e in BU%INE%% OR 9IM%E(, UN(E%%
the partnership e6pressly permits him to do so
I 9E %9OU(! !O %O, the )apitalist partners may either:
*+ E&C(U!E him "rom the "irm OR
,+ A1AI( themselves o" the bene"its whi)h he may have obtained in violation o" this
provision
with a ri#ht to !AMA2E% in either )ase
C the prohibition a#ainst an industrial partner en#a#in# in business "or himsel" see=s
to prevent any )on"li)t o" interest between the industrial partner and the partnership and
to ensure "aith"ul )omplian)e by said partner with his prostation
Page 32 of 32