Agency, Trust, and Partnership
Atty. Jose Cochingyan
I. PARTNERSHIP AS PRIMARILY A CONTRACTUAL
RELATIONSHIP
1. Essential Elements and Purpose of Partnership
a. Consent: Partnership must necessarily arise from a
Contractual Relationship
i. Persons who are not partners to one another are not
partners as to third persons
 Art. 1769 (1): In determining whether a partnership exists,
these rules shall apply: (1) Except as provided by Article
1825, persons who are not partners as to each other are not
partners as to third persons
ii. Except: Partnership by Estoppel
 Art. 1825: When a person, by words spoken or written or by
conduct, represents himself, or consents to another
representing him to anyone, as a partner in an existing
partnership or with one or more persons not actual partners,
he is liable to any such persons to whom such
representation has been made, who has, on the faith of
such representation, given credit to the actual or apparent
partnership, and if he has made such representation or
consented to its being made in a public manner he is liable
to such person, whether the representation has or has not
been made or communicated to such person so giving credit
by or with the knowledge of the apparent partner making the
representation or consenting to its being made:
(1) When a partnership liability results, he is liable as
though he were an actual member of the partnership;
(2) When no partnership liability results, he is liable pro
rata with the other persons, if any, so consenting to the
contract or representation as to incur liability, otherwise
separately.
When a person has been thus represented to be a partner
in an existing partnership, or with one or more persons not
actual partners, he is an agent of the persons consenting to
such representation to bind them to the same extent and in
the same manner as though he were a partner in fact, with
respect to persons who rely upon the 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 consenting to the representation.
b. Subject matter: Partners must undertake to jointly pursue a
business enterprise thru their agreements to: (i) contribute to
a common fund; and (ii) divide the profits and losses;
 Art. 1767: By the contract of partnership two or more persons
bind themselves to contribute money, property, or industry to a
common fund, with the intention of dividing the profits among
themselves.
Two or more persons may also form a partnership for the
exercise of a profession.
 Partnership must be of the common benefit of the parties
o Art. 1770: A partnership must have a lawful object or
purpose, and must be established for the common benefit or
interest of the partners.
When an unlawful partnership is dissolved by a judicial
decree, the profits shall be confiscated in favor of the State,
without prejudice to the provisions of the Penal
Code governing the confiscation of the instruments and
effects of a crime.
o Obtaining of profit or gain from the business is the essence
of a partnership;
o Example: One while contribute his services while the other
provides the capital and the profits will be divided between
them
 EXCEPT: Professional Partnership
c. Consideration: undertaking to contribute money, property, or
industry to a common fund
 Art. 1767: By the contract of partnership two or more persons
bind themselves to contribute money, property, or industry to a
common fund, with the intention of dividing the profits among
themselves.
Two or more persons may also form a partnership for the
exercise of a profession.
d. Rules on Determining Perfected Partnership
 Art. 1769: In determining whether a partnership exists, these
rules shall apply:
(1) Except as provided by Article 1825, persons who are not
partners as to each other are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish
a partnership, whether such-co-owners or co-possessors do or
do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a
joint or common right or interest in any property from which the
returns are derived;
(4) The receipt by a person of a share of the profits of a
business is prima facie evidence that he is a partner in the
business, but no such inference shall be drawn if such profits
were received in payment:
(a) As a debt by installments or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased
partner;
(d) As interest on a loan, though the amount of payment vary
with the profits of the business;
(e) As the consideration for the sale of a goodwill of a
business or other property by installments or otherwise.
 Co-Ownership or Co-Possession Does Not Itself Establish
a Partnership, Even When Profits Are Shared
 Sharing in the Gross Return/Receipts of a Business Does
Not Create Partnership
 Receipt by a Person of a Share of the Profits of a Business
 When Entitlement to Net Profits Does Not Create
Presumption of Partnership
o As installment payments of debt or interest thereof
o As wages of an employee
o As rent payments to a landlord
o As annuity to a widow or representative of deceased
partner
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Atty. Jose Cochingyan
o As the consideration on the sale of goodwill or other
property
2. Essential Characteristics of the Contract of Partnership
Art. 1767. By the contract of partnership two or more persons bind
themselves to contribute money, property, or industry to a common
fund, with the intention of dividing the profits among themselves.
Two or more persons may also form a partnership for the exercise
of a profession.
a. Nominate and Principal
b. Consensual
c. Onerous and Commutative
d. Bilateral and Reciprocal
e. Preparatory and Progressive
II. PARTNERSHIP AS A JURIDICAL PERSON
Art. 44. The following are juridical persons: (3) Corporations,
partnerships and associations for private interest or purpose to which the
law grants a juridical personality, separate and distinct from that of each
shareholder, partner or member.
Art. 45. Juridical persons mentioned in Nos. 1 and 2 of the preceding
article are governed by the laws creating or recognizing them.
Private corporations are regulated by laws of general application on the
subject.
Partnerships and associations for private interest or purpose are
governed by the provisions of this Code concerning partnerships.
Art. 1768. The partnership has a judicial personality separate and distinct
from that of each of the partners, even in case of failure to comply with
the requirements of Article 1772, first paragraph.
Art. 1772. Every contract of partnership having a capital of three
thousand pesos or more, in money or property, shall appear in a public
instrument, which must be recorded in the Office of the Securities and
Exchange Commission.
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.
Art. 1784. A partnership begins from the moment of the execution of the
contract, unless it is otherwise stipulated.
1. Consequences of Partnership being a juridical person
a. Entity has legal capacity to enter into contracts and incur
obligations
Art. 46. Juridical persons may acquire and possess property of all
kinds, as well as incur obligations and bring civil or criminal actions,
in conformity with the laws and regulations of their organization.
b. Entity may acquire properties in its own name
Art. 46. Juridical persons may acquire and possess property of all
kinds, as well as incur obligations and bring civil or criminal actions,
in conformity with the laws and regulations of their organization.
Art. 1774. Any immovable property or an interest therein may be
acquired in the partnership name. Title so acquired can be conveyed
only in the partnership name.
c. It may sue and may be sued in its firm name
Art. 46. Juridical persons may acquire and possess property of all
kinds, as well as incur obligations and bring civil or criminal actions,
in conformity with the laws and regulations of their organization.
d. It would have domicile: Place where legal representation is
established or where it exercises its principal function
Art. 51. When the law creating or recognizing them, or any other
provision does not fix the domicile of juridical persons, the same
shall be understood to be the place where their legal representation
is established or where they exercise their principal functions.
e. It is taxed as a corporate tax payer
f. It may be declared insolvent even if the partners are not
g. Partnership is a person entitled to constitutional rights
2. Provisions Contravening the Attributes of Separate Juridical
Personality
a. Partners are co-owners of partnership properties
Art. 1811. A partner is co-owner with his partners of specific
partnership property.
b. Parties may individually dispose of real property of the
partnership even when in the partnership name
Art. 1819. Where title to real property is in the partnership name,
any partner may convey title to such property by a conveyance
executed in the partnership name; but the partnership may recover
such property unless the partner's act binds the partnership under
the provisions of the first paragraph of article 1818, or unless such
property has been conveyed by the grantee or a person claiming
through such grantee to a holder for value without knowledge that
the partner, in making the conveyance, has exceeded his authority.
Where title to real property is in the name of the partnership, a
conveyance executed by a partner, in his own name, passes the
equitable interest of the partnership, provided the act is one within
the authority of the partner under the provisions of the first paragraph
of Article 1818.
Where title to real property is in the name of one or more but not all
the partners, and the record does not disclose the right of the
partnership, the partners in whose name the title stands may convey
title to such property, but the partnership may recover such property
if the partners' act does not bind the partnership under the provisions
of the first paragraph of Article 1818, unless the purchaser or his
assignee, is a holder for value, without knowledge.
Where the title to real property is in the name of one or more or all
the partners, or in a third person in trust for the partnership, a
conveyance executed by a partner in the partnership name, or in his
own name, passes the equitable interest of the partnership, provided
the act is one within the authority of the partner under the provisions
of the first paragraph of Article 1818.
Where the title to real property is in the name of all the partners a
conveyance executed by all the partners passes all their rights in
such property.
Art. 1818 par. 1. Every partner is an agent of the partnership for the
purpose of its business, and the act of every partner, including the
execution in the partnership name of any instrument, for apparently
carrying on in the usual way the business of the partnership of which
he is a member binds the partnership, unless the partner so acting
has in fact no authority to act for the partnership in the particular
matter, and the person with whom he is dealing has knowledge of
the fact that he has no such authority.
c. Partners are personally liable for partnership debts after
exhaustion of partnership assets
Art. 1816. All partners, including industrial ones, shall be liable pro
rata with all their property and after all the partnership assets have
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Atty. Jose Cochingyan
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. However, any
partner may enter into a separate obligation to perform a partnership
contract.
Art. 1817. Any stipulation against the liability laid down in the
preceding article shall be void, except as among the partners.
Art. 1824. All partners are liable solidarily with the partnership for
everything chargeable to the partnership under Articles 1822 and
1823.
Art. 1839. In settling accounts between the partners after
dissolution, the following rules shall be observed, subject to any
agreement to the contrary:
(2) The liabilities of the partnership shall rank in order of payment,
as follows:
(a) Those owing to creditors other than partners,
(b) Those owing to partners other than for capital and profits,
(c) Those owing to partners in respect of capital,
(d) Those owing to partners in respect of profits.
(4) The partners shall contribute, as provided by article 1797, the
amount necessary to satisfy the liabilities.
(7) The individual property of a deceased partner shall be liable for
the contributions specified in No. 4.
III. FORMALITIES REQUIRED FOR THE CONTRACT OF
PARTNERSHIP
1. A partnership begins from the moment of the meeting of the
minds to pursue a business jointly; unless, otherwise stipulated
Art. 1784. A partnership begins from the moment of the execution of
the contract, unless it is otherwise stipulated.
2. Formalities Required
a. General Rule: Being Consensual in Character, a Partnership
may be constituted in any form
Art. 1771. A partnership may be constituted in any form, except
where immovable property or real rights are contributed thereto, in
which case a public instrument shall be necessary.
b. Except: When Capital Contribution is P3,000 or More:
Art. 1772. Every contract of partnership having a capital of three
thousand pesos or more, in money or property, shall appear in a
public instrument, which must be recorded in the Office of the
Securities and Exchange Commission.
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.
i. Failure to comply with the requirements shall not affect the
liability of the partnership and its members to third persons
c. Except: Where immovable property or real rights are
contributed
i. Articles of Partnership must be in a public instrument
Art. 1771. A partnership may be constituted in any form, except
where immovable property or real rights are contributed thereto, IV. PARTNERS’ RIGHTS, POWER, AND AUTHORITY; DUTIES AND
in which case a public instrument shall be necessary.
ii. Would be void if inventory of the property is not made, signed
by the parties, and attached to the public instrument
Art. 1773. A contract of partnership is void, whenever immovable
property is contributed thereto, if an inventory of said property is
not made, signed by the parties, and attached to the public
instrument.
d. Legal Value of the Formal Requirements of Partnerships
3. When corporate venture fails to incorporate, do incorporators
become partners?
4. Other rules on the constitution of a partnership
a. A partnership must have a lawful object or purpose
Art. 1770. A partnership must have a lawful object or purpose, and
must be established for the common benefit or interest of the
partners.
When an unlawful partnership is dissolved by a judicial decree, the
profits shall be confiscated in favor of the State, without prejudice to
the provisions of the Penal Code governing the confiscation of the
instruments and effects of a crime.
b. When articles kept secret among members and one member
may contract in his own name
Art. 1775. Associations and societies, whose articles are kept secret
among the members, and wherein any one of the members may
contract in his own name with third persons, shall have no juridical
personality, and shall be governed by the provisions relating to co-
ownership.
i. Shall have no separate juridical personality
ii. Shall be governed by the provisions relating to co-
partnership
c. Rules on partnership name
Art. 1815. Every partnership shall operate under a firm name, which
may or may not include the name of one or more of the partners.
Those who, not being members of the partnership, include their
names in the firm name, shall be subject to the liability of a partner.
i. Every partnership must operate under a firm name
ii. Which may or may not include the name of one or more of
the partners
iii. A person who allows his name to be in the firm name shall
be subject to the liability of a partner
iv. The use by the person or partnership continuing the
partnership business of the partnership name, or the name
of the deceased partner: shall not of itself make the
individual property of the deceased partner liable for any
debts contracted by such person or partnership
Art. 1840, last par. 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.
d. Rule 3.02, Code of Professional Responsibility
Rule 3.02: In the choice of a firm name, no false, misleading or
assumed name shall be used. The continued use of the name of a
deceased partner is permissible provided that the firm indicates in
all its communications that said partner is deceased.
OBLIGATIONS
1. Kinds of Partners
a. Industrial and Capitalist Partners
b. Ostensible, Nominal and Dormant Partners
c. Original and Incoming Partners
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Atty. Jose Cochingyan
d. Managing and Liquidating Partners
e. General and Limited Partners
f. Retiring, surviving, and Continuing Partners
2. Property Rights of Partners
a. Co-Ownership rights to specific partnership properties
Art. 1810. The property rights of a partner are:
(1) His rights in specific partnership property;
(2) His interest in the partnership; and
(3) His right to participate in the management.
Art. 1811. A partner is co-owner with his partners of specific
partnership property.
The incidents of this co-ownership are such that:
(1) A partner, subject to the provisions of this Title and to any
agreement between the partners, has an equal right with his
partners to possess specific partnership property for partnership
purposes; but he has no right to possess such property for any
other purpose without the consent of his partners;
(2) A partner's right in specific partnership property is not
assignable except in connection with the assignment of rights of all
the partners in the same property;
(3) A partner's right in specific partnership property is not subject to
attachment or execution, except on a claim against the partnership.
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 homestead or exemption
laws;
(4) A partner's right in specific partnership property is not subject to
legal support under Article 291.
i. Equal Rights to possess, but for partnership purpose only
ii. Non-assignable
iii. Not subject to the attachment or execution by partner’s
separate creditors nor for a partner’s legal support
obligations
b. Mutual Agency
i. General Rule on Agency
 All Partners Shall Be Considered Agents and Whatever
Any One of Them May Do Alone Shall Bind the
Partnership
Art. 1803. When the manner of management has not been
agreed upon, the following rules shall be observed:
(1) All the partners shall be considered agents and whatever
any one of them may do alone shall bind the partnership,
without prejudice to the provisions of Article 1801.
 Every Partner Is an Agent of the Partnership for
Apparently Carrying-on the Usual Way the Business of
the Partnership
Art. 1818. Every partner is an agent of the partnership for
the purpose of its business, and the act of every partner,
including the execution in the partnership name of any
instrument, for apparently carrying on in the usual way the
business of the partnership of which he is a member binds
the partnership, unless the partner so acting has in fact no
authority to act for the partnership in the particular matter,
and the person with whom he is dealing has knowledge of
the fact that he has no such authority.
An act of a partner which is not apparently for the carrying
on of business of the partnership in the usual way does not
bind the partnership unless authorized by the other
partners.
Except when authorized by the other partners or unless they
have abandoned the business, one or more but less than all
the partners have no authority to:
(1) Assign the partnership property in trust for creditors or
on the assignee's promise to pay the debts of the
partnership;
(2) Dispose of the good-will of the business;
(3) Do any other act which would make it impossible to carry
on the ordinary business of a partnership;
(4) Confess a judgment;
(5) Enter into a compromise concerning a partnership claim
or liability;
(6) Submit a partnership claim or liability to arbitration;
(7) Renounce a claim of the partnership.
No act of a partner in contravention of a restriction on
authority shall bind the partnership to persons having
knowledge of the restriction.
 Partnership Shall Answer to Each Partner for the
Obligation a Partner May Have Contracted in Good
Faith in the Interest of the Partnership Business, and
the Risks in Consequence of Its Management
Art. 1796. The partnership shall be responsible to every
partner for the amounts he may have disbursed on behalf of
the partnership and for the corresponding interest, from the
time the expense are made; it shall also answer to each
partner for the obligations he may have contracted in good
faith in the interest of the partnership business, and for risks
in consequence of its management.
ii. Other Powers or Rights Relating to Mutual Agency
 Can Dispose of Partnership Property Even When in
Partnership Name
Art. 1819. Where title to real property is in the partnership
name, any partner may convey title to such property by a
conveyance executed in the partnership name; but the
partnership may recover such property unless the partner's
act binds the partnership under the provisions of the first
paragraph of article 1818, or unless such property has been
conveyed by the grantee or a person claiming through such
grantee to a holder for value without knowledge that the
partner, in making the conveyance, has exceeded his
authority.
Where title to real property is in the name of the partnership,
a conveyance executed by a partner, in his own name,
passes the equitable interest of the partnership, provided
the act is one within the authority of the partner under the
provisions of the first paragraph of Article 1818.
Where title to real property is in the name of one or more
but not all the partners, and the record does not disclose the
right of the partnership, the partners in whose name the title
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Atty. Jose Cochingyan
stands may convey title to such property, but the partnership
may recover such property if the partners' act does not bind
the partnership under the provisions of the first paragraph
of Article 1818, unless the purchaser or his assignee, is a
holder for value, without knowledge.
Where the title to real property is in the name of one or more
or all the partners, or in a third person in trust for the
partnership, a conveyance executed by a partner in the
partnership name, or in his own name, passes the equitable
interest of the partnership, provided the act is one within the
authority of the partner under the provisions of the first
paragraph of Article 1818.
Where the title to real property is in the name of all the
partners a conveyance executed by all the partners passes
all their rights in such property.
 Admission or Representation Made by Any Partner
Concerning Partnership Affairs Is Evidence Against the
Partnership
Art. 1820. An admission or representation made by any
partner concerning partnership affairs within the scope of
his authority in accordance with this Title is evidence against
the partnership.
 Notice to Any Partner Relating to Partnership Affairs Is
Notice to the Partnership
Art. 1821. Notice to any partner of any matter relating to
partnership affairs, and the knowledge of the partner acting
in the particular matter, acquired while a partner or then
present to his mind, and the knowledge of any other partner
who reasonably could and should have communicated it to
the acting partner, operate as notice to or knowledge of the
partnership, except in the case of fraud on the partnership,
committed by or with the consent of that partner.
 Wrongful Act or Omission of Any Partner Acting for
Partnership Affairs Makes the Partnership liable
Art. 1822. Where, by any wrongful act or omission of any
partner acting in the ordinary course of the business of the
partnership or with the authority of co-partners, loss or injury
is caused to any person, not being a partner in the
partnership, or any penalty is incurred, the partnership is
liable therefor to the same extent as the partner so acting or
omitting to act.
 Partnership Bound to Make Good Losses for Acts or
Misapplications of Partners
Art. 1823. The partnership is bound to make good the loss:
(1) Where one partner acting within the scope of his
apparent authority receives money or property of a third
person and misapplies it; and
(2) Where the partnership in the course of its business
receives money or property of a third person and the money
or property so received is misapplied by any partner while it
is in the custody of the partnership.
iii. Acts requiring unanimous consent
Art. 1818. Every partner is an agent of the partnership for the
purpose of its business, and the act of every partner, including
the execution in the partnership name of any instrument, for
apparently carrying on in the usual way the business of the
partnership of which he is a member binds the partnership,
unless the partner so acting has in fact no authority to act for
the partnership in the particular matter, and the person with
whom he is dealing has knowledge of the fact that he has no
such authority.
An act of a partner which is not apparently for the carrying on
of business of the partnership in the usual way does not bind
the partnership unless authorized by the other partners.
Except when authorized by the other partners or unless they
have abandoned the business, one or more but less than all
the partners have no authority to:
(1) Assign the partnership property in trust for creditors or on
the assignee's promise to pay the debts of the partnership;
(2) Dispose of the good-will of the business;
(3) Do any other act which would make it impossible to carry
on the ordinary business of a partnership;
(4) Confess a judgment;
(5) Enter into a compromise concerning a partnership claim or
liability;
(6) Submit a partnership claim or liability to arbitration;
(7) Renounce a claim of the partnership.
No act of a partner in contravention of a restriction on authority
shall bind the partnership to persons having knowledge of the
restriction.
iv. Consent required in making alterations on immovable
property
Art. 1803. When the manner of management has not been
agreed upon, the following rules shall be observed: (2) None
of the partners may, without the consent of the others, make
any important alteration in the 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 manifestly
prejudicial to the interest of the partnership, the court's
intervention may be sought.
v. When there is designation of managing partner in the
articles of partnership
Art. 1800. The partner who has been appointed manager in
the articles of partnership may execute all acts of
administration despite the opposition of his partners, unless
he should act in bad faith; and his power is irrevocable without
just or lawful cause. The vote of the partners representing the
controlling interest shall be necessary for such revocation of
power.
A power granted after the partnership has been constituted
may be revoked at any time.
Art. 1801. If two or more partners have been intrusted with the
management of the partnership without specification of their
respective duties, or without a stipulation that one of them shall
not 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. In case of a tie, the matter shall be
decided by the partners owning the controlling interest.
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Atty. Jose Cochingyan
Art. 1802. 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
validity of the acts, and the absence or disability of any one of
them cannot be alleged, unless there is imminent danger of
grave or irreparable injury to the partnership.
c. Equity Rights
Art. 1810. The property rights of a partner are:
(1) His rights in specific partnership property;
(2) His interest in the partnership; and
(3) His right to participate in the management.
Art. 1812. A partner's interest in the partnership is his share of the
profits and surplus.
VOID: Art. 1799. A stipulation which excludes one or more partners
from any share in the profits or losses is void.
i. Participation in profits and losses
Art. 1797. The losses and profits shall be distributed in
conformity with the agreement. If only the share of each partner
in the profits has been agreed upon, the share of each in the
losses shall be in the same proportion.
In the absence of stipulation, the share of each partner in the
profits and losses shall be in proportion to what he may have
contributed, but the industrial partner shall not be liable for the
losses. As for the profits, the industrial partner shall receive
such share as may be just and equitable under the
circumstances. If besides his services he has contributed
capital, he shall also receive a share in the profits in proportion
to his capital.
 Distributed in accordance with stipulation
 If share in profits only stipulated, share in the losses
shall be the same
 If no stipulation on Sharing, Partners Share Profits and
Losses in Proportion to their Capital Contributions
 Industrial Partner: In the Absence of Stipulation, He Shall
Receive Such Share in the Profits as May Be Just and
Equitable under the Circumstances
ii. Third-party may be designated to determine profit-loss
sharing
Art. 1798. If the partners have agreed to intrust to a third person
the designation of the share of each one in the profits and
losses, 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.
The designation of losses and profits cannot be intrusted to one
of the partners.
 Third-Party Determination May Be Impugned Only
When Manifestly Inequitable
 But Such Right to Impugn Is Lost:
o When Partnership Has Began to Execute the Third Party
Decision; or
o 3 Months Have Lapsed from Knowledge of Such
Decision
d. Art. 1813: conveyance by partner of his whole partnership:
merely entitles assignee to receive profits to which assignor
is entitled to;
Art. 1813. A conveyance by a partner of his whole interest in the
partnership does not of itself dissolve the partnership, or, as
against the other partners in the absence of agreement, entitle the
assignee, during the continuance of the partnership, to interfere in
the management or administration of the partnership business or
affairs, or to require any information or account of partnership
transactions, or to inspect the partnership books; but it merely
entitles the assignee to receive in accordance with his contract the
profits to which the assigning partner would otherwise be entitled.
However, in case of fraud in the management of the partnership,
the assignee may avail himself of the usual remedies.
In case of a dissolution of the partnership, the assignee is entitled
to receive his assignor's interest and may require an account from
the date only of the last account agreed to by all the partners.
BUT DOES NOT:
 Dissolve the partnership
 Entitle Assignee to Interfere with
Management/Administration of Partnership;
 Entitle Assignee to Require Information/Accounting of
Partnership Matters, Much Less to Inspect Partnership
Books
IN CASE OF DISSOLUTION: Assignee is entitled to receive
his assignor’s interest and may require an account from the
date only of the last account agreed to by all the partners.
e. Other proprietary rights of partners
i. Right to inspect partnership books and records
Art. 1805. The partnership books shall be kept, subject to any
agreement between the partners, at the principal place of
business of the partnership, and every partner shall at any
reasonable hour have access to and may inspect and copy
any of them.
ii. Right to full information
Art. 1806. Partners shall render on demand true and full
information of all things affecting the partnership to any partner
or the legal representative of any deceased partner or of any
partner under legal disability.
iii. Right to formal accounting
Art. 1809. Any partner shall have the right to a formal account
as to partnership affairs:
(1) If he is wrongfully excluded from the partnership business
or possession of its property by his co-partners;
(2) If the right exists under the terms of any agreement;
(3) As provided by article 1807;
(4) Whenever other circumstances render it just and
reasonable.
Art. 1807. Every partner must account to the partnership for
any benefit, and hold as trustee for it any profits derived by
him without the consent of the other partners from any
transaction connected with the formation, conduct, or
liquidation of the partnership or from any use by him of its
property
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 Agency, Trust, and Partnership
Atty. Jose Cochingyan
iv. Right to reimbursement for advances
Art. 1796. The partnership shall be responsible to every
partner for the amounts he may have disbursed on behalf of
the partnership and for the corresponding interest, from the
time the expense are made; it shall also answer to each
partner for the obligations he may have contracted in good
faith in the interest of the partnership business, and for risks in
consequence of its management.
v. Delectus Personae: Right to Dissolve the partnership
Art. 1830. Dissolution is caused: (2) In contravention of the
agreement between the partners, where the circumstances do
not permit a dissolution under any other provision of this
article, by the express will of any partner at any time;
3. Obligations of partners to the partnership
a. Obligation to contribute to the common fund
 Every Partner Is a Debtor of the Partnership for Whatever He
Has Promised to Contribute to the Common Fund
Art. 1786. Every partner is a debtor of the partnership for
whatever he may have promised to contribute thereto.
He shall also be bound for warranty in case of eviction with
regard to specific and determinate things which he may have
contributed to the partnership, in the same cases and in the
same manner as the vendor is bound with respect to the vendee.
He shall also be liable for the fruits thereof from the time they
should have been delivered, without the need of any demand.
 Unless There Is a Stipulation to the Contrary, Partners Shall
Contribute Equal Shares to the Partnership Capital
Art. 1790. Unless there is a stipulation to the contrary, the
partners shall contribute equal shares to the capital of the
partnership.
b. When bound to contribute money: liable to the partnership for
interest and damages from the time contribution became due
Art. 1788. A partner who has undertaken to contribute a sum of
money and fails to do so becomes a debtor for the interest and
damages from the time he should have complied with his
obligation.
The same rule applies to any amount he may have taken from the
partnership coffers, and his liability shall begin from the time he
converted the amount to his own use.
c. When bound to contribute property
i. When property contributed is specific or determinate
Art. 1786. Every partner is a debtor of the partnership for
whatever he may have promised to contribute thereto.
He shall also be bound for warranty in case of eviction with
regard to specific and determinate things which he may have
contributed to the partnership, in the same cases and in the
same manner as the vendor is bound with respect to the
vendee. He shall also be liable for the fruits thereof from the
time they should have been delivered, without the need of any
demand.
 Bound to the warranty against eviction
 Liable to the fruits thereof from the time they should
have been delivered without need of demand
ii. When property contributed are fungible or cannot be kept
without deterioration: Risk of loss borne by the
partnership
iii. When contribution in goods:
 Must be appraised to establish value; subsequent
change of value for the partnership’s account
Art. 1787. When the capital or a part thereof which a partner
is bound to contribute consists of goods, their appraisal
must be made in the manner prescribed in the contract of
partnership, and in the absence of stipulation, it shall be
made by experts chosen by the partners, and according to
current prices, the subsequent changes thereof being for
account of the partnership.
Art. 1795. The risk of specific and determinate things, which
are not fungible, contributed to the partnership so that only
their use and fruits may be for the common benefit, shall be
borne by the partner who owns them.
If the things contribute are fungible, or cannot be kept
without deteriorating, or if they were contributed to be sold,
the risk shall be borne by the partnership. In the absence of
stipulation, the risk of the things brought and appraised in
the inventory, shall also be borne by the partnership, and in
such case the claim shall be limited to the value at which
they were appraised.
iv. When real property contributed:
 Inventory of immovable property must be made and
attached to articles of partnership registered with the
SEC
Art. 1772. Every contract of partnership having a capital of
three thousand pesos or more, in money or property, shall
appear in a public instrument, which must be recorded in
the Office of the Securities and Exchange Commission.
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.
Art. 1773. A contract of partnership is void, whenever
immovable property is contributed thereto, if an inventory of
said property is not made, signed by the parties, and
attached to the public instrument.
v. Art. 1791: Additional contribution in case of imminent
loss: unless, otherwise agreed, partner who refuses to
contribute additional capital, except an industrial partner,
to save the venture shall be obliged to sell his interest to
other partners
Art. 1791. If there is no agreement to the contrary, in case of
an imminent loss of the business of the partnership, any
partner who refuses to contribute an additional share to the
capital, except an industrial partner, to save the venture, shall
he obliged to sell his interest to the other partners
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