Agency, Trusts, Partnerships & Joint Ventures Atty. Jose U. Cochingyan III

AGENCY, TRUSTS, PARTNERSHIPS & JOINT VENTURES
Atty. Jose U. Cochingyan III

B. RESULTING TRUSTS Art. 1452 If two or more persons agree to purchase property and
by common consent the legal title is taken in the name of one
1. Purchase of Property Where Beneficial Title Constituted in of them for the benefit of all, a trust is created by force of law
One Person, But Price Paid by Another Person (Art. 1448) in favor of the others in proportion to the interest of each.
Art. 1448 There is an implied trust when property is sold, and the The second co-owner serves as a legal trustee insofar as the
legal estate is granted to one party but the price is paid by proportionate share of the first co-owner is concerned.
another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the 5. Property Conveyed to a Person Merely as Holder Thereof
beneficiary. However, if the person to whom the title is (Art. 1453)  
conveyed is a child, legitimate or illegitimate, of the one paying
the price of the sale, no trust is implied by law, it being Art. 1453 When property is conveyed to a person in reliance upon
disputably presumed that there is a gift in favor of the child. his declared intention to hold it for, or transfer it to another or
the grantor, there is an implied trust in favor of the person
2. Purchase of Property Where Title Is Placed in the Name of whose benefit is contemplated.
Person Who Loaned the Purchase Price As Security for the
Loan (Art. 1450) – Equitable Mortgage   6. Donation of Property to a Donee Who Shall Have No
Beneficial Title (Art. 1449)  
Art. 1450 If the price of a sale of property is loaned or paid by one
person for the benefit of another and the conveyance is made Art. 1449 There is also an implied trust when a donation is made
to the lender or payor to secure the payment of the debt, a trust to a person but it appears that although the legal estate is
arises by operation of law in favor of the person to whom the transmitted to the donee, he nevertheless is either to have no
money is loaned or for whom its is paid. The latter may redeem beneficial interest or only a part thereof.
the property and compel a conveyance thereof to him.
Adaza v. CA: Where father formally donates a piece of land in the
3. When Absolute Conveyance of Property Effected Only as a name of the daughter with verbal notice that the other half would
Means to Secure Performance of Obligation of the Grantor be held by her for the benefit of a younger brother, coupled with
(Art. 1454) – Equitable Mortgage   a deed of waiver subsequently executed by the daughter that she
held the land for the common benefit of her brother, created an
Art. 1454 If an absolute conveyance of property is made in order implied trust in favor of the brother under Art.1449[not express
to secure the performance of an obligation of the grantor trust?].
toward the grantee, a trust by virtue of law is established. If the
fulfillment of the obligation is offered by the grantor when it Prescription will not mechanically apply between siblings
becomes due, he may demand the reconveyance of the 7. Land Passes By Succession, But Heir Places Title in a
property to him. Trustee (Art. 1451)  
4. Several Persons Jointly Purchase Property, But Place Title Art. 1451 When land passes by succession to any person and he
In One of Them (Art. 1452)   causes the legal title to be put in the name of another, a trust
Talisa Mari D. Dela Rosa | ALS 2E 2022 1

is established by implication of law for the benefit of the true which meant to transfer the property back to the principal under
owner. the terms and conditions offered to the original owner.
C. CONSTRUCTIVE TRUSTS There was a fiduciary relationship arising from an employer-

employee and principal-agent relationship.
1. General Doctrines for Constructive Trusts
The Court saw a trust under the concept of quasi-contract.
Diaz v. Gorricho and Aguado: In constructive trusts there is neither
promise nor fiduciary relations; the ― trusteeǁ does not recognize Hernandez v. Hernandez: Relation of agent to his principal is
any trust, with no intent to hold property for the beneficiary. fiduciary and, an agent is estopped from acquiring or asserting a
title adverse to that of the principal—a position analogous to that
• By operation of law. Arises contrary to intention and in invitum, of a trustee—he cannot be allowed to create in himself an interest
against one who, by fraud, actual or constructive, by duress or in opposition to that of his principal or cestuique trust.
abuse of confidence, by commission of wrong or by any form of
unconscionable conduct, artifice, concealment or questionable Compare this case with Ticong v. Malim
means, or who in any way against equity and good conscience,
has obtained or holds the legal right to property which he ought 3. When Property Acquired Through Mistake or Fraud (Art.
not, in equity and good conscience, hold and enjoy.   1456)
• Fictions of equity that courts use as devices to remedy any
situation in which the holder of the legal title, the purported Art. 1456 If property is acquired through mistake or fraud, the
trustee, should not, in good conscience, retain title over a person obtaining it is, by force of law, considered a trustee of
property.   an implied trust for the benefit of the person from whom the
property comes.
2. When a Fiduciary Uses Funds or Property Held in Trust to
Purchase Property Which Is Registered in Fiduciary’s Name Constructive trust can be done by the trustor or the trustee
or a Third Party (Art. 1455)  
IV. RULES OF PRESCRIPTION ON TRUSTS
Art. 1455 When any trustee, guardian or other person holding a
1. Summary of rulings for express trusts
fiduciary relationship uses trust funds for the purchase of
property and causes the conveyance to be made to him or to
GENERAL RULE: Express trusts are generally imprescriptible: The
a third person, a trust is established by operation of law in favor
express undertaking to hold title for the benefit of the beneficiary
of the person to whom the funds belong.
disables the trustee from acquiring for himself the property
committed to his management or custody.
Sing Juco and Sing Bengco v. Sunyantong and Llorente: A
confidential employee who, knowing that his principal was EXCEPTION: For acquisitive prescription to bar recovery against the
negotiating with the owner of some land for the purchase thereof, trustee, it must be shown that:
surreptitiously succeeds in buying it in the name of his wife, (1) Trustee performed unequivocal acts of repudiation to oust
commits an act of disloyalty and infidelity to his principal, whereby
cestuique trust;  
he becomes liable, among other things, for the damages caused,

(2) Such positive acts of repudiation have been made known to the to his right to enforce the trust, prefer the trust to persist and
cestuique trust;   demand no conveyance from the trustee.
(3) Evidence is clear and conclusive: a clear repudiation of the trust
duly communicated to the beneficiary: A trustee who obtains a EXCEPTION: In resulting trusts, acquisitive prescription run in favor
Torrens title over the property held in trust for another cannot of the trustee only when he repudiates expressly the trusts and
repudiate the trust by relying on the registration. The rule requires makes known such repudiation to the beneficiary, and there is a
a clear repudiation of the trust duly communicated to the lapse of 10 years from:
beneficiary, which can only cover where respondents filed the (1) Notice of repudiation served upon the beneficiary;
petition for reconstitution seeking registration only in his name (2) Registration of title in name of trustee that constitutes a clear act
(Heirs of Tranquilino Labiste v. Heirs of Jose Labiste)  of repudiation: Such as registration by one of the co-owners of
title in his sole name in fraud of the other co-owners (which makes
(4) Lapse of 10 years after repudiation. (Escay v. Court of it a constructive trust).
Appeals)
3. Summary of rulings for constructive trusts
HOWEVER: Though prescription does not run between the trustee
and cestuique trust as long as the trust relations subsist, it runs GENERAL RULE: In constructive trusts, laches constitutes a bar to
between against the trustee and in favor of a third person who actions to enforce the trust, without need of prior repudiation, and
holds actual, open, public and continuous possession adverse to that acquisitive prescription runs in favor of the trustee after 10
the trust, of land for over 10 years. years from the registration of title in trustee‘s name.  
There is repudiation of an express trust when trustee fails to deliver In constructive trusts, there is neither promise nor fiduciary relation;
the title to the land in the beneficiary name, as was the main the so-called trustee does not recognize any trust and has no
obligations assumed, and his heirs subsequently sold the intent to hold for the beneficiary; therefore, the beneficiary is not
property to a third party who is not privy thereto justified in delaying action to recover his property; it is his fault if
he delays; hence, he may be estopped by his own laches.
2. Summary of rulings for resulting trusts
EXCEPTIONS: The acquisitive prescription of 10 years upon
GENERAL RULE: As a rule, resulting trusts do not prescribe except registration of title does not apply to favor the supposed “trustee”
when the trustee repudiates the trust. Further, the action to in the following cases:
reconvey does not prescribe so long as the property stands in the (1) Where Trustee Recognizes the Rights of CestuiQue Trust–
name of the trustee. To allow prescription would be tantamount Prescription may not apply by mere registration of the title in the
to allowing a trustee to acquire title against his principal and true name of the trustee, where the trustee formally recognized the
owner. Tong v. Go Tiat Kun beneficial right of the cestuique trust. xGeronimo and Isidro v.
Nava and Aquino, 105 Phil. 145 (1959); xAdaza v. Court of
The imprescriptibility of the action to recover applies to resulting. Appeals, 171 SCRA 369 (1989).  
trusts as long as the trustee has not repudiated the trust. The
continuous recognition of a resulting trust, therefore, precludes (2) When the CestuiQue Trust Is a Minor – When the act of
any defense of laches in a suit to declare and enforce the trust. repudiation of the trustee was effected at the time the cestuique
After all, the beneficiary in a resulting trust may, without prejudice trust was still a minor, then such act does not prejudice the latter:
―We ... are unable to see how a minor with whom another is in

trust relation can be prejudiced by repudiation of the trustee to seek the declaration of nullity is imprescriptible. xMacababbad
addressed to him by the person who is subject to the trust v. Masirag, 576 SCRA 70 (2009).90  
obligation. xCastro v. Castro, 57 Phil. 675 (1932).  
(6) Where Property Is in the Hands of an Innocent Purchaser–
(3) When CestuiQue Trust Is a Close Relation of Trustee–The Aggrieved party may no longer file an action for reconveyance
existence of a confidential relationship based upon consanguinity based on a constructive trust, when the property has been
is an important circumstance for consideration; hence, laches acquired by an innocent purchaser for value. xKhoemani v. Heirs
being rooted in equity, is not to be applied mechanically as of Anastacio Trinidad, 540 SCRA 83 (2007).  
between near relatives. xAdaza v. Court of Appeals, 171 SCRA
369 (1989).87  
(4) Where CestuiQue Trust Is in Possession of Trust Property – An

action for reconveyance based is imprescriptible if the person
enforcing the trust is in possession of the property—it is really an
action to quiet title, which does not prescribe.
Reason: One in actual possession claiming to be its owner may wait

until his possession is disturbed or his title is attacked before
taking steps to vindicate his right. His undisturbed possession
gives him a continuing right to seek the aid of a court of equity to
ascertain and determine the nature of the adverse claim of a third
party and its effect on his own title, which right can be claimed
only by one who is in possession. xGabutan v. Nacalaban, 795
SCRA 115 (2016).88  
Given the falsity of the ESW, it becomes apparent that petitioner

obtained the registration through fraud. This wrongful registration
gives occasion to the creation of an implied or constructive trust
under Art.1456. An action for reconveyance based on an implied
trust generally prescribes in ten years. However, if the plaintiff
remains in possession of the property, the prescriptive period to
recover title of possession does not run against him. In such case,
his action is deemed in the nature of a quieting of title, an action
that is imprescriptible. xOcampo v. Ocampo, Sr.,830 SCRA 418
(2017).  
(5) Where Trustee’s Title Is Void– Where signatures of the

petitioners, being forced heirs, in the extrajudicial settlement with
sale have been forged, although title to the land had been
registered in the name of the buyer, contract is void, and action

PARTNERSHIPS Art. 1784 A partnership begins from the moment of the execution
of the contract, unless it is otherwise stipulated. (1679)
I. HISTORICAL BACKGROUND
b. Separate juridical personality (Art. 1768)
1. Old branches of partnership law
• Civil partnerships: not pursued in the regular course of business Art. 1768 The partnership has a juridical personality separate and
• Commercial partnerships: in pursuit of industry or commerce; distinct from that of each of the partners, even in case of failure
characterized by habituality or “pursuit in the regular course of to comply with the requirements of article 1772, first paragraph.
business” (n)
a. Commercial Partnerships Were Deemed to Be, and Subject c. Underlying business enterprise as the primary objective
to Code of Commerce Provisions for, Merchants
b. Registration Key for Commercial Partnerships Coming into Yu v. NLRC: When original partners sell their equity interests, the
Existence (Arts. 118-119, Code of Commerce); While Mere original juridical person was extinguished and the new set of
Consent Perfected the Civil Partnership   partners constituted a new partnership arrangement with a new
c. On Partnership Debts: Commercial Partners Were Solidarily juridical personality. Yet the underlying business enterprise
But Subsidiarily Liable; While Civil Partners Were Primarily remained the same between the two sets of investors and the
But Only Jointly Liable   succession of liability rule pertaining to the underlying business
enterprise must be respected  
II. NATURE AND ATTRIBUTES OF THE PARTNERSHIP
3. Essential attributes of the partnership
1. Definition (Art. 1767) a. Foremost, it’s a contractual relationship (Art. 1767, 1771, and
1784 – see above)
Art. 1767 By the contract of partnership two or more persons bind b. Bounded by attribute of “mutual agency” (Arts. 1803[1],
themselves to contribute money, property, or industry to a 1818, 1819, 1821 to 1823)  
common fund, with the intention of dividing the profits among
themselves. Art. 1803[1] When the manner of management has not been
agreed upon, the following rules shall be observed: 
Two or more persons may also form a partnership for the exercise
of a profession. (1665a) (1) All the partners shall be considered agents and whatever any
one of them may do alone shall bind the partnership, without
2. Tri-level existence/legal relationships in a partnership prejudice to the provisions of article 1801.
setting No agreement at all – anybody can act. But should a partner
a. Primarily a contractual relationship (Art. 1767, 1771, & 1784) disagree with that act, then they vote, then if there’s a tie, it shall
be decided by the controlling interest. *ANYONE CAN ACT FOR
Art. 1771 A partnership may be constituted in any form, except ANYTHING.
where immovable property or real rights are contributed
thereto, in which case a public instrument shall be necessary. *the entire article applies only WHEN THERE IS NO MANAGER
(1667a)

Art. 1818 Every partner is an agent of the partnership for the Art. 1819 Where title to real property is in the partnership
purpose of its business, and the act of every partner, including name, any partner may convey title to such property by a
the execution in the partnership name of any instrument, for conveyance executed in the partnership name; but the
apparently carrying on in the usual way the business of the partnership may recover such property unless the partner's act
partnership of which he is a member binds the partnership, binds the partnership under the provisions of the first
unless the partner so acting has in fact no authority to act paragraph of article 1818, or unless such property has been
for the partnership in the particular matter, and the person conveyed by the grantee or a person claiming through such
with whom he is dealing has knowledge of the fact that he grantee to a holder for value without knowledge that the
has no such authority. partner, in making the conveyance, has exceeded his
An act of a partner which is not apparently for the carrying on of authority.
business of the partnership in the usual way does not bind the
partnership unless authorized by the other partners. Where title to real property is in the name of the partnership,
Except when authorized by the other partners or unless they have a conveyance executed by a partner, in his own name, passes
abandoned the business, one or more but less than all the the equitable interest of the partnership, provided the act is one
partners have no authority to: within the authority of the partner under the provisions of the
first paragraph of article 1818.
(1) Assign the partnership property in trust for creditors or on the
assignee's promise to pay the debts of the partnership; Where title to real property is in the name of one or more but
(2) Dispose of the good-will of the business;  not all the partners, and the record does not disclose the right
(3) Do any other act which would make it impossible to carry on of the partnership, the partners in whose name the title stands
the ordinary business of a partnership;  may convey title to such property, but the partnership may
(4) Confess a judgment; recover such property if the partners' act does not bind the
(5) Enter into a compromise concerning a partnership claim or partnership under the provisions of the first paragraph of article
liability; 1818, unless the purchaser or his assignee, is a holder for
(6) Submit a partnership claim or liability to arbitration;  value, without knowledge.
(7) Renounce a claim of the partnership.
Where the title to real property is in the name of one or more
No act of a partner in contravention of a restriction on authority or all the partners, or in a third person in trust for the
shall bind the partnership to persons having knowledge of the partnership, a conveyance executed by a partner in the
restriction. (n) 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
*Art. 1898!!!!
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. (n)
JBL Reyes: problem with the first paragraph is it did not take into
consideration the provisions of 1803

In the name of Partner in the Conveyance passes the
Under whose Conveyed by Effect: one or more or partnership equitable interest of the
name whom all the partners, name or in his partnership, provided the act is
Partnership Any partner (by partnership may recover such or in a third own name one within the authority of the
name conveyance property unless the partner's person in trust partner under the provisions of
executed in act binds the partnership under the first paragraph of article
partnership the provisions of the first 1818.
name) paragraph of article 1818
In the name of By all Conveyance passes all their rights
or unless such property has all the partners in such property
been conveyed by the grantee
or a person claiming through
such grantee to a holder for
value without knowledge that
Art. 1821 Notice to any partner of any matter relating to
the partner, in making the
partnership affairs, and the knowledge of the partner acting
conveyance, has exceeded his
in the particular matter, acquired while a partner or then
authority.
present to his mind, and the knowledge of any other partner
Name of the Partner in his Conveyance passes the
who reasonably could and should have communicated it to the
partnership own name equitable interest of the acting partner, operate as notice to or knowledge of the
partnership, provided the act is partnership, except in the case of fraud on the partnership,
one within the authority of the committed by or with the consent of that partner. (n)
partner under the provisions of
the first paragraph of article
Art. 1822 Where, by any wrongful act or omission of any partner
1818.
acting in the ordinary course of the business of the partnership
or with the authority of his 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. (n)
Name of one or Partner in The partnership may recover
more but not all whose name such property if the partners' act Art. 1823 The partnership is bound to make good the loss: 
partners and the title stands does not bind the partnership
the record may convey under the provisions of the first (1) Where one partner acting within the scope of his apparent
does not title to such paragraph of article 1818, authority receives money or property of a third person and
disclose the property unless the purchaser or his misapplies it; and
right of the assignee, is a holder for value, (2) Where the partnership in the course of its business receives
partnership without knowledge. 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. (n)

c. Bounded by attribute of “delectus personae” separate and distinct from that of each shareholder, partner or
i. Assignment of share does NOT make assignee a partner (Art member (35a)
1804 and 1813)
Art. 1768 The partnership has a juridical personality separate and
Art. 1804 Every partner may associate another person with him in distinct from that of each of the partners, even in case of failure to
his share, but the associate shall not be admitted into the comply with the requirements of article 1772 first paragraph. (n)
partnership without the consent of all the other partners, even if
the partner having an associate should be a manager. (1696) Art. 1774 Any immovable property or an interest therein may be
acquired in the partnership name. Title so acquired can be
Art. 1813 A conveyance by a partner of his whole interest in the conveyed only in the partnership name. (n)
partnership does not of itself dissolve the partnership, or, as
against the other partners in the absence of agreement, entitle e. Yet, partners are “unlimitedly liable” to partnership debts
the assignee, during the continuance of the partnership, to (Art. 1816, 1817, 1824, 1839[4] and [7])
interfere in the management or administration of the partnership
business or affairs, or to require any information or account of Art. 1816 All partners, including industrial ones, shall be liable pro
partnership transactions, or to inspect the partnership books; but rata with all their property and after all the partnership assets
it merely entitles the assignee to receive in accordance with his have been exhausted, for the contracts which may be entered
contract the profits to which the assigning partner would into in the name and for the account of the partnership, under its
otherwise be entitled. However, in case of fraud in the signature and by a person authorized to act for the partnership.
management of the partnership, the assignee may avail himself However, any partner may enter into a separate obligation to
of the usual remedies. perform a partnership contract. (n)
*in a general partnership, the liabilities of the partners are liable “pro
In case of a dissolution of the partnership, the assignee is entitled rata”
to receive his assignor's interest and may require an account
from the date only of the last account agreed to by all the Art. 1817 Any stipulation against the liability laid down in the
partners. (n) preceding article shall be void, except as among the partners.
(n)
Ortega v. CA: The right to choose with whom to associate himself
is the very foundation and essence of the partnership. Its Art. 1824 All partners are liable solidarily with the partnership for
continued existence is, in turn, dependent on the constancy of everything chargeable to the partnership under articles 1822
that mutual resolve, along with each partner‘s capability to give it, and 1823. (n)
and the absence of a cause for dissolution provided by the law ??
itself
Art. 1839 In settling accounts between the partners after
d. Albeit, enterprise granted separate juridical personality (Art. dissolution, the following rules shall be observed, subject to any
44[3], 1768, 1774) agreement to the contrary:
Art. 44[3] The following are juridical persons:
(3) corporations, partnerships and associations for private interest
or purpose to which the law grants a juridical personality,

1
[4] The partners shall contribute, as provided by article 1797 , the Art. 1780 A universal partnership of profits comprises all that the
amount necessary to satisfy the liabilities. partners may acquire by their industry or work during the
[7] The individual property of a deceased partner shall be liable for existence of the partnership.
the contributions specified in No. 4. Movable or immovable property which each of the partners may
possess at the time of the celebration of the contract shall
4. Kinds of partnerships continue to pertain exclusively to each, only the usufruct passing
a. As to object (Art. 1776, par. 1) to the partnership. (1675)
Art. 1776 As to its object, a partnership is either universal or - Deemed a “universal partnership of profits” when articles do not
particular. As regards the liability of the partners, a partnership specify the partnership’s nature (Art. 1781)
may be general or limited. (1671a)  Art. 1781 Articles of universal partnership, entered into without
specification of its nature, only constitute a universal partnership
of profits. (1676)
i. Universal partnership (Art. 1777 to 1782)
Art. 1777 A universal partnership may refer to all the present - Persons who are prohibited from giving each other any donation
property or to all the profits. (1672) or advantage cannot enter into a universal partnership (Art. 1782)
Art. 1782 Persons who are prohibited from giving each other any
Art. 1778 A partnership of all present property is that in which the donation or advantage cannot enter into universal partnership.
partners contribute all the property which actually belongs to (1677)
them to a common fund, with the intention of dividing the same Art. 739 à Art. 1027 applies to universal partnerships
among themselves, as well as all the profits which they may
acquire therewith. (1673) ii. Particular partnership (Art. 1783)
Art. 1783 A particular partnership has for its object determinate
Art. 1779 In a universal partnership of all present property, the things, their use or fruits, or a specific undertaking, or the
property which belonged to each of the partners at the time of exercise of a profession or vocation. (1678)
the constitution of the partnership, becomes the common
property of all the partners, as well as all the profits which they Ø Usefulness of such distinction:
may acquire therewith. Lyons v. Rosenstock: “Where two individuals had been jointly
associated in various real estate deals, one of them, while the
A stipulation for the common enjoyment of any other profits may other was away, bought a valuable piece of property with a view
also be made; but the property which the partners may acquire to the promotion of a suburban development, and as he expected
subsequently by inheritance, legacy, or donation cannot be that his absent former associate would come into this deal and
included in such stipulation, except the fruits thereof. (1674a) contribute some capital to the purchase and development of the
property, he subjected a piece of mortgaged property owned by
them jointly to a second mortgage, to secure against loss a surety
company which had been induced to sign a note with the active

1The losses and profits shall be distributed in conformity with the agreement. If only the share of each the industrial partner shall receive such share as may be just and equitable under the circumstances. If
partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion. besides his services he has contributed capital, he shall also receive a share in the profits in proportion to
In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to his capital.
what he may have contributed, but the industrial partner shall not be liable for the losses. As for the profits,

promoter to secure a loan necessary to complete the first Art. 1776, par. 2
payment on the property purchased. After the second individual As regards the liability of the partners, a partnership may be general
returned to Manila he consented for this second mortgage (which or limited. (1671a) 
had been executed under a sufficient power of attorney) to remain
upon the property until it was paid off, as was presently done. ii. Limited partnership (sociedad en comandita) (Art. 1843 to 1867)
Held, that the use to which the joint property was thus subjected 5. COMPARED WITH OTHER MEDIA OF DOING BUSINESS
did not create a trust in favor of the second individual, with the a. Co-ownership (Art. 484 to 486)
effect of making him a co-partner in the ownership of the property Art. 484 There is co-ownership whenever the ownership of an
purchased as aforesaid.” undivided thing or right belongs to different persons.
*If Elser had used any money actually belonging to Lyons in this deal, In default of contracts, or of special provisions, co-ownership shall
he would under article 1724 of the Civil Code and article 264 of be governed by the provisions of this Title. (392)
the Code of Commerce, be obligated to pay interest upon the
money so applied to his own use Art. 485 The share of the co-owners, in the benefits as well as in
the charges, shall be proportional to their respective interests.
*A particular partnership is only for a single undertaking – implying Any stipulation in a contract to the contrary shall be void.
that if there are several transactions of the same kind, it’s not The portions belonging to the co-owners in the co-ownership shall
anymore particular. be presumed equal, unless the contrary is proved. (393a)
b. As to duration (Art. 1785)
Art. 486 Each co-owner may use the thing owned in common,
provided he does so in accordance with the purpose for which it
Art. 1785 When a partnership for a fixed term or particular is intended and in such a way as not to injure the interest of the
undertaking is continued after the termination of such term or co-ownership or prevent the other co-owners from using it
particular undertaking without any express agreement, the rights according to their rights. The purpose of the co-ownership may
and duties of the partners remain the same as they were at such be changed by agreement, express or implied. (394a)
termination, so far as is consistent with a partnership at will.
b. Sole proprietorship
A continuation of the business by the partners or such of them as There is no separate juridical personality.
habitually acted therein during the term, without any settlement c. Agency
or liquidation of the partnership affairs, is prima facie evidence d. Business trust
of a continuation of the partnership. (n)
Utilizes the trust concept first recognized by equity to create an
unincorporated business association commonly known as the
i. Partnership with fixed term Massachusetts Trust. (check phone for slide)
ii. Partnership with particular undertaking e. Corporations
iii. Partnership at will f. Cooperatives
Recall bargaining elements: risk of loss, return, control & duration
III. PARTNERSHIP AS PRIMARILY A CONTRACTUAL RELATIONSHIP
c. As to the nature and liabilities of partners 1. Essential elements and purpose of the partnership
i. General partnership (Art. 1776, par. 2) a. CONSENT: partnership must necessarily arise from a
contractual relationship

Ø Persons who are not partners to one another are not partners b. SUBJECT MATTER: ―Partners Undertake to Jointly Pursue a
as to third persons (Art. 1769[1]) Business Enterprise (Art. 1767), through their Agreements to:
Art. 1769 In determining whether a partnership exists, these rules shall Art. 1767 By the contract of partnership two or more persons bind
apply: (1) Except as provided by article 1825, persons who are not themselves to contribute money, property, or industry to a
partners as common fund, with the intention of dividing the profits among
to each other are not partners as to third persons; themselves.
Ø EXCEPT: Partnership by estoppel (Art. 1825) Two or more persons may also form a partnership for the exercise
Art. 1825 When a person, by words spoken or written or by of a profession. (1665a)
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 (i) Contribute to a Common Fund; and
persons to whom such representation has been made, who has, (ii) Divide the Profits and Losses; EXCEPT: A Profession al
on the faith of such representation, given credit to the actual or Partnership  
apparent partnership, and if he has made such representation or
consented to its being made in a public manner he is liable to such Ø Partnership must be established for common benefit of parties
person, whether the representation has or has not been made or (Art. 1770)
communicated to such person so giving credit by or with the Art. 1770 A partnership must have a lawful object or purpose, and
knowledge of the apparent partner making the representation or must be established for the common benefit or interest of the
consenting to its being made: partners.
(1) When a partnership liability results, he is liable as though he When an unlawful partnership is dissolved by a judicial decree, the
were an actual member of the partnership; profits shall be confiscated in favor of the State, without prejudice to
the provisions of the Penal Code governing the confiscation of the
(2) When no partnership liability results, he is liable pro rata with instruments and effects of a crime. (1666a)
the other persons, if any, so consenting to the contract or
representation as to incur liability, otherwise separately.
c. CONSIDERATION: undertakings to contribute money, property
When a person has been thus represented to be a partner in an or industry to a common fund (Art. 1767 – see codal above)
existing partnership, or with one or more persons not actual
partners, he is an agent of the persons consenting to such d. Rules on determining perfected partnership (Art. 1769)
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. (n)

Art. 1769 In determining whether a partnership exists, these rules (4) When Entitlement to Net Profits Does Not Create
shall apply:  Presumption of Partnership:
Ø As installment payments of debt or interest thereof
(1) Except as provided by article 1825, persons who are not Ø As wages of an employee
partners as to each other are not partners as to third persons; Ø As rents payments to a landlord
Ø As annuity to a widow or representative of deceased partner
(2) Co-ownership or co-possession does not of itself establish a Ø As the consideration on the sale of goodwill or other
partnership, whether such-co-owners or co-possessors do or do not property
share any profits made by the use of the property;
2. Essential characteristics of the contract of partnership (Art.
(3) The sharing of gross returns does not of itself establish a 1767)
partnership, whether or not the persons sharing them have a joint a. Nominate and principal
or common right or interest in any property from which the returns b. Consensual
are derived; c. Onerous and commutative
d. Bilateral and reciprocal
(4) The receipt by a person of a share of the profits of a e. Preparatory and progressive
business is prima facie evidence that he is a partner in the
business, but no such inference shall be drawn if such profits IV. PARTNERSHIP AS A JURIDICAL PERSON
were received in payment: Art. 44(3) The following are juridical persons: 
(a) As a debt by installments or otherwise; (3) Corporations, partnerships and associations for private interest
or purpose to which the law grants a juridical personality, separate
(b) As wages of an employee or rent to a landlord; and distinct from that of each shareholder, partner or member. (35a)
(c) As an annuity to a widow or representative of a deceased Art. 45 Juridical persons mentioned in Nos. 1 and 2 of the preceding
partner; article are governed by the laws creating or recognizing them.
(d) As interest on a loan, though the amount of payment vary with Private corporations are regulated by laws of general application on
the profits of the business; the subject.
(e) As the consideration for the sale of a goodwill of a business or Partnerships and associations for private interest or purpose are
other property by installments or otherwise.(n) governed by the provisions of this Code concerning partnerships.
(36 and 37a)
(1) Co-Ownership or Co-Possession Does Not Itself Establish a Art. 1768 The partnership has a juridical personality separate and
Partnership, Even When Profits Are Shared distinct from that of each of the partners, even in case of failure to
(2) Sharing in the Gross Return/Receipts of a Business Does comply with the requirements of article 1772, first paragraph. (n)
Not Create Partnership
(3) Receipt by a Person of a Share of the Profits of a Business Art. 1784 A partnership begins from the moment of the execution of
the contract, unless it is otherwise stipulated. (1679)

property for any other purpose without the consent of his
1. Consequences of partnership being a juridical person: partners;
a. Entity has legal capacity to enter into contracts and incur (2) A partner's right in specific partnership property is not
obligations (Art. 46) assignable except in connection with the assignment of
Art. 46 Juridical persons may acquire and possess property of all rights of all the partners in the same property;
kinds, as well as incur obligations and bring civil or criminal actions, (3) A partner's right in specific partnership property is not
in conformity with the laws and regulations of their organization. subject to attachment or execution, except on a claim
(38a) against the partnership. When partnership property is
attached for a partnership debt the partners, or any of them,
b. It may acquire properties in its own name (Art. 46 and 1774) or the representatives of a deceased partner, cannot claim
Art. 1774 Any immovable property or an interest therein may be any right under the homestead or exemption laws;
acquired in the partnership name. Title so acquired can be (4) A partner's right in specific partnership property is not
conveyed only in the partnership name. (n) subject to legal support under article 291. (n)
c. It may sue and be sued in its firm name (Art. 46 – see codal DISTINGUISH: specific partnership property =/= interest in the
above) partnership
d. It would have domicile: Place where legal representation is
established or where it exercises its principal functions (Art. b. Partners may individually dispose of real property of the
51) partnership even when in partnership name (Art. 1819)
Art. 51 When the law creating or recognizing them, or any other Art. 1819 Where title to real property is in the partnership name, any
provision does not fix the domicile of juridical persons, the same partner may convey title to such property by a conveyance executed
shall be understood to be the place where their legal representation in the partnership name; but the partnership may recover such
is established or where they exercise their principal functions. (41a) property unless the partner's act binds the partnership under the
provisions of the first paragraph of article 1818, or unless such
e. It is taxed as a corporate taxpayer property has been conveyed by the grantee or a person claiming
f. It may be declared insolvent even if the partners are not through such grantee to a holder for value without knowledge that
g. Partnership is a person entitled to constitutional rights the partner, in making the conveyance, has exceeded his authority.
2. Provisions contravening the attribute of separate juridical Where title to real property is in the name of the partnership, a
personality conveyance executed by a partner, in his own name, passes the
a. Partners are co-owners of partnership properties (Art. 1811) equitable interest of the partnership, provided the act is one within
Art. 1811 A partner is co-owner with his partners of specific the authority of the partner under the provisions of the first
partnership property. The incidents of this co-ownership are such paragraph of article 1818.
that:
Where title to real property is in the name of one or more but not all
(1) A partner, subject to the provisions of this Title and to any the partners, and the record does not disclose the right of the
agreement between the partners, has an equal right with partnership, the partners in whose name the title stands may
his partners to possess specific partnership property for convey title to such property, but the partnership may recover such
partnership purposes; but he has no right to possess 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. c. EXCEPT: Where immovable property or real rights are
contributed
Where the title to real property is in the name of one or more or all Ø Must be in a public instrument (Art. 1771 – see above)
the partners, or in a third person in trust for the partnership, a
conveyance executed by a partner in the partnership name, or in Ø Would be void if inventory of the property is not made,
his own name, passes the equitable interest of the partnership, signed by the parties and attached to the public
provided the act is one within the authority of the partner under the instrument (Art. 1773)
provisions of the first paragraph of article 1818. Art. 1773 A contract of partnership is void, whenever immovable
property is contributed thereto, if an inventory of said property is not
Where the title to real property is in the name of all the partners a made, signed by the parties, and attached to the public instrument.
conveyance executed by all the partners passes all their rights in (1668a)
such property. (n)
d. Legal value of the formal requirements for partnerships
c. Partners are personally liable for partnership debts after
exhaustion of partnership assets (Art. 1816, 1817, 1824, 3. Other rules on the constitution of a partnership
1839[4] and [7] – go back to similar provisions above) a. A partnership must have a lawful object or purpose (Art.
1770)
V. FORMALITIES REQUIRED FOR THE CONTRACT OF Art. 1770 A partnership must have a lawful object or purpose, and
PARTNERSHIP must be established for the common benefit or interest of the
partners.
1. A partnership begins from the moment of meeting of the
minds to pursue a business jointly; UNLESS: it is otherwise When an unlawful partnership is dissolved by a judicial decree, the
stipulated (Art. 1784) profits shall be confiscated in favor of the State, without prejudice
Art. 1784 A partnership begins from the moment of the execution of to the provisions of the Penal Code governing the confiscation of
the contract, unless it is otherwise stipulated. (1679) the instruments and effects of a crime. (1666a)
2. Formalities required b. When articles kept secret among members and one member
a. GENERAL RULE: Being consensual in character, a may contract in his own name (Art. 1775)
partnership may be constituted in any form (Art. 1771) Art. 1775 Associations and societies, whose articles are kept secret
Art. 1771 A partnership may be constituted in any form, except among the members, and wherein any one of the members may
where immovable property or real rights are contributed thereto, in contract in his own name with third persons, shall have no juridical
which case a public instrument shall be necessary. (1667a) personality, and shall be governed by the provisions relating to co-
ownership. (1669)
b. EXCEPT: when capital contribution is P3,000 or more
Ø Must appear in public instrument Ø Shall have no separate juridical personality
Ø Registered with SEC Ø Shall be governed by the provisions relating to co-
Ø BUT: failure to comply with requirements shall not affect ownership
the liability of the partnership and its members to third
persons (Art. 1784 – see above) c. Rules on partnership name (Art. 1815)

Art. 1815 Every partnership shall operate under a firm name, which f. Retiring, surviving and continuing
may or may not include the name of one or more of the partners.
2. Property rights
Those who, not being members of the partnership, include their a. Co-ownership rights to specific partnership properties (Art.
names in the firm name, shall be subject to the liability of a partner. 1810 and 1811)
(n)
Art. 1810
Ø Every partnership must operate under a firm name The property rights of a partner are: 
Ø Which may or may not include the name of one or more (1) His rights in specific partnership property;
of the partners (2) His interest in the partnership; and
Ø A person who allows his name to be in the firm name shall (3) His right to participate in the management (n) 
be subject to the liability of a partner
Ø The Use by the Person or Partnership Continuing the Art. 1811
Partnership Business of the Partnership Name, or the Name
of a Decease Partner (Art. 1840, last paragraph): Shall Not of A partner is co-owner with his partners of specific partnership
Itself Make the Individual Property of the Deceased Partner property. The incidents of this co-ownership are such that:
Liable for Any Debts Contracted by Such Person or (1) A partner, subject to the provisions of this Title and to any
Partnership.   agreement between the partners, has an equal right with his
Art. 1840 (last paragraph) The use by the person or partnership partners to possess specific partnership property for partnership
continuing the business of the partnership name, or the name of a purposes; but he has no right to possess such property for any
deceased partner as part thereof, shall not of itself make the other purpose without the consent of his partners;
individual property of the deceased partner liable for any debts (2) A partner's right in specific partnership property is not
contracted by such person or partnership. (n) assignable except in connection with the assignment of rights of
all the partners in the same property;
d. Rule 3.02, Code of Professional Responsibility: “The (3) A partner's right in specific partnership property is not subject
continued use of the name of a deceased partner in a to attachment or execution, except on a claim against the
professional partnership is permissible, provided that the partnership. When partnership property is attached for a
firm indicated in all its communications that said partner is partnership debt the partners, or any of them, or the
deceased” representatives of a deceased partner, cannot claim any right
under the homestead or exemption laws;
VI. PARTNERS’ RIGHTS, POWER & AUTHORITY, DUTIES (4) A partner's right in specific partnership property is not subject
AND OBLIGATIONS to legal support under article 291. (n)
1. Kinds of partners Ø Equal right to possess, but for partnership

a. Industrial and capitalist purposes only
b. Ostensible, nominal and dormant Ø Non-assignable (Art. 1811[2] – see above)
Nominal à “in name” partner Ø Not subject to attachment/execution by partners’
c. Original and incoming separate creditors nor for a partner’s legal
d. Managing and liquidating support obligations (Art. 1811[3] – see above)
e. General and limited

b. Mutual agency: Right to participate in management of (1) Assign the partnership property in trust for creditors or on the
partnership assignee's promise to pay the debts of the partnership;
i. General rule on agency (2) Dispose of the good-will of the business; 
Ø All Partners Shall Be Considered Agents and Whatever (3) Do any other act which would make it impossible to carry on
Any One of Them May Do  Alone Shall Bind the the ordinary business of a partnership; 
Partnership (Arts. 1803[1])   (4) Confess a judgment;
Art. 1803 (5) Enter into a compromise concerning a partnership claim or
When the manner of management has not been agreed upon, the liability;
following rules shall be observed:  (6) Submit a partnership claim or liability to arbitration; 
(1) All the partners shall be considered agents and whatever any (7) Renounce a claim of the partnership.
one of them may do alone shall bind the partnership,
without prejudice to the provisions of article 1801. No act of a partner in contravention of a restriction on authority
(2) None of the partners may, without the consent of the others, shall bind the partnership to persons having knowledge of the
make any important alteration in the immovable property of the restriction. (n)
partnership, even if it may be useful to the partnership. But if the
refusal of consent by the other partners is manifestly prejudicial to Ø Partnership Shall Answer to Each Partner for the
the interest of the partnership, the court's intervention may be Obligation a Partner May Have Contracted in Good Faith
sought. (1695a) in the Interest of the Partnership Business, and the Risks
in Consequence of Its Management (Art. 1796)  
Ø Every Partner Is an Agent of the Partnership for
Apparently Carrying-on the Usual  Way the Business of Art. 1796 The partnership shall be responsible to every partner for
the Partnership (Art. 1818)   the amounts he may have disbursed on behalf of the partnership
Art. 1818 Every partner is an agent of the partnership for the and for the corresponding interest, from the time the expense are
purpose of its business, and the act of every partner, including the made; it shall also answer to each partner for the obligations he may
execution in the partnership name of any instrument, for have contracted in good faith in the interest of the partnership
apparently carrying on in the usual way the business of the business, and for risks in consequence of its management. (1688a)
partnership of which he is a member binds the partnership, unless
the partner so acting has in fact no authority to act for the ii. Other powers or rights relating to mutual agency:
partnership in the particular matter, and the person with whom he Ø Can Dispose of Partnership Property Even When in
is dealing has knowledge of the fact that he has no such authority. Partnership
Name (Art. 1819 – see codal above)
An act of a partner which is not apparently for the carrying on of Ø Admission or Representation Made by Any Partner
business of the partnership in the usual way does not bind the Concerning
partnership unless authorized by the other partners. Partnership Affairs Is Evidence Against the Partnership
(Art. 1820)
Except when authorized by the other partners or unless they have Art. 1820 An admission or representation made by any partner
abandoned the business, one or more but less than all the concerning partnership affairs within the scope of his authority in
partners have no authority to: accordance with this Title is evidence against the partnership. (n)
Attribution of knowledge

iii. Acts requiring unanimous consent (Art. 1818)
Ø Notice to Any Partner Relating to Partnership Affairs Is Art. 1818 Every partner is an agent of the partnership for the
Notice purpose of its business, and the act of every partner, including the
to the Partnership (Art. 1821) execution in the partnership name of any instrument, for apparently
Art. 1821 Notice to any partner of any matter relating to partnership carrying on in the usual way the business of the partnership of which
affairs, and the knowledge of the partner acting in the particular he is a member binds the partnership, unless the partner so acting
matter, acquired while a partner or then present to his mind, and the has in fact no authority to act for the partnership in the particular
knowledge of any other partner who reasonably could and should matter, and the person with whom he is dealing has knowledge of
have communicated it to the acting partner, operate as notice to or the fact that he has no such authority.
knowledge of the partnership, except in the case of fraud on the
partnership, committed by or with the consent of that partner. (n) An act of a partner which is not apparently for the carrying on of
While a partner business of the partnership in the usual way does not bind the
Present to his mind – was in the past (but he still remembers it; partnership unless authorized by the other partners.
knowledge is still valid)
Except when authorized by the other partners or unless they have
Ø Wrongful Act or Omission of Any Partner Acting for abandoned the business, one or more but less than all the partners
Partnership have no authority to:
Affairs Makes the Partnership liable (Art. 1822)   (1) Assign the partnership property in trust for creditors or on the
Art. 1822 Where, by any wrongful act or omission of any partner assignee's promise to pay the debts of the partnership;
acting in the ordinary course of the business of the partnership or (2) Dispose of the good-will of the business; 
with the authority of his co-partners, loss or injury is caused to any (3) Do any other act which would make it impossible to carry on the
person, not being a partner in the partnership, or any penalty is ordinary business of a partnership; 
incurred, the partnership is liable therefor to the same extent as the (4) Confess a judgment;
partner so acting or omitting to act. (n) (5) Enter into a compromise concerning a partnership claim or
liability;
Ø Partnership Bound to Make Good Losses for Acts or (6) Submit a partnership claim or liability to arbitration; 
Misapplications of Partners (Art. 1823) (7) Renounce a claim of the partnership.
Art. 1823 The partnership is bound to make good the loss: 
(1) Where one partner acting within the scope of his apparent No act of a partner in contravention of a restriction on authority shall
authority receives money or property of a third person and bind the partnership to persons having knowledge of the restriction.
misapplies it; and (n)
(2) Where the partnership in the course of its business receives “Statutory apparent authority”
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 iv. Consent required in making alterations on immovable
partnership. (n) property (Art. 1803[2])
Art. 1803[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. (1695a) 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
v. When there is designation of managing partner in AOP (Art.
the absence or disability of any one of them cannot be alleged,
1800 to 1802)
unless there is imminent danger of grave or irreparable injury to the
Art. 1800 The partner who has been appointed manager in the
partnership. (1694)
articles of partnership may execute all acts of administration despite
the opposition of his partners, unless he should act in bad faith; and
Is there an instance when unanimous consent is required? When
his power is irrevocable without just or lawful cause. The vote of the
it is stipulated in the articles of partnership
partners representing the controlling interest shall be necessary for
Is there an exception?
such revocation of power.
c. Equity rights: Right to share in profits and losses (Art. 1810
A power granted after the partnership has been constituted may be
and 1812)
revoked at any time. (1692a)
What are the powers of a manager appointed in the articles of Art. 1810 The property rights of a partner are: 
partnership? (1) His rights in specific partnership property;
What if the partners object to his actions? (2) His interest in the partnership; and
Remedy? (3) His right to participate in the management (n) 
Can the appointment be revoked? YES Art. 1812 A partner's interest in the partnership is his share of the
1. Stipulated in articles of partnership profits and surplus. (n)
a. Acted in bad faith AND
b. There is just and lawful cause Ø Void: stipulation excluding partner from sharing in profits
2. Remedy: controlling interest or losses (Art. 1799)
Art. 1799 A stipulation which excludes one or more partners from
Art. 1801 If two or more partners have been intrusted with the any share in the profits or losses is void. (1691)
management of the partnership without specification of their
respective duties, or without a stipulation that one of them shall not i. Participation in profits or losses (Art. 1797)
act without the consent of all the others, each one may separately Art. 1797 The losses and profits shall be distributed in conformity
execute all acts of administration, but if any of them should oppose with the agreement. If only the share of each partner in the profits
the acts of the others, the decision of the majority shall prevail. In has been agreed upon, the share of each in the losses shall be in
case of a tie, the matter shall be decided by the partners owning the the same proportion.
controlling interest. (1693a)
Is it possible that there is more than 1 managing partner? In the absence of stipulation, the share of each partner in the profits
How are matters managed? and losses shall be in proportion to what he may have contributed,
What if there is opposition? Who can oppose? but the industrial partner shall not be liable for the losses. As for the
How is voting done? Per capita? One man one vote? profits, the industrial partner shall receive such share as may be just
and equitable under the circumstances. If besides his services he
In Art. 1801, majority trumps controlling – different from Art. 1800

has contributed capital, he shall also receive a share in the profits Art. 1813 A conveyance by a partner of his whole interest in the
in proportion to his capital. (1689a) 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
• Distributed in accordance with stipulation affairs, or to require any information or account of partnership
• If share in profits only stipulated, share in the losses shall transactions, or to inspect the partnership books; but it merely
be the same entitles the assignee to receive in accordance with his contract the
• If no stipulation on sharing, partners share profits and profits to which the assigning partner would otherwise be entitled.
losses in proportion to their capital contributions However, in case of fraud in the management of the partnership,
• Industrial partner: In the absence of stipulation, he shall the assignee may avail himself of the usual remedies.
receive such share in the profits as may be just and
equitable under circumstances In case of a dissolution of the partnership, the assignee is entitled
to receive his assignor's interest and may require an account from
Does an industrial partner have rights to residual? No, unless the date only of the last account agreed to by all the partners. (n)
he contributed
BUT DOES NOT:
ii. Third-party may be designated to determine profit-loss Ø Dissolve the partnership
sharing (Art. 1798) Ø Entitle assignee to interfere with
Art. 1798 If the partners have agreed to entrust to a third person the management/administration of partnership
designation of the share of each one in the profits and losses, such Ø Entitle assignee to require information/accounting of
designation may be impugned only when it is manifestly inequitable. partnership matters, much less to inspect partnership
In no case may a partner who has begun to execute the decision of books
the third person, or who has not impugned the same within a period
of three months from the time he had knowledge thereof, complain In case of dissolution: Assignee is entitled to receive his
of such decision. assignor’s interest and may require an account from the date
only of the last account agreed to by all the partners.  
The designation of losses and profits cannot be entrusted to one of
the partners. (1690) e. Other property rights of partners:
1. Right to inspect partnership books and records (Art.
• Third party determination may be impugned only when 1805)
manifestly inequitable Art. 1805 The partnership books shall be kept, subject to any
• But such right to impugn is lost: agreement between the partners, at the principal place of business
- When partnership has began to execute the third party of the partnership, and every partner shall at any reasonable hour
decision; or have access to and may inspect and copy any of them.
- 3 months have lapsed from knowledge of that decision
d. Art. 1813: conveyance by partner of His Whole Partnership

Interest Merely Entitles Assignee to Receive Profits to Which
Assignor Is Entitled To;  

2. Right to full information (Art. 1806) Art. 1786 Every partner is a debtor of the partnership for whatever
Art. 1806 Partners shall render on demand true and full information he may have promised to contribute thereto.
of all things affecting the partnership to any partner or the legal
representative of any deceased partner or of any partner under He shall also be bound for warranty in case of eviction with regard
legal disability. (n) to specific and determinate things which he may have contributed
to the partnership, in the same cases and in the same manner as
3. Right to formal accounting (Art. 1809) the vendor is bound with respect to the vendee. He shall also be
Art. 1809 Any partner shall have the right to a formal account as to liable for the fruits thereof from the time they should have been
partnership affairs:  delivered, without the need of any demand. (1681a)
(1) If he is wrongfully excluded from the partnership business or
possession of its property by his co-partners; Ø Unless There Is a Stipulation to the Contrary,
(2) If the right exists under the terms of any agreement;  Partners Shall Contribute Equal Shares to the
(3) As provided by article 1807;  Partnership Capital (Art. 1790)  
(4) Whenever other circumstances render it just and reasonable. (n) Art. 1790 Unless there is a stipulation to the contrary, the partners
shall contribute equal shares to the capital of the partnership.
4. Right to reimbursement for advances (Art. 1796) b. When Bound to Contribute Money: Liable to the Partnership
Art. 1796 The partnership shall be responsible to every partner for for Interest and Damages from the Time Contribution Became
the amounts he may have disbursed on behalf of the partnership Due (Art. 1788)  
and for the corresponding interest, from the time the expense are
Art. 1788 A partner who has undertaken to contribute a sum of
made; it shall also answer to each partner for the obligations he may
money and fails to do so becomes a debtor for the interest and
have contracted in good faith in the interest of the partnership
damages from the time he should have complied with his obligation.
business, and for risks in consequence of its management. (1688a)
The same rule applies to any amount he may have taken from the
5. Delectus personae: right to dissolve the partnership (Art. partnership coffers, and his liability shall begin from the time he
1830[2]) converted the amount to his own use. (1682)
Art. 1830 Dissolution is caused:
(2) In contravention of the agreement between the partners, where c. When bound to contribute property
the circumstances do not permit a dissolution under any other 1. When Property Contributed Is Specific/Determinate (Art.
provision of this article, by the express will of any partner at any 1786):
time;
Art. 1786 Every partner is a debtor of the partnership for whatever
he may have promised to contribute thereto.
3. Obligations of partners to the partnership
a. Obligation to contribute to the common fund: He shall also be bound for warranty in case of eviction with regard
Ø Every Partner Is a Debtor of the Partnership for to specific and determinate things which he may have contributed
Whatever He Has Promised to Contribute to the to the partnership, in the same cases and in the same manner as
Common Fund (Art. 1786)   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. (1681a)

Every partner is a debtor for whatever he shall have contributed to the Art. 1772 Every contract of partnership having a capital of three
partnership thousand pesos or more, in money or property, shall appear in a
There is a transfer of ownership public instrument, which must be recorded in the Office of the
Ø Bound to the Warranty Against Eviction   Securities and Exchange Commission.
Ø Liable for the Fruits Thereof from the Time They Failure to comply with the requirements of the preceding paragraph
Should Have Been Delivered,  Without Need of shall not affect the liability of the partnership and the members
Demand   thereof to third persons. (n)
2. When Property Contributed Are Fungible/Cannot Be Kept
Art. 1773 A contract of partnership is void, whenever immovable
Without Deterioration:  
property is contributed thereto, if an inventory of said property is not
Ø Risk of Loss Borne by the Partnership  
made, signed by the parties, and attached to the public instrument.
3. When Contribution in Goods:   (1668a)
Ø Must Be Appraised to Establish Value;
Subsequent Change of Value for the d. Art. 1791: Additional Contribution in Case of Imminent Loss:
Partnership’s Account (Arts. 1787 and 1795)   Unless Otherwise Agreed, Partner Who Refuses to Contribute
Art. 1787 When the capital or a part thereof which a partner is bound Additional Capital, Except an Industrial Partner, to Save the
to contribute consists of goods, their appraisal must be made in the Venture, Shall Be Obliged to Sell His Interest to Other Partners
manner prescribed in the contract of partnership, and in the  
absence of stipulation, it shall be made by experts chosen by the Art. 1791 If there is no agreement to the contrary, in case of an
partners, and according to current prices, the subsequent changes imminent loss of the business of the partnership, any partner who
thereof being for account of the partnership. (n) refuses to contribute an additional share to the capital, except an
industrial partner, to save the venture, shall he obliged to sell his
Art. 1795 The risk of specific and determinate things, which are not interest to the other partners. (n)
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. 4. Fiduciary duties of partners
a. DUTY OF DILIGENCE: Each Partner Is Responsible to the
If the things contribute are fungible, or cannot be kept without Partnership for Damages Suffered  By It Through His Fault
deteriorating, or if they were contributed to be sold, the risk shall be
(Art. 1794) 
borne by the partnership. In the absence of stipulation, the risk of
Art. 1794 Every partner is responsible to the partnership for
the things brought and appraised in the inventory, shall also be
borne by the partnership, and in such case the claim shall be limited damages suffered by it through his fault, and he cannot compensate
to the value at which they were appraised. (1687) them with the profits and benefits which he may have earned for the
partnership by his industry. However, the courts may equitably
lessen this responsibility if through the partner's extraordinary
efforts in other activities of the partnership, unusual profits have
4. When Real Property Contributed: 
been realized. (1686a)
Ø Inventory of Immovable Property Must Be Made
and Attached to Articles of  Partnership Ø Partner at Fault Cannot Compensate Such
Registered with SEC (Arts. 1772 and 1773)   Damages with the Profits and Benefits  Which He

May Have Earned for the Partnership from His
Industry   • Received for Partner’s Account: Share
Ø However, the Courts May Equitably Lessen If Proportionately With Partnership
Partner’s Extraordinary Efforts in Other Activities • Received for Partnership Account: All for to the
of the Partnership, Unusual Profits Have Been Partnership’s Account
Realized Ø On Receiving Partnership Credits (Art. 1793):
  Art. 1793 A partner who has received, in whole or in part, his share
b. DUTY TO ACCOUNT: Every Partner Must Account for Any of a partnership credit, when the other partners have not collected
Benefit, and Hold as Trustee Any Profits Derived by Him theirs, shall be obliged, if the debtor should thereafter become
Without the Consent of Other Partners from Any Transaction insolvent, to bring to the partnership capital what he received even
Connected with the Formation, Conduct, or Liquidation of the though he may have given receipt for his share only. (1685a)
Partnership or from Any Use by Him of Its Property (Arts. 1807
and 1809)   • Partner Receiving Capital When Others Have Not,
Art. 1807 Every partner must account to the partnership for any Obliged to Bring Sum to the Partnership Capital in
benefit, and hold as trustee for it any profits derived by him without the Event Partnership Becomes Insolvent
the consent of the other partners from any transaction connected Ø Partners in General Cannot Engage in
with the formation, conduct, or liquidation of the partnership or from Competitive Business:
any use by him of its property. (n) • Capitalist Partners Cannot Engage for Their Own
Account in Similar  Partnership Business(Art.
Art. 1809 Every partner must account to the partnership for any 1808)
benefit, and hold as trustee for it any profits derived by him without Art. 1808 The capitalist partners cannot engage for their own
the consent of the other partners from any transaction connected account in any operation which is of the kind of business in which
with the formation, conduct, or liquidation of the partnership or from the partnership is engaged, unless there is a stipulation to the
any use by him of its property. (n) contrary.
Any capitalist partner violating this prohibition shall bring to the
c. DUTY OF LOYALTY:  common funds any profits accruing to him from his transactions,
Ø On Recovery of Demandable Sum (Art. 1792): and shall personally bear all the losses. (n)
Art. 1792 If a partner authorized to manage collects a demandable
sum which was owed to him in his own name, from a person who • Industrial Partner Cannot Engage in Any Form of
owed the partnership another sum also demandable, the sum thus Business (Art. 1789)  
collected shall be applied to the two credits in proportion to their Art. 1789 An industrial partner cannot engage in business for
amounts, even though he may have given a receipt for his own himself, unless the partnership expressly permits him to do so; and
credit only; but should he have given it for the account of the if he should do so, the capitalist partners may either exclude him
partnership credit, the amount shall be fully applied to the latter. from the firm or avail themselves of the benefits which he may have
obtained in violation of this provision, with a right to damages in
The provisions of this article are understood to be without prejudice either case. (n)
to the right granted to the other debtor by article 1252, but only if
the personal credit of the partner should be more onerous to him.
(1684)

5. Partners subject to unlimited liability for partnership debts • Partnership Received Property in the Ordinary
a. Partners Liable Pro-Rata with Their Separate Properties Course of Business (Art. 1823)  
After Partnership Assets Have Been Exhausted, for All Art. 1823 The partnership is bound to make good the loss: 
Partnership Debts(Art. 1816) (1) Where one partner acting within the scope of his apparent
Art. 1816 All partners, including industrial ones, shall be liable pro authority receives money or property of a third person and
rata with all their property and after all the partnership assets have misapplies it; and
been exhausted, for the contracts which may be entered into in the (2) Where the partnership in the course of its business receives
name and for the account of the partnership, under its signature and money or property of a third person and the money or property so
by a person authorized to act for the partnership. However, any received is misapplied by any partner while it is in the custody of the
partner may enter into a separate obligation to perform a partnership. (n)
partnership contract. (n)
c. Limited Liability: Newly Admitted Partner into an Existing
Ø Any Stipulation Against Personal Liability of Partnership Is Liable Only Out of Partnership Property
Partners, Even Industrial Partners, for Shares and Contributions, for All the Obligations of the
Partnership Debts Is Void, Except as Among Partnership Arising Before His Admission (Art. 1826)  
Themselves (Art. 1817)
Art. 1826 A person admitted as a partner into an existing
Art. 1817 Any stipulation against the liability laid down in the
partnership is liable for all the obligations of the partnership arising
preceding article shall be void, except as among the partners. (n)
before his admission as though he had been a partner when such
obligations were incurred, except that this liability shall be satisfied
only out of partnership property, unless there is a stipulation to the
b. Art. 1824: All Partners Solidarily Liable with Partnership for contrary. (n)
Everything Chargeable to the Partnership When Caused By:
Ø Wrongful Act or Omission of Any Partner d. Partnership Creditors Have Preference Over the Personal
Acting— Creditors of Each of the Partners as Regards the Partnership
• In the Partnership’s Ordinary Course of Business; Property (Art. 1827)
or Art. 1827 The creditors of the partnership shall be preferred to those
• With Authority from the Other Partners(Art. 1822) of each partner as regards the partnership property. Without
  prejudice to this right, the private creditors of each partner may ask
the attachment and public sale of the share of the latter in the
Art. 1822 Where, by any wrongful act or omission of any partner
partnership assets. (n)
acting in the ordinary course of the business of the partnership or
*Cross reference with Art. 1811(3)
with the authority of his co-partners, loss or injury is caused to any
“Partnership assets” – “fondo social” but this is not the same
person, not being a partner in the partnership, or any penalty is
with specific partnership property
incurred, the partnership is liable therefor to the same extent as the
partner so acting or omitting to act. (n)
Specific partnership property =/= interest in the partnership
(partnership assets)
Ø Partner’s Act or Misapplication of Properties of
Ø Remedy of Partner’s Separate Creditors (Art.
Third Parties
1814): Apply with the Courts That Entered the
• Where Partner Receives Property Acting With
Judgment Debt—
Apparent Authority; or  

Art. 1814 Without prejudice to the preferred rights of partnership Art. 1825. When a person, by words spoken or written or by
creditors under article 1827, on due application to a competent court conduct, represents himself, or consents to another representing
by any judgment creditor of a partner, the court which entered the him to anyone, as a partner in an existing partnership or with one
judgment, or any other court, may charge the interest of the debtor or more persons not actual partners, he is liable to any such
partner with payment of the unsatisfied amount of such judgment persons to whom such representation has been made, who has, on
debt with interest thereon; and may then or later appoint a receiver the faith of such representation, given credit to the actual or
of his share of the profits, and of any other money due or to fall due apparent partnership, and if he has made such representation or
to him in respect of the partnership, and make all other orders, consented to its being made in a public manner he is liable to such
directions, accounts and inquiries which the debtor partner might person, whether the representation has or has not been made or
have made, or which the circumstances of the case may require. communicated to such person so giving credit by or with the
knowledge of the apparent partner making the representation or
The interest charged may be redeemed at any time before consenting to its being made:
foreclosure, or in case of a sale being directed by the court, may be
purchased without thereby causing a dissolution: (1) When a partnership liability results, he is liable as though he
were an actual member of the partnership;
(1) With separate property, by any one or more of the partners; or 
(2) With partnership property, by any one or more of the partners (2) When no partnership liability results, he is liable pro rata with the
with the consent of all the partners whose interests are not so other persons, if any, so consenting to the contract or
charged or sold. representation as to incur liability, otherwise separately.
Nothing in this Title shall be held to deprive a partner of his right, if When a person has been thus represented to be a partner in an
any, under the exemption laws, as regards his interest in the existing partnership, or with one or more persons not actual
partnership. (n) partners, he is an agent of the persons consenting to such
representation to bind them to the same extent and in the same
Known as the CHARGING ORDER manner as though he were a partner in fact, with respect to persons
who rely upon the representation. When all the members of the
• To Charge the Debtor’s Equity Interests for the existing partnership consent to the representation, a partnership act
Payment from His Share in the Profits or Any or obligation results; but in all other cases it is the joint act or
Other Money Due from the Partnership obligation of the person acting and the persons consenting to the
• Which Interest Charged May Be Redeemed at Any representation. (n)
Time Before Foreclosure by the Other Partners or
the Partnership Itself a. Liable to Third Parties Who Act in Good Faith—
Ø When Partnership Liability Results, He Is Liable
6. Art. 1825: Liability Rules When Non-Partner Represents as Though He Were an Actual Member  of the
Himself to Third Parties as a Partner in an Existing Partnership  
Partnership: Ø When No Partnership Liability Results, Liable Pro
Rata with the Other Persons, If Any, So
Consenting to the Contract or Representation as
to Incur Liability, Otherwise Separately  

b. When It Is the Firm That Has Made Such Representation, He Is delivery; in any case by the loss of the thing, when the
an Agent and May Bind the Representers to the Same Extent partner who contributed it having reserved the
as Though He Were in Fact a Partner   ownership thereof, has only transferred to the
partnership the use or enjoyment of the same; but the
VII. DISSOLUTION, WINDING UP AND TERMINATION OF partnership shall not be dissolved by the loss of the
PARTNERSHIP thing when it occurs after the partnership has acquired
the ownership thereof;
Partnership dissociation – separation of a partner (5) By the death of any partner;
Partnership dissolution – stops functioning as a forward-looking (6) By the insolvency of any partner or of the partnership; 
enterprise (7) By the civil interdiction of any partner; 
(8) By decree of court under the following article. (1700a
1. TYPES AND CAUSES OF DISSOLUTION and 1701a)
a. Non-judicial/Ipso jure dissolution (Art. 1830, 1833 and You can ask for judicial dissolution
1840[1])
Art. 1833 Where the dissolution is caused by the act, death
Art. 1830 Dissolution is caused:  or insolvency of a partner, each partner is liable to his co-
(1) Without violation of the agreement between the partners for his share of any liability created by any partner
partners: acting for the partnership as if the partnership had not been
(a) By the termination of the definite term or particular dissolved unless:
undertaking specified in the agreement;
(b) By the express will of any partner, who must act in (1) The dissolution being by act of any partner, the partner
good faith, when no definite term or particular is acting for the partnership had knowledge of the
specified; dissolution; or
(c) By the express will of all the partners who have not (2) The dissolution being by the death or insolvency of a
assigned their interests or suffered them to be charged partner, the partner acting for the partnership had
for their separate debts, either before or after the knowledge or notice of the death or insolvency.
termination of any specified term or particular
undertaking; Art. 1840 In the following cases creditors of the dissolved
(d) By the expulsion of any partner from the business partnership are also creditors of the person or partnership
bona fide in accordance with such a power conferred continuing the business:
by the agreement between the partners; (1) When any new partner is admitted into an existing
(2) In contravention of the agreement between the partnership, or when any partner retires and
partners, where the circumstances do not permit a assigns (or the representative of the deceased
dissolution under any other provision of this article, by partner assigns) his rights in partnership property
the express will of any partner at any time; to two or more of the partners, or to one or more
(3) By any event which makes it unlawful for the business of the partners and one or more third persons, if
of the partnership to be carried on or for the members the business is continued without liquidation of
to carry it on in partnership; the partnership affairs;
(4) When a specific thing which a partner had promised to
contribute to the partnership, perishes before the

(2) When all but one partner retire and assign (or the creditors of the retiring or deceased partner or the
representative of a deceased partner assigns) their representative of the deceased partner, have a prior right to
rights in partnership property to the remaining partner, any claim of the retired partner or the representative of the
who continues the business without liquidation of deceased partner against the person or partnership continuing
partnership affairs, either alone or with others; the business, on account of the retired or deceased partner's
interest in the dissolved partnership or on account of any
(3) When any partner retires or dies and the business consideration promised for such interest or for his right in
of the dissolved partnership is continued as set partnership property.
forth in Nos. 1 and 2 of this article, with the
consent of the retired partners or the Nothing in this article shall be held to modify any right of
representative of the deceased partner, but without creditors to set aside any assignment on the ground of
any assignment of his right in partnership property; fraud. The use by the person or partnership continuing the
business of the partnership name, or the name of a deceased
(4) When all the partners or their representatives partner as part
assign their rights in partnership property to one
or more third persons who promise to pay the
debts and who continue the business of the dissolved Ø Without violation of the partnership agreement
partnership; (Without breach):
• Expiration of the partnership term or achievement
of undertaking
(5) When any partner wrongfully causes a dissolution • By the express will of a partner acting in good
and the remaining partners continue the business faith in a partnership at will
under the provisions of article 1837, second • Mutual assent of the partners to dissolve or
paragraph, No. 2, either alone or with others, and accept a new partner
without liquidation of the partnership affairs; • Expulsion of a partner pursuant to an agreement
granting such right
(6) When a partner is expelled and the remaining Ø In Contravention of Agreement (Art. 1830[2] – see
partners continue the business either alone or above): Where Circumstances Do Not Permit
with others without liquidation of the partnership Dissolution Under Any Other Provision, By Express
affairs. Will of Any Partner at Any Time
Ø By Operation of Law (Art. 1830 – see above) 
The liability of a third person becoming a partner in the
partnership continuing the business, under this article, to the • Supervening Illegality of the Partnership
creditors of the dissolved partnership shall be satisfied out of Business
the partnership property only, unless there is a stipulation to • Loss of Specific Thing Contributed 
the contrary. • Death, Insolvency or Civil Interdiction of a Partner
When the business of a partnership after dissolution is

continued under any conditions set forth in this article the
creditors of the dissolved partnership, as against the separate

b. By judicial decree of dissolution Ø Partner Judicially Declared Insane or Shown to Be of
Ø Partnership With an Unlawful Object or Purpose Unsound Mind  
May Be Dissolved by Judicial Decree, and the Profit Ø Partner Becomes in Any Other Way Incapable of
Confiscated in Favor of the State (Art. 1770) Performing His Contract
Ø A Partner Has Been Guilty of Such Conduct as Tends
Art. 1770 A partnership must have a lawful object or purpose, and to Affect Prejudicially the Carrying on of the
must be established for the common benefit or interest of the Partnership Business  
partners. Ø A Partner Willfully or Persistently Commits a Breach
of the Agreement That It Is Not Reasonably
When an unlawful partnership is dissolved by a judicial decree, the Practicable to Carry-on the Partnership Business with
profits shall be confiscated in favor of the State, without prejudice Him  
to the provisions of the Penal Code governing the confiscation of Ø When Partnership Business Can Only Be Carried-on
the instruments and effects of a crime. (1666a) at a Loss  
Ø Other Circumstances That Render a Dissolution
Equitable
Ø By decree of a court on application by or for a Ø Assignee of Partner’s Interest May Seek Court Order:
partner (Art. 1831): Upon Termination of the Specified Term or the
Art. 1831 On application by or for a partner the court shall decree a
Particular Undertaking; or  
dissolution whenever: 
Ø At Any Time in a Partnership at Will  
(1) A partner has been declared insane in any judicial proceeding
or is shown to be of unsound mind;  2. OPTIONS ARISING BY REASON OF DISSOLUTION
(2) A partner becomes in any other way incapable of performing his Art. 1837 When dissolution is caused in any way, except in
part of the partnership contract;  contravention of the partnership agreement, each partner, as
(3) A partner has been guilty of such conduct as tends to affect against his co-partners and all persons claiming through them in
prejudicially the carrying on of the business; respect of their interests in the partnership, unless otherwise
(4) A partner willfully or persistently commits a breach of the agreed, may have the partnership property applied to discharge
partnership agreement, or otherwise so conducts himself in matters its liabilities, and the surplus applied to pay in cash the net
relating to the partnership business that it is not reasonably amount owing to the respective partners. But if dissolution is
practicable to carry on the business in partnership with him; caused by expulsion of a partner, bona fide under the
(5) The business of the partnership can only be carried on at a loss; partnership agreement and if the expelled partner is
(6) Other circumstances render a dissolution equitable.  discharged from all partnership liabilities, either by
payment or agreement under the second paragraph of
On the application of the purchaser of a partner's interest under article 1835, he shall receive in cash only the net amount
article 1813 or 1814: due him from the partnership.
(1) After the termination of the specified term or particular
undertaking; When dissolution is caused in contravention of the partnership
(2) At any time if the partnership was a partnership at will when the agreement the rights of the partners shall be as follows:
interest was assigned or when the charging order was issued. (n)

(1) Each partner who has not caused dissolution wrongfully the value of the good-will of the business shall
shall have: not be considered. (n) (Coch: good will is locked
a. All the rights specified in the first paragraph of into the business)
this article, and
b. The right, as against each partner who has
caused the dissolution wrongfully, to damages a. When Dissolution Is Without Contravention of Partnership
breach of the agreement. Agreement: Each Partner May Demand for the Winding-Up
(2) The partners who have not caused the dissolution of the Partnership (Art. 1837):  
wrongfully, if they all desire to continue the business in Ø Partnership Properties Applied to Discharge
the same name either by themselves or jointly with Liabilities, and Surplus Applied to Pay in Cash the
others, may do so, during the agreed term for the Net Amount Owing to the Respective Partners  
partnership and for that purpose may possess the b. When Dissolution Caused by Bona Fide Expulsion of a
partnership property, provided they secure the payment Partner Who Is Discharged from Partnership Liabilities
by bond approved by the court, or pay any partner who (Art. 1837):  
has caused the dissolution wrongfully, the value of his Ø Expelled Partner Shall Receive in Cash Only Net
interest in the partnership at the dissolution, less any
Amount Due Him, i.e., Less Damages  
damages recoverable under the second paragraph, No.
Ø Partnership Business Continues with the Remaining
1 (b) of this article, and in like manner indemnify him
against all present or future partnership liabilities. Partners  
c. When dissolution is in contravention of partnership
(3) A partner who has caused the dissolution wrongfully agreement:
shall have: Ø Each non-breaching partner shall have the right to
(Art. 1837):
a. If the business is not continued under the • Liquidate the partnership (i.e. have partnership
provisions of the second paragraph, No. 2, all properties applied to discharge liabilities and
the rights of a partner under the first paragraph, receive his share of the surplus)
subject to liability for damages in the second • Recover damages against each breaching partner
paragraph, No. 1 (b), of this article. In this case, the partners are the wrongful partners
b. If the business is continued under the second Ø All breaching partners are limited (Art. 1387 – see
paragraph, No. 2, of this article, the right as above)
against his co- partners and all claiming through • If partnership business not continued: to receive
them in respect of their interests in the their net share in the surplus after payment of all
partnership, to have the value of his interest liabilities
in the partnership, less any damage caused • If partnership business continued: to have net
to his co-partners by the dissolution, value of their interests ascertained (excluding
ascertained and paid to him in cash, or the goodwill) and paid to them in cash or payment is
payment secured by a bond approved by the secured by a bond, and to be released from all
court, and to be released from all existing existing partnership liabilities
liabilities of the partnership; but in Ø All non-breaching partners, if they all desire, may
ascertaining the value of the partner's interest continue the business:

• Provided they secure the payment by bond or pay e. Where the partnership contract is rescinded on the
to any breaching partner the value of his interest, ground of fraud or misrepresentation of one of the parties
net the damages, and indemnify him against all (Art. 1838), party rescinding is entitled, after payment of
present or future partnership liabilities (Art. 1837) all partnership liabilities to third persons, to:
• A new partnership is thereby constituted among Art. 1838 Where a partnership contract is rescinded on the
the continuing partners ground of the fraud or misrepresentation of one of the parties
d. When dissolution is by operation of law thereto, the party entitled to rescind is, without prejudice to any
Ø When a partner retires or dies and business is other right, entitled:
continued without settlement of accounts, such
partner or his representative shall against such (1) To a lien on, or right of retention of, the surplus of the
person or partnership (Art. 1841): partnership property after satisfying the partnership
Art. 1841 When any partner retires or dies, and the business is liabilities to third persons for any sum of money paid by
continued under any of the conditions set forth in the preceding him for the purchase of an interest in the partnership
article, or in article 1837, second paragraph, No. 2, without any and for any capital or advances contributed by him;
settlement of accounts as between him or his estate and the person (2) To stand, after all liabilities to third persons have been
or partnership continuing the business, unless otherwise agreed, he satisfied, in the place of the creditors of the partnership
or his legal representative as against such person or partnership for any payments made by him in respect of the
may have the value of his interest at the date of dissolution partnership liabilities; and
ascertained, and shall receive as an ordinary creditor an amount (3) To be indemnified by the person guilty of the fraud or
equal to the value of his interest in the dissolved partnership with making the representation against all debts and
interest, or, at his option or at the option of his legal representative, liabilities of the partnership. (n)
in lieu of interest, the profits attributable to the use of his right in
the property of the dissolved partnership; provided that the creditors Ø Lien or right of retention of surplus of the remaining
of the dissolved partnership as against the separate creditors, or partnership property for any sum paid by him for
the representative of the retired or deceased partner, shall have purchase of an interest in the partnership and for any
priority on any claim arising under this article, as provided article capital or advances contributed by him
1840, third paragraph. (n) Ø Stand in place of the creditors of the partnership for
Relate this to Art. 1842 – the right to account for your interest any payments made by him in respect of partnership
automatically from the time of dissolution, in the absence of any liabilities
agreement to the contrary Ø Be indemnified by person guilty of fraud or making
the representation against all debts and liabilities of
• Have the value of his interest (in) the dissolution the partnership
ascertained
• Receive as an ordinary creditor an amount equal Singson v Isabela Sawmill
to the value of his interest
• Option to receive interest on such value or the 3. NATURE AND EFFECTS OF DISSOLUTION
profits attributable to the use of his right in the a. As between and among the partners:
property of the dissolved partnership Ø Dissolution is the change in the relationship of the
BUT: Partnership creditors have priority over partners caused by any partner ceasing to be
partner’s separate creditors associated in carrying on the partnership (Art. 1828)

Art. 1828 The dissolution of a partnership is the change in the c. On the authority of the partners
relation of the partners caused by any partner ceasing to be Ø Terminates all partners’ authority to bind the
associated in the carrying on as distinguished from the winding up partnership, except for winding-up of the partnership
of the business. (n) (Art. 1832)
Art. 1832 Except so far as may be necessary to wind up partnership
affairs or to complete transactions begun but not then finished,
Ø It terminates all authority of any partner to act for the dissolution terminates all authority of any partner to act for the
partnership, except as may be necessary to wind-up partnership:
partnership affairs (Art. 1832) (1) With respect to the partners, 
Art. 1832 Except so far as may be necessary to wind up partnership (a) When the dissolution is not by the act, insolvency or death of a
affairs or to complete transactions begun but not then finished, partner; or
dissolution terminates all authority of any partner to act for the (b) When the dissolution is by such act, insolvency or death of a
partnership: partner, in cases where article 1833 so requires;
(1) With respect to the partners, (a) When the dissolution is not by (2) With respect to persons not partners, as declared in article 1834.
the act, insolvency or death of a partner; or (n)
(b) When the dissolution is by such act, insolvency or death of a
partner, in cases where article 1833 so requires; Ø A partner can still bind the partnership (Art. 1834):
(2) With respect to persons not partners, as declared in article 1834. Lingering apparent authority
(n) Art. 1834 After dissolution, a partner can bind the partnership,
except as provided in the third paragraph of this article:
Ø In the absence of any agreement to the contrary, the (1) By any act appropriate for winding up partnership
right to an accounting of his interest shall accrue to affairs or completing transactions unfinished at dissolution;
any partner (or his representative) as against the (2) By any transaction which would bind the partnership if
winding-up partners, or the surviving partners, or the dissolution had not taken place, provided the other party
person or partnership continuing the business to the transaction:
b. On the partnership itself a. Had extended credit to the partnership prior to
Ø Partnership continues only for purposes of winding dissolution and had no knowledge or notice of the
up (Art. 1829) dissolution; or
Art. 1829 On dissolution the partnership is not terminated, but b. Though he had not so extended credit, had
continues until the winding up of partnership affairs is completed. nevertheless known of the partnership prior to
(n) dissolution, and, having no knowledge or
notice of dissolution, the fact of dissolution had
Ø EXCEPT: when the non-breaching partners choose not been advertised in a newspaper of general
to continue the partnership business under a new circulation in the place (or in each place if more
partnership than one) at which the partnership business was
regularly carried on.

The liability of a partner under the first paragraph, No. 2, shall be • But unknown partners not liable to such creditors
satisfied out of partnership assets alone when such partner had with their separate properties
been prior to dissolution: Ø Where dissolution is caused by act, death or
(1) Unknown as a partner to the person with whom the contract insolvency of partner (Art. 1833): Each partner is liable
is made; and to co-partners for his share of any liability created by
(2) So far unknown and inactive in partnership affairs that the any partner acting for partnership as if partnership had
business reputation of the partnership could not be said to not been dissolved
have been in any degree due to his connection with it. Art. 1833 Where the dissolution is caused by the act, death or
insolvency of a partner, each partner is liable to his co-partners
The partnership is in no case bound by any act of a partner after for his share of any liability created by any partner acting for the
dissolution: partnership as if the partnership had not been dissolved unless:
(1) Where the partnership is dissolved because it is
unlawful to carry on the business, unless the act is (1) The dissolution being by act of any partner, the partner acting
appropriate for winding up partnership affairs; or for the partnership had knowledge of the dissolution; or
(2) Where the partner has become insolvent; or (2) The dissolution being by the death or insolvency of a partner,
(3) Where the partner has no authority to wind up the partner acting for the partnership had knowledge or notice of the
partnership affairs; except by a transaction with one who death or insolvency.
–
a. Had extended credit to the partnership prior to
dissolution and had no knowledge or notice of his Ø UNLESS: Partner acting had knowledge of the
want of authority; or dissolution or notice of the death or insolvency of
b. Had not extended credit to the partnership prior to another partner
dissolution, and, having no knowledge or notice d. On the existing liabilities of the partners (Art. 1834 – see
of his want of authority, the fact of his want of above):
authority has not been advertised in the manner Ø Dissolution itself does not discharge existing liability
provided for advertising the fact of dissolution in the of any partner
first paragraph, No. 2 (b). Ø EXCEPT: When partner is discharged by reason of an
express agreement between the continuing partners
Nothing in this article shall affect the liability under article 1825 of and the creditors
any person who after dissolution represents himself or consents to Ø Art. 1840
another representing him as a partner in a partnership engaged in Art. 1840 In the following cases creditors of the dissolved
carrying on business. (n) partnership are also creditors of the person or partnership
continuing the business:
• By any act or contract appropriate for winding up (1) When any new partner is admitted into an existing
partnership affairs partnership, or when any partner retires and assigns
• By non-winding-up contracts when third party (or the representative of the deceased partner assigns) his
had extended credit to the partnership in good rights in partnership property to two or more of the partners,
faith (not having knowledge or notice of or to one or more of the partners and one or more third
dissolution) persons, if the business is continued without liquidation of
the partnership affairs;

(2) When all but one partner retire and assign (or the Nothing in this article shall be held to modify any right of
representative of a deceased partner assigns) their rights creditors to set aside any assignment on the ground of
in partnership property to the remaining partner, who fraud. The use by the person or partnership continuing the
continues the business without liquidation of partnership business of the partnership name, or the name of a deceased
affairs, either alone or with others; partner as part thereof, shall not of itself make the individual
(3) When any partner retires or dies and the business of property of the deceased partner liable for any debts contracted by
the dissolved partnership is continued as set forth in such person or partnership. (n)
Nos. 1 and 2 of this article, with the consent of the retired
partners or the representative of the deceased partner, but
without any assignment of his right in partnership property; 4. WINDING-UP AND TERMINATION OF THE PARTNERSHIP
(4) When all the partners or their representatives assign BUSINESS ENTERPRISE
their rights in partnership property to one or more third
persons who promise to pay the debts and who continue a. Partners’ authority would only be for purposes of winding
the business of the dissolved partnership; up (Art. 1834 – see above )
(5) When any partner wrongfully causes a dissolution and b. Authority to wind-up (Art. 1836): Only the partners who
the remaining partners continue the business under have not wrongfully dissolved the partnership or the legal
the provisions of article 1837, second paragraph, No. 2, representative of the last surviving partner
either alone or with others, and without liquidation of the Art. 1836 Unless otherwise agreed, the partners who have not
partnership affairs; wrongfully dissolved the partnership or the legal representative of
(6) When a partner is expelled and the remaining partners the last surviving partner, not insolvent, has the right to wind up the
continue the business either alone or with others partnership affairs, provided, however, that any partner, his legal
without liquidation of the partnership affairs. representative or his assignee, upon cause shown, may obtain
winding up by the court. (n)
The liability of a third person becoming a partner in the
partnership continuing the business, under this article, to the Art. 1839 In settling accounts between the partners after
creditors of the dissolved partnership shall be satisfied out of dissolution, the following rules shall be observed, subject to any
the partnership property only, unless there is a stipulation to the agreement to the contrary:
contrary.
(1) The assets of the partnership are:
When the business of a partnership after dissolution is (a) The partnership property,
continued under any conditions set forth in this article the (b) The contributions of the partners necessary for the payment of
creditors of the dissolved partnership, as against the separate all the liabilities specified in No. 2.
creditors of the retiring or deceased partner or the representative
of the deceased partner, have a prior right to any claim of the (2) The liabilities of the partnership shall rank in order of payment,
retired partner or the representative of the deceased partner as follows:
against the person or partnership continuing the business, on (a) Those owing to creditors other than partners, 
account of the retired or deceased partner's interest in the dissolved
(b) Those owing to partners other than for capital and profits,
partnership or on account of any consideration promised for such
(c) Those owing to partners in respect of capital, 
interest or for his right in partnership property.
(d) Those owing to partners in respect of profits.

(3) The assets shall be applied in the order of their declaration in A partner is discharged from any existing liability upon dissolution
No. 1 of this article to the satisfaction of the liabilities. of the partnership by an agreement to that effect between himself,
(4) The partners shall contribute, as provided by article 1797, the the partnership creditor and the person or partnership continuing
amount necessary to satisfy the liabilities. the business; and such agreement may be inferred from the course
of dealing between the creditor having knowledge of the dissolution
(5) An assignee for the benefit of creditors or any person appointed and the person or partnership continuing the business.
by the court shall have the right to enforce the contributions The individual property of a deceased partner shall be liable for all
specified in the preceding number. obligations of the partnership incurred while he was a partner, but
subject to the prior payment of his separate debts. (n)
(6) Any partner or his legal representative shall have the right to
enforce the contributions specified in No. 4, to the extent of the
amount which he has paid in excess of his share of the liability. d. Settlement of liabilities and partnership claims (Art.
1839):
(7) The individual property of a deceased partner shall be liable for Ø Partnership assets cover partnership properties and
the contributions specified in No. 4. partners’ required contributions under the “unlimited
liability rule”
(8) When partnership property and the individual properties of the Ø Partnership liabilities shall be paid in the following
partners are in possession of a court for distribution, partnership order of payment:
creditors shall have priority on partnership property and separate • Those owing to creditors other than the partners
creditors on individual property, saving the rights of lien or secured • Those owing to partners other than for capital and
creditors. profits
• Those owing to partners in respect of capital
(9) Where a partner has become insolvent or his estate is insolvent, • Those owing to partners in respect of profits
the claims against his separate property shall rank in the following
order: VIII. LIMITED PARTNERSHIPS
(a) Those owing to separate creditors; 
(b) Those owing to partnership creditors;  1. BACKGROUND AND DEFINITION
(c) Those owing to partners by way of contribution. (n) a. Origin, Concept and Purpose of Limited Partnership 
Art. 1843 A limited partnership is one formed by two or more

c. Upon dissolution (Art. 1839[4] and [7]): partners shall persons under the provisions of the following article, having as
contribute amounts necessary to satisfy partnership members one or more general partners and one or more limited
debts not covered by partnership assets partners. The limited partners as such shall not be bound by the
obligations of the partnership.
Ø HOWEVER: Separate creditors of deceased partner
shall have priority over his separate properties (Art. b. Definition (Art. 1843): A limited partnership is one that is:
1835) Ø Formed Formed By At Least One General Partner and
Art. 1835 The dissolution of the partnership does not of itself At Least One Limited Partner 
discharge the existing liability of any partner. Ø Who Shall Sign and Swear to the Articles of Limited
Partnership (“Certificate”)

Ø Which Certificate Must Be Registered with the SEC
A limited partnership is formed if there has been substantial
2. FORMATION AND STATUTORY REQUIREMENTS (Art. compliance in good faith with the foregoing requirements.
1844)
Art. 1844 Two or more persons desiring to form a limited partnership a. Contents of the Articles of Limited Partnership (the
shall: “Certificate”)
Ø Partnership name, add the word “limited”
(1) Sign and swear to a certificate, which shall state - • Name of the limited partner cannot appear in the
(a) The name of the partnership, adding thereto the word "Limited"; partnership name (Art. 1846)
(b) The character of the business;
(c) The location of the principal place of business; Art. 1846 The surname of a limited partner shall not appear in the
(d) The name and place of residence of each member, general and partnership name unless:
limited partners being respectively designated;
(e) The term for which the partnership is to exist; (1) It is also the surname of a general partner, or
(f) The amount of cash and a description of and the agreed value of (2) Prior to the time when the limited partner became such, the
the other property contributed by each limited partner; business has been carried on under a name in which his
(g) The additional contributions, if any, to be made by each limited surname appeared.
partner and the times at which or events on the happening of
which they shall be made; A limited partner whose surname appears in a partnership name
(h) The time, if agreed upon, when the contribution of each limited contrary to the provisions of the first paragraph is liable as a
partner is to be returned; general partner to partnership creditors who extend credit to the
(i) The share of the profits or the other compensation by way of partnership without actual knowledge that he is not a general
income which each limited partner shall receive by reason of his partner.
contribution;
(j) The right, if given, of a limited partner to substitute an assignee Ø Character and Location of Business
as contributor in his place, and the terms and conditions of the Ø Term of Existence of the Partnership
substitution; Ø On the Partners:
(k) The right, if given, of the partners to admit additional limited • Name and Residence of Each General and Limited
partners; Partners, and Their  Designation as Such Being
(l) The right, if given, of one or more of the limited partners to priority
Specifically Delineated  
over other limited partners, as to contributions or as to
compensation by way of income, and the nature of such priority; • Amount/Description of Contributions, Details of
(m) The right, if given, of the remaining general partner or partners Future Contributions, If Any, to Be Made by
to continue the business on the death, retirement, civil Limited Partners.  
interdiction, insanity or insolvency of a general partner; and • Right of Limited Partners to Demand/Receive
(n) The right, if given, of a limited partner to demand and receive Partnership Property Other Than Cash in Return
property other than cash in return for his contribution. for His Contribution  
• Shares of Profits, and Compensation by Way of
(2) File for record the certificate in the Office of the Securities and Income of Limited Partners  
Exchange Commission. • Priority Rights Among the Limited Partners  

• Right of Substitution or Assignment by Limited (2) A person is substituted as a limited partner;
Partners   (3) An additional limited partner is admitted;
• Admission of Additional Limited Partners   (4) A person is admitted as a general partner;
• Right to Continue the Business by the Remaining (5) A general partner retires, dies, becomes insolvent or
General Partners Upon Death, Retirement, Civil insane, or is sentenced to civil interdiction and the business
Interdiction, Insanity or Insolvency of General is continued under article 1860;
Partner (6) There is a change in the character of the business of the
  partnership;
(7) There is a false or erroneous statement in the certificate;
b. Substantial Compliance (Art. 1844): Limited Partnership
(8) There is a change in the time as stated in the certificate for
Is Formed If There Has Been Substantial Compliance in
the dissolution of the partnership or for the return of a
Good Faith With Requirements Mandated by Law
contribution;
(9) A time is fixed for the dissolution of the partnership, or the
c. Effects of False Statement in Certificate (Art. 1847): One
return of a contribution, no time having been specified in the
Who Suffers Loss Relying on Such Statement May Hold
certificate, or
Liable Any Party to the Certificate Who Knew the
(10) The members desire to make a change in any other
Statement to Be False.
statement in the certificate in order that it shall accurately
represent the agreement among them.
Art. 1847 If the certificate contains a false statement, one who
suffers loss by reliance on such statement may hold liable any
party to the certificate who knew the statement to be false:
Art. 1865 The writing to amend a certificate shall:
(1) At the time he signed the certificate, or (1) Conform to the requirements of article 1844 as far as necessary
(2) Subsequently, but within a sufficient time before the to set forth clearly the change in the certificate which it is desired
statement was relied upon to enable him to cancel or amend to make; and
the certificate, or to file a petition for its cancellation or (2) Be signed and sworn to by all members, and an amendment
amendment as provided in article 1865. substituting a limited partner or adding a limited or general
partner shall be signed also by the member to be substituted or
added, and when a limited partner is to be substituted, the
d. Cancellation or Amendment of Certificate (Arts. 1864 and
amendment shall also be signed by the assigning limited
1865):
partner.
Ø Certificate must be cancelled when:
• Partnership is dissolved
The writing to cancel a certificate shall be signed by all
• There cease to be limited partners members.
Art. 1864 The certificate shall be cancelled when the partnership is A person desiring the cancellation or amendment of a certificate, if
dissolved or all limited partners cease to be such. A certificate any person designated in the first and second paragraphs as a
shall be amended when: person who must execute the writing refuses to do so, may petition
the court to order a cancellation or amendment thereof.
(1) There is a change in the name of the partnership or in the
amount or character of the contribution of any limited partner;

If the court finds that the petitioner has a right to have the writing b. HOWEVER: A General Partner Shall Have Authority to Do
executed by a person who refuses to do so, it shall order the Office the Following Only With the  Written Consent or
of the Securities and Exchange Commission where the certificate Ratification of the Limited Partners:  
is recorded, to record the cancellation or amendment of the Ø Do Any Act in Contravention of the Certificate 
certificate; and when the certificate is to be amended, the court shall Ø Do Any Act Making It Impossible to Carry on
also cause to be filed for record in said office a certified copy of its Partnership Business 
decree setting forth the amendment.
Ø Confess a Judgment Against the Partnership 
A certificate is amended or cancelled when there is filed for record Ø Possess Partnership Property or Assign Rights Other
in the Office of the Securities and Exchange Commission, where Than Partnership Purpose
the certificate is recorded: Ø Admit a New General Partner 
(1) A writing in accordance with the provisions of the first or second Ø Admit a New Limited Partner, Unless Right to Do So Is
paragraph, or  Given in the Certificate  
(2) A certified copy of the order of the court in accordance with the Art. 1850 A general partner shall have all the rights and powers
provisions of the fourth paragraph; and be subject to all the restrictions and liabilities of a partner in a
(3) After the certificate is duly amended in accordance with this partnership without limited partners. However, without the written
article, the amended certified shall thereafter be for all purposes consent or ratification of the specific act by all the limited partners,
the certificate provided for in this Chapter. a general partner or all of the general partners have no authority to:
Ø Certificate must be AMENDED when (Art. 1849): (1) Do any act in contravention of the certificate;
• Change in: Firm Name, in Character of the (2) Do any act which would make it impossible to carry on the
Partnership Business, in the Period, or a Time Is ordinary business of the partnership;
Fixed for Its Dissolution; Amount or Character of (3) Confess a judgment against the partnership;
Contributions of Limited Partners, in Time for (4) Possess partnership property, or assign their rights in specific
Return of a Contribution partnership property, for other than a partnership purpose;
• An Additional Limited Partner and/or General (5) Admit a person as a general partner; 
Partners Is Admitted, or a Person Is Substituted (6) Admit a person as a limited partner, unless the right so to
as a Limited Partners   do is given in the certificate;
(7) Continue the business with partnership property on the death,
Art. 1849 After the formation of a limited partnership, additional
retirement, insanity, civil interdiction or insolvency of a general
limited partners may be admitted upon filing an amendment to
the original certificate in accordance with the requirements of partner, unless the right so to do is given in the certificate.
article 1865.
General partner can go to court if the other’s don’t want to sign (see
#6)
3. GENERAL PARTNERS (Art. 1850)
a. General Partners Have the Rights and Powers and Be
Compare with Art. 1818
Subject to All the Restrictions and  Liabilities of a
Partnership Without Limited Partners.  c. General partner may also be a limited partner (Art. 1853):

Art. 1853 A person may be a general partner and a limited partner Art. 1851 A limited partner shall have the same rights as a general
in the same partnership at the same time, provided that this fact partner to: 
shall be stated in the certificate provided for in article 1844.
(1) Have the partnership books kept at the principal place of
A person who is a general, and also at the same time a limited business of the partnership, and at a reasonable hour to inspect
partner, shall have all the rights and powers and be subject to all and copy any of them;
the restrictions of a general partner; except that, in respect to his
contribution, he shall have the rights against the other members (2) Have on demand true and full information of all things
which he would have had if he were not also a general partner. affecting the partnership, and a formal account of partnership
affairs whenever circumstances render it just and reasonable; and
Ø Provided Such Fact Shall Be Stated in the Certificate   (3) Have dissolution and winding up by decree of court.
Ø Shall Have All the Rights/Powers, Subject to All
Restrictions of General Partner   A limited partner shall have the right to receive a share of the profits
Ø EXCEPT: In Respect to His Contribution, He Shall Have or other compensation by way of income, and to the return of
the Rights Against the Other Members Which He his contribution as provided in articles 1856 and 1857.
Would Have Had If He Were Not Also a General Partner
Ø Have Partnership Books Kept at Principal Place of
4. LIMITED PARTNERS Business, to Inspect and/or Copy  Them at
a. May Contribute Money or Property, But Never Service Reasonable Hours  
(Art. 1845)   Ø Have on Demand True and Full Information of Things
Art. 1845 The contributions of a limited partner may be cash or Affecting the Partnership  
property, but not services.  Ø A Formal Account of Partnership Affairs  
Ø Have the Dissolution and Winding-up by Judicial
b. He Shall Not Be Liable As Such to the Obligations of the Decree  
Partnership (Art. 1843), EXCEPT:
Ø When He Allows His Surname to Be Part of the d. He May Loan Money to, and Transact Business with, the
Partnership Name (Art. 1846) Partnership and Receive on Account of the Resulting
Ø He Takes Part in the Control of the Partnership Claims Against the Partnership, with General Creditors
Business (Art. 1848)    
Art. 1848 A limited partner shall not become liable as a general Ø But He Cannot in Respect to Such Claims Receive or
partner unless, in addition to the exercise of his rights and Hold a Collateral Security on Partnership Assets;  
powers as a limited partner, he takes part in the control of the Ø Nor a Payment, Conveyance or Release When Assets
business. of the Partnership Not Sufficient to Cover All
Liabilities to Third Parties. (Art. 1854)  
c. He Shall Have the Same Right as a General Partner to Art. 1854 A limited partner also may loan money to and transact
(Art. 1851): other business with the partnership, and, unless he is also a
general partner, receive on account of resulting claims
against the partnership, with general creditors, a pro rata

share of the assets. No limited partner shall in respect to any partners on account of their contributions and to general
such claim: partners.
(1) Receive or hold as collateral security any partnership property, Compensation here is a passive income for his contribution
or
g. He Has the Right to Demand Return of His Contribution
(2) Receive from a general partner or the partnership any payment, (Art. 1857):  
conveyance, or release from liability if at the time the assets of Art. 1857 A limited partner shall not receive from a general partner
the partnership are not sufficient to discharge partnership or out of partnership property any part of his contributions until:
liabilities to persons not claiming as general or limited partners.
(1) All liabilities of the partnership, except liabilities to general
The receiving of collateral security, or payment, conveyance, or partners and to limited partners on account of their contributions,
release in violation of the foregoing provisions is a fraud on the have been paid or there remains property of the partnership
creditors of the partnership. sufficient to pay them;
e. He Shall Have Priority of Settlement of Their Claims as (2) The consent of all members is had, unless the return of the
Agreed Upon Them or as Provided in the Certificate.   contribution may be rightfully demanded under the provisions of
Ø In the Absence of Agreement or Provision in the the second paragraph; and
Certificate, Limited Partners Shall Stand Upon Equal
Footing (Art. 1855)   (3) The certificate is cancelled or so amended as to set forth the
withdrawal or reduction. 
Art. 1855 Where there are several limited partners the members
may agree that one or more of the limited partners shall have a Subject to the provisions of the first paragraph, a limited partner
priority over other limited partners as to the return of their may rightfully demand the return of his contribution:
contributions, as to their compensation by way of income, or as (1) On the dissolution of a partnership; or 
to any other matter. If such an agreement is made it shall be (2) When the date specified in the certificate for its return has
stated in the certificate, and in the absence of such a arrived, or
statement all the limited partners shall stand upon equal footing. (3) After he has six months' notice in writing to all other members,
if no time is specified in the certificate, either for the return of the
f. He May Receive the Stipulated Share in the Profits contribution or for the dissolution of the partnership.
and/or Compensation By Way of Income, Provided That
After Such Payment the Partnership Assets Are In the absence of any statement in the certificate to the contrary or
Sufficient to Cover Liabilities to Third Parties (Art. 1856) the consent of all members, a limited partner, irrespective of the
  nature of his contribution, has only the right to demand and receive
Art. 1856 A limited partner may receive from the partnership cash in return for his contribution.
the share of the profits or the compensation by way of
income stipulated for in the certificate; provided, that after A limited partner may have the partnership dissolved and its
such payment is made, whether from property of the partnership affairs wound up when: 
or that of a general partner, the partnership assets are in excess
of all liabilities of the partnership except liabilities to limited

(1) He rightfully but unsuccessfully demands the return of his (2) Money or other property wrongfully paid or conveyed to him on
contribution, or account of his contribution.
(2) The other liabilities of the partnership have not been paid,
or the partnership property is insufficient for their payment as The liabilities of a limited partner as set forth in this article can be
required by the first paragraph, No. 1, and the limited partner waived or compromised only by the consent of all members; but a
would otherwise be entitled to the return of his contribution. waiver or compromise shall not affect the right of a creditor of a
partnership who extended credit or whose claim arose after the filing
Ø When the Date Specified in the Certificate for Its and before a cancellation or amendment of the certificate, to enforce
Return Has Arrived   such liabilities.
Ø On Dissolution of the Partnership  
Ø If No Time Is Specified in Certificate for Return of When a contributor has rightfully received the return in whole or in
Contribution or for Dissolution of Partnership: After part of the capital of his contribution, he is nevertheless liable to the
He Has Given 6 Months’ Written Notice to All Members partnership for any sum, not in excess of such return with interest,
  necessary to discharge its liabilities to all creditors who extended
h. He Shall Not Receive Any Part of His Contribution Until credit or whose claims arose before such return.
**Liquidation right – only in cash
(Art. 1857 – see above):  
Ø All Liabilities to Third Parties Have Been Paid or There
EXCEPT:  
Remains Property of the  Partnership Sufficient to
Ø For Difference Between His Contribution as Actually
Pay;   Made and That Stated in Certificate as Having Been
Ø Such Return Is With Consent of All Members, or Return Made
Is Rightfully Demanded;   Ø For Any Unpaid Contribution Which He Agreed in the
Ø Certificate Is Cancelled or Amended.   Certificate in the Future  
i. He Is Not Liable for the Partnership Debts Beyond His Ø A Limited Partner Holds as Trustee for Partnership
Contribution (Art. 1858); • Specific Property Stated in the Certificate as
Contributed by Him, But Which Was Not
Art. 1858 A limited partner is liable to the partnership:  Contributed or Wrongfully Returned  
• Money or Other Property Wrongfully Paid or
(1) For the difference between his contribution as actually made Conveyed to Him on Account of His Contribution
and that stated in the certificate as having been made,  
and
j. Limited Partners’ Right to ―Assign Their Rights or
Substitute Another (Art. 1859):
(2) For any unpaid contribution which he agreed in the certificate to
make in the future at the time and on the conditions stated in the
Art. 1859 A limited partner's interest is assignable. A substituted
certificate.
limited partner is a person admitted to all the rights of a limited
A limited partner holds as trustee for the partnership: partner who has died or has assigned his interest in a partnership.
(1) Specific property stated in the certificate as contributed by him,
but which was not contributed or which has been wrongfully returned, An assignee, who does not become a substituted limited partner,
and has no right to require any information or account of the partnership

transactions or to inspect the partnership books; he is only entitled Ø Substitution Does Not Release Assignor From
to receive the share of the profits or other compensation by way of Partnership Liabilities for:  
income, or the return of his contribution, to which his assignor would • False Statements in the Certificate (Art. 1847)  
otherwise be entitled. • The Difference or What Is Due From Him for His
Contributions (Art. 1858)  
An assignee shall have the right to become a substituted limited Ø An Assignee Who Is Not Substituted Limited Partner
partner if all the members consent thereto or if the assignor, being Has Only One Right: To Receive the Share of the
thereunto empowered by the certificate, gives the assignee that Profits or the Return of the Contribution Which the
right.
Assignor Was Entitled To  
An assignee becomes a substituted limited partner when the
k. Application by Creditors of Limited Partner (Art. 1862):
certificate is appropriately amended in accordance with article
A Limited Partner’s Creditors May Apply With the Courts
1865.
To:
The substituted limited partner has all the rights and powers, and is
Art. 1862 On due application to a court of competent jurisdiction by
subject to all the restrictions and liabilities of his assignor, except
any creditor of a limited partner, the court may charge the interest
those liabilities of which he was ignorant at the time he became a
of the indebted limited partner with payment of the unsatisfied
limited partner and which could not be ascertained from the
amount of such claim, and may appoint a receiver, and make all
certificate.
other orders, directions and inquiries which the circumstances of
The substitution of the assignee as a limited partner does not the case may require.
release the assignor from liability to the partnership under articles
1847 and 1858. The interest may be redeemed with the separate property of any
general partner, but may not be redeemed with partnership
property.
Ø A Limited Partner’s Interest Is Assignable  
Ø A “Substituted Limited Partner” Is a Person Admitted The remedies conferred by the first paragraph shall not be deemed
to All the Rights of a Limited Partner Who Dies or Has
exclusive of others which may exist. Nothing in this Chapter shall
Assigned His Interest  
be held to deprive a limited partner of his statutory exemption. 
Ø Assignee Shall Have the Right to Become a
Kind of debt: judgment debt
Substituted Limited Partner Only If:
• All the Members Consent; OR  
Ø Charge His Partnership Interests with Payment of
• Assignor Gives Assignee Such Right under the Unsatisfied Amount of Such Claims, Appoint a
Terms of the Certificate   Receiver, Make All Other Orders Which May Be
• AND the Certificate Is Appropriately Amended   Appropriate
Ø Substituted Limited Partner Has All the Rights and Ø Interest May Be Redeemed With Separate Property of
Powers, and Is Subject to All the Restrictions and Any General Partner, But Not Partnership Property  
Liabilities of Assignor; EXCEPT: Those Liabilities of
Which He Was Ignorant and Which Could Not Be l. Limited Partner Is Not a Proper Party to Proceedings By
Ascertained from the Certificate   or Against the Partnership

Ø EXCEPT: Where Object Is to Enforce a His Right Ø Death, Insolvency, Civil Interdiction, Insanity or
Against or Liability to the  Partnership (Art. 1866)   Retirement, of a General Partner Dissolves the
Art. 1866 A contributor, unless he is a general partner, is not a Partnership
proper party to proceedings by or against a partnership, except Ø UNLESS: Business Is Continued by Remaining
where the object is to enforce a limited partner's right against General Partners–
or liability to the partnership. • Under a Right To Do So in the Certificate; OR  
• With the Consent of All Members  
m. A Person Who Has Contributed to Capital of a Business b. Causes Pertaining to the Limited Partner:  
Conducted as a Partnership, Believing that He Has Ø Death of a Limited Partner Does Not Dissolve the
Become a Limited Partner: Partnership
Ø Is Not a General Partner By Reason of Exercise of • BUT: Executor/Administrator Shall Step-in for
Such Rights; PROVIDED: On Ascertaining Mistake, Purposes of Settling His Estate, Including the
He Promptly Renounces His Interest in the Profits of Power to Constitute an Assignee (Arts. 1861 and
the Business or Other Compensation by Way of 1864)  
Income  
Ø EXCEPT: When He Allows His Surname to Be Part of Art. 1861 On the death of a limited partner his executor or
the Firm Name (Art. 1852)   administrator shall have all the rights of a limited partner for the
purpose of setting his estate, and such power as the deceased
Art. 1852 Without prejudice to the provisions of article 1848, a had to constitute his assignee a substituted limited partner.
person who has contributed to the capital of a business conducted
by a person or partnership erroneously believing that he has The estate of a deceased limited partner shall be liable for all his
become a limited partner in a limited partnership, is not, by reason liabilities as a limited partner.
of his exercise of the rights of a limited partner, a general partner
with the person or in the partnership carrying on the business, or
bound by the obligations of such person or partnership, provided Ø When There Cease to Be Limited Partners, the
that on ascertaining the mistake he promptly renounces his interest Partnership Is Dissolved and the Certificate Must Be
in the profits of the business, or other compensation by way of Cancelled(Art. 1864)  
income. Ø A Limited Partner May Demand Dissolution and
Winding-up When (Art. 1857):  
5. DISSOLUTION AND WINDING UP • He Rightfully But Unsuccessfully Demands
a. Causes Affecting the General Partners (Art. 1860): Return of His Contribution; OR
• Liabilities to Third Parties Have Not Be Paid,
Art. 1860 The retirement, death, insolvency, insanity or civil
Partnership Property Insufficient for Their
interdiction of a general partner dissolves the partnership, unless Payment, But Limited Partner Would Otherwise
the business is continued by the remaining general partners: Be Entitled to the Return of His Contribution
c. Order of settlement of accounts (Art. 1863):
(1) Under a right so to do stated in the certificate, or
(2) With the consent of all members.

Art. 1863 In settling accounts after dissolution the liabilities of the (1) The amount of the original contribution of each limited partner,
partnership shall be entitled to payment in the following order: and the time when the contribution was made; and
(1) Those to creditors, in the order of priority as provided by law,
except those to limited partners on account of their contributions, (2) That the property of the partnership exceeds the amount
and to general partners; sufficient to discharge its liabilities to persons not claiming as
(2) Those to limited partners in respect to their share of the profits general or limited partners by an amount greater than the sum
and other compensation by way of income on their contributions; of the contributions of its limited partners.
(3) Those to limited partners in respect to the capital of their
contributions; A limited partnership formed under the law prior to the effectivity of
(4) Those to general partners other than for capital and profits;  this Code, until or unless it becomes a limited partnership under
(5) Those to general partners in respect to profits;  this Chapter, shall continue to be governed by the provisions of
(6) Those to general partners in respect to capital. the old law.
Subject to any statement in the certificate or to subsequent

agreement, limited partners share in the partnership assets in
respect to their claims for capital, and in respect to their claims
for profits or for compensation by way of income on their
contribution respectively, in proportion to the respective
amounts of such claims.
Ø Those to Creditors, Including Limited Partners’

Claims Other Than for Contributions and Share in the
Profits  
Ø Those to Limited Partners as Shares in
Profits/Compensation by Way of Income  
Ø Those to Limited Partners in Respect to Their
Contributions  
Ø Those to General Partners Other Than for Capital and
Profits  
Ø Those to General Partners In Respect to Profits  
Ø Those to General Partners in Respect to Capital  
Codal provision with no heading (Art. 1867)
Art. 1867 A limited partnership formed under the law prior to the
effectivity of this Code, may become a limited partnership under
this Chapter by complying with the provisions of article 1844,
provided the certificate sets forth:

D. JOINT VENTURE AGREEMENTS ii. 5.3 Contractual JV - A legal and binding agreement under
which the JV Partners shall perform the primary functions
I. THE ESSENCE OF JOINT VENTURE AGREEMENTS (JVA) and obligations under the JVA without forming a JV
Company.  
1. Joint ventures are species of the partnership iii. 5.8 JV Company - A stock corporation incorporated and
registered in accordance with the provisions of the
REALUBIT v. JASO Corporation Code of the Philippines, and based on the
Generally understood to mean an organization formed for some prevailing rules and regulations of the SEC of which fifty
temporary purpose, a joint venture is likened to a particular percent (50%) or less of the outstanding capital stock is
partnership. Joint ventures are governed by the law on partnerships owned by the government. The JV Company shall be
which are, in turn, based on mutual agency or delectus personae. registered by the JV partners that shall perform the primary
Applying therefore Art. 1813, it is evident that ―(t)he transfer by a functions and obligations of the JV as stipulated under the
partner of his partnership interest does not make the assignee of JV Agreement. The JV Company shall possess the
such interest a partner of the firm, nor entitle the assignee to characteristics stipulated under these Guidelines.
interfere in the management of the partnership business or to
receive anything except the assignee's profits   b. Regulating combinations in restraint of trade and unfair
competition: Rules and regulations to implement R.A.
2. Special joint venture definition and concepts 10667 (Philippine Competition Act)
Rule 2(i): “Joint venture” refers to a business arrangement
a. Revised guidelines for entering into JVAs between whereby an entity or group of entities contribute capital,
government and private entities per Sec. 8 of E.O. 423 services, assets, or a combination of any or all of the foregoing,
i. 5.7 Joint venture (JV) - An arrangement whereby a private to undertake an investment activity or a specific project, where
sector entity or a group of private sector entities on one each entity shall have the right to direct and govern the policies
hand, and a Government Entity or a group of Government in connection therewith, with the intention to share both profits
Entities on the other hand, contribute money/capital, and risks and losses subject to agreement by the entities.
services, assets (including equipment, land, intellectual
property or anything of value), or a combination of any or all II. JURISPRUDENTIAL RULES ON THREE TYPES OF JVA
of the foregoing to undertake an investment activity. The
investment activity shall be for the purpose of accomplishing 1. Information on contractual JVA without a “separate firm”
a specific goal with the end view of facilitating private sector
initiative in a particular industry or sector, and eventually Sec opinions
transfer the activity to either the private sector under 22 Dec.
competitive market conditions or to the government. The JV 1966; 29 Feb.1980; 03 Sept. 1984
involves a community or pooling of interests in the NOTE: SEC’s online database does not have any opinions earlier than the
year 2005, so the following are very brief summaries lifted from online
performance of the investment activity, and each party shall
sources. Not sure how relevant or helpful they will be.
have the right to direct and govern the policies in connection
therewith with the intention to share both profits and, risks 22 DEC 1966
and losses subject to agreement by the parties. A JV may a corporation cannot enter into a contract of partnership with an individual
be a Contractual JV or a Corporate JV (JV Company).   or another corporation on the premise that if a corporation enters into a
partnership agreement, it would be bound by the acts of the persons who

are not its duly appointed and authorized agents and officers, which is
entirely inconsistent with the policy of the law that the corporation shall a. Informal JVAs must be construed and enforced as
manage its own affairs separately and exclusively. contracts among co-venturers
PHILEX MINING CORP v COMMISSIONER OF INTERNAL REVENUE
29 FEB 1980
The authority to enter into a partnership relation is expressly conferred by Although parties executed a “Power of Attorney” and referred to
the charter or the articles of incorporation of the corporation, and the nature themselves as “Principal” and “Manage”, it reveals that a joint
of the business venture to be undertaken by the partnership is in line with venture was indeed intended by the parties. Perusal of the
the business authorized by the charter or articles of incorporation agreement indicates that the parties had intended to create a
partnership and establish a common fund for the purpose. They
03 SEPT 1984 also had a joint interest in the profits of the business as shown by a
The agreement on the articles of partnership must provide that all the 50-50 sharing in the income of the mine. While a corporation, like
partners shall manage the partnership, and the articles of partnership must
petitioner, cannot generally enter into a contract of partnership
stipulate that all the partners shall be jointly and severally liable for all the
obligations of the partnership.
unless authorized by law or its charter, it has been held that it may
enter into a joint venture which is akin to a particular partnership
relationship.
KILOSBAYAN INC v. GUINGONA JR.
Contract of Lease violates PCSO‘s charter which prohibits it “to hold PHILEX MINING CORP v. CIR
and conduct charity sweepstakes races, lotteries and other similar The fact that the instrument does not clearly provide for an option,
activities” “in collaboration, association or joint venture” with any and not an obligation, on the part of one of the co-venturers to make
other party, because it mandates lessee to contribute resources into contributions into the business enterprise, will not detract from the
the venture and to manage and operate directly the facilities, and legal fact that they constituted a partnership between themselves:
makes lessee participate not only in the revenues generated from “The wording of the parties‘ agreement as to petitioner‘s
the venture, and in fact absorb most of the risks involved therein. contribution to the common fund does not detract from the fact that
AJVA has really been constituted between purported lessor and petitioner transferred its funds and property to the project as
lessee, since under the Law on Partnership, whenever there is an specified in paragraph 5, thus rendering effective the other
agreement to contribute money, property or industry to a common stipulations of the contract, particularly paragraph 5(c) which
fund, with an agreement to share the profits and losses, then a prohibits petitioner from withdrawing the advances until termination
partnership arises of the parties‘ business relations. As can be seen, petitioner
became bound by its contributions once the transfers were made.
The contributions acquired an obligatory nature as soon as
INFORMATION TECHNOLOGY FOUNDATION v. COMELEC
petitioner had chosen to exercise the option”.
When the purported primary co-venturer in a consortium (which is
an association of corporation bound in a joint venture arrangement)
declares unilaterally that the other four members are part of a MENDOZA v. PAULE
consortium, but there is no affirmation from any of the other When principal and agent have entered into a “Power of Attorney”
members, nor is there a showing through a formal joint venture covering a construction project, with the principal contributing
agreement of a community of interest, a sharing of risks, profits and thereto his contractor‘s license and expertise, while the agent would
losses in the project bidded for, then there is really no joint venture provide and secure the needed funds for labor, materials and
constituted among them, lacking the essential elements of what services, deal with the suppliers and sub-contractors; and in
makes a partnership general and together with the principal, oversee the effective
implementation of the project, for which the principal would receive

as his share 3% of the project cost while the rest of the profits shall partnership creditors and cannot be invoked when the issue is
go to the agent, the parties have in effect entered into a partnership, between and among the partners; and (b) the alleged nullity of the
and the revocation of the powers of management of the agent is partnership will not prevent courts from considering the JVA as an
deemed a breach of the contract ordinary contract form which the parties rights and obligations to
each other should be inferred and enforced
TRAVENO v. BOBONGON BANANA GROWERS MULTI- PRIMELINK PROPERTIES & DEV. CORP. v. LAZATIN-MAGAT
PURPOSE COOPERATIVE Since the parties entered into a joint venture as evidenced by their
In an informal joint venture arrangement, because no separate firm JVA, the issues shall be governed by the laws on partnership. Since
or business enterprise has been constituted as to the dealing public, it has been proven that Primelink as developer of the subdivision
then the effects of the attributes of “mutual agency” and “unlimited project has defrauded the Lazatins from their share in the income,
liability” are not made to apply with respect to creditors. it was proper for the trial court to give possession of the property
under development to the Lazatins who had sought rescission of
See: the JVA. However, the property is held by the Lazatins for purposes
BASTIDA v. MENZI & CO of winding-up the affairs of the joint venture as provided under Art.
Despite agreement that Bastida was to receive 35% of the profit 1836. Until there is proper winding-up of the affairs which requires
from the business of mixing and distributing fertilizer registered in the settlement of all claims of partnership creditors, it would be
the name of Menzi& Co., there was never any contract of premature for Primelink to demand the value of the improvements
partnership constituted on the following key elements: it has introduced on the property contributed by the Lazatins
(a) there was never any common fund created between the parties,
since the entire business as well as the expenses and MARSMANDRYSDALE LAND INC v. PHILIPPINE
disbursements for operating it were entirely for the account of GEOANALYTICS INC
Menzi& Co.; JV is governed by Law on Partnerships. Here, the JVA parties
(b) there was no provision in the agreement for reimbursing Menzi& agreed on a 50-50 ratio on the proceeds of the project, although
Co. in case there should be no profits at the end of the year; and they did not provide for the splitting of losses, which therefore puts
(c) the fertilizer business was just one of the many lines of business into application Art. 1797: the same ratio applies in splitting the
of Menzi& Co., and there were no separate books and no separate obligation-loss of the joint venture. There being a JVA, not allowing
bank accounts kept for that particular line of business. The MarsmanDrysdale to recover from Gotesco what it paid to PGI
arrangement was one of employment. would not only be contrary to the law on partnership on division of
losses but would partake of a clear case of unjust enrichment at
2. Formal JVA: A form of partnership with a firm established Gotesco‘s expense.
TORRES v. CA
When a “Joint Venture Agreement” covers the terms for the J. TIOSEJO INVESTMENT CORP v. ANG
development of a subdivision project, the contributions of co- A joint venture is a partnership and governed by the Law of
venturers, and manner of distribution of the profits, then a Partnerships. Art. 1824 provides all partners solidarily liable with the
partnership has been duly constituted under Art. 1767 of Civil Code, partnership due to any wrongful act or omission of any partner
and although no inventory was prepared covering the parcels of acting in the ordinary course of the business of the partnership or
land contributed to the venture, much less was a certificate of with the authority of his co- partners. Whether innocent or guilty, all
registrations filed with the SEC. The partnership was not void the partners are solidarily liable with the partnership itself.
because: (a) Art. 1773 is intended for the protection of the

AURBACH v. SANITARY WARES MANUFACTURING CORP.
BUENVIAJE v. SPS. SALONGA The manner of nomination of the members of the Board of Directors
Co-Venturers Are Liable Only for Liabilities Pursued in the Name of provided in the Joint Venture Agreement must be made effective
and Pursuant to the Purpose of the JV Arrangement. – While and reconciled with the statutory provision on cumulative voting
Jebson, as developer, and Spouses Salonga, as land owner, made applicable by the Corporation Code to stock corporations.
entered into a joint venture, which — based on case law — may be
considered as a form of partnership, the fact remains that their joint JG SUMMIT HOLDINGS INC. v. CA
venture was never privy to any obligation with Buenviaje. It must be The right of first refusal in the JVA under which the corporation is
pointed out that the JVA between Jebson and Spouses Salonga organized constitutes a legal means by which the corporate venture
was limited to the construction of the residential units under the would include the delectus personae characteristic within the JV
Brentwoods Project, and thereafter the distribution of specified units arrangement, allowing stockholders the ability to prevent equity
between the co-ventures; and that Jebson had the sole hand in interests from being transferred to third parties. The JVA‘s right of
marketing the units allocated to it to third persons, such as first refusal must be made to apply and be binding to the
Buenviaje. Hence, liability cannot be imputed against the joint Government and the bidder at a public bidding held on the shares
venture based on the same principle of relativity as above- of the JV corporation.
mentioned. In fact, under the express terms of the JVA, Jebson, as
the developer, had even stipulated to hold Spouses Salonga free HONTIVEROS-BARAQUEL v. TOLL REGULATORY BOARD
from any liability to third parties for non-compliance with HLURB JV is an association of companies jointly undertaking a commercial
rules and regulations. As things stand, only Jebson should be held endeavor, with all contributing assets and sharing risks, profits, and
liable for its obligations to Buenviaje under the subject CTS. losses. It is hardly distinguishable from a partnership considering
that their elements are similar and, thus, generally governed by the
3. Arrangement pursue through a JV Corporation law on partnership. In the JVA PNCC contributes its franchise, while
a. Status of the JVA prior to the incorporation of the JV the partner contributes the financing — both necessary for the
corporation construction, maintenance, and operation of the toll facilities. PNCC
FONG v. DUENAS did not thereby lease, transfer, grant the usufruct of, sell, or assign
A verbal JVA to incorporate a company that would hold parties‘ its franchise or other rights or privileges. This is true even though
shares and serve a business vehicle for their food enterprise, is the partnership acquires a separate personality or leads to a JV
valid and binding. JVA created between them reciprocal obligations Company.
that must be performed in order to fully consummate the contract
and achieve the purpose for which it was entered into. JVAis MABUHAY HOLDINGS CORP v. SEMBCORP LOGISTICS LTD.
deemed extinguished through rescission under Art.1192 in relation Joint venture between Mabuhay, IDHI and Sembcorp was pursued
with Art. 1191. Dueñas must therefore return the P5 Million that under the JV Corporations, WJSC and WJNA. By choosing to adopt
Fong initially contributed since rescission requires mutual a corporate entity as the medium to pursue the joint venture
restitution. After rescission, parties must go back to their original enterprise, the parties are bound by Corporate Law principles,
status before the agreement among which is the limited liability doctrine. The use of a joint
venture allows the co-venturer to take full advantage of the limited
b. Emerging doctrinal rules under a JVA pursued through a liability feature of the corporate vehicle which is not present in a
JV corporation formal partnership arrangement.

Agency, Trusts, Partnerships & Joint Ventures Atty. Jose U. Cochingyan III

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AGENCY, TRUSTS, PARTNERSHIPS & JOINT VENTURES

Atty. Jose U. Cochingyan III

Talisa Mari D. Dela Rosa | ALS 2E 2022 1

C. CONSTRUCTIVE TRUSTS There was a fiduciary relationship arising from an employer-

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(4) Where CestuiQue Trust Is in Possession of Trust Property – An

Reason: One in actual possession claiming to be its owner may wait

Given the falsity of the ESW, it becomes apparent that petitioner

(5) Where Trustee’s Title Is Void– Where signatures of the

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Where the title to real property is in the name of all the

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1. Kinds of partners Ø Equal right to possess, but for partnership

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d. Art. 1813: conveyance by partner of His Whole Partnership

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When the business of a partnership after dissolution is

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Art. 1843 A limited partnership is one formed by two or more

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Subject to any statement in the certificate or to subsequent

Ø Those to Creditors, Including Limited Partners’

Codal provision with no heading (Art. 1867)

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