Art. 1800.

The partner who has been appointed manager in the articles of partnership may execute all acts of
administration despite the opposition of his partners, unless he should act in bad faith; and his power is
irrevocable without just or lawful cause. The vote of the partners representing the controlling interest shall be
necessary for such revocation of power.
A power granted after the partnership has been constituted may be revoked at any time. (1692a)

RIGHTS AND OBLIGATIONS WITH RESPECT TO MANAGEMENT

GR: A partner who has been appointed a MANAGER in the ARTICLES OF PARNTERSHIP may EXECUTE ALL ACTS of
administration despite the opposition of his co-partners (provided he is in GF)
EXPN: But if he acts in BAD FAITH and there is an opposition, he may not execute such acts

Gen rule on revocation: The power (to execute all acts of admin) may not be revoked UNLESS:
1. There is JUST OR LAWFUL CAUSE and
2. The vote of the partners representing the CONTROLLING INTEREST is had
Exception: Powers granted AFTER THE CONSTITUTION OF THE PARTNERSHIP may be revoked at any time

TWO DISTINCT CASES OF APPOINTMENTS UNDER ART 1800

1. Appointment as manager in the ARTICLES OF PARNTERSHIP
- Here, the partner appointed as managing partner by common agreement in the Articles of Partnership
may execute all acts of administration (and not acts of strict of ownership under Art. 1818 par. 3)
- He may execute such acts of admin EVEN WITH the opposition of the other partners
Exception: Unless he acted in bad faith
- His appointment as manger may be REVOKED ONLY IF:
o There is just and lawful cause
o The vote of the partners constituting the controlling interest is had
Because the revocation is deemed to be a CHANGE IN THE TERMS OF THE CONTRACT. The appointment
made is considered as one of the conditions of the contract and can therefore be changed only with the
consent of ALL the partners including the appointee.

2. Appointment as manager AFTER the constitution of the partnership

- If a partner is designated as a MANAGER after the articles of partnership is constituted, then, the
appointment may be revoked at ANY TIME, FOR ANY CAUSE
- Reason: Because in this case, the appointment is not a condition of the contract and therefore, the
revocation is not founded on a CHANGE OF THE WILL OF THE PARTNERS. There is merely a CONTRACT OF
AGENCY which may be revoked anytime
- But, for there to be revocation, there should be a vote of a majority of the partners, having the
CONTROLLING INTEREST

SCOPE OF THE POWER OF THE MANAGING PARTNER

GR: the managing partner has ALL THE POWERS OF A GENERAL AGENT and those INCIDENTAL POWERS necessary
to carry out the object of the partnership
EXPN: When the power of the managing partner is restricted

COMPENSATION FOR SERVICES RENDERED

GR: He is NOT entitled to an additional compensation BEYOND his share in the profits of the business
Reason: because EACH PARTNER (in the absence of an agreement) assumes the duty to give his TIME,
ATTENTION and SKILL to manage the affairs of the partnership. In his managing the partnership, he in
effect is taking care of his own interest and property. Thus, even if his services is greater in proportion
 than the rest because he is the managing partner; or because his co-partners are ill, his only
compensation is his share in the PROFITS
EXPN:
1. The law may IMPLY a contract for compensation
a. When the partner is made to do something NOT in the fulfillment of his duties in the partnership
or not related to the partnership business
b. When the partner employs his co-partner for him to do something for him OUTSIDE OF AND
INDEPENDENT of the partnership business
c. When the partner is guilty of EXTRAORDINARY NEGLIGENCE in which case, the burden of
management is shifted to the other partner (the latter shall be entitled to compensation)
d. Where the partner is EXEMPT from rendering services in which case, he may demand payment
for services he rendered OR WHERE THE SERVICES rendered were EXTRAORDINARY
e. When the managing partner is OVERBURDENED with work because he devotes all his time and
attention to the partnership while his co-partners are busy with their individual business in which
case, an UNUSUAL CONDITION presents itself and he may thus demand compensation
f. Where there is WILFUL failure on the part of the managing partner to fulfill his duty in which case
the other partners are burdened to perform such
2. The parties may agree that there would be payment of compensation

* If there is no PROHIBITION AS THIS REGARD in the Articles of Partnership, then, compensation may be agreed to
be given to a GENERAL PARTNER
Art. 1801.
If two or more partners have been intrusted with the management of the partnership without
specification of their respective duties, or without a stipulation that one of them shall not act without the
consent of all the others, each one may separately execute all acts of administration, but if any of them should
oppose the acts of the others, the decision of the majority shall prevail. In case of a tie, the matter shall be
decided by the partners owning the controlling interest. (1693a)

GR: If 2 or more partners were instructed with the management of the partnership BUT there was no
SPECIFICATION of their duties or WITHOUT stipulation that ONE OF THEM shall not act WITHOUT THE CONSENT of
the others, then they may SEPARATELY execute all acts of administration

EXPN: However if any of them (other managing partners) should oppose the acts of the others:

1. The decision of a majority shall prevail

2. In case of tie, the decision of the partners owning the controlling interest shall prevail

Q; WHAT DECISION WILL PREVAIL IN CASE OF OPPOSITION?

1. First, the matter shall be decided by the MAJORITY of the managing partners
2. In case of a tie, the matter shall be decided by the partners having the controlling interest (more than 50%
of the capital investment)

THE REQUISITES FOR THE APPLICATION OF THE RULE

1. 2 OR MORE partners have been appointed as managing partners
2. There is no specification of their respective duties
3. There is no stipulation that one may not act without the consent of the others
*If there is no specification as re the respective duties of the partners, then, one may not have MORE POWERS
than the other managing partners in the conduct and management of the partnership

*But if there is a SPECIFICATION OF DUTIES, then, the partner’s (in charged) decision will prevail over the others

Art. 1802.
In case it should have been stipulated that none of the managing partners shall act without the consent
of the others, the concurrence of all shall be necessary for the validity of the acts, and the absence or disability
of any one of them cannot be alleged, unless there is imminent danger of grave or irreparable injury to the
partnership. (1694)

GR: In case where there is a stipulation that no MANAGING PARTNER may act without the consent of ALL the
partners, the CONCURRENCE OF ALL shall be necessary for the validity of their acts

Gen rule 2: And the ABSENCE or DISABILITY of the partner may not be alleged as an excuse or justification
Exception:

1. The same may be an excuse or justification if there is an IMMINENT DANGER OF GRAVE OR IRREPARABLE
INJURY to the partnership
2. Where the partnership is engaged in the BUY AND SELL BUSINESS where it is USUAL AND CUSTOMARY TO
BUY AND SELL ON CREDIT – Smith, Bell and Co. v. Aznar

NB:

1. The partners may stipulate in their ARTICLES OF PARTNERSHIP that no managing partner may act without
the consent of all the other managing partners

Q; WHAT THEN IS REQUIRED IN SUCH CASE?

The UNANIMOUS consent of all the managing partners is necessary for the validity of their acts

Q; WHAT IS THE EFFECT OF SUCH REQUIREMENT OF UNANIMITY OF CONSENT?

The consent of ALL THE MANAGING PARTNERS are so INDISPENSABLE such that the absence or
disability of the partners may not be interposed as an excuse or justification to dispense with
such a requirement
Exception: Where there is IMMINENT DANGER of GRAVE OR IRREPARABLE INJURY TO THE PARNTERSHIP
then one managing partner may act EVEN without the consent of the ABSENT OR DISABLED without
prejudice to his liability under Art. 1794

2. The EXCEPTION under Art. 1802 will not apply where there is an OPPOSITION on the part of the other
managing partners
Reason: One of the essential conditions of the authority conferred on the managing partner is that the
MANAGEMENT should be with the consent of ALL THE PARTNERS

Q; WHAT IF SUCH CONSENT IS WANTING?

If such unanimous consent is wanting, then, the proposed act is OUTISIDE HIS AUTHORITY
Art. 1803.
When the manner of management has not been agreed upon, the following rules shall be observed:
(1) All the partners shall be considered agents and whatever any one of them may do alone shall bind
the partnership, without prejudice to the provisions of Article 1801.
 (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)

The standing of the partners in case they failed to indicate the manner of management
- In case of their failure to indicate either in the Articles of Partnership or subsequent contract WHO SHALL
MANAGE the affairs of the partnership, then ALL THE PARTNERS shall have EQUAL RIGHTS in the conduct
and management of the partnership affairs. ALL OF THEM shall be MANAGERS AND AGENTS and any act
done by them alone shall BIND THE PARTNERSHIP subject, however to the provision of Art. 1801 in case of
TIMELY OPPOSITION on the part of any partner in which case, the MAJORITY VOTE shall be had for the
PRESUMED INTENT OF THE PARTIES is that they shall all manage REGARDLESS of their capital
contribution. In case of a tie, then, the CONTROLLING INTEREST’S decision will prevail

Q: HOW MANY PARTNERS SHOULD CONCEDE AS RE THE IMPORTANT ALTERATION OF IMMOVABLE PROPERTY?
Unanimous consent is necessary so that ANY IMPORTANT ALTERATION to the immovable property may be
made.

Q: HOW SHOULD THE CONSENT BE GIVEN?

The consent need not be express. It may be implied from the fact that ACTUAL KNOWLEDGE was acquired and
no opposition from the other partners was made

Q: DOES THE PROHIBITION APPLY TO MOVABLE PROPERTY?

No, it only applies to immovable property because of the greater importance of this kind of property

Q: IS ANY ALTERATION CONTEMPLATED?

No, it must be an IMPORTANT ALTERATION in immovable property. Any important alteration constitutes an
act of STRICT DOMINION.

Q: MAY THE MANAGING PARTNER MAKE ANY IMPORTANT ALTERATION IN THE IMMOVABLE PROPERTY?
No, even the managing partner may not make any important alteration in the immovable property WITHOUT
THE CONSENT of the other partners

Exception: If the refusal of consent by any partner is MANIFESTLY PREJUDICIAL to the interest of the
partnership, then, the intervention of the court may be sought so that important alterations to the immovable
property may be made.

NB: The consent may be presumed from the failure to make any opposition

Q: WHAT IF THE ALTERATION IS NECESSARY FOR THE PRESERVATION?

The law speaks of alteration that is useful to the partnership. Hence, when the alteration is necessary for its
preservation, then, the consent of the other partners is not necessary

Q: A, B AND C FORMED A PARTNERSHIP FOR A TRANSPORTATION BUSINESS. THERE WAS NO AGREEMENT AS RE

THE MANNER OF MANAGEMENT. A CONTRACTED A DEBT FOR SUPPLIES. ARE THE PARTNERSHIP AND THE
PARTNERS LIABLE FOR THE INDEBTEDNESS?
Yes. Where there was no agreement was re the manner of management, each partner is considered as an
AGENT of the partnership. A must be deemed to have an authority to contract the debt in as much as he
incurred the same in the prosecution of the partnership business – Bachrach v. La Protectora

Q: IN THE ARTICLES OF PARTNERSHIP, THE PARNTERS ARE NOT GIVEN THE AUTHORITY TO ENTER INTO
CONTRACTS. IT IS THE DEPARTMENT THRU A RESO OF 6 MEMBERS THAT COULD SO ENTER INTO SUCH CONTRACT.
A 3RD PERSON SEEKS ENFORCEMENT OF A CONTRACT ENTERED INTO BY ONE OF THE PARTNERS. IS THE
PARTNERSHIP BOUND?
No. The partners may be empowered to contract in the name of the partnership ONLY if there is no provision
as re the management of the partnership. In this case, the articles did so provide. The partners are not
empowered to enter into contracts. Hence, the department cannot be bound without a resolution adopted by
it in a meeting – Council of Red Men v. Veterans Army

Art. 1804.
Every partner may associate another person with him in his share, but the associate shall not be
admitted into the partnership without the consent of all the other partners, even if the partner having an
associate should be a manager. (1696)

GR: Every partner may ASSOCIATE another person with him in his share BUT such associate shall NOT be admitted
into the partnership without the consent of ALL THE OTHER PARTNERS, even if the partner having an associate
may be the MANAGER

Q: WHAT IS THE RULE PROVIDED FOR UNDER ART. 1804?

That every partner may associate with another person, known as the SUBPARTNER, as re his share (partner’s
share) even without the consent of the other partners

Q: WHAT IS THE PARTNERSHIP FORMED BETWEEN A MEMBER OF A PARNTERSHIP AND A 3RD PERSON?
A SUBPARTNERSHIP. The manner by which the profits are to be divided between the members of the
subpartnership or that one of the members shall receive the entire profits is immaterial as re the formation of
the subparntership

Q: IS THE SUBPARTNERSHIP = MAIN PARTNERSHIP?

No. it could be said that it is a partnership within a partnership. It is a distinct and separate partnership from
that of the main partnership

Q: DOES A SUBPARTNER AUTOMATICALLY BECOME A MEMBER OF THE PARTNERSHIP?

No. A subpartnership agreement does not in any wise AFFECT the composition, existence and operations of
the firm. But the subpartners are partners INTER SE but the subpartner does not become a member of the
firm WITHOUT the mutual assent of all the partners EVEN if they know of the existence of the subpartnership
agreement

Q: DOES THE SUBPARTNER ACQUIRE THE RIGHTS OF A PARNTER AS WELL AS THEIR OBLIGATONS?
NO. Not being a member of the partnership, then, he does not acquire the rights of the partners and neither
does he become indebted for the partnership’s debts