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RULES ON ASSOCIATE OF PARTNER CONVEYANCE OF PARTNER’S INTEREST

o Every partner may associate another person with him in his share Conveyance of Whole Interest
o For a partner to have an associate in his share consent of all the other o Partnership may still remain
partners is NOT REQUIRED. – mere conveyance does not dissolve the partnership
o For the associate to become a partner ALL MUST CONSENT. o Partnership may be dissolved
– upon agreement of all partners
RULES ON PARTNERSHIP BOOK
o Kept at the principal place of business of the partnership Rights Withheld From Assignee
o At any reasonable hour, every partner shall have access to and may 1. Cannot interfere with the management of partnership.
inspect and copy any of them. 2. Cannot require any information or account.
o Partner may only use such information gathered from the books for 3. Cannot inspect partnership books
partnership purposes. The ASSIGNEE does not necessarily become a partner
– The ASSIGNOR is still the partner, with a right to demand accounting
DUTY OF PARTNERS TO GIVE INFORMATION and settlement.
o Duty to render true and full information affecting the partnership upon
demand. Rights of Assignee
o Good faith not only requires that a partner should not make any FALSE o To get whatever profits the assignor-partner would have obtained.
CONCEALMENT, BUT he should abstain from all concealment. o To avail himself of the usual remedies in case of fraud in the management
Every partner must account to the partnership o To demand an accounting BUT only if the partnership is dissolved.
ü Any benefit acquired o To ask for ANNULMENT of the contract of assignment if:
ü Any profits received a.) He was induced to enter into it through any of the vices of consent;
ü Any use of partnership property b.) He himself was incapacitated to give consent
RIGHT TO DEMAND A FORMAL ACCOUNT PREFERENTIAL RIGHT OF PARTNERSHIP CREDITOR
Any partner shall have the right to a formal account as to partnership affairs Application of Article 1814
o If wrongfully excluded from partnership BUSINESS o Partnership creditors are entitled to PRIORITY over partnership assets,
o If wrongfully excluded from partnership PROPERTY by his co-partners including the partners interest in the profits.
o If the right exists under the terms of agreement o SEPARATE or INDIVIDUAL creditors have PREFERENCE in
o If the other partner receives other benefits, profits or uses partnership separate or individual properties of partners.
property o When the CHARGING ORDER is applied for and granted, the court
o Whenever other circumstances render it just and reasonable may appoint a receiver of the partners share in the profits.
PROPERTY RIGHTS OF PARTNERS Rule:
1. Rights in specific partnership property - The receiver appointed is entitled to any relief necessary to conserve the
2. Interest in the partnership partnership assets for partnership purposes.
3. Right to participate in the management - Interest charged may be redeemed at any time before foreclosure.
Rights to Specific Partnership Property FIRM NAME
Rule: (1811) 1. A name under which a business operates
1. A partner has equal rights with his partners to POSSESS the property 2. It distinguishes the partnership who has a separate and distinct personality
BUT only for PARTNERSHIP PURPOSES. from the partners composing it.
2. A partner CANNOT ASSIGN his right to the property EXCEPT if all 3. Such firm name must be registered with DTI and SEC.
the other partners assign their rights in the same property.
3. A partner’s right in specific partnership property is NOT subject to Rule: (Art. 1815)
attachment or execution EXCEPT on a claim against the partnership. 1. Every partnership shall operate under a FIRM NAME.
4. A partner’s right in specific partnership property is not subject to legal – the firm name may or may not include the name of one or more of the
support. partners.

Exception: 2. STRANGERS who include their names in the firm are liable as partners
• A partner may possess such property for other purposes PROVIDED the because of ESTOPPEL, BUT do NOT have the RIGHTS of partners.
other partners expressly or impliedly gives their CONSENT.
• If used by a partner for his own benefit, he should account to the others Other Rules:
the profits derived from the property. o May not use false, misleading, or assumed name
o May use deceased partner’s name but such must be indicated in all its
• Wrongful exclusive possession of a partner of such property may be a
communications.
ground for dissolution.
• By agreement, rights to possess specific property maybe surrendered to a PARTNER’S LIABILITY FOR CONTRACTUAL OBLIGATIONS
managing partner. Application of Article 1816
All partners, including industrial ones, shall be liable pro-rata with all their
Partner’s Interest in Partnership
property and after all the partnership assets have been exhausted.
Application of Article 1812
A PARTNER’S INTEREST in the partnership is his SHARE of the STIPULATION AGAINST LIABILITY
PROFITS and SURPLUS. Rule: (Art. 1817)
It can be: o Agreement among parties against pro-rata and subsidiary liability is void
o ASSIGNED, ATTACHED, Be subject to LEGAL SUPPORT as against 3rd party.
PROFIT o But valid and enforceable among partners.
– Excess of returns over expenditures. Also known as net income. PARTNERS AS AGENT OF PARTNERSHIP
SURPLUS General Rule:
– Assets after payment of partnership’s debts and liabilities. Excess of Assets The act of every partner for apparently carrying on in the USUAL WAY the
over Liabilities. business of the partnership of which he is member binds the partnership.
Except: RULES ON CONVEYANCE OF REAL PROPERTY
1. If he has NO AUTHORITY, and 1. If title to real property is in the partnership name:
2. The person with whom he was dealing with HAS KNOWLEDGE of the – Any partner may convey title to such property by a conveyance
fact that he has no such authority. executed in the partnership name.
– Partnership may recover such property
Partners as Agent of Partnership Except:
o An act of a partner which is not apparently for the carrying on of business – If the firm is engaged in the buying and selling of land (USUAL
of the partnership in the usual way does not bind the partnership BUSINESS)
UNLESS authorized by the other partners. – If property was conveyed to a HOLDER for VALUE and who had
o A partnership is a CONTRACT of MUTUAL AGENCY, each partner NO KNOWLEDGE of the partners LACK of AUTHORITY.
acting as a principal on his own belief and as an agent of his co-partners 2. IF title if in the name of the partnership and partner sold in his OWN NAME.
or the firm. – IF DONE IN USUAL BUSINESS buyer does not become owner
BUT ACQUIRES EQUITABLE INTEREST.
REQUISITES on WHEN can a partner BIND the partnership
– IF NOT DONE IN USUAL BUSINESS buyer does not become
o Expressly or impliedly AUTHORIZED
owner and is not even entitled to equitable interest
o When he acts in BEHALF AND IN THE NAME of the partnership
3. IF title is in the name of one or more BUT not all the partners
INSTANCES of IMPLIED AUTHORIZATION – Partners in whose name the title is named MAY CONVEY BUT the
o When the other partners DO NOT OBJECT, although they have PARTNERSHIP may RECOVER such property IF done not in its
knowledge of the act USUAL BUSINESS EXCEPT if he had transferred it to a Holder
o When the act is for “apparently carrying on in the usual way the business for value.
of the partnership 4. IF the property is “held in trust” by partner
– this is binding on the firm even if the partner was not really – A sale only conveys EQUITABLE INTEREST
authorized PROVIDED that the third party is in GOOD FAITH 5. IF title is in the name of all partners
– Conveyance executed by all partners passes all rights of such
RULE on UNUSUAL ACTS property.
One or more but less than all the partners have no authority to:
o ASSIGN the PARTNERS PROPERTY CONVEYANCE OF REAL PROPERTY BELONGING TO THE
o DISPOSE of GOODWILL PARTNERSHIP
o Do any other act which would make it impossible to carry on the ordinary a. Prima facie ownership of real property
business of the partnership – Presumption: it belongs to the partnership if partnership funds are
o CONFESS a judgement used.
o ENTER into a COMPROMISE
o SUBMIT to ARBITRATION b. Legal effects of conveyance – real property may be registered or owned in
o RENOUNCE to CLAIM the name of:
Ø The partnership
POWER OF PARTNER AS AGENT OF PARTNERSHIP Ø One or more but not all the partners
o In the absence of an agreement to the contrary, all partners have equal Ø One or more or all the partners or in a third person in trust for the
rights in the management and conduct of the partnership business. partnership
Ø All the partners
o As among themselves
– when a partner performs an act within the scope of his actual, RULE ON ADMISSION OR REPRESENTATION MADE BY A
implied or apparent authority, he is not only a principal as to himself, PARTNER
but is also for all purposes, an agent as to his co-partners or to the An admission by a partner is an admission against the partnership, under the following
partnership. conditions:
o The admissions must concern partnership affairs
o As to 3rd persons o Must be within the scope of his authority
– limitations upon the authority of any one of the partners are not
RESTRICTIONS ON THE RULE
binding upon innocent 3rd person dealing with the partnership, who
o Admissions made BEFORE DISSOLUTION are binding only when the
have the right to assume that every general partner has power to bind
partner has authority to act on the particular matter
the partnership especially those acting with ostensible authority.
o Admissions made AFTER DISSOLUTION are binding only if the
LIABILITY OF PARTNERSHIP FOR ACTS OF PARTNERS admissions were necessary to WIND UP the business.
1. Acts for apparently carrying on in the usual way of the business of the o An admission made by a former partner made after he has RETIRED
partnership from the partnership is not evidence against the firm
– Generally, partnership is liable; exception:
EFFECT OF NOTICE TO A PARTNER
(1) Partner so acting has in fact no authority, and
o Notice to a partner is notice to the partnership
(2) The third person knows that the acting partner has no authority
– Notice to a partner, given while already a partner is a notice to the
partnership PROVIDED it relates to partnership affairs.
2. Acts of strict dominion or ownership
– For acts which are not apparently carrying on in the usual way the EFFECT OF KNOWLEDGE ALTHOUGH NO NOTICE WAS GIVEN
business of the partnership, the partnership is NOT bound. Knowledge of the partner is also knowledge of the firm PROVIDED THAT:
– The knowledge was acquired by a partner who is acting in the
3. Acts in contravention of a restriction on authority particular matter involved; and
– Partnership not liable to 3rd persons having actual or presumptive
knowledge of the restrictions – The partner having knowledge, had reason to believe that the fact
related to a matter which had some possibility of being the subject of
4. Liability of partner acting without authority the partnership business AND he was so situated that he could
= Personally liable communicate it to the partner acting on that particular matter.
WRONGFUL ACT OR OMISSION OF A PARTNER
The partnership is solidarily liable with the partner if the wrongful act or
omission was done.
– The partner is acting in the ordinary course of business of the
partnership, or
– With authority of his co-partners

WHEN THE FIRM AND OTHER PARTNERS ARE NOT LIABLE


1. If the wrongful act or omission was NOT DONE
– Within scope of partnership business
– With authority of the other co-partners
2. If the act or omission is NOT WRONGFUL.
3. If the act or omission, although wrongful did not make the partner
concern liable
4. If the wrongful act or omission was committed after the firm had been
dissolved and the same was not in connection with the process of winding
up.