BUSINESS LAWS &

REGULATIONS
 INTRODUCTION:

Scope of the Law on Business Organization/

Except Sole Proprietorship/Partnership and
Corporation/separate Juridical Entities/ Examples
of partnership and Corporation

This course will discuss the nature of these

business organizations/ the
establishment/operations/all the intricacies of
management/the procedures and the various
aspects of operating the business/liquidation
 The practical aspects: Formation of partnership/
Integration/Articles of incorporation, etc./Blending of
theory and practice

Source: Partnership Law, portion of Book V of the

Civil Code, Article 1767 to 1867 (101 articles); the
Revised Corporation Code; Cooperative Code of the
Philippines
 MEANINGS:

Organization: A generic term for any type of group or

association of individuals who are joined together either
formally or legally. The term organization includes a
corporation, government, partnership, and any type of
civil or political association of people.

Association: Any group of people who have joined

together for a particular purpose, ranging from social to
business, and usually meant to be a continuing
organization.
Business Organization: A business
organization is an entity aimed at carrying on
commercial enterprise by providing goods or
services, to meet needs of the customers. All business
organizations: have the common features such as
formal structure, aim to achieve objectives, use of
resources, requirement of direction, and legal
regulations controlling them. The different forms of
business organizations are Sole Proprietorship,
General Partnership, Limited Partnership,
Corporation,
 ORIGIN OF BUSINESS
ORGANIZATION

1. Human is a social being. He needs to

exchange goods and services in order to live.
It is imperative for him to venture/enters into
business- sole proprietorship-the simplest
form/one man’s business
 ADVANTAGE DISADVANTAGE
Easy to register/minimal Difficulty in raising capital
fee
Exclusive control of owner Sole responsibility of
owner
Simple management Unlimited liability
Possibility to engage in Lack of business
unrelated business stability/incapable of
undertaking big enterprises
Less govt. control/taxes Death leads to dissolution
2. Humans find ways to form other
business organization. Partnership. It
emerged as early as the ancient
Athenians and Phoenecians who
contribute to a common fund to build
ships for trade and explorations.
 ADVANTAGE DISADVANTAGE

Less formalities Divided authority

Less expensive than corp. Unlimited liability
Secure more credit than Based on trust &
corp. confidence
Direct gains to partners Chances of expansion is
less
Relative flexibility/less No right of perpetual
gov’t control succession
3. Dawn of mercantilism and capitalism. Emergence
of corporation. Emphasis on how to limit individual
liability in business.
ADVANTAGE DISADVANTAGE

Huge capital Complex management

Limited liability Less participation in mngt.

Transfer of capital Difficult to enter

Perpetual succession

Private assets are More govt. control

protected
4. COMPARISON OF THE THREE TYPES OF
BUSINESS:

As to Formation/As to Existence of juridical

personality/owner and management/Extent of
liability/Capitalization and investments/Expansion of
business/dissolution/ government control

5. PARTNERSHIP as the middle ground between sole

proprietorship and corporation.
 1767 : CONTRACT OF PARTNERSHIP

1. Meaning under Art 1767.

2. Other concepts of partnership:

association/legal relation/ joint
undertaking/ status / organization/ entity
3. Partnership for the exercise of a profession: it is a group of
men pursuing a learned art or a common calling in the spirit
of public service. Law allows a partnership on this field.
@ can there be corporation for the practice of a profession?

4. Characteristics of partnership.

Consensual
Nominate
Bilateral
Onerous
Commutative
Principal
Preparatory
5. Essential Requisites of partnership

Existence of a valid contract: It is a form of

voluntary and personal association/ Delectus
personae/ May be created informally but it is
customarily embodied in an Articles of partnership/
At least two persons/Excluded all other organizations
particularly those created by law or by implication of
the law. Exception: Limited partnership: need of a
certificate filed before the SEC.
@ Can a partnership be created orally?
Voluntary agreement?

Legal capacity of contracting parties: A

person who cannot give consent to a contract
cannot be a partner/Exceptions: Article
1782: persons who are prohibited to donate
to each other is not allowed to enter a
universal partnership/ married women/
@ Can a partnership enters another
partnership? Can a partnership
enters a corporation? Can a
corporation enters a partnership?

Mutual contribution to a common fund:

Proprietary and financial interest in business/
Form of contribution
 Legality of object: When to we say the
object is unlawful/ prohibition for a
partnership: General Banking Law

Intention to realize and divide the profits.

Other purposes are allowed provided the
principal purpose is to obtain profit/ Sharing is
not necessarily in equal shares/Sharing of
profits is not a conclusive but only a
presumptive evidence of partnership/ sharing
of losses/
 1768: SEPARATE JURIDICAL ENTITY

1. A partnership is a juridical person: it may acquire and

possess properties of all kinds/incur obligations/ file or
defend a suit/

@If A, B & C had formed a partnership D? How many persons

are they?

@ If x has a debt against partnership y , can z who is partner

thereon filed a case against x for himself and for his own
benefit?

@If partnership A has a debt, and it became insolvent, can the

creditor go after the properties of the partners?
2. Effect of failure to comply with
statutory requirements:

Even if there is no compliance with article 1772,

the partnership acquires juridical personality

Exception; article 1773: There is no inventory

attached to the public instrument/ article 1775:
secret partnerships
 1769 : RULES TO DETERMINE THE
EXISTENCE OF P
-Instances: terms of the contract is not clear/ the existence is
disputed

1. Persons who are partners as between

themselves are partners as to 3rd persons:

Reason? Partnership is a matter of intention/ Its existence

cannot be denied/ after establishment of P, belief of each
partner is already immaterial

P by estoppels: subject to liabilities of partners @ example

2. Co-ownership and co-possession
(ownership in an undivided thing
belongs to two or more person)

@ There is no P if there is no C? There is no C

if there is no P?

@ Examples: Inheritance/ Pool of funds for

specific purpose
3. Sharing in gross returns is not
necessarily P . Why? In P there is
the need to deduct liabilities
before dividing the profits.

Requisite: Does he has a voice as proprietor

of a business (jeepney owner and
driver/tenancy system/ fishing
vendors/lending)
4. Receipt of share in the profits: PRIMA
FACIE evidence of P

 Exceptions:

Debt by installment ( creditor manages the business)

Wages to employee or rent to a landlord (E&E
relationship)
Annuity to a widow ( P continue to exist without
liquidation)
Interest on a loan (creditor’s right)
Consideration for sale of goodwill or property ( P as
buyer)
5. Test of P (terms of the
contract) vs Incidents of P
(Consequences or incidents
that followed: share in the
profits/ equal rights in
management/agency/solidary
liability/fiduciary
relation/winding up after
dissolution.
 6. Comparison
P vs. CPG
P Cpg
How created Will or consent Operation of law

Governing law Will of the parties Law

Legal personality Yes No

Commencement Execution of contract Celebration of marriage

Purpose Profit Family life

Division of profits Based on agreement Equal shares

Management Managing partner Both spouses

Dissolution Many Few

Liquidation of profits Before dissolution After dissolution

P VS. CO
Co-ownership
P
Creation Contract Contract/law

Juridical person Yes yes

Purpose Profit Collective enjoyment

Agency Mutual rep None

Transfer of interest No, exception Pro indiviso share

Length of existence No term limit 10 years

Profits Yes Pro rate

Dissolution By death or incapacity no

Form Need of public instrument No need

P VS. JSC
P JSC
Composition Asso of person Asso of capital

Division of Not divided into Divided into

capital shares shares
Management All partners bod

Liability Exhaustion Up to their shares

Transfer of No yes
interest
P vs. SO
P SO
Contribution Yes no

Liability Exhaustion Individual

liability
Purpose Profit Other purpose

Legal Yes no
personality
P VS. Business Trust - cestui que trust
(beneficiaries)

P VS. TENANCY –
representation/legal personality

P VS. AGENCY – Partners are both

principals and agents
1770 – OBJECT OF PARTNERSHIP:
must be lawful/ for common
benefit

1. Effect of unlawful partnership: void contract/

confiscation of profits and tools and
instruments of the crime (exception:
contributions not used in crime)

2. Dissolution of unlawful P @ Is there a need

for a judicial decree?
 1771: FORM OF PARTNERSHIP
CONTRACT
Contribution of RP needs a public instrument

1772- PARTNERSHIP WITH CAPITAL OF

P3,000 MUST BE IN A PUBLIC
INSTRUMENT and recorded in the SEC

Each partner has the right to compel the other for its
observance : protection of interest of the partners

Registration is necessary as a condition for issuance

of permits
1773-PARTNERSHIP WITH
CONTRIBUTION OF IMMOVABLE
PROPERTY requires: contract must be
in a public instrument and the inventory
of RP must be attached therein

Purpose is to protect 3rd persons

1774- ACQUISITION OR CONVEYANCE

OF PROPERTY must be in the name of
the P

@ Examples
 1775 -SECRET PARTNERSHIP
WITHOUT JURIDICAL
PERSONALITY

Voluntary agreement requires full

disclosure of information
P is nominate
There is a need to protect 3rd persons
Secret partnership is void
@ CPA EXAMS: What are the formalities by
law for the organization or constitution of a P?
: What are the requisites of a contract
of P
with a capital of P3,000 in money or property or
a land or a warehouse is contributed?
: When shall a contract of P appear in a
public instrument?
GENERAL RULE: No form is
required for its validity and
enforceability/ May be made orally
or in writing (1784)

EXCEPTIONS:

When real properties are contributed;

Capital of 3k or more are contributed;
Limited partnership must be registered with the SEC
1776- Classification of Partnership
1. As to extent of the subject matter
UPPP UPP
All properties are contributed Retention of ownership of
Common Property(part of present and future properties
common fund)
Only profits or income and
Profits as part of common funds usufruct became part of
common funds
Fruits from future properties It must be acquired through
part of common funds industry or work

Profits from other source by Profits acquired through chance

stipulation are not included

Profits of subsequently acquired

property by the partners are
excluded except by express
stipulation
2. As to liability of the partners

GP LP
All are liable Limited
pro rata partner is not
liable

3. As to duration
4. As to legality of its existence
5. As to representation to others
6. As to publicity
7. As to purpose
 KINDS OF PARTNERS
Point of view of contribution:

Capitalist - (gp/lp) – contribute cash or property

Industrial – (gp) - contribute industry or services
Capitalist - industrial

Liability as criteria:

GP- liable to 3rd persons beyond the extent of his

contribution
LP/Specific partner- liable only to the extent of his
contribution
Participation in management

1. Managing Partner- to whom it is entrusted

the active management of the partnership
affairs
2. Silent partner-does not participate in
management
3. Liquidating partner-entrusted with the
liquidation or winding up of the affairs after
the firm has been dissolved
4. Ostensible partner- has active and public
participation
Based on the extent of the subject
matter of the P
1. Universal Partner – one whose participation refers
to the whole of the business
2. Particular partner- relation to the business is
specific or limited

Miscellaneous classification
3. Secret partner-connection with the firm is
concealed but may participates in management
4. Dormant or sleeping p- he is both a secret and
silent partner
3. Nominal /by estoppel-not a partner but allows
himself to be part of the P name
4. Original – from the beginning of P
5. Incoming – one who is brought into an
existing Partnership
6. Retiring – one who ceases to be a partner
after dissolution
7. Continuing –one who continuous the business
after its dissolution / Surviving or
remaining
1777 – UPAPP/UPP
1778 – 1779

How to determine common property:

UPAPP UPP

All present property; Usufruct;

Profits from all property; Profits from usufruct;

Other sources by stipulations; All those that come from work or

industry;
Future property by donation, legacy,
not included except fruits by Future property not included except
stipulations the fruits
1780 – Universal Partnership of Profits (UPP)
Ownership of present and future property
retains to each partners.

Profits acquired through chance are not

included.

Fruits of property subsequently acquired do not

belong to the partnership unless through express
stipulation.
1781 – UPP AS DEFAULT PARTNERSHIP

1782 – LIMITATIONS

1783 – PARTICULAR PARTNERSHIPS

Chapter 2 – Obligations of the Partners

1784 – COMMENCEMENT OF PARTNERSHIPS

Executory agreement of partnership.
▫ Future Partnership
▫ Agreement to create partnership

1785 – CONTINUATION OF PARTNERSHIP

Rights and duties of partners in a partnership at will.

Dissolution/Termination of the partnership.

1786 – OBLIGATIONS OF THE PARTNERS
AMONG THEMSELVES & TO THE
PARTNERSHIP
• Obligations
1. To contribute at the beginning of the partnership or at the stipulated
time anything he may have promised to contribute;

2. To answer for eviction in case the partnership is deprived of the

determinate property contributed;

3. To answer for the fruits of the property the contribution of which he

delayed;

4. To preserve said property with due diligence of a good father of a

family pending delivery to the partnership;

5. To indemnify the partnership for any damage caused

1786 – OBLIGATIONS OF THE PARTNERS
AMONG THEMSELVES & TO THE
PARTNERSHIP

• Effect of failure to contribute property promised.

Liability as debtor to partnership.
Remedy of other partners.

• Liability of partner in case of eviction.

• Liability of partner for fruits of property in case of delay.

1787 – APPRAISAL OF GOODS OR PROPERTY
CONTRIBUTED

• Appraisal of the value of the goods contributed is

necessary to determine how much has been contributed
by the partners.

• In the case of immovable property, appraisal is made in

the inventory of said property.
1788 – OBLIGATION WITH RESPECT TO
CONTRIBUTION OF MONEY AND
MONEY CONVERTED TO
PERSONAL USE
• Obligations of partners with respect to the partnership
capital:
1. To contribute on the due date the amount he has
undertaken to contribute;
2. To reimburse any amount he may have taken from the
partnership coffers and converted to his own use;
3. To pay the agreed or legal interest if he fails to pay his
contribution on time;
4. To indemnify the partnership for the damages caused
to it by the delay in the contribution
1788 – OBLIGATION WITH RESPECT TO
CONTRIBUTION OF MONEY AND
MONEY CONVERTED TO
PERSONAL USE
• Liability of guilty partner for interest and
damages.
Accrual of liability.
Justification for double responsibility.
1789 – OBLIGATIONS OF INDUSTRIAL
PARTNER

Who is an industrial partner?

 one who contributes his industry, labor or services
to the partnership
 considered the owner of his services, his
contribution to the common fund

Prohibition against engaging in business.

1. As regards an industrial partner
2. As regards capitalist partners
1789 – OBLIGATIONS OF INDUSTRIAL
PARTNER

Remedies where industrial partner engages in

business.

Capitalist partners have a right to damages

It is believed that industrial partners are also
entitled to the remedy
1790 – CONTRIBUTION TO PARTNERSHIP
CAPITAL

Extent of contribution
▫ In the absence of stipulation of unequal
distribution, the presumption is that the
contribution is in equal shares

▫ Not applicable to an industrial partner

1791 – OBLIGATION OF CAPITALIST
PARTNERS TO CONTRIBUTE
ADDITIONAL CAPITAL

• Capitalist partner is bound to contribute to the

partnership more than what he agreed to
contribute

• In imminent losses, he is under obligation to

contribute an additional share to save the
venture.
1791 – OBLIGATION OF CAPITALIST
PARTNERS TO CONTRIBUTE
ADDITIONAL CAPITAL

• Requisites for application of rule

1. Imminent loss of the business of the partnership
2. Majority of the capitalist partners are of the
opinion that additional contribution would save
the business
3. Capitalist partner refuses to contribute an
additional share to the capital
4. No agreement even in case of an imminent loss the
partners are not obliged to contribute
1792 – OBLIGATION OF MANAGING PARTNER
WHO COLLECTS DEBT

Rule 1: Any person may be separately indebted to the

partnership and to the managing partner at the same time.
On this case, any amount received by the managing
partner shall be applied to the two credits in proportion to
their amounts.

Rule 2: exception is where the managing partner received

the sum for the account of the partnership, in which case,
whole sum shall be applied to the partnership credit only.
1792 – OBLIGATION OF MANAGING PARTNER
WHO COLLECTS DEBT

Requisites for application of the rule.

1. There exist at least two debts
2. Both debts are demandable
3. One who collects is authorized to manage and
actually manages the partnership

What is the reason for applying payment to partnership?

The right of debtor to application of payment.

1793 – OBLIGATION OF PARTNER WHO
RECEIVES SHARE OF PARTNERSHIP
CREDIT

Requisites for application of rule

1. A partner has received, in whole or in part, his share
of the partnership credit;
2. The other partners have not collected their shares;
and
3. The partnership debtor has become insolvent.

What is the reasons for imposing obligation to return?

1794 – OBLIGATION OF PARTNER FOR
DAMAGES TO PARTNERSHIP

Compensation of damages with profits earned for

partnership by guilty partner.

1. Damages not generally subject to set-off

2. What is the exception?
1795 – RISK OF LOSS OF THINGS
CONTRIBUTED

Five cases contemplated:

1. Specific and determinate things which are not
fungible where only the use is contributed
2. Specific and determinate things the ownership of
which is transferred to the partnership
3. Fungible things or things which cannot be kept
without deteriorating even if they are contributed
only for the use of the partnership
4. Things contributed to be sold
5. Things brought and appraised in the inventory
1796 – RESPONSIBILITY OF PARTNERSHIP TO
PARTNERS

1. Refunds amounts disbursed by him in behalf of the

partnership

2. To answer for the obligation he may have contracted in

good faith in interest of the partnership

3. To answer for risks in consequence of its management

1797 – RULES FOR PROFIT AND LOSSES
DISTRIBUTION

1. Distribution of profits
Partners share profits according to agreement
If no agreement:
 For capitalist partners?
 Industrial partners?

2. Distribution of losses
 Losses shall be shared according to the agreement
 If no agreement?
1798 – DESIGNATION OF SHARE IN PROFITS
AND LOSSESS BY A THIRD PERSON
What is the binding force of designation by third person?

1799 – STIPULATION EXCLUDING A PARTNER

IN PROFITS OR LOSSES
Stipulation generally void, but partnership subsists.

Stipulation, a factor to show no partnership exists.

Where partner excluded is industrial partner

1799 – STIPULATION EXCLUDING A PARTNER
IN PROFITS OR LOSSES
Stipulation generally void, but partnership subsists.

Stipulation, a factor to show no partnership exists.

Where partner excluded is industrial partner.

What is the reason for exemption of industrial partner from losses?

1800 – RIGHTS & OBLIGATIONS WITH
RESPECT TO MANAGEMENT

- act of administration vs. act of strict dominion

(Art 1818)

- comparison
 Appointment Not in the
in the AOP AOP

Scope of the Execute all acts Maybe opposed

authority despite opposition by those who
holds the
controlling
interest
Revocation of
Appointment With just or lawful Removal by the
cause-controlling controlling
interest interest
Appointment Not in the
in the AOP AOP

Without just The amp is

or lawful cause- an agent
consent of all
partners is
needed for
revocation would
be a novation of
the terms thereof.
Scope of Power : the mp has the power of a
general agent with necessary and incidental powers
(power to issue receipts)/exceptions: the powers are
specifically restricted or expressly withheld

Compensation : with consent of all partners /

normal vs beyond normal tasks
1801 – WHEN 2 MP HAVE BEEN
APPOINTED MANAGERS
When there is specification of respective
duties:
1. Scope of authority: each shall perform only the duties
specified in his appointment
When there is no specification of respective
duties:
2. Scope of authority: each may separately execute all acts of
administration
3. In case of opposition: the decision of majority of the
managers shall prevail/in case of tie: the decision of mp
owning the controlling interest
Requisites for the application of the rule
1802 – WHERE UNANIMITY OF ACTION
IS STIPULATED

 When there is stipulation that none of the mp

shall act without the consent of the others :
concurrence shall be necessary for the validity of the
acts

 In case of absence or disability : cannot be

alleged/ except if there is imminent danger of grave
or irreparable injury to the P
1803 – MANNER OF MANAGEMENT HAS
NOT BEEN AGREED UPON
 All are agents of the P/ exception : none may made
alterations in immovable property even if useful to
the P exception : if it is manifestly prejudicial to the
interest of the P---- court intervention maybe sought
 Act of one is the act of all
 In case of opposition; decision to majority shall
prevail/ in case of tie-controlling interest
1804 – CONTRACT OF SUBPARTNERSHIP

 Nature: a partnership within a partnership but is separate and

distinct from the latter

 Division of Profits

 Right of a subpartner : subpartners are partners among

themselves but a subpartner is not a partner of the P
1805 – DUTY TO KEEP THE
PARTNERSHIP BOOKS

• Right of partners : partnership books are

under co-ownership

• Access must be under reasonable hour

1806 – DUTY TO RENDER INFORMATION

1807 – PARTNER ACCOUNTABLE AS

FIDUCIARY
◊ Duty to act for common benefit.
◊ Duty to account for secret and similar profits.
◊ Duty to make full disclosure of information
affecting partnership.

Example
1808 – RIGHT OF CP TO ENGAGE IN
BUSINESS: PROHIBITED IN SAME
OR SIMILAR BUSINESS

1809 – RIGHT OF P TO FORMAL ACCOUNT

• What is the General Rule?
 Partner is not entitled to a formal account of
Partnership affairs

• Exceptions?
1810 – PROPERTY RIGHTS OF A PARTNER
• Extent of property rights of a partner
1. Principal rights
2. Related Rights

• Partnership property vs. Partnership Capital

1810 – PROPERTY RIGHTS OF A PARTNER

Partnership Property Partnership Capital

Changes in Value Variable Constant

Assets included original capital Aggregate of the individual

contributions of the contributions made by the
partners partners, either in cash or in
property or services;
+
returnable on dissulotion
property subsequently
acquired on account of
partnership or with
partnership funds
1810 – PROPERTY RIGHTS OF A PARTNER

• Ownership of certain property.

▫ Property used by the partnership
▫ Property acquired by a partner with partnership
funds
▫ Property carried in partnership books as
partnership asset
▫ Other factors tending to indicate property
ownership
1811 – NATURE OF PARTNER’S RIGHT IN
SPECIFIC PARTNERHSIP
PROPERTY.
What are the characteristics of the partnership
relation?
1. Equal right of possession of the property for
partnership purposes.
2. Assignment of right to the property.
3. Attachment or execution.
4. Legal support.
1812 – NATURE OF PARTNER’S INTEREST
IN PARTNERHSIP

• What constitutes partner’s interest in the

partnership?
 It consists of his proportionate share in the profits
during the life of the partnership as a going concern
and his share in the surplus after its dissolution.

• Extent of the partner’s interest

1813 – EFFECT OF ASSIGNMENT OF
PARTNER’S WHOLE INTEREST IN
PARTNERSHIP
• Rights withheld from assignee
• Status and rights of assignor in partnership
unaffected

Four (4) rights of assignee of partner’s interest

1814 – REMEDIES OF SEPARATE
JUDGMENT CREDITOR OF A
PARTNER
• Separate creditor of a partner cannot attach or levy upon specific
partnership property for the satisfaction of his credit.

• However, creditor can secure a judgment on his credit and then

apply to the court for a charging order.

• Redemption of interest charged.

• Right of partner under exemption laws.

▫ Partner cannot claim any right under the homestead or exemption laws
when specific partnership property is attached for partnership debt.
▫ The partner may avail himself of the exemption laws after partnership
debts have been paid.
1815
Right of partners to choose firm name
Use of misleading name
Use of names of deceased persons

Liability for inclusion of name in firm name

1816 – LIABILITY FOR
CONTRACTUAL OBLIGATIONS
OF THE PARTNERHSIP
• Partnership Liability
• Individual Liability

Nature of individual liability of partners.

The debts & obligations of the partnership
are, in substance, also the debts and obligations of
each individual member of the firm.
1816
Liabilities of creditor:
1. Pro rata
2. Subsidiary or secondary

Liability of industrial partner

Liability vs. Loss

1817 – STIPULATION AGAINST
LIABILITY

1818 – POWER OF PARTNER AS

AGENT OF PARTNERSHIP
• As among themselves
• As to third persons

Liability of partnership for acts of partners

1. Acts for apparently carrying on in the ususal
way of business of the partnership
2. Acts of strict dominion or ownership

3. Acts of contravention of a restriction on

authority
1819 – CONVEYANCE OF REAL
PROPERTY BELONGING TO A
PARTNERSHIP
1. Prima facie ownership of real property.
2. Legal effects of conveyance.
3. Title in name of one or more of partners,
conveyance in name of partners in whose name title
stands.
4. Title in name of one or more or all partners or a
third person in trust for partnership, conveyance
executed in partnership name or in name of partner.
5. Title in name of all partners, conveyance in name of
all partners.
1820 – ADMISSION BY PARTNER

1821 – NOTICE TO, OR KNOWLEDGE

OF, A PARTNER OF MATTER
AFFECTING PARTNERSHIP
AFFAIRS
Three cases of knowledge of a partner
1. Knowledge of the partner acting in the particular matter acquired while
a partner;
2. Knowledge of the partner acting in the particular matter then present
to his mind; and
3. Knowledge of any other partner who reasonably could and should have
communicated it to the acting partner
1822, 1823 & 1824
– LIABILITY ARISING FROM
PARTNER’S WRONGFUL ACT
OR OMISSION, OT BREACH OF
TRUST
Solidary Liability

Different liability under Article 1816

What are the requisites for liability?

Misapplication of money or property of a third

person
1825 – PARTNER BY ESTOPPEL;
PARTNERSHIP BY ESTOPPEL
What is estoppel? What is the effect of estoppel?

When person a partner by estoppel.

When partnership liability results.

When liability pro rata.

When liability separate.

Estoppel does not create partnership.

1826 – LIABILITY OF INCOMING
PARTNER FOR EXISTING
OBLIGATIONS
Liability of incoming partner
▫ Limited to his share in partnership property for
existing obligations.
▫ Extends to his separate property for subsequent
obligations.

What are the rights of existing and subsequent creditors?

What is the reason for the rule making new partner

liable?
1827 – PREFERENCE OF
PARTNERSHIP CREDITORS IN
PARTNERSHIP PROPERTY
Partnership creditors are entitled to priority of
payment (Art 1839)

Remedy of private creditors of a partner