Law on Partnership (Article 1784-1827) and in the same manner as the vendor is bound

with respect to the vendee. He shall also be liable

Art. 1784. A partnership begins from the moment of
for the fruits thereof from the time they should have
the execution of the contract, unless it is otherwise
been delivered, without the need of any demand.
stipulated. (1679)
Explanation: The article explains that failure of a
Article 1679 - If nothing has been stipulated
partner to deliver the promised specific and
concerning the place and the time for the payment
determinate contribution in a partnership
of the lease, the provisions or article 1251 shall be
automatically makes that partner a debtor even
observed as regards the place; and with respect to
without the demand of the other partner. If we can
the time, the custom of the place shall be followed.
still remember, during ObliCon, there is a need to
(1574)
demand so that debtor is bound to his/her
Article 1251. Payment shall be made in the place obligation but it this case, the partner who failed to
designated in the obligation. deliver the promised contribution makes the partner
automatically a debtor and is bound to his/her
Article 1574. There is no warranty against hidden obligation and liability in partnership. But this only
defects of animals sold at fairs or at public auctions, apply to specific and determinate things.
or of live stock sold as condemned. (1493a)
Failure of compliance doesn’t mean recession,
Explanation: Partnership starts at the very dissolution/cancelation of partnership. It is a call for
moment of the execution of contract, unless there is action on specific performance as to the damages
a stipulation/condition such as an agreement on the and liability made.
start of date, requirements or terms.
Art. 1787. When the capital or part thereof which a
Art. 1785. When a contract for a fixed term or partner is bound to contribute consists of goods,
particular undertaking is continued after the their appraisal must be made in the manner
termination of such term or particular undertaking prescribed in the contract of partnership, and in the
without any express agreement, the rights and absence of stipulation, it shall be made by experts
duties of the partners remains the same as they chosen by the partners, and according to current
were at such termination, so far as is consistent prices, the subsequent changes thereof being for
with a partnership at will. the account of the partnership.
A continuation of the business by the partners or Explanation: Article 1787 explains that the
such of them as habitually acted therein during the appreciation/deprecation of Capital or a part of it
term, without any settlement or liquidation of the depends on the prescribed contracts of the
partnership affairs, is prima facie evidence of a partnership as to the extent of its subject matter
continuation of the partnership. under article 1776. The appreciation/depreciation of
Partnership at will is one in which no term of the capital or a part of the capital such as (land,
existence has been fixed and which may be machinery, equipment) in a Universal Partnership
terminated at the will of any partners of All present property the gain and loss of the
capital/part of the capital is accounted to the
Explanation: Paragraph 1 explains Partnership partnership since the extent of the partnership
with fixed terms is a partnership wherein there is a extends to the all the properties they have
term of existence/duration agreed upon meaning contributed. But in a Universal Partnership of Profit,
that once the fixed term is finished, the partnership the appreciation/depreciation of the capital/part of
therefore is now dissolved/extinguished but in any the capital is bound to account by the partner and
case, the partners continued the NOT by the partnership/business since the extent
partnership/business, the fixed term or particular of the subject matter is only in to the gains/usufruct,
undertaking is now deemed extinguished and so in any case, the appraisal of the capital/part of
partnership at will arises. In partnership at will, the the capital is being account to the partner solely
obligation of the partners still remains the same so
far that it is consistent with partnership at will Art. 1788. A partner who has undertaken to
meaning it can be dissolved by will of either the contribute a sum of money and fails to do so
partners becomes a debtor for the interest and damages
from the time he should have complied with his
***Once there is no indication of fixed term/duration obligation.
of existence/operations it is considered as
partnership at will The same rule applies to any amount he may have
taken from the partnership coffers, and his liability
Art. 1786. Every partner is a debtor of the shall begin from the time he converted the amount
partnership for whatever he may have promised to to its own use
contribute thereto. He shall also be bound for
warranty in case of eviction with regard to specific Explanation: Article 1788 explains that a partner’s
and determinate things which he may have failure to contribute the pledged sum of money
contributed to the partnership, in the same cases becomes a debtor to the sworn contribution
including the damages from the time of the
supposed execution of the obligation. In the case The provisions of this article are understood to be
that a partner used the money of the without prejudice to the right granted to the debtor
partnership/business for his/her personal use by Art. 1252, but only if the personal credit of the
he/she is a debtor thereof. partner should be more onerous to him.
Art. 1789. An industrial partner cannot engage in Requisites:
any business for himself, UNLESS the partnership
1. Two existing debts
expressly permits him to do so; and if he should do
so, the capitalist partners may either exclude him 2. Both debts must be demandable
from the firm or avail themselves of the benefits
which he may have obtained in violation of this 3. The one who collected the debt is a partner who
provision, with a right to damages in either case. is authorized to manage and is actually managing
the partnership.
Explanation: Article 1789 explains that an
industrial partner cannot engage in other business Article 1252. He who has various debts of the same
for the his/her own benefit unless the partnership kind in favor of one and the same creditor, may
allows the industrial partner to do so. Industrial declare at the time of making the payment, to which
partner engage in other business for his/her own of them the same must be applied. Unless the
benefit can be excluded in the partnership or the parties so stipulate, or when the application of
capitalist may avail themselves of the benefits that payment is made by the party for whose benefit the
the indus. Partner obtain including damages in the term has been constituted, application shall not be
case. This is to prevent any conflict of interest made as to debts which are not yet due.
between the industrial and the partnership, and to If the debtor accepts from the creditor a receipt in
ensure faithful compliance by said partner with his which an application of the payment is made, the
prestation. On the side note, the Industrial are not former cannot complain of the same, unless there
allowed to engage in any business even if he/she is a cause for invalidating the contract. (1172a)
renders two different service to each. Capitalist are
prohibited to engage in similar business only. Explanation: Article 1792 explains that in any case
a managing partner collect a demandable sum to a
Art. 1790. Unless there is a stipulation to the debtor who has a demandable sum to both the
contrary, the partners shall contribute equal shares partnership and to the managing partner, the
to the capital of the partnership. collected demandable sum will be given to the
Explanation: Since there is no agreement or partnership and the partner proportionately even if
stipulation partners should contribute their shares the debtor only paid for the account of the
equally to the capital. managing partner and not yet the partnership. But
in any case, that the debtor credit his payment to
Art. 1791. If there is no agreement to the contrary, the partnership, the amount should be fully
in case of an imminent loss of the business of the received by the partnership alone.
partnership, any partner who refuses to contribute
an additional share to the capital, except an This only applies when,
industrial partner, to save the venture, shall be 1. Two existing debts
obliged to sell his interest to the other partners.
2. Both debts must be demandable
Explanation: In case of imminent loss of the
partnership between the capitalist and industrial, 3. The one who collected the debt is a partner who
the industrial partner is not required to contribute is authorized to manage and is actually managing
additional share to the capital since their industry is the partnership.
their 100% share in the partnership. But capitalist
Paragraph 2 states that the demandable sum in
has a natural obligation to contribute additional
whole or in part can be credited to the partner if and
share to save the venture unless otherwise the
only the demandable sum of the partner is onerous
capitalist is insolvent or there is a stipulation. In any
(larger sum for example/or larger interest)
case that the solvent Capitalist refuses to
contribute, then they may sell his/her interest to Art. 1793. A partner who has received, in whole or
other willing partners. in part, his share of a partnership credit, when the
other partners have not collected theirs, shall be
Art. 1792. If a partner authorized to manage
obliged, if the debtor should thereafter become
collects a demandable sum, which was owed to
insolvent, to bring to the partnership capital what he
him in his own name, from a person who owned the
received even though he may have given receipt
partnership another sum also demandable, the sum
for his share only.
thus collected shall be applied to the two credits in
proportion to their amounts, even though he may Explanation: Article 1793 state that in case the
have given a receipt for his own credit only; but debtor to both the partnership and partners
should he have given it for the account of the becomes insolvent and one of the partners already
partnership credit, the amount shall be fully applied received his/her share from a partnership credit and
to the latter. the other partner has still a demandable sum to the
debtor. The partner who already received in whole
or in part of his/her share, is obliged to bring back
to partnership what he received even if the share is
for him/her only. This is to protect the other
partners from bad debt/loss in partnership that they
should all bear equally
Art. 1794. Every partner is responsible to the
partnership for damages suffered by it through his
fault, and he cannot compensate 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 been
realized.
Explanation:
Art. 1795. The risk of specific and determinate
things, which are not fungible, contributed to the
partnership so that only their use and fruits may be
for the common benefit, shall be borne by the
partner who owns them. If the things contributed
are fungible, or cannot be kept without
deteriorating, or if they were contributed to be sold,
the risk shall be borne by the partnership. In the
absence of stipulation, the risk of things brought
and appraised in the inventory, shall also be borne
by the partnership, and in such case the claim shall
be limited to the value at which they were
appraised.