PARTNERSHIP SIMPLIFIED- PART 1

1. In order that there may be a partnership, two or more persons must agree to unite their money, property, labor or skill in carrying out

a legitimate business for profit. Two or more persons may also form a partnership for the exercise of their profession.

2. A partnership is consensual (it is perfected by mere consent, when two or more persons agree expressly or impliedly), bilateral (it is

entered into by two or more persons with reciprocal rights and obligations), principal (it does not depend for its validity or existence

upon some other contract), commutative (the undertaking of one partner is regarded as equivalent of that of the other partners),

preparatory (it is entered into in order that such persons may lawfully engage in business in order to realize profits which will then be divided

among themselves), onerous (one person contributes something in order that he may share in the profit), and nominate (it has a special

name or designation under the law).

3. A partnership duly formed under the law is a juridical person

which has a personality separate and distinct from the persons composing the partnership. It may acquire and possess property of all

kinds, incur obligations and bring suits or become defendants in suits brought before the courts of law.

4. In order to establish the existence of a partnership, the following

essential features must be proven to exist: 1) a valid contract; 2) legal capacity of the persons forming the partnership; 3) mutual

contribution of money, property or industry to a common business; 4)

its business must be lawful; and 5) the primary purpose must be obtain profits and to divide the same among the parties. Article 1769

sets out the rules in determining the existence of a partnership and enumerates certain features, which, taken alone would not prove the

existence of a partnership:

a. Persons who are not partners as between themselves are not partners as to third persons. However, whether or not a

partnership exists depends upon how the parties conduct themselves since third persons may be misled into believing that

the parties are partners because of the latters acts, consent of representation, thus said parties become subject to the liabilities of partners to third persons who in good faith deal with such

parties, in accordance with the doctrine of estoppel;

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b. Co-ownership or co-possession exists whenever the ownership or

possession of an undivided thing belongs to different persons, but this does not of itself establish a partnership even if these

persons derived profits from the joint ownership or joint possession of said undivided thing, because in a partnership, the

profits must be derived from the operation of the business or undertaking by the parties to the partnership;

c. The mere sharing of gross returns does not indicate the existence of a partnership, since in a partnership, what is being

divided among the partners is the net profits after paying off all the partnership liabilities; and

d. The receipt by a party of his share in the profits of a business is a prima facie evidence of the existence of a partnership, which

may be contradicted if it can be proven that such profits were received in payment of a debt, wages, rents, annuity, interest on

loan, or as consideration for the sale of a goodwill of a business.

5. The essential elements of a partnership are as follows: lawful

object and common benefit or interest of the partners. Since a partnership is really a contract between the parties, the parties are

free to choose the business or transaction they want to enter into provided this is lawful and for the common benefit of the parties. If the

purpose of the partnership is unlawful, then the contract is void ab initio. Consequently, if said unlawful partnership is dissolved by a

judicial decree, its profits shall be confiscated in favor of the government, the instrument or tools and proceeds of the crime shall

likewise be forfeited in favor of the government, and even the

contributions of the partners shall be confiscated should they fall under the instrument or tools and proceeds of the crime.

6. As a general rule, a contract of partnership may be made orally

or in writing, unless immovable property or real rights are contributed in which case the execution of a public instrument is required.

7. Where the capital of the partnership is P3,000.00 or more, whether in money or property, the contract of partnership must

appear in a public instrument and said contract must be recorded or registered with the Securities and Exchange Commission. Failure to

comply with these requirements, however, does not prevent the formation of a partnership nor affect its liability, and that of the

partners, to third persons.

8. Where immovable property, regardless of value, is contributed by any of the partners, the contract of partnership must be in a public

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instrument and an inventory of the property contributed must be

made, signed by the parties, and attached to the public instrument. Failure to comply with these requirements will render the contract of

partnership void, insofar as the contracting parties are concerned. With regards third persons, however, a de facto partnership or

partnership by estoppel may exist.

9. Immovable property or any interest therein may be acquired in the partnership name since it has a juridical personality separate from

and distinct from the partners and title so acquired can thus be conveyed only in the partnership name.

10. The element of delectus personae exists in a partnership. Delectus personae may be defined as the right of a person to choose

whom he wants to associate with. A partnership is thus formed by the voluntary agreement between the parties and it is a must that the

parties be fully apprised of the agreement and all the matters affecting the partnership since he is considered the agent of his co-partners and

of the partnership in respect of all the partnership transactions. Thus, associations whose articles are kept secret among the members and

wherein they contract in their own name with third persons, are not partnerships because they do not have juridical personality, and shall

be governed by the provisions on co-ownership.

11. As to subject matter, a partnership is either universal (one which

refers to all the present property or to all profits) or particular (one which has for its object determinate things, their use or fruits, or

specific undertaking, or the exercise of a profession or vocation). As to liability of partners, a partnership may be general (one consisting of

general partners who are liable pro rata and subsidiarily or at times, solidarity with their separate property for partnership obligations) or

limited (one formed by two or more persons having as members one or more general partners and one or more limited partners (who are

not personally liable for the partnership obligations).

12. A universal partnership of all present property in a partnership in

which the partners contribute all properties belonging to them at the time of the constitution of the partnership to a common fund or

business, with the intention to divide the same, as well as the profits which they may acquire from these properties, among themselves. In

other words, in a universal partnership of all present property, the property which belonged to each of them at the time of the

constitution of the partnership and the profits which they may acquire from said property contributed become the common property of all the

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partners. With regard to future properties, any stipulation including the

properties subsequently acquired by the partners through inheritance, legacy, or donation is void. Profits from other sources (that is, not

from the properties contributed by the partners) will become common property only if there is a stipulation, hence, fruits of the properties

subsequently acquired by inheritance, legacy or donation may be included in the stipulation.

13. A universal partnership of profits is one which comprises all

those properties which the partners may acquire by their industry or work during the existence of the partnership, including the usufruct (or

the right to enjoy or use the property of another, with the obligation to

preserve the propertys form and substance) of movable or immovable property which each of the partners may possess at the time of the

celebration of the contract. The partners retain their ownership over both their present and future properties and what is actually

contributed to the partnership are the income and the use of the property. Upon the dissolution of the partnership the properties are

returned to the partners who own them. Only those profits which the partners may acquire by their work or industry are included in the

partnership while those profits acquired by the partners through chance such as lottery are excluded. Fruits of property subsequently

acquired by the partners are likewise not included, unless there is an express stipulation to the contrary.

14. If the articles of partnership do not specify the nature of the partnership, it is presumed that the parties intended only a partnership

of profits.

15. Persons who are prohibited by law to give donations cannot enter into a universal partnership. A partnership formed by persons

who are prohibited from giving each other any donation or advantage is null and void. A husband and wife may, however, form a particular

partnership.

16. A particular partnership is one which has for its object

determinate things, their use or fruits, or specific undertaking, or the exercise of a profession or vocation. Examples of this kind of

partnership are: partnership formed by professionals (like accountants, lawyers, engineers) who associate themselves in the practice of their

profession; or those partnerships created for the purpose of carrying out a specific project.

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17. A contract of partnership creates for kinds of relationships: 1)

among the partners; 2) between the partners and the partnership; 3) between the partnership and third persons; and 4) between the

partners and third persons.

18. Since a partnership is a consensual contract, that is, perfected by mere consent or agreement of the parties, it exists from the

moment of the execution of the contract, unless otherwise stipulated. Thus, parties who have agreed to become partners at some future

time or upon the happening of a condition or arrival of a period, do not become partners until the happening of the condition or unless the

period has arrived. A future partnership thus exists, which at the moment has yet no juridical personality.

19. A partnership with a fixed term is one in which the term for which the partnership is to exist is fixed or agreed upon or one formed

for a particular undertaking, and upon the expiration of the term or accomplishment of the particular undertaking, the same is dissolved.

The expiration of the definite period agreed upon or the accomplishment of the particular undertaking specified will result to

the automatic dissolution of the partnership. This partnership, however, may be extended expressly (by an agreement which is either

written or oral) or impliedly (by mere continuation of the business by any of the partners after the termination of such term or particular

undertaking without any settlement or liquidation). If a partnership is continued beyond the fixed term, the rights and duties of the partners

remain the same as they were at such termination but only insofar as

is consistent with a partnership at will. With such continuation, the old partnership is dissolved and a new one, a partnership at will, is

created which can be lawfully terminated at anytime by the express will of all the partners or any of them.

20. A partnership at will is one in which no time is fixed and is not

formed for a particular undertaking and may thus be terminated anytime by mutual agreement of the partners, or by the will of any

one partner. Therefore, a partnership which is created for a fixed term or particular undertaking and which is continued by the partners after

the termination of such term or particular undertaking in the absence

of an express agreement, is a partnership at will.

21. A capitalist partner is one who contributes money or property to the common fund while an industrial partner is one who contributes

only his industry or personal service. Regardless of the nature of his contribution to the partnership, however, every partner is obliged to

contribute at the beginning of the partnership or at the stipulated time

the money, property or industry which he may have promised to contribute to the partnership. If he promised to contribute specific

property, he is obliged to preserve said property with the diligence of a good father of a family pending delivery to the partnership. If a

partner fails to contribute the property which he promised, he becomes liable as a debtor of the partnership, without need of any

demand, and the other partners can file an action against said defaulting partner for specific performance with damages. He is

likewise liable for eviction in case the partnership is deprived of the property contributed. Moreover, he is likewise liable to the partnership

for the fruits of the property the contribution of which he delayed from the time they should have been contributed up to the time of actual

delivery even in the absence of any demand. He is obliged to indemnify the partnership for any damage caused to the partnership

by the retention of the same or by the delay in its contribution.

22. When what is to be contributed by the partner consists of goods,

the appraisal of the value of said goods, done in accordance with the manner prescribed in the contract of partnership, is required to

determine how much has been contributed by the partners and in the absence of stipulation, by experts chosen by the partners and

according to current prices.

23. Every partner is obliged to contribute on the date due the

amount he has undertaken to contribute to the partnership and to reimburse any amount he may have taken from the common fund and

converted to his own use. He is liable to pay the agreed or legal interest should he fail to pay his contribution on time or in case he

takes any amount from the common fund and converts it to his own use. Moreover, he is obliged to indemnify the partnership for the

damages caused to the partnership for his delay in the contribution or by reason of his having converted any sum from the common fund for

his personal benefit. He is liable to pay both interest and damages counted from the time he should have complied with his obligation to

contribute the sum of money or from the time he converted the amount to his own use.

24. An industrial partner is one who contributes only his industry or personal service to the partnership and he becomes a debtor of the

partnership for his work or services from the moment of the commencement of the partnership. Thus, the partnership acquires an

exclusive right to the avail itself of his personal service, unless the contrary is stipulated. Hence, if an industrial partner engages in

business for himself, whether or not it is the same business in which

the partnership is engaged or any kind of business, such act of an industrial partner engaging in business for himself is considered as

prejudicial to the interest of the partnership and the other partners as well.

25. An industrial partner is absolutely prohibited from engaging in

business fro himself without the express permission of the partnership. If the industrial partner engages in business for himself, without the

express permission of the partnership, the capitalist partners, as well as the other industrial partners since they are equally prejudiced by

the act of their co-industrial partner, have the right either to exclude

him from the partnership or to avail themselves of the benefits which said industrial partner may have obtained, with a right to damages in

either case.

26. In the absence of any stipulation on the contribution of unequal shares to the common fund, it is presumed that the contribution of the

partners shall be in equal shares.

27. A capitalist partner is one who contributes money or property to

the common fund. As a general rule, he is not bound to contribute to the partnership more than what he agreed to contribute. However, in

case of an imminent loss of the business of the partnership, the majority of the capitalist partners being of the opinion that an

additional contribution to the common fund would save the business, and in the absence of an agreement to the contrary, he is obliged to

contribute an additional share to save the business. If the capitalist partner refuses to do so (deliberately and not because he is financially

unable), he shall be obliged to sell his interest to the other partners. Obviously, the industrial partner is exempted from the requirement to

contribute and additional share because having already contributed his entire industry, he cannot contribute anything further.

28. A managing partner is one who manages the business of the partnership, appointed either in the articles of partnership or after the

constitution of the partnership. He is a general partner or one whose liability to third persons extends to his separate property and may be

either a capitalist or an industrial partner.

29. Article 1792 explains the obligation of a managing partner who

collects debts. In order that this article shall apply, there must therefore be at least two debts which are demandable and collected by

the collecting partner who is duly authorized to manage and actually

manages the partnership- one where said managing partner is the

creditor and the other one where the partnership is the creditor. Where a person separately owes the partnership and the managing

partner at the same time, any sum received by the managing partner has to be applied to the two obligations in proportion to their amounts,

except when the managing partner received the whole sum paid for the account of the partnership in which case the entire amount shall

be applied to the obligations owing the partnership. Clearly, the article does not apply if the partner who collects for his own credit only is not

authorized to manage the business. If, however, the manner of management has not been agreed upon and all the partners

participate in the management of the partnership, then every partner shall be considered as managing partner for purposes of application of

this article. If the obligation in favor of the managing partner is more onerous or burdensome, the law allows the debtor to prefer the

payment of the managing partners credit in case he so desires, in accordance with said debtors right to application of payment.

30. Article 1793 applies where a a person owes the partnership a sum of money and a partner has received from said person his share,

in whole or in part, of the partnership credit ahead of the other partners or while the other partners have not collected their share and

said person (the partnership debtor) has become insolvent. Under the law, even if the partner who received his share of the partnership

credit had given a receipt for his share only, and regardless of whether he is authorized to manage or not, he can be required to share the

amount he received from the partnership debtor with the other

partners.

31. Every partner who is guilty of fault or negligence in the fulfillment of his obligation shall be liable for damages suffered by the

partnership. As a general rule, the damages caused by a partner to the partnership cannot be offset by the profits or benefits which he

may have earned for the partnership by his industry. This is because every partner is obliged to secure benefits for the partnership and to

exercise diligence in the performance of his obligation as partner. If unusual profits are realized, however, through the extraordinary

efforts of the partner at fault, the courts may equitably mitigate the

partner at faults liability for damages.

32. Article 1795 provides the rules to be applied in determining who bears the risk of loss of the things contributed, that is, things that

have been delivered actually or constructively to the partnership. In case of specific and determinate things which are not fungible and

where only the use is contributed by the partner, the risk of loss is

borne by the partner since he remains to be the owner of the thing.

33. In case of specific and determinate things the ownership of which is transferred to the partnership, the risk of loss is for the

account of the partnership, it being the owner. In case of fungible things (things or goods of which any unit is, from its nature or by

mercantile usage, treated as the equivalent of any other unit such as oil, wine, rice, etc.) or things which cannot be kept without

deteriorating even if they are contributed only for the use of the partnership, the risk of loss is borne by the partnership because

obviously, the ownership to these things was transferred to the

partnership since the same cannot possibly be used without these things being consumed or impaired. In case of things contributed in

order that the partnership may sell the same, the partnership bears the risk of loss because ownership was transferred to the partnership

otherwise the partnership could not effect the sale. In case of things brought and appraised in the inventory, the partnership bears the risk

of loss because the intention of the partners was to contribute to the partnership the price of the things contributed. If the loss is due to the

fault of any of the partners, the partner at fault shall be liable for damages to the partnership in accordance with Article 1794.

34. Under Article 1796, the partnership is obliged to refund to the partner the amounts disbursed by him in behalf of the partnership,

such as advances for partnership obligations due and payable) together with the corresponding interest from the time the expenses

were incurred. The partnership is also obliged to answer for the obligation which the partner may have contracted in good faith in the

interest of partnership business and is obliged to answer for risks in consequence of its management.

35. As to the distribution of profits, the partners share the profits

according to their agreement, subject to the provisions of Art. 1799. If

there is no such agreement, the share of each capitalist partner shall be in proportion to his capital contribution and the industrial partner

shall be entitled to such share as may be just and equitable under the circumstances and which share must be satisfied first before the

capitalist partners divide the profits.

36. As to the distribution of losses, the losses shall be distributed to the partners according to their agreement, subject to Art. 1799. If

there is no such agreement, but there is an agreement on the sharing of profits, the share of each partner in the losses shall be in

accordance with the profit-sharing ratio, but the industrial partner shall

not be liable for losses. In the absence of the profit sharing ratio or agreement, the losses shall be borne by the partners in proportion to

their capital contribution, but the purely industrial partner shall not be liable for the losses. If the industrial partner is also a capitalist partner,

he shall share in the losses in proportion to his contribution.

37. The partners may agree to delegate to a third person the designation of the share in the profits and losses. The decision of the

third person is generally binding and may be impugned only when it is manifestly inequitable. However, a partner who has started to execute

the decision of the third person or who failed to impugn the same

within three months from the time he had knowledge of said decision can no longer complain.

38. Any stipulation which excludes one or more partners from any

share in the profits and losses is void but the partnership remains valid and subsists and the profits and losses shall be distributed as if there

were no agreement. Thus, the share of each capitalist partner in the profits shall be in proportion to his capital contribution and the

industrial partner shall be entitled to such share as may be just and equitable under the circumstances and which share must be satisfied

first before the capitalist partners divide the profits. The losses shall be

borne by the partners in proportion to their capital contribution. With regard to the industrial partner, a stipulation exempting him from the

losses is valid since the law itself excludes him from losses in accordance with Art. 1797.

39. Article 1800 refers to the appointment of a partner as manager

of the partnership. A partner appointed as manager possess all the necessary and incidental powers to carry out the business of the

partnership. While every partner has a right to participate in the management of the partnership business, the partners may

nevertheless appoint a managing partner (one who manages the

business of the partnership, usually a general partner or one whose liability to third persons extends to his separate property and may be

either a capitalist or an industrial partner) either in the articles of partnership or after the constitution of the partnership.

40. A managing partner may be appointed by common agreement of

the partners in the articles of partnership, and whose powers include all acts of administration notwithstanding the opposition of the other

partners unless he should act in bad faith. His power is revocable only

upon just and lawful cause and upon the vote of the partners

representing the controlling interest.

41. A partner may be appointed as managing partner after the partnership has been constituted but his power may be revoked at any

time for any cause whatsoever and upon the vote of the partners representing the controlling interest.

42. Where there are two or more managing partners who have been appointed without specification of their respective duties or without

stipulation that one of them shall not act without the consent of all the others, each of the managing partners may separately perform all acts

of administration. If one or more of the managing partners shall oppose the acts of the others, the decision of the majority of the

managing partners shall prevail. In case of tie, the matter shall be resolved by the partners owning the controlling interest, that is, more

than 50% of the capital investment of the partnership.

43. In case there is more than one managing partner appointed by

the partners and the partners have agreed that none of the managing partners shall act without the consent of the other managing partners,

the unanimous consent of all the managing partners is required in order for their acts to be valid. This consent is, however, not required

in case of routine transactions or transactions required in the regular course of business of a partnership, in which case any of the partners

can act without the consent of others and his or her act alone shall be valid. Example of this act is when a managing partner purchases goods

which are regularly purchased by the partnership in its business of buying and selling goods. The consent of the managing partners

under Article 1802 is indispensable, in that the absence of one of the managing partners or the disability of any of them cannot be alleged

or cited as an excuse or as a justification for not complying with the requirement. There is, however, an exception to this- when there is an

imminent danger of grave or irreparable injury to the partnership. In

such a case, a managing partner may act alone and even without the consent of the other managing partner or partners who may be absent

or under disability.

44. Article 1803 sets forth the rules to be observed when the manner of management of the partnerships has not been agreed upon

either at the time of the perfection of the contract or after the perfection of the contract of partnership. In case the partners fail to

designate who among them shall act as managing partner or partners, all of them shall be considered as managers or agents of the

partnership, in which case whatever any one of them may do alone

shall bind the partnership, subject to the timely opposition or objection of any partner. In such a case, the matter shall be decided by the

majority vote of the partners who are entitled to one vote each. In case of tie, then the matter shall be decided by the vote of the

partners representing the controlling interest. According to the second paragraph of this article, the unanimous consent of all the partners

shall be required in case of any important alteration in the immovable property of the partnership, even if such alteration may be useful or

beneficial to the partnership. This is because an important alteration is considered as an act or ownership or strict dominion in which case

all the partners must give their consent since all have interest in the partnership property. The consent need not be expressly given by a

partner but it may be impliedly given or presumed when a partner knew of the alteration but interposed no objection thereto. If the

refusal of the consent of the partner or partners is evidently prejudicial

to the interest of the partnership, then the other partners may seek the intervention of the court in order to secure the authority to effect

the necessary alteration.

45. Every partner has the right to associate another person with him in his share of the profits coming from the partnership even without

the consent of the partners. This person becomes what is known as a sub-partner. Being a sub-partner, such person is not a partner and

shall not become such in the absence of the unanimous consent of all the other partners, even if the partner associating him is a managing

partner. He is not a partner and therefore, he does not acquire the

rights nor the liability of a partner. The reason for this is that the partnership is created based on the mutual trust and confidence

among the partners, and naturally, a sub-partner does not ipso facto enjoy the mutual trust and confidence among the partners. His

inclusion as a new partner will in effect be a modification of the existing contract of partnership.

46. The partnership books is presumed to contain the true and

correct record of the accounts of the partnership and is normally in the custody of the managing partner or partners, or in the absence of the

managing partner or partners, the active partners. The partnership

books is one of the properties of the partnership and as such, in the absence of any agreement to the contrary, shall be kept at the

principal place of business of the partnership. Any of the partners may freely have access to the partnership books and enjoy the right to

inspect or copy any of the books of the partnership at any reasonable hour, and even after the dissolution of the partnership. Other partners

may, however, deny a partner of his rights to inspect the books if the

information to be gathered will be utilized for some purpose other than the partnership purpose.

47. Since there exists mutual trust and confidence among the

partners, any and all of the partners have the duty to render true and full information of all things affecting the partnership upon demand by

any partner, the legal representative of any deceased partner or any partner suffering from legal disability. Any and all of the partners

have also the duty to voluntarily disclose all material facts within his exclusive knowledge, which facts relate to or affect the partnership.

Note, however, that this obligation to disclose pertains only to those

matters which are not reflected in the partnership books which, as discussed in the previous article, is already readily available to any

partner under his right of inspection.

48. Each of the partners occupies a fiduciary position as against the other partners. He has the duty to act for the common benefit of all

the partners and is obliged to account for any profits he may have acquired from any transaction involving the use of partnership

property, or from any transactions relating to the operation of the partnership business. He cannot keep for himself any profit or benefit

received from the operation of the partnership business and is bound

to hold all these benefits as trustee for the partnership, more so, if the same is derived by him in the absence of the consent of the other

partners.

49. In the absence of an agreement to the contrary, the capitalist partner is prohibited from engaging for his own account in any

business which is the same or similar to and in competition with the business in which the partnership is engaged. If he violated this

provision, he shall be duty-bound to bring to the common fund any profits he derived from his transactions, but he shall personally bear

the losses. The partners may by agreement, however, permit the

capitalist partner to engage in the same kind of business as that of the partnership.

50. As a general rule, during the existence of the partnership, a

partner does not have the right to a formal account of partnership affairs since he already enjoys the right of access to partnership books

at any reasonable hour and a right to demand from his partners, a true and full information of all things affecting the partnership. Thus, a

formal account as to partnership affairs would only be necessary upon the dissolution of a partnership. In the following cases, however, a

partner has the right to a formal account of partnership affairs even

before the dissolution of the partnership: 1) when his co-partners wrongfully or unjustifiably excludes him from the partnership business

or possession of the partnership property; 2) when there is an agreement giving the partner the right to a formal account during the

existence of the partnership; 3) in case any of his co-partners need to account to the partnership any benefits or profits the latter received

and holds as trustee for the partnership without the consent of the other partners from any transaction connected with the operations of

the partnership business; and 4) whenever other circumstances render the same just and reasonable, such as in case he is an absentee

partner who needs to determine his rightful share in the profits upon his return.

51. Each partner has the following property rights: 1) his rights in specific partnership property; 2) his interest in the partnership; and 3)

his right to participate in the management.

52. Accurately speaking, it is the partnership which has a personality separate and distinct from the partners comprising it, which is the real

owner of the properties. Be as it may, however, this article provides that a partner is a co-owner with his partners of specific partnership

property. As such, a partner stands on equal footing with his co-

partners relative to the right to possess specific partnership property for partnership purposes. Should a partner desire to possess such

property for some other purpose then the consent of his partners is necessary.

53. Even while a partner is considered as co-owner with his partners

of specific partnership property, separate creditors of an individual partner still cannot run after any specific partnership property. This is

due to the impossibility of determining the extent of a partners beneficial interest in the property until after the liquidation of

partnership affairs. Strictly speaking, a partner has no interest in the

partnership property except for his share of what remains after all the partnership obligations are paid.

54. None of the partners can assign his right in specific partnership

property, nor can he dispose or mortgage his share. He can only assign his right in specific partnership property if all his other co-

partners also assign their respective rights in such specific partnership property, and in favor of a common individual or entity. The partners right in specific property is likewise not subject to attachment or execution except when the claim is against the partnership, in which

case not even any of the partners or representatives of a deceased

partner can claim any right under the homestead or exemption laws. Furthermore, a partners right in specific partnership property is not subject to legal support. It is the partners interest in the partnership itself (which is actually his share in the profits and surplus), which may

be levied upon by a judgment creditor or may be subject to legal support.

55. The partners interest in the partnership consists of his share in the profits (defined as the excess of returns over expenditures in a transaction or the net income) during the existence of the partnership

and his share in the surplus (defined as the net or remaining assets of

the partnership after all partnership obligations are paid and settled) after its dissolution. The partners interest is his share of the residue or balance after a formal account has been taken and the value of a partners share cannot be determined until liquidation of the business had taken place and all the obligations of the partnership settled. The partners interest is his personal property and is therefore assignable by him in the absence of any stipulation to the contrary. It may also be levied upon by a judgment creditor and subject to legal support.

56. A partner may assign, sell, donate, encumber, or convey his whole interest in the partnership without causing its dissolution. The

conveyance does not grant entitle the assignee the right to interfere in the management or administration of the partnership business, to

require or demand any information or account of partnership transactions, or to inspect the partnership books because these are the

rights available only to partners. The person to whom the conveyance is made does not become a partner and his only rights are to receive

in accordance with his contract the profits accruing to the assigning partner, to avail himself of the usual remedies under the law in case of

fraud in management, to receive the assignors interest in case of dissolution, and in case the partnership is dissolved, to require an

account of partnership affairs covering the period from the date of the last account agreed to by all the partners.

57. While a separate creditor of a partner cannot attach or levy upon specific partnership property for the satisfaction of his credit, he can

go to court and secure a judgment on his credit and then apply to the court for a charging order against the interest of the debtor- partner in

the partnership, but subject to the preferred rights of partnership creditors. The interest of the debtor-partner so charged may be

redeemed with the separate property of any one or more of the partners, or with partnership property but with the consent of all the

partners whose interests not so charged or sold. In addition, while a

partner cannot claim any right under the homestead laws or exemption laws in case of specific partnership property being attached

for partnership debt, with respect to a partners interest in the partnership, however, since such is really the property of a partner,

then the partner may avail himself of the exemption laws after partnership debts have been paid.