C. PROPERTY RIGHTS OF A PARTNER
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1. To To possess specifc partnership property and to participate in ana!eent (Art. 1810, 1811)
c.
Artic"e 1#1$. The property rights rights of a partner are:
d.
(1) His rights rights in specic partnership property; (2) His interest interest in the partnersh partnership; ip; and (3) His right right to participate participate in the anageen anageentt
INCI%ENTS OF CO&O'NERSHIP 1. E()a" ri!hts to Possess Artic"e 1#11. A partner is co!o"ner "ith his partners of specic partnership property. The incidents of this co!o"nership are s#ch that: (1) A partner, s#$%ect to the pro&isions of this Tit'e and to any agreeent $et"een the partners, has an e#a' right "ith his partners to possess specic partnership property for partnership p#rposes; $#t he has no right to possess s#ch property for any other p#rpose "itho#t the consent of his partners; •
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A partner has an e#a' right "ith his partners to possess partnership property for partnership p#rposes nc'#des #se and contro' e&en "itho#t the consent of the other partners. This inc'#des sa'e and disposition (e.g. app'ying partnership property to partnership de$ts)
*iitations: (1) Not Exclusive + Exclusive + ne partner is not entit'ed to the e-c'#si&e possession or contro' of the r assets; the e-c'#ded partner or partners ay as for a fora' acco#nt fro the e-c'#ding partner and/or to petition for a decree of disso'#tion (2) For partnership purposes only + + partner has no right to possess property for any other p#rpose "itho#t the consent of his partners. f he does, he is acco#nta$'e for the &a'#e of s#ch and the prots he ay ha&e deri&ed therefro. (3) Subject to agreement and provisions of Code y agreeent, e-c'#si&e possession and contro' of partnership property ay $e &ested in one partner y e-press pro&ision of the ode: a. one of the partners partners ay, ay, "itho#t "itho#t the the consent consent of of the others, ae any iportant a'teration in the •
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io&a$'e property of the partnership e&en if s#ch a'teration ay $e #sef#' to the partnership The partne partnerr "ho has has $een $een appoint appointed ed anager anager in in the artic'e s of partnership ay e-ec#te a'' acts of adinistration despite opposition of his partners, #n'ess he sho#'d act in $ad faith f any of the partners partners sho#'d sho#'d oppos oppose e the acts acts of the other partners, the decision of the a%ority sha'' pre&ai', or in case of a tie, the decision of those o"ning the contro''ing interests ertain ertain acts acts en#erate en#erated d in Art. Art. 1818 1818 (e.g. (e.g. assignent of partnership property in tr#st, disposa' of the good!"i'' of the $#siness, etc.) #st $e a#thoried $y a'' the partners.
*. Nonassi!na+i"ity Artic"e 1#11. A partner is co!o"ner "ith his partners of specic partnership property. The incidents of this co!o"nership are s#ch that: (2) A partner4s right in specic partnership property is not assigna$'e e-cept in connection "ith the assignent of rights of a'' the partners in the sae property; •
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A partner4s right in specic partnership property is not assigna$'e e-cept in connection "ith the assignent of rights of a'' the partners in the sae property This r#'e o$tains e&en if the assignent is ade after after disso'#tion of the partnership $#t $efore its terination $y the cop'etion of the "inding #p of its $#siness.
56ect of separate assignent Any separate assignent of s#ch right, or any attept at s#ch assignent is n#'' and &oid e-cept "hen rea' property is in&o'&ed and the pro&isions of Art. 1817 of the ode re'ati&e to the interest of an innocent p#rchaser app'y #t s#ch assignent, ay in a proper case $e regarded and he'd as a &a'id assignent of his interest in the partnership •
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easons for nonassigna$i'ity 1. 9artners 9artnership hip is a &o'#ntary &o'#ntary re'ation re'ation and and the other partners partners cannot cannot ha&e a ne" partner thr#st #pon the "itho#t their consent. Assignee "o#'d pro "o#'d pro tanto $ecoe tanto $ecoe a partner since he "o#'d ha&e the right to possess the property for partnership p#rposes irrespecti&e of the desires of the other partners. 2. possi$i' possi$i'ity ity to eas#re eas#re or &a'#e &a'#e a partners partners $enecia' $enecia' interest interest in a partic#'ar partnership asset 9rohi$ition is 'iited to: 1. Assignent Assignent $y one one partner partner to a third party party or stranger stranger #n'ess #n'ess it is %oined in $y a'' the other partners, partners, or
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Assignent to a partner not e-ec#ted $y a'' the other partners
9rohi$ition does not app'y to: 1. Assignent $y a partner to his so'e reaining partner 2. Assignent to t"o or ore reaining partners, "ith the consent of a'' easons for inapp'ica$i'ity of prohi$ition on a$o&e t"o: 1. o o#tsider co#'d interfere "ith the cond#ct, possession or anageent of the partnership or partnership property 2. o ne" partner is aditted to the partnership 3. o other partner or no partnership creditor is depri&ed of his right to ha&e the partnership assets app'ied to the payent of partnership de$ts . o other partner nor partnership creditor are pre%#diced and neither are s#$ordinated to the c'ais of creditors of i ndi&id#a' partners ,. Not s)+-ect to Attachent or Eec)tion Artic"e 1#11. A partner is co!o"ner "ith his partners of specic partnership property. The incidents of this co!o"nership are s#ch that: (3) A partner4s right in specic partnership property is not s#$%ect to attachent or e-ec#tion, e-cept on a c'ai against the partnership.
A partners right in specic partnership property is not s#$%ect to attachent, e-cept on a c'ai against the partnership.
ationa'e *ogica' conse#ence of the prohi$ition against separate assignent $y a partner of his right in s#ch property. •
eedy of partners separate creditors A'tho#gh a partners separate creditors are pre&ented fro reaching the specic property of the partnership or his rights therein, they ay proceed against the partners interest in the partnership in accordance $y o$taining fro the co#rt a charging order or 'ien, ha&e the co#rt appoint a recei&er and order, "here necessary, the sa'e of the de$tor partners interest in the partnership. •
/. Not s)+-ect to S)pport Artic"e 1#11. A partner is co!o"ner "ith his partners of specic partnership property. The incidents of this co!o"nership are s#ch that:
() A partner4s right in specic partnership property is not s#$%ect to ' ega' s#pport #nder artic'e 271. •
ased on the $asic po'icy of the 'a" to eep intact partnership property for creditors and for partnership p#rposes
PARTICIPATION IN 0ANAGE0ENT Genera" R)"e A'' partners ha&e e#a' rights in the anageent and cond#ct of partnership $#siness.
Eception 9artners agree that anageent $e &ested in one or ore of the partners Etent o2 A)thority A anaging partner ay e-ec#te a'' acts of adinistration. 9o"ers are not specied >ay e-ercise a'' acts that ay $e necessary to attain the o$%ect of the partnership 9o"ers are specied >#st act "ithin the scope of his a#thority; sho#'d not act in $ad faith ?o'e anager >ay e-ercise a'' acts e&en against the opposition of his partners, #n'ess he does so in $ad faith ?o'idary >anageent (#'tip'e >ay e-ec#te a'' acts of anagers "ith no specication of adinistration, $#t if any of the respecti&e d#ties nor necessity of opposes, the a%oritys decision consent of a'' to act) sha'' pre&ai' @oint >anageent (#'tip'e onc#rrence of a'' sha'' $e anagers "ith stip#'ation that necessary for the &a'idity of the they cannot act "itho#t the acts.
consent of others)
acco#nt agreed to $y a'' the partners.
A$sence or disa$i'ity of any one of the cannot $e a''eged, #n'ess there is iinent danger of gra&e or irrepara$'e in%#ry to the partnership. (ote: this restriction is addressed to partner acting in the transaction not the third person "ho is #nder no o$'igation to ascertain "hether partner o$tained consent of copartners) (ote: restriction app'ies on'y to e-ec#tion of fora' "ritten contracts and not ro#tine atters) Re3ocation o2 a)thority 9o"er of anaging partner is irre&oca$'e "itho#t %#st or 'a"f#' ca#se The ode does not specify "hat "o#'d $e considered as %#st or 'a"f#' ca#se. Ho"e&er, it has $een opined, that a'' gro#nds for the re&ocation of agency ay $e considered as s#ch. f po"er "as granted $y artic'es of partnership ! re&ocation needs &ote of the partners representing contro''ing interest f po"er "as granted $y s#$se#ent agreeent ! ay $e re&oed at any tie •
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*. To share in the profts and s)rp")s and to con3ey partnership interest (Art. 1812, 1813) Artic"e 1#1*. A partner4s interest in the partnership is his share of the prots and s#rp'#s.
Artic"e 1#1,. A con&eyance $y a partner of his "ho'e interest in the partnership does not of itse'f disso'&e the partnership, or, as against the other partners in the a$sence of agreeent, entit'e the assignee, d#ring the contin#ance of the partnership, to interfere in the anageent or adinistration of the partnership $#siness or a6airs, or to re#ire any inforation or acco#nt of partnership transactions, or to inspect the partnership $oos; $#t it ere'y entit'es the assignee to recei&e in accordance "ith his contract the prots to "hich the assigning partner "o#'d other"ise $e entit'ed. Ho"e&er, in case of fra#d in the anageent of the partnership, the assignee ay a&ai' hise'f of the #s#a' reedies. n case of a disso'#tion of the partnership, the assignee is entit'ed to recei&e his assignor4s interest and ay re#ire an acco#nt fro the date on'y of the 'ast
INTEREST IN PARTNERSHIP Partner4s interest in the partnership + his share of the prots and s#rp'#s PROFIT S5RP65S ain rea'ied fro the $#siness or 5-cess of assets o&er 'ia$i'ities in&estent o&er and a$o&e e-pendit#res or the e-cess of the &a'#e of ret#rns o&er the &a'#e of ad&ances >ay $e deterined and distri$#ted Bs#a''y deterined and distri$#ted fro tie to tie $efore the on'y after disso'#tion, "inding #p disso'#tion of the partnership and and 'i#idation "inding #p and 'i#idation of its a6airs Nat)re o2 a partner4s interest in the partnership 7EFORE %ISSO65TION 5PON %ISSO65TION nterest is in the partnership as a nterest is in the property reaining $#siness or a going concern. after a'' the de$ts and 'ia$i'ities to o#tside creditors ha&e $een satised. INTEREST IN PARTNERSHIP 9ersona' property (intangi$'e in nat#re) and present interest Assigna$'e irrespecti&e of the consent of the other partners >ay $e reached $y the partners separate creditors $y eans of a charging order and other reedies specied in Art. 181 9artner can, "ith respect to it, c'ai rights #nder the e-eption 'a"s
RIGHT IN SPECIFIC PROPERTY
onassigna$'e ot s#$%ect to attachent or e-ec#tion
ASSIGN0ENT OF INTEREST Genera" R)"e: A partner ay assign his interest in the partnership to his copartners or any of the, or to a third person. Eception: 9artners ay agree that one of the cannot se'' or assign his interest "itho#t the consent of the others, or agree to prohi$it assignent a'together. Ri!hts o2 assi!nee
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The transfer $y a partner of his partnership interest to a third person does not ae the assignee of s#ch interest a partner in the r. He ay not interfere in the anageent or adinistration of the partnership $#siness or a6airs, or to re#ire any inforation or acco#nt of partnership transactions, or to inspect partnership $oos. t ere'y entit'es hi to recei&e the prots to "hich his assignor "o#'d other"ise $e entit'ed. To $ecoe a partner, (1) the assignee #st ha&e s#ch intention and that (2) nonassigning partners agree to his %oining the in $#siness
Ri!hts o2 assi!nor An assignent of partnership interest does not necessari'y di&est the assigning partner of his stat#s as partner. t a'' depends on the ters of the assignent and the intent of the parties #t if assignor does not 'ose his rights, he a'so is not re'ie&ed of his o$'igations. Note Assignent is not of itse'f a ca#se of disso'#tion ('oo at nat#re of the assignent and intent or agreeent of the parties)
CHARGING OR%ER Without prejudice to the preferred rights of partnership creditors under article 1827, on due application to a competent court by any judgment creditor of a partner, the court which entered the judgment, or any other court, may charge the interest of the debtor partner with payment of the unsatisfied amount of such judgment debt with interest thereon; and may then or later appoint a receiver of his share of the profits, and of any other money due or to fall due to him in respect of the partnership, and make all other orders, directions, accounts and inuiries which the debtor partner might have made, or which the circumstances of the case may reuire! Article 1814.
"he interest charged may be redeemed at any time before foreclosure, or in case of a sale being directed by the court, may be purchased without thereby causing a dissolution# $1% $2%
With separate property, by any one or more of the partners; or With partnership property, by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold!
&othing in this "itle shall be held to deprive a partner of his right, if any, under the e'emption laws, as regards his interest in the partnership!
This artic'e "as taen fro the B.?. Bnifor 9artnership Act "hich "as patterned after the 5ng'ish 9artnership Act of 1870. Reedies )nder the Artic"e The copetent co#rt, #pon d#e app'ication $y a %#dgent creditor of a partner, is epo"ered to:
(1) 5nter an order charging the interest of the de$tor partner "ith payent of the #nsatised ao#nt of the %#dgent de$t as "e'' as the interest thereon (2) Appoint a recei&er of the de$tor partners share of the prots any other oney d#e or to fa'' d#e to hi in respect of the partnership (3) >ae a'' other orders, directions, acco#nts, and in#iries "hich the de$tor partner ight ha&e ade, or "hich the circ#stances of the case ay re#ire () =irect the sa'e of the interest charged The t"o $asic reedies are: (1) ep'oyent of a charging order and, this pro&es inade#ate, (2) the sa'e of the de$tors interest in the partnership. The other reedies ser&e sip'y as aids to these t"o $asic reedies. 5-ap'e: harging order ay $e e6ected thro#gh a recei&er ("ho recei&es the de$tor!partners share in the prots) and the sa'e of the interest ay again $e done $y the recei&er Reach o2 Reedies The a$o&e reedies can on'y reach the distri$#ti&e share of the de$tor partner, i.e. his share of s#ch prots as ay fro tie to tie $e distri$#ted These reedies cannot e-tend to the partnership assets Ho"e&er, since any diin#tion of partnership assets a#toatica''y entai's a diin#tion of the prots d#e to a partner, a %#dgent creditor ay a&ai' of e&ery eas#re to pre&ent #na#thoried or i''ega' dissipation or transfer of partnership assets (e.g. n#''ify ortgages, assignents) •
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Redeption or P)rchase o2 Char!ed Interest 9artners ay redee or p#rchase the interest of a de$tor partner "hich is charged "ith satisfaction of the %#dgent of his creditor edeption or p#rchase ay $e ade "ith the separate property of one of the partners or "ith the partnership property (in the 'atter case, a'' partners #st consent) •
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Ri!ht to disso"3e partnership edeption or p#rchase of the charged interest of a de$tor partner does not disso'&e the partnership #t the ere s#6erance $y a partner of a charging 'ien on his interest is a gro#nd for the other partners to disso'&e the partnership #nder Art. 1830(c) . •
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RE%E0PTION >ade at any tie $efore sa'e or $efore the e-piration of a redeption period. edeption ade after sa'e is discretionary on the co#rt >ere'y ad&anced oneys for the
P5RCHASE 5-ercised "hen sa'e of the charged interest is directed $y the co#rt
Ac#ire the de$tor partners interest
$enet of the de$tor and ho'ds the interest in tr#st for hi
a$so'#te'y
Genera" R)"e o partner has a right to deand a fora' acco#nting e-cept as a conse#ence of disso'#tion or #n'ess he at the sae tie sees disso'#tion of the partnership. This is $eca#se he has e#a' access "ith his partners to the partnership $oos •
,. To ha3e access to partnership +oo8s
Eception: circ#stances in Art. 1807 Artic"e 1#$9. The partnership $oos sha'' $e ept, s#$%ect to any agreeent $et"een the partners, at the principa' p'ace of $#siness of the partnership, and e&ery partner sha'' at any reasona$'e ho#r ha&e access to and ay inspect and copy any of the. •
Ceasona$'e ho#rD eans any reasona$'e ho#r on $#siness days thro#gho#t the year and not ere'y d#ring soe ar$itrary period of a fe" days chosen $y soe or one of the partners.
/. To tr)e and 2)"" in2oration Artic"e 1#$:. 9artners sha'' render on deand tr#e and f#'' inforation of a'' things a6ecting the partnership to any partner or the 'ega' representati&e of any deceased partner or of any partner #nder 'ega' disa$i'ity.
:. To rei+)rseent o2 ad3anceent and indenifcation o2 ris8s Artic"e 1<;:. The partnership sha'' $e responsi$'e to e&ery partner for the ao#nts he ay ha&e dis$#rsed on $eha'f of the partnership and for the corresponding interest, fro the tie the e-pense are ade; it sha'' a'so ans"er to each partner for the o$'igations he ay ha&e contracted in good faith in the interest of the partnership $#siness, and for riss in conse#ence of its anageent.
9artnership sha'' $e responsi$'e to e&ery partner for: (1) Ao#nts he ay ha&e dis$#rsed on $eha'f of the partnership and for the corresponding interest, fro the tie the e-penses are ade (2) $'igations he ay ha&e contracted in good faith in the interest of the partnership $#siness (3) For riss in conse#ence of its anageent
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9. To a 2ora" acco)nt
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Artic"e 1#$;. Any partner sha'' ha&e the right to a fora' acco#nt as to partnership a6airs: •
(1) f he is "rongf#''y e-c'#ded fro the partnership $#siness or possession of its property $y his co!partners; (2) f the right e-ists #nder the ters of any agreeent; (3) As pro&ided $y artic'e 180E; ()
A partner has no o$'igation to 'oan or ad&ance oney to his r. f he does, he $ecoes a creditor of his r and is entit'ed to rei$#rseent for s#ch 'oan or ad&ance $efore there can $e any distri$#tion of prots. Any &o'#ntary contri$#tion of oney or property for the #se of the partnership $eyond the ao#nt re#ired to $e contri$#ted $y the partnership agreeent is considered an ad&ance or a 'oan.
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