a. Property Rights of Partners

3. Property Rights of Partners

Civil Code, Articles 1810-1814

Property Rights of a Partner

Article 1810.¹ The property rights of a partner are:

(1) His rights in specific partnership property;

(2) His interest in the partnership; and

(3) His right to participate in the management (n)

Article 1811.² A partner is co-owner with his partners of specific partnership property.

The incidents of this co-ownership are such that:

(1) A partner, subject to the provisions of this Title and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes; but he has no right to possess such property for any other purpose without the consent of his partners;

(2) A partner's right in specific partnership property is not assignable except in connection with the assignment of rights of all the partners in the same property;

(3) A partner's right in specific partnership property is not subject to attachment or execution, except on a claim against the partnership. When partnership property is attached for a partnership debt the partners, or any of them, or the representatives of a deceased partner, cannot claim any right under the homestead or exemption laws;

(4) A partner's right in specific partnership property is not subject to legal support under article 291³. (n)

Article 1812.⁴ A partner's interest in the partnership is his share of the profits and surplus. (n)

Article 1813.⁵ A conveyance by a partner of his whole interest in the partnership does not of itself dissolve the partnership, or, as against the other partners in the absence of agreement, entitle the assignee, during the continuance of the partnership, to interfere in the management or administration of the partnership business or affairs, or to require any information or account of partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to receive in accordance with his contract the profits to which the assigning partner would otherwise be entitled. However, in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies.

In case of a dissolution of the partnership, the assignee is entitled to receive his assignor's interest and may require an account from the date only of the last account agreed to by all the partners. (n)

Article 1814.⁶ Without prejudice to the preferred rights of partnership creditors under article 1827⁷, 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 inquiries which the debtor partner might have made, or which the circumstances of the case may require.

The 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) With separate property, by any one or more of the partners; or

(2) 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.

Nothing in this Title shall be held to deprive a partner of his right, if any, under the exemption laws, as regards his interest in the partnership. (n)

Property Rights of a Partner:

• Right in specific partnership property;
• Interest in the partnership (share in the profits and surplus); and
• Right to participate in the management. (Art. 1810, Civil Code)⁹

Related Rights to the Property Rights of a Partner

• Right to reimbursement by the partnership for amounts disbursed on its behalf, with interest, and to indemnification for obligations contracted in good faith in the partnership’s interest and risks arising from its management; (Art. 1796, NCC)¹⁰
• The right of access and inspection of partnership books;(Art. 1805, NCC)¹¹
• The right to a formal account of partnership affairs under certain circumstances; and (Art. 1809, NCC)¹²
• The right to have the partnership dissolved also under certain conditions. (De Leon, 2010; Arts. 1830¹³ and 1831, NCC)

Nature of a Partner's Right in Specific Partnership Property

• Equal right to possession for partnership purposes;
• Right is not assignable, except in connection with assignment of rights of all partners in the same property;
• A partner’s right in specific partnership property is governed by Article 1811 of the Civil Code; the partner’s share of profits and surplus is a distinct property right under Article 1812;
• Right is not subject to attachment or execution except on a claim against the partnership; and
• Right is not subject to legal support

Effects of Assignment of Partner’s Whole Interest in the Partnership

• Rights withheld from the assignee:

Such assignment does not grant the assignee the right to:

• To interfere in the management;
• To require any information or account; and
• To inspect partnership books.
• Rights of assignee on partner’s interest:
• To receive in accordance with his contract the profits accruing to the assigning partner;
• To avail himself of the usual remedies provided by law in the event of fraud in the management;
• To receive the assignor’s interest in case of dissolution; and
• To require an account of partnership affairs, but only in case the partnership is dissolved, and such account shall cover the period from the date only of the last account agreed to by all the partners.

Q: Rosa received from Jois money, with the express obligation to act as Jois’ agent in purchasing local cigarettes, to resell them to several stores, and to give Jois the commission corresponding to the profits received. However, Rosa misappropriated and converted the said amount due to Jois to her personal use and benefit. Jois filed a case of estafa against Rosa. Can Rosa deny liability on the ground that a partnership was formed between her and Jois?

A: NO. Even assuming that a contract of partnership was indeed entered into by and between the parties, when a partner receives any money or property for a specific purpose (such as that obtaining in the instant case) and he later misappropriates the same, he is guilty of estafa. (Liwanag v. Court of Appeals and the People of the Philippines, G.R. No. 114398, 7 September 1997)¹⁴