hi guys and welcome to another episode of attorneys of vlogger love for the everyday layman today we continue with our series on partnerships and today we'll be talking about the relationship of the partnership to the partners as well as the rights of the partners themselves so if you like my videos and you want to see more please hit the subscribe button also please remember that this is only for educational purposes and it's not a substitute for proper legal advice or for studying and understanding the law a like on this video and all my other videos would also be highly appreciated okay now let's begin now as i mentioned in the previous video no the contract of partnership creates relations between among the partners uh between the partnership and the partners now and that is our focus today you know so one of the relations created by the contract of partnership partnership is the one that results between the partners now the individual partners and the partnership itself okay as a result the partnership has certain responsibilities or duties to the partners which are as follows first the partnership should refund amounts which are disbursed by the partner in behalf of the partnership okay add to this no the corresponding interest which must be paid from the time the expenses are made no so uh these refer to a loans or advances made by the partner on behalf of the partnership other than capital okay the second would be to answer know the partnership answers for the obligation obligations rather no which the partner may have contracted in good faith in the interest of the partnership business and also the partnership has to answer for risks in consequence of management provided of course that the partner is not at fault and that he acted within the scope of his authority okay now we can go to the rights of a partner let's uh breeze through all of them first before i discuss them one by one first of course under 1810 we have the property rights of the partner and under these property rights we have the right in specific partnership property we also have the interest in the partnership or the equity rights and the right to participate in management okay the second right that a partner has would be the right to reimbursement for amounts advanced to the partnership as well as indemnification for risks in consequence of management the another right would be the right to associate with another person in his share otherwise known as the contract of sub-partnership the fourth right would be the right of access and inspection of partnership books the fifth right would be a right to a true and full information okay of all things affecting the partnership next we have the right to a formal account of partnership affairs under certain circumstances and we also have the right to have the partnership dissolved under certain conditions okay and additionally let's just add the right to use a firm or partnership name okay now let's begin with our discussion we begin with the property rights of a partner and in this regard take note that property is different from the capital which is contributed no the property or the assets is variable you know the value may change as the market value likewise changes no and the property when we talk about property it can include goodwill or it can even include the capital itself the capital however will always be constant its value is always constant because it is fixed in the articles of partnership or in the contract of partnership itself and it may consist of money property or industry so generally when we say property that's bigger it includes the capital okay under this umbrella of the property rights of a partner as i mentioned earlier we have three rights no first right in specific partnership property rights to the interest in the partnership or the equity rights and the right to participate in management when we talk about the rights in specific partnership property this contemplates of course tangible property okay and this tangible property this belongs to the partnership remember the partnership has a separate juridical personality separate and distinct from the partners this means that the partners have no actual interest in the partnership property until after the partnership itself is dissolved okay take note that under uh article 1811 a partner is considered a co-owner with his co-partners over specific partnership property as a result of this co-ownership there are certain incidents first we have the right of possession in other words each partner has an equal right with his co-partners to possess specific partnership property for partnership purposes he has no right to possess that property for any other purpose without the consent of his partners and if a partner uses that property for his own profit then he must account to his whole partners for the said profit no second incident would be that a partner cannot assign his interest in any specific partnership property i emphasize that because later on when we talk about interest that is assignable take note first now that the partner cannot assign his interest in any specific partnership property why because the individual partners have no specific interest in the specific partnership property which belongs of course to the partnership okay and it is impossible to determine the extent of a partner's beneficial interest in that property until after liquidation this also serves the in the purpose no of preserving the interest in the property after liquidation it protects the rights of the partners and partnership creditors to have the partnership assets applied to the firm's liabilities or debts and this will prevent interference by outsiders in partnership affairs okay take note however all of the partners may collectively know all of them may collectively make an assignment of their entire interest in any specific partnership property it has to be all of them okay third incident of this co-ownership is that the specific partnership property is not subject to attachment or execution against an individual partner again because the part the property does not belong to the partner it belongs to the partnership okay however no a claim if the claim is brought against a partnership then that property may now be attached or executed upon because the claim is against the partnership and the partner owns that property okay another incident of this co-ownership is that the specific partnership property is not subject to legal support why because again the partner does not own the property it belongs to the partnership it is only the partners interest in the partnership that may be subject to legal support no and finally the last incident would be the partners interest is not a debt jew from the partnership no in there's no credit or debt or relationship so while creditors of a single individual partner may go after his interest those creditors cannot go after specific partnership property again because there is a separate personality what belongs to the partnership does not necessarily does not necessarily belong to any of the individual partners no they only have a beneficial interest in the property owned by that partnership okay now let's go to uh the interest of a partner in the partnership or the equity rights now the interest of a partner in the partnership refers to a partner's share in the profits meaning the excess of returns over expenditures in a transaction or series of transactions or i end rather end the partner share in the profits and the surplus and the surplus simply refers to the assets of the partnership after its liabilities are paid and the rights of the partners among themselves are adjusted okay now uh again just to uh make sure the partner's interest in the partnership would refer to his share in the profits and surplus no without mentioning any specific property after all debts and liabilities to outside creditors have been satisfied and their equity is adjusted no it is it is the interest of the partner after the solution to receive any debts due to him by by way of advances salary or interest if any his capital contribution and after that his proper share of the remaining profits if there are any so since the partner's interest in the partnership is his personal property a partner no an individual partner may assign his whole interest in the partnership and this will not necessarily result in this solution okay and the assignee know that the person who receives the interest of the partner no he does not become a partner and he cannot interfere in the management or in our administration of the partnership he cannot require information and accounting he cannot inspect partnership books however that assignee you know he has certain rights he has the right to receive in accordance with his contract the prophets which the assigning partner would have otherwise been entitled to he can also avail himself of the usual remedies provided by law in the event of fraud in management further an assignee has the right to receive his assigners interest in case of the solution as well as to require an account of the partnership affairs in case the partnership is dissolved okay the account will cover the period from the date only of the last account agreed to by all of the parties now uh distinguishing this from the previous discussion while a partner's right in a specific property is not subject to execution on a claim against him as an individual a creditor may subject a partner's interest in the partnership to attachment no when we talk about this what i mean is the share in the surplus after the firm debts are paid and equities to the partners are adjusted no that is what the creditor can attach and not a specific property like a car a house etc and how is this attachment done this is done through what is called a charging order take note also that while the creditors may ask for attachment and public sale of the share of a partner it is the creditors of the partnership itself that are preferred over the creditors of each individual partner when it comes to partnership property the final property right of partner would be the right to participate in management and i'll talk about that in the next video okay don't worry it'll be in the next video now let's go on to the second right of the of a partner no which is the right to reimbursement for amounts advanced to the partnership and the right to be indemnified for risks in consequence of management under article 1796 except when otherwise stipulated every partner is an agent of the partnership for the purpose of its business so this means that the partnership must refund amounts which are disbursed by the partner on behalf of the partnership okay this includes advances for partnership debts which are due and payable plus interest from the time of demand in case of loans made to the partnership which are not capital take note they should not be capital so uh the partnership must answer for the obligation contracted by its partner which is done in good faith okay as long as it's done on behalf of the partnership the partner can be is entitled to rather know is entitled to receive reimbursement or indemnification and the partnership must answer for risk in consequence of its management let's now go to the third right the third right no of a partner would be the right to associate with with another person in his share this is otherwise known as a contract of sub-partnership and the governing rule is article 1804 okay and a contract of subpartnership is one form between a member of a partnership let's say goku gohan vegeta are members of a partnership no and then vegeta is a partner as i said no trunks will agree with vegeta okay the trunks will be the sub partner of vegeta but trunks will not be a part of this partnership he just has an agreement with vegeta okay so uh it's one form between a member of a partnership and a third person for the division of profits owing to the member of the partnership from the partnership enterprise okay so it's like a partnership within a partnership it is separate and distinct from the main or principal partnership okay the partnership between talks and vegeta is separate from the partnership of goku gohan and vegeta the part the some partners are partners among themselves okay but the sub-partner himself is not a member of the main partnership so therefore he does not acquire the rights of a partner and he is not liable for partnership debts in order for trunks the sub-partner to become a member of the main partnership the original contract of partnership should be modified okay in other words all the other partners must agree that trunks can now join okay if they do not agree then it's just a contract of some partnership between vegeta and trunks okay that is based on the principle of the lectures personae know that the partners have the right to choose who they will be associated with now while the consent is necessary in order for trunks to join the partnership consent of the others is not necessary for trunks to become a mere sub-partner okay vegeta or trunks does not need the consent of gohan and goku for them to have a sub-partnership relation okay now let's go to the next right of a partner this is the right of access and to inspect the partnership box now take note now i mentioned in the previous video that there is an obligation on the part of the partner no or in this case the duty of the managing partner or the partner who is assigned no or voted upon no they have the duty to keep a true and correct uh records in the books okay they have to show accurately the firm's accounts and these books should be open to inspection at all times no of course within reasonable hours on business days now this implies that there is a if there is a duty to keep books faithfully then there is the right to inspect the books okay and that right stems from the from uh from the fact no that a partner is a co-ownership of partnership properties which of course includes the books no now just take note that when it comes to this right to access and inspect that right is not absolute and a partner may be restrained from using the information gathered no in case he uses it for a purpose that is other than or in conflict with the partnership purpose okay moreover now it is presumed that the partners have knowledge of the contents of the books and that the books are the books accurately state the actual state of accounts now let's move on to the next right now the right to true and full information of all things affecting the partnership this is under article 1806 no and this was already mentioned in the previous video that each partner has a duty to render on demand it through render on demand true and full information of all things affecting the partnership and again by implication each partner has a right to demand and receive information provided of course it must be used only for partnership purposes and not in conflict with the partnership business take note that the duty to render information or the right to demand the same does not arise with regard to matters that are in the books since they already have the right to inspect the books just check the books okay so there's no more need to demand the information anymore okay now on to the next right no the right to a formal account of partnership affairs under certain circumstances this is under article 1809 now generally a partner is not entitled to a formal account of partnership affairs during the existence of a partnership why because aside from being inconvenient and possibly a waste of time the right to know such affairs are already protected by 1805 on the inspection of books and 1806 on the right to demand information affecting the partnership okay so this formal account is usually proper only as a necessary incident of the solution so when a partner asks for the solution he also asks usually for a formal account of the partnership affairs okay however no 1809 gives us situations no when a formal account may be demanded namely first if a partner is wrongfully excluded from the partnership business or from possession of its property by his co-partners wrongfully excluded second if the right exists under the terms of any agreement entered into by the partners third if a partner has derived profits from any transaction connected with the formation conduct or liquidation of the partnership or from any use by him of property and fourth whenever other circumstances render it just and reasonable for instance if a partner has been assigned abroad for a long period of time in connection with the partnership business okay so as long as the partnership exists any of the partners may demand an accounting of the partnership business under the circumstances i mentioned okay the next right of a partner is the right to have the partnership dissolved under certain uh conditions now and i will just uh give i will just discuss this in a future episode on the solution please just wait for that okay and finally i just want to discuss the right of the partners to use a firm name no the partnership name so the law tells us that every partnership shall operate under a firm name which may or may not include the name of one or more partners for uh law offices we have let's say de la cruz santos and uh villanueva like that whatever you know so uh or in case of a limited partnership the word limited must be uh included no like uh velasco and uh reyes limited okay now uh the rule is persons who not being partners no persons who are not partners who include their name in the firm name they do not uh acquire the rights of a partner okay because it's contra a partnership is contractual it has to be agreed upon and the electors personae affords the partners the right to choose who to be associated with so the mere fact that you put your name in the partnership name does not make you a partner but take note okay if they include their name in the partnership name they shall be subject to the liability of a partner in so far as third persons are concerned okay and so far as third parties third persons who have no notice of the actual relation are concerned these are who are known as partners by estoppel now take note that liability is different from losses now when we talk about liability that's what you uh that's your uh relation to the debtor when we talk about losses that's the relation of partners among themselves okay uh i'll talk about that more in the next video now the partners what name can the partners use the partners can use any firm name that they want okay but of course they cannot use a misleading name or a name that is identical or deceptively confusing or similar to any existing partnership or corporation or any other name which is already protected by law and what about the case where a partner dies no and the partnership is continued can you still use his name before you could not no okay because uh the partnership should be dissolved no but uh if you will notice that there are some partnerships in the philippines today where they use names of people who are already dead and how can this uh take place no this has been allowed no provided that the firm or the partnership indicates in all its communications its letters its emails whatever that that part that specific partner is already deceased and this is usually done by putting a cross uh beside the name no so you will know that he's there okay you just have to inform the public that said partner is already deceased okay so one more time let's just go through the rights of a uh partner we have the property rights of the partner under 1810 which include the rights to specific partnership property the interest in the partnership or the equity rights and the right to participate in the management the other rights would be the right to reimbursement for amounts advanced to the partnership and to be indemnified for risks and consequence of the management the third is the right to associate with another person in his share otherwise known as a contract of sub-partnership fourth the right of access and inspection of partnership books fifth the right to true and full information of all things affecting the partnership uh sixth the right to a formal account of the partnership affairs under certain circumstances seventh the right to have the partnership dissolved under certain conditions and finally the right to use a firm or partnership name okay so i hope you may have picked up a thing or two and uh i hope to see you next time guys okay see you soon bye