2 Re: ARTICLE 1799 on Tue Feb 02, 2016 8:31 pm
(1) Stipulation Excluding a Partner from Profits or Losses
(a) The general rule is that a stipulation excluding one or morepartners from any share in the
profits or losses is void.
Reason: The partnership is for COMMON BENEFIT.
(b) One exception is in the case of the industrial partner whom the law itself excludes from losses. (Art. 1797, par. 2). If the law itself does this, a stipulation exempting the industrial partner from losses is naturally valid. (Of course, it is permissible to stipulate that even the industrial partner shall be liable for losses.)
(2) Reason Why Industrial Partner Is Generally Exempted from Losses
While capitalist partners can withdraw their capital, the industrial partner cannot withdraw any labor or industry he had already exerted. Moreover, in a certain sense, he already has shared in the losses in that, if the partnership shows no profit, this means that he has labored in vain. (See 11 Manresa 377).
- excerpt from Civl Code Volume 5 by Justice Paras
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