An industrial partner cannot engage in business for himself, unless the partnership expressly permits him to do so; and if he should do so, the capitalist partners may either exclude him from the firm or avail themselves of the benefits which he may have obtained in violation of this provision, with a right to damages in either case.
Obligations of industrial partner.
An industrial partner is one who contributes his industry, labor, or services, which are his contribution to the common fun. (Limuco vs. Calina, [C. A] No. 10099-R, Sept. 9,1953.)
Unless the contrary is stipulated, he becomes a debtor of the partnership for his work or services from the moment of the commencement of the partnership. In effect, the partnership acquires an exclusive right to avail itself of his industry. Consequently, if he engages in business for himself, such act is considered prejudicial to the interest of the other partners.
Prohibition against engaging in business.
- As regards an industrial partner. – The prohibition is absolute and applies whether the industrial partner is to engage in the same business in which the partnership is engaged or in any kind of business. It is clear that the reason for the prohibition exists in both cases, which is to prevent any conflict of interest between the industrial partner and the partnership and to insure faithful compliance by said partner with his obligation.
- As regards capitalist partners. – The prohibition extends only to any operation which is of the same kind of business in which the partnership is engaged unless there is a stipulation to the contrary. (Art. 1808)
Remedies where industrial partner engages in business.
If the industrial partner engages in business for himself, without the express permission of the partnership, the capitalist partners have the right either to exclude him from the firm or to avail themselves of the benefits which he may have obtained.
- In either case, the capitalist partners have a right to damages. Note that the permission given to the industrial partners must be express to exempt him from liability.
- Although the law mentions only the capitalist partners, It is believed that industrial partners are also entitled to the remedy granted since they are equally prejudice by the act of their co-partner engaging in business for himself.
[Ayon po sa aking pagkakaintindi, ang isang kasosyo daw po sa isang industriya ay hindi maaaring makisali sa negosyo para sa kanyang sarili, maliban kung ang pakikipagtulungan ay malinaw na pinahihintulutan siyang gawin ito at kung dapat niyang gawin ito maaaring ibukod ng kapitalistang kapareho sa kanya o mapakinabangan ang kanilang mga benepisyo na maaaring nakuha niya sa paglabag sa probisyon na ito, na may karapatang mapahamak sa alinmang kaso. ]
Example:
Suppose that a partnership is engaged in a automobile repair shop. Arvie is the industrial partner and works only up to 5pm every working day. He must be expressed permission even if he says it to the capitalists partners everyday.
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