Short answer. Yes. Even though an assignee of a partner's interest normally has no right to interfere in management, the Civil Code expressly carves out an exception: in case of fraud in the management of the partnership, the assignee may avail himself of the usual legal remedies.
What the law says
in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies
Civil Code, Article 1813 — Conveyance of a Partner's Interest. Read the full provision →
The ordinary limitation on an assignee
As a rule, an assignee of a partner's interest holds a purely economic position. Article 1813 of the Civil Code makes clear that the conveyance of a partner's interest does not entitle the assignee to interfere in management, demand information, or inspect the books. The other partners never agreed to accept this assignee as one of their own, and partnership law protects that relationship. While the partnership continues, the assignee is entitled only to the profits the assigning partner would otherwise have received. That passivity is the baseline.
The fraud exception breaks the baseline
Article 1813 then carves out a specific exception: in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies. The law does not enumerate exactly which remedies apply — that depends on the nature and extent of the fraud. What is clear is that an assignee is not required to stand by and absorb the financial loss silently when fraudulent management is draining the very profits he is entitled to receive. The fraud exception gives him legal standing to act.
What "usual remedies" can mean in practice
The phrase usual remedies points to the ordinary legal tools available for fraud: a civil action for damages, an action for accounting, an injunction to prevent continuing harm, or other appropriate relief. What is being protected is the assignee's financial interest — the stream of profits he purchased. If management fraud is reducing or eliminating those profits, the assignee has a legitimate basis to seek judicial intervention. The appropriate remedy in any particular case will depend on what the fraud consists of and what harm has resulted; a lawyer can help identify the proper cause of action.
Fraud must be actual, not just suspected
The exception is tightly worded around the word fraud. Poor management decisions, unfavorable results, or disagreements over strategy do not trigger the exception. The assignee must be able to point to fraudulent conduct — dishonest or deliberately deceptive acts by those managing the partnership. Suspicion alone will not support a claim. If you believe fraud is occurring, gathering documentation of the conduct — financial irregularities, false records, undisclosed self-dealing — is important groundwork before pursuing any remedy.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Josefina P. Realubit vs. Prosencio D. Jaso and Eden G. Jaso, G.R. No. 178782, September 21, 2011 — read the decision on LawPhil →