Short answer. No. Article 1798 expressly says the designation of losses and profits cannot be entrusted to one of the partners. You may hand that decision to a third person outside the partnership, whose decision binds unless manifestly inequitable, but not to a partner himself.
What the law says
The designation of losses and profits cannot be intrusted to one of the partners.
Civil Code, Article 1798 — Designation by a Third Person. Read the full provision →
A partner cannot be the one who decides the shares
The Code draws a firm line here. Article 1798 ends with the flat prohibition: the designation of losses and profits cannot be intrusted to one of the partners. So the arrangement you are asking about is not allowed. The reason is fairness and self-dealing. A partner who got to decide everyone's share of profits and losses would be judge in his own cause, tempted to enlarge his own slice and shrink the others'. The law removes that temptation entirely by forbidding the role, rather than trying to police how a partner might exercise it. Any clause giving one partner that power runs against this provision.
But a third person may be entrusted with it
What the article does permit is delegation to someone outside the circle. It opens: if the partners have agreed to intrust to a third person the designation of the share of each one in the profits and losses, such designation may be impugned only when it is manifestly inequitable. A neutral outsider, having no personal stake to inflate, can be trusted with the task. Once he decides, his allocation is meant to stand. It can be challenged, but only on the narrow ground that it is manifestly inequitable — plainly, grossly unfair — not merely because one partner is disappointed with his share or would have preferred a different split.
Time limits on challenging the third person's decision
Even that narrow right to complain can be lost. Article 1798 provides that in no case may a partner who has begun to execute the decision of the third person, or who has not impugned the same within a period of three months from the time he had knowledge thereof, complain of such decision. So a partner who starts carrying out the allocation, or who simply sits on his objection for three months after learning of it, is bound by it. The practical guidance is clear: if you want a decision-maker for profit and loss shares, choose a genuine third person, put any objection in promptly, and never assign that power to a partner.
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.
- In the Matter of Urgent Petition for the Release of Prisoners on Humanitarian Grounds, G.R. No. 252117, July 28, 2020 — read the decision on LawPhil →