Short answer. No. You are responsible to the partnership for damages caused by your fault, and you cannot offset those damages against profits you brought in through other transactions. The two are treated separately — your good work does not cancel out your harmful one.
What the law says
he cannot compensate them with the profits and benefits which he may have earned for the partnership by his industry
Civil Code, Article 1794 — Partner's Liability for Damage. Read the full provision →
The rule: liability and profits are kept separate
Article 1794 of the Civil Code is direct: Every partner is responsible to the partnership for damages suffered by it through his fault, and he cannot compensate them with the profits and benefits which he may have earned for the partnership by his industry. The logic is that your co-partners are entitled to benefit from the profits you generate — those belong to the partnership as a whole. Allowing you to use those profits to neutralize a separate loss you personally caused would mean your co-partners effectively absorb the consequences of your negligence.
One narrow exception: extraordinary profits
The article provides one path to reduction, not elimination, of the liability: the courts may equitably lessen this responsibility if through the partner's extraordinary efforts in other activities of the partnership, unusual profits have been realized. This is a limited and discretionary exception. It requires that the profits you generated were genuinely unusual — not ordinary business results — and that they came from extraordinary effort on your part. Even then, the court merely lessens the liability; it does not extinguish it. A partner cannot invoke this as a matter of right; the court decides whether the circumstances justify relief.
Why the law draws this line
The prohibition on offsetting damages with profits protects the integrity of the partnership relationship. Each partner has a separate duty of care to the firm. Meeting that duty in some transactions and failing it in others does not produce a balance sheet that cancels out obligations. If it did, a partner could cause significant harm to co-partners by negligent conduct and escape responsibility simply by pointing to profitable deals they closed elsewhere. The firm's profitability and a partner's liability for negligence are governed by different principles.
What this means practically
If your negligence caused a loss to the partnership, the partnership has a claim against you for the amount of that loss. The claim is calculated based on the actual damage you caused, not reduced by whatever you contributed in other transactions. Your co-partners will pursue that claim, and your best defense — if the exception applies — is to ask the court to consider your extraordinary contributions and whether they justify a reduced liability. Otherwise, the full measure of the loss caused by your fault is owed to the partnership.
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 →