Law on Partnership Flashcards
1
Q
By the contract, two or more persons bind themselves to contribute money, property, or industry to a common fund with the intention of dividing the profits among themselves.
Two or more persons may also form this for the exercise of a profession
A
Partnership
2
Q
A meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.
A
Contract
3
Q
It is a juridical entity which has a personality separate and distinct from that each of the partners.
It begins from the moment of the execution of contract, unless it is otherwise stipulated.
A
Business Organization
4
Q
What are the characteristics of a contract of partnership?
A
(ConPriBiMuNoPreOne)
1.Consensual
2. Principal
3. Bilateral or Multilateral
4. Nominate
5. Preparatory
6. Onerous
5
Q
This is perfected by mere consent of the parties
A
Consensual
6
Q
It does not depend upon any other contract for its validity or existence.
A
Principal
7
Q
If the contract depends on any other contract, what is it called?
A
Accessory contract
8
Q
It is entered into by two or more persons whose rights and obligations are reciprocal.
A
Bilateral or Multilateral
9
Q
It has a special name given to it by law.
A
Nominate
- If there is no special name, it is an innominate contract.
10
Q
It is a means by which other contracts will be entered into as the partnership pursues its business.
Ex: Contract of Sale - arise between partnership and buyer
Contract of Lease - arise between contract of lessor and lessee
A
Preparatory
11
Q
The partners contribute money, property, or industry to a common fund.
A
Onerous
12
Q
What is the main purpose of a partnership?
A
To obtain profit
13
Q
What is the principle in law that says a partnership is fiduciary in nature (base on trust and confidence)
A
Delectus Personae
14
Q
What are the Essential Requisites of a Partnership?
A
1.There must be a valid contract.
2. There must be a mutual contribution of money, property, or industry to a common fund.
3. It must have a lawful object or purpose.
4.The partnership must be established for the common benefit or interest of the partners which is to obtain profits and to divide the profits among the partners.
15
Q
What are the essential elements of a Contract?
A
- Consent of the contracting parties
- Object certain which is the subject matter of the contract
- Cause of the obligation which must be established.
N: Without these, there will be no contract
16
Q
If a partnership is formed for the practice of a common profession, its primary purpose is to?
A
Render service to the public.
N: (not to obtain profit).
17
Q
General rule in forming a partnership contract
A
Partnership contract may be in any form (Oral or Written)
18
Q
Exception to the GR of forming a partnership contract
A
- Where immovable property or real rights are contributed to the partnership (regardless of the amount thereof)
- Where the capital of the partnership is P3,000.00 or more, in money or property
- If the partnership is a limited partnership, a certificate signed under oath by the partners and recorded with the Securities and Exchange Commission is required.
19
Q
Exception to the GR of forming a partnership contract
- Where immovable property or real rights are contributed to the partnership (regardless of the amount thereof)
What is the requirement?
A
a. The partnership contract must be in a public instrument; and
b. An inventory of the said property must be made, signed by the parties and attached to the public instrument. (Art. 1773)
20
Q
Exception to the GR of forming a partnership contract
- Where immovable property or real rights are contributed to the partnership (regardless of the amount thereof)
If requirement are not complied?
A
a. The partnership contract is void. (Art. 1773),
b. The partnership will not have any juridical personality.
21
Q
Exception to the GR of forming a partnership contract
- Where the capital of the partnership is P3,000.00 or more, in money or property
What is the requirement?
A
a. The partnership contract must be in a public instrument, and
b. Registered with the Securities and Exchange Commission (SEC). (Art. 1771)
22
Q
Exception to the GR of forming a partnership contract
- Where the capital of the partnership is P3,000.00 or more, in money or property
What is the requirement?
A
a. The partnership contract must be in a public instrument, and
b. Registered with the Securities and Exchange Commission (SEC). (Art. 1771)
23
Q
Exception to the GR of forming a partnership contract
- Where the capital of the partnership is P3,000.00 or more, in money or property
If requirement are not complied?
A
a. The partnership contract is still valid. Accordingly, the partnership still acquires júridical personality. (Arts. 1768, 1772)
b. The liability of the partnership and the members thereof to third persons are not affected. (Art. 1772)
24
Q
What are the reasons for the registration with the SEC?
A
> Business license to engage in business.
> To assess its tax liabilities
> Enable third persons to determine both the composition of the firm and its capital before dealing with it and its members.
25
Exception to the GR of forming a partnership contract
3. If the partnership is a limited partnership, a certificate signed under oath by the partners and recorded with the Securities and Exchange Commission is required.
If requirement are not complied?
The partnership will be considered as a general partnership.
26
Exception to the GR of forming a partnership contract
3. If the partnership is a limited partnership
What is the requirement?
A certificate signed under oath by the partners and recorded with the Securities and Exchange Commission is required.
27
Exception to the GR of forming a partnership contract
3. If the partnership is a limited partnership
If requirement is not complied?
The partnership will be considered as a general partnership.
28
Who may become partners?
1.Natural Person
2. Artificial Persons
29
What are the general rules applied when determining whether a partnership exists?
1. Persons who are not partners as to each other are not partners as to third persons
2. Co-ownership or co-possession does not of itself establish a partnership
3. The sharing of gross returns, does not of itself establish a partnership
4. The receipt by a person of a share of the profits of a business is a prima facie evidence that he is a partner in the business.
30
What are the exemptions in determining whether a partnership exists?
1. When a person represents himself or co to another representing him to anyone, as a partner in an existing partnership or with one or more persons not actual partners. (Ans 1769, 1825)
4. No such inference shall be drawn if such profits were received in payment:
a. As a debt by installments or otherwise.
b. As wages of an employee or rent to a landlord.
c. As annuity to a widow or representative of a deceased partner.
d. As interest on loan though the amount of payment vary with the profits of the business.
e.As the consideration for the sale of goodwill of a business or other property by installment or otherwise. (Art. 1769)
31
Who can form a partnership?
Anyone as long as not disqualified by law.
32
Who cannot form a partnership?
1.Minors
2. Deaf-mutes who do not know how to read or write
3. Insane or demented persons
4. Incompetents under guardianship
5. Those suffering civil interdiction
6. Those prohibited by law to make donations to each other
(If we allow them to enter into a contract, this is now a circumvention of the prohibition)
33
Can you form a professional partnership?
Yes
34
What is general professional partnership's purpose?
Practicing a common profession.
35
Can A and B, both Certified Public Accountants form a general professional partnership to go into public accounting?
Yes
36
Can C and D, both lawyers form a general professional partnership to practice law?
Yes
37
Can E, a lawyer, and F, a Certified Public Accountant, go into the practice of taxation as a general professional partnership?
No, because of different professions
38
Can G, an architect, and H, an engineer form a partnership that will qualify as a general professional partnership?
No
39
Can I and J, both Certified Public Accountants in partnership selling business machines form a general professional partnership?
No, even if they have the same profession, their joint activity is business which is to sell business machines and not a common profession.
40
What are the three elements that may form a general professional partnership?
1.The partners have a common profession.
2. The purpose is to practice the common profession.
3. No part of the net income is derived from engaging in any trade or business
41
Is Partnership also a business organization?
Yes
42
What are the forms of business organizations?
1.Sole Proprietorship
2. Partnership
3. Corporation
43
What are the kinds of partners?
1. Kinds of Partners as to Liability
2. Kinds of Partners as to Contribution
3. Other Classifications of Partners
44
What are the kinds of partners as to Liability?
1.General
2.Limited
3.General-limited
45
Is a partner who is liable for partnership debts to the extent of his or her separate property after all the assets of the partnership have been exhausted
General partner
46
Is a partner who is liable for partnership debts to the extent of his or her capital contribution only.
Limited
47
Is a partner who is liable pro-rata to partnership creditors to the extent of his or her separate assets after the partnership assets have been exhausted, but he or she can demand reimbursement of the amount he or she paid from his or her co-partners.
General-limited
48
As to third persons, a general-limited partner is considered as what partner?
General
49
Among the partners, a general-limited partner is considered as what partner?
Limited
50
X,Y and Z are partners in XTZ Company, Ltd.
X- limited partner
Y- general partner
Z- general-limited partner
Assets- 50,000
Liabilities - 80,000
In the settlement of the liabilities, the assets will first be exhausted.
Can the creditors collect the balance of 30,000 to both Y and Z?
Yes, After payment to the creditors, Z may demand reimbursement of 15,000 from Y
51
What are the kinds of partners as to contribution?
1. Capitalist partner
2. Industrial partner
3. Capitalist-industrial partner
52
Is a partner who contributes money or property to a common fund.
Capitalist
53
Is a partner who contributes his or her services or industry to the partnership
Industrial
54
Is a partner who contributes his or her services or industry to the partnership
Industrial
55
Is a partner who contributes not only money or property but also his or her services to the partnership.
Capitalist-industrial
56
What are the other classifications of partners?
1. Managing partner
2. Liquidating partner
3. Nominal Partner
4. Ostensible partner
5. Secret partner
6. Silent partner
7. Dormant partner
57
Is a partner who manages the business or the affairs of the partnership.
Managing partner
58
Is a partner who takes charge of the winding up of the affairs of the partnership after the partnership is dissolved.
Liquidating partner
59
What are the Stages in the Life of Partnership?
1.Formation
2. Operation
3. Dissolution
4. Liquidation - winding up of affairs (setting the business or affairs of the partnership after dissolution)
60
Is one who is not actually a partner but who may become liable as such to third persons.
Nominal Partner
61
Is one who is not really a partner, not being a party to a partnership agreement, but is liable as a partner for the protection of innocent third persons.
Partner by estoppel
62
Is a partner who is active and known to the public as a partner, such as by allowing his or her name to be included in the firm name.
Ostensible partner
63
Is a partner whose connection with the partnership is kept from the public. (active partner)
- He or she participates in the management of partnership affairs
Secret partner
64
Is a partner who has no voice in the management of the business (though he or she shares in the profits and losses)
- he or she does not take any active part in the business but he or she is known to be a partner.
Silent Partner
65
Is a partner who does not participate in the management of the business and not known to the public as a partner.
Dormant partner
66
A, B and C form a partnership. How many persons are in the partnership?
There are 4 persons. A, B, C and, ABC Partnership
67
A, B and C form a partnership. How many persons are in the partnership?
There are 4 persons. A, B, C and, ABC Partnership
68
Ex: A, B and C form a partnership. How many persons are in the partnership?
There are 4 persons. A, B, C and, ABC Partnership
Why ABC partnership considered as a person?
It is not a literal person but in the eyes of the law, it is a person and it is called a Juridical Person.
69
What is the GR in the debt of partnership?
Whatever the debt of the partnership will only be the debt of the partnership.
- If the partnership owes you money, you can only go to the partnership. You cannot go after the individual partners.
70
What is the exemption to the GR in the debt of partnership?
If the partnership was used by the partner for fraudulent means.
- The creditor can now go after the individual partners
71
A partnership is created by mere agreement of the parties.
A co-ownership may be formed by agreement or by law.
For two questions, true or false?
Both true
72
In partnership, it is formed by virtue of an agreement, express or implied.
In co-ownership, it is formed by law through succession.
True or False?
True, True
73
When a person dies and he has several heirs and properties, he leaves his properties to them. Now, the properties or estate are transferred to his heirs at the moment of death. Is there a co-ownership formed?
Yes
74
In partnership, the purpose is to obtain profit
In co-ownership, the purpose is common enjoynment
True or False?
True, True
75
A partnership has a juridical personality because it can enter into a contract, and can own and sell properties.
A co-ownership do not have a juridical personality
True or False?
True, True
76
If X and Y are co-owners of a certain parcel of land. Is the co-ownership considered a separate person?
No, only 2 persons. Co-owner A and Co-owner B
77
In partnership, partners can agree as to the term of existence of the partnership. While in co-ownership, the limit is 10 years.
True or False?
True
- Reason of co-ownership is so the property can be developed.
78
When there is a partnership transfer, all partners must consent
True or False?
True
79
In co-ownership, they can transfer interest without consent
True or False?
True
80
In partnership, partners acts as agent, binding
In co-ownership, co-owners acts do not bind the others
True or False?
TRUE
81
In partnership, When a partner dies, the partnership is dissolved
In co-ownership, co-ownership is not terminated
True or False?
TRUE
82
X, Y and Z form a partnership. If X dies, the partnership between X, Y and Z is terminated. However, if they want to continue, can it still be allowed?
Yes, the partnership will be Y and Z partnership.
83
A and B are co-owners of a property and then A dies. A leaves 2 heirs which are X and Y. When A dies, is the co-ownership terminated?
No, because X and Y will now become the co-owners of A.
84
Partnership is governed by Civil Code while Corporation is Governed by Revised Corporation Code (RA 11232)
True or False?
True
85
Partnership is created by mere agreement of the parties (express or implied) while Corporation is created by operation of law (COR by SEC)
True or False?
True
86
Partnership should have at least two partners while Corporation by RCC state that there are no minimum number of incorporators. However, Incorporators in a corporation must not be more than 15.
True or False?
True
87
You can create a corporation with only one incorporator.
True or False?
True, It is called ONE-PERSON CORPORATION (OPC)
88
In Partnership, a juridical personality is created at the time of the execution of contract. While in Corporation, a juridical personality is created when there is already a issuance of the certificate of registration.
True or False?
True
89
In Partnership, they can exercised any power authorized by the partners. While in Corporation, they can only exercise powers that are authorized by law.
True or False?
True
90
In Partnership, managing partner will manage, if assigned. If management is not agreed upon, each partner acts as an agent of the partnership.
While in Corporation, it is managed by BOD or Trustees.
True or False?
True
91
In Partnership, if there is a mismanagement, partnership can sue managing partner.
In Corporation, if there is mismanagement, the corporation can sue members, in the name of the corp.
True or False?
True
92
In Partnership, General partners can be subsidiary liable.
In Corporation, the extent of liability can only be limited to subscription.
True or False?
True
93
In Partnership, partner cannot sell interest without consent of all the partners.
In Corporation, stockholder can sell shares without consent.
True or False?
True
94
In Partnership, partners can agree as to the term of existence of the partnership (there is no limitation).
In Corporation, In RCC, it can have perpetual existence, unless otherwise stipulated.
True or False?
True
- before RCC, the term is 50yrs
95
In Partnership, it can be dissolved anytime by the will of the partners.
In Corporation, it can only dissolved only when there is a state’s consent.
True or False?
True
96
What is the general rule about the form of partnership?
A partnership can be made in any form
97
What is one of the exemption to the general rule about the form of partnership?
When there is a immovable property, it must be in public instrument
- writing (written agreement must be notarized)
98
What is one of the exemption to the general rule about the form of partnership?
When there is a immovable property, it must be in public instrument
- writing (written agreement must be notarized)
99
If the immovable property is not in a public instrument, that does make the partnership void?
Yes, the partnership will not have a juridical personality
100
What is the another exemption to the general rule about the form of partnership?
(2) If the capital of the partnership is 3,000 or more, then it must be in writing
- Partnership must be registered with the SEC
101
If the partnership didn’t comply with the capital being in a public instrument and should be registered in SEC, does that make the partnership void or invalid?
NO, the reason for registration is to notify
third persons of the existence of the partnership and for their protection.
- (Art. 1357) Will give the parties the right to compel the other parties to observe that particular form
102
If there is no inventory in the contributed immovable property, is the partnership still valid?
No, it is void
- Inventory is important to determine the contributed capital of the partners and for fairness.
103
This partnership may refer to all the present property or to all the profits.
Universal partnership
104
This is a partnership in which all the partners contribute all the property which actually belonged to them to the common fund, with the intention of dividing the same among themselves, as well as the profits which they acquire therewith.
Universal partnership of all present property
105
What are the properties which shall belong to the common fund?
a) Property belonging to the partners at the time of the constitution of the partnership (present property).
b) Profits that may be acquired from the present property.
106
What more of the properties which shall belong to the common fund?
c) Property acquired by each partner after the formation of the partnership, but only if stipulated. This property shall include:
(1) The property itself except that the stipulation shall not include property acquired by inheritance, legacy, or donation,
(2) The profits and fruits therefrom including those from property acquired by inheritance, legacy or donation.
107
A and B formed a universal partnership of all present property. At the time of the establishment of the partnership, A owned a fleet of taxis which he had purchased and an agricultural lot which he had inherited. B, on the other hand, owned an apartment which he had earlier acquired by exchange and shares of stock which were donated to him. The partners agreed that property acquired by each partner after the formation of the partnership shall belong to the partnership. During the first year of operations of the partnership, the following transactions took place:
a) Fare revenues of P200,000.00 were realized. from the operation of the fleet of taxis.
b) Crops amounting to P100,000.00 were gathered from the agricultural lot.
c) Rentals of P150,000.00 were collected from the apartment.
d) Dividends of P50,000.00 were received from the shares of stock.
e) A coconut plantation was purchased by A from his own funds.
f) Coconuts worth P80,000.00 were gathered from the coconut plantation.
g) A fishpond was received by B by way of donation from a rich uncle.
h) Fish valued at P70,000.00 were harvested from the fishpond.
Based on the foregoing, what should belong to the partnership?
a) Fleet of taxis
b) Agricultural lot
c) Apartment
d) Shares of stock
e) Fare Revenues
f) Crops gathered from a agricultural lot
g) Rentals from the apartment
h) Dividends from the shares of stock
i) Coconut plantation
j) Coconuts harvested
k) Fish harvested
- The fishpond belongs to B because the stipulation on future property does not include property acquired by inheritance, legacy or donation, However, the fruits therefrom, represented by the fish harvested, belong to the partnership.
108
This comprises all that the partners may acquire by their work or industry during the existence of the partnership.
Universal partnership of profits
109
What are the profits/property which shall belong to the partnership?
a) Profits obtained by the partners by their work or industry during the existence of the partnership.
- Profits acquired by the partners without the exertion of physical or intellectual efforts, such as those acquired by chance or lucrative title are EXCLUDED.
b) The usufruct (the use) of the property belonging to each partner at the time of the constitution of the partnership.
The ownership of the property (whether movable or immovable) belonging to each partner at the time of the constitution of the partnership shall continue to pertain exclusively to each partner as only the usufruct is passed on to the, partnership.
c) The profits and fruits from the properties aforementioned (Items "a" and "b").
d) Profits and fruits, if stipulated, of property acquired by each partner after the constitution of the partnership.
110
A and B formed a universal partnership of profits. At the time of the establishment of the partnership, A owned a fleet of taxis which he had purchased and an agricultural lot which he had inherited. B, on the other hand, had an apartment which he had earlier acquired by exchange and shares of stock which were donated to him. The parties stipulated that fruits of future property shall belong to the partnership. During the first year of operations of the partnership, the following transactions took place:
a) Fare revenues of P200,000.00 were realized from the operation of the fleet of taxis.
b) Crops amounting to P100,000.00 were gathered from the agricultural lot.
c) Rentals of P150,000.00 were collected from the apartment.
d) Dividends of P50,000.00 were received from the shares of stock.
e) Salary of P200,000.00 was received by A as professor of a certain college.
f) P1,000,000.00 was won by B in the lotto draw.
g) A coconut plantation was purchased by A
from his own funds.
h) Coconuts worth P80,000.00 were gathered from the coconut plantatión.
i) A fishpond was received by B by way of donation from a rich uncle.
j) Fish valued at P70,000.00 were harvested from the fishpond.
Based on the foregoing, what in the following belongs to the partnership?
a) Fare revenues
b) Crops gathered from agricultural lot
c) Rentals from the apartment
d) Dividends from the shares of stock
e) Salary of A as professor in a certain college
f) Coconuts gathered from the coconut plantation
g) Fish harvested from the fishpond
NOTE:
- The fleet of taxis and agricultural lot shall continue to pertain to A
- The apartment and shares of stock shall continue to pertain to B, since only the use and fruits of the said properties were contributed to the partnership at the time of its establishment.
- The coconut plantation belongs to A because it is not a fruit and it was not indicated that it was acquired by his industry.
- The lotto winnings and fishpond belong to B since they were acquired by chance and lucrative title, respectively.
- However, the coconuts gathered and the fish harvested belong to the partnership because of the stipulation that fruits of future property shall belong to the partnership.
111
When there is no specification about the nature of universal partnership. What should be followed?
Universal Partnership of Profits
- Universal partnership of profits transmits less rights and interests.
112
Who are the persons prohibited to enter into a universal partnership?
1) Husband and Wife
Donations between spouses during the marriage except moderate gifts on the occasion of a family rejoicing. These prohibition applies to persons living as husband and wife without the benefit of marriage. (Art. 87, Family Code)
2) Guilty of adultery or concubinage
Those made between persons who were guilty of adultery or concubinage at the time of the donation. (Art. 789)
3) Those made between two persons found guilty of the same criminal offense, in consideration thereof. (Art. 789)
4) Those made to a public officer or his wife, descendants or ascendants by reason of his office. (Art. 789)
113
A kind of partnership for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.
Particular partnership
114
A kind of partnership for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.
Particular partnership
115
A real estate partnership whereby partner A contributed a parcel of land and partner B a building.
Is this an example of Particular Partnership?
Yes
116
A real estate partnership whereby partner A contributed a parcel of land and partner B a building.
Is this an example of Particular Partnership?
Yes
117
A real estate lessor partnership whereby A contributed cash and B the use and lease of his building.
Is this an example of Particular Partnership?
Yes
118
A partnership formed for the exercise of the law profession.
Is this an example of Particular Partnership?
Yes
119
A partnership formed for the exercise of the law profession.
Is this an example of Particular Partnership?
Yes
120
May a husband and wife form or be a Particular Partnership? (General Professional Partnership)?
Yes, since a GPP is only a particular partnership for the exercise of a common profession or ocupation
121
May a husband and wife form or be a Particular Partnership? (General Professional Partnership)?
Yes, since a GPP is only a particular partnership for the exercise of a common profession or ocupation
122
What are the partners as to liability?
General and Limited partnership
123
What are the partnership as to duration?
1. Partnership for a fixed term
2.Partnership for a particular undertaking
3. Partnership at will
124
What are the kinds of partnership as to representation to others?
1. Ordinary Partnership
2. Partnership by estoppel
125
What are the kinds of partnership as to representation to others?
1. Ordinary Partnership
2. Partnership by estoppel
126
As a general rule, Partnership begins the moment there is a meeting of minds.
True or False?
True
127
There is no limit in the duration of a partnership.
True or False?
True
128
When partners have already accomplished the particular undertaking they agreed on or the fixed term they have agreed on for the existence of the partnership has expired and they still continue on with the partnership, does the rights and obligations will remain the same?
Yes, the rights and obligations will remain the same as if it were a partnership at will.
129
Kind if partnership where partners do not agree on a fixed term. They only agree that they will continue with the partnership and dissolve it at will.
Partnership at will
130
When partners continued the partnership without liquidation, they implied that they would renew their contract of partnership.
True or False?
True
131
A, B and C are partners in Durable Enterprises. They want to purchase materials on credit from X but X does not know any of them. So they ask D who is known to X to represent himself as a partner in Durable Enterprises. X thus grants a charge sale to Durable Enterprises amounting to P90,000.00. A partnership by estoppel is created among A, B, C and D and a partnership liability results because all the partners consented to the misrepresentation. D becomes a partner by estoppel in Durable Enterprises. Assuming that Durable Enterprises has assets of P60,000.00 only.
Can X go to the separate assets of A,B,C, and D for the balance of 30,000 after the collection of their remaining assets?
Yes
132
If only A and B permitted D to represent himself as a partner. A partnership by estoppel is created among A, B and D.
In collecting his claim of P90,000, Can X go after the partnership assets?
No, X can only go after the separate assets of A, B and D.
133
If only A and B permitted D to represent himself as a partner. A partnership by estoppel is created among A, B and D.
In collecting his claim of P90,000, Can X cannot go after the partnership assets?
No, X can only after the separate assets of A, B and D.
134
If A and B are not partners but they represent themselves to X as partners. A and B are partners by estoppel. Can X go after between their separate assets?
Yes, they shall be responsible jointly or pro-rata to X for any liability incurred on account of the misrepresentation.
135
Manuel, Alberto and Conrado are partners in MAC Company, Ltd. with Manuel as limited partner, Alberto as general of bpartner, and Conrado as general-limited partner. The partnership has a assets of P60,000.00 and liabilities of P90,000.00. In the settlement of the liabilities, the assets will first be exhausted.
Who can the creditors collect with the amount of 30,000?
The creditors can collect the balance of P30,000.00 from the separate assets of Alberto and Gonrado who will be liable for P15,000.00 each.
136
Manuel, Alberto and Conrado are partners in MAC Company, Ltd. with Manuel as limited partner, Alberto as general of bpartner, and Conrado as general-limited partner. The partnership has a assets of P60,000.00 and liabilities of P90,000.00. In the settlement of the liabilities, the assets will first be exhausted.
Who can the creditors collect with the amount of 30,000?
The creditors can collect the balance of P30,000.00 from the separate assets of Alberto and Gonrado who will be liable for P15,000.00 each.
137
Manuel, Alberto and Conrado are partners in MAC Company, Ltd. with Manuel as limited partner, Alberto as general partner, and Conrado as general-limited partner. The partnership has a assets of P60,000.00 and liabilities of P90,000.00. In the settlement of the liabilities, the assets will first be exhausted. Thereafter, the creditors can collect the balance of P30,000.00 from the separate assets of Alberto and Gonrado who will be liable for P15,000.00 each.
After payment to the creditors, Can Conrado demand reimbursement? and from who between the partners?
Yes, Conrado may demand reimbursement of P15,000.00 from Alberto. This is so because as to third persons, Conrado is a general partner, but among the partners, he is a limited partner. Manuel will not be liable with his separate assets being a limited partner.
138
Fail to contribute Money (generic thing)
You and your friend enter into a partnership. Partner promised to contribute 500,000 to the business. What happens if he does not give you what he has promised to contribute to the partnership?
(1) He will become a debtor of the partnership
(2) Will also be liable for damages (delay or default) - (no need for demand to incur delay)
When you are a debtor of a partnership, the partners can legally compel you to contribute the amount of money you promised to the partnership.
139
Fail to contribute Property (determinate thing)
If the parcel of land has been given to the partners as promised, however after 2 years the land has been judged that it belongs to another person and the partners are unaware. The partner loses to claim that the land is his. What will happen?
(1) He made a warranty against eviction (Art. 1555) therefore when he loses the title of the land, he will be liable for damage.
140
Fail to contribute Property (determinate thing)
What happens if a partner contributes a determinate thing and he fails his warranty against eviction?
(1) He is liable for damage
(2) He is liable to replace the property contributed
(3) He is also liable for the fruits that the partnership could have enjoyed
141
Fail to contribute Industry
If he promised to contribute industry but did not contribute skills or services. Can you compel him to contribute the service that he promised?
No, because the constitution prohibits involuntary servitude. If you force him or if you compel him to render service and it is against his will, that is already a violation against involuntary servitude
142
Fail to contribute Industry
If he cannot render the service, can you ask another person to perform the services that he promised?
No
Because this is a partnership, and the other partners may not trust the replacement (Basic Principle - Base on Trust and Confidence)
143
Fail to contribute Industry
If he cannot render the service, can you ask another person to perform the services that he promised?
No
Because this is a partnership, and the other partners may not trust the replacement (Basic Principle - Base on Trust and Confidence)
144
You and your friend enter into a partnership. Partner promised to contribute 500,000 to the business. What happens if he does not give you what he has promised to contribute to the partnership?
(1) He will become a debtor of the partnership
(2) Will also be liable for damages (delay or default) - (no need for demand to incur delay)
According to Art.1788, he will also be liable to?
(3) He is also liable to pay interest
145
How much will be the interest
if he does not give you what he has promised to contribute to the partnership?
(1) The amount that is agreed by the partner
(2) When other partners did not agree on the said interest, they will follow the legal interest of 12% per annum.
146
The partner uses partnership money and converted it for his own use and not for the benefit of the partnership. What are his obligations?
1. Reimbursement
2. Liable for interest and damages
- Interest is counted from the time that he converted the money to his own
147
What happens if the partner fails to return the amount that he has converted for his own use?
- He can be made liable for ESTAFA
148
What is the general rule when a partner promises to contribute industry?
The services should be exclusive to the partnership.
149
What happens if your Industrial Partner has another business apart from the business of your partnership?
Remedies:
1. Exclude the industrial partner from the firm, plus damages
2. Avail themselves of the benefits which the industrial partner may have obtained, plus damages
150
What is the exemption in the general rule when a partner promises to contribute industry?
Unless partnership expressly permits him to do so
NOTE:
- The prohibition to enter into a business is absolute (it doesn’t matter what kind of business he will engage in - he will still be prohibited)
- The reason is that an industrial partner contributes labor or services and he cannot divide himself to two because he devotes his time in the business
- An industrial partner is not supposed to enter into any other business
151
If the partnership is a retail business and the industrial partner enters into a professional business, is it still considered as conflict of interest?
Yes, that is still considered as conflict of interest (can avail remedies)
152
What is the rule when there is no agreement about how many capital should partners contribute in the partnership?
They should contribute capital equally
- Partners presume that they have equal rights and liabilities
153
Obligation of the partners to contribute additional capital of the partnership
When can you compel other partners to contribute additional capital to the partnership?
When there is imminent loss and partners want to save the business
NOTE: This only applies to Capitalist Partners
- Industrial partner cannot contribute because he has already labored in vain
154
Obligation of the partners to contribute additional capital of the partnership
When can you compel other partners to contribute additional capital to the partnership?
When there is imminent loss and partners want to save the business
NOTE: This only applies to Capitalist Partners
- Industrial partner cannot contribute because he has already labored in vain
155
What happens if the Capitalist Partner refuses to contribute without any reason?
Remedies
(1) Compel the refusing capitalist partner to sell his interest in the partnership
156
ZONE Enterprises is owned by partners Zorina, Odessa, Norma and Elma with capital contributions of P10,000.00, 20,000.00, P30,000.00 and P40,000.00, respectively. During the year, the partnership realized a net profit of 8,000.
Assuming that the partners agreed to divide profits in the ratio of 2:1:2:5. What will the amount of profit divisions among the partners?
Zorina will have a share of P1,600.00; Odessa, P800.00; Norma, P1,600.00; and Elma, P4,000.00.
Solution:
2+1+2+5=10
8,000 x 2/10 =1,600
8,000 x 1/10=800
8,000 x 2/10=1,600
8,000 x 5/10 =4,000
157
ZONE Enterprises is owned by partners Zorina, Odessa, Norma and Elma with capital contributions of P10,000.00, 20,000.00, P30,000.00 and P40,000.00, respectively. During the year, the partnership realized a net profit of 8,000.
If the partners have no profit sharing agreement, what amount of profit sharing will the partners received?
The profit shall be divided according to the ratio of their capital, contribution.
Zorina's share of the profit is P800.00; Odessa, P1,600.00; Norma, P2,400.00; and Elma, P3,200.00.
Solution:
10,000+20,000+30,000+40,000 =100,000
8,000x10,000/100,000=800
8,000x20,000/100,000=1,600
8,000x30,000/100,000=2,400
8,000x40,000/100,000=3,200
158
ZONE Enterprises is owned by partners Zorina, Odessa, Norma and Elma with capital contributions of P10,000.00, 20,000.00, P30,000.00 and P40,000.00, respectively. Assuming the partnership sustained a loss of P7,000.00. In case they agreed to a loss sharing of 3:2:1:4. What would be the amount partner's will incurred as loss?
Zórina's share is P2,100.00; Odessa, P1,400.00; Norma, P700.00; and Elma, P2,800.00.
Solution:
3+2+1+4=10
7,000 x 3/10=2,100
7,000 x 2/10 =1,400
7,000 x 1/10 =700
7,000 x 4/10 =2,800
159
ZONE Enterprises is owned by partners Zorina, Odessa, Norma and Elma with capital contributions of P10,000.00, 20,000.00, P30,000.00 and P40,000.00, respectively. Assuming the partnership sustained a loss of P7,000.00. If the partners do not have any loss sharing agreement. What would be the amount partner's will incurred as loss?
Such loss shall be divided according to their profit sharing agreement in the ratio of 2:1:2:5.
Zorina's share is P1,400.00; Odessa, P700.00; Norma, P1,400.00; and Elma, P3,500.00.
160
ZONE Enterprises is owned by partners Zorina, Odessa, Norma and Elma with capital contributions of P10,000.00, 20,000.00, P30,000.00 and P40,000.00, respectively. Assuming the partnership sustained a loss of P7,000.00.
If the partners do not have any profit and loss sharing agreement. What would be the amount partner's will incurred as loss?
The loss shall be divided according to the ratio of their capital contribution as follows:
Zorina, P700.00; Odessa, P1,400.00; Norma, P2,100.00; and Elma, P2,800.00
161
If aside from the capitalist partners, there is also an industrial partner (or there are industrial partners)
As to profits, how shall it be divided?
1) The profits shall be divided according to their agreement.
2) In the absence of any agreement thereon, the industrial partner shall first receive a just and equitable share of the profits, and thereafter, each capitalist partner shall share in the profits in proportion to his capital contribution.
162
Lucille, Abigail, Cherrie and Elaine are partners in LACE Company. Lucille, Abigail and Cherrie are capitalist partners with contributions of P20,000.00, P30,000.00 and P50,000.00, respectively. Elaine is an industrial partner. They have no profit- sharing agreement. LACE Company earned P15,000.00 during the year.
Elaine shall first be given an equitable share to be decided by the partners, say, P3,000.00. The remaining profit of P12,000.00 shall be divided among the three capitalist partners in the ratio of their capital contribution of 2:3:5.
What amount of profit sharing will the partners received?
Lucille's share is P2,400.00; Abigail, P3,600:00; and Cherrie, P6,000.00.
163
The industrial partner shall not share in the losses.
True or False?
True
164
The capitalist partners shall share in the losses as to what following?
a) According to their agreement.
b) In the absence of any agreement thereon, each capitalist partner shall share in the losses in the same proportion as the share of each in the profits.
c) In the absence of both, each capitalist partner best shall share in the losses in proportion to his capital contribution.
165
Carlos, Albert, Roland and Edwin are partners in CARE Company with Carlos contributing P20,000.00; Albert, P30,000.00; and Roland, P50,000.00. Edwin contributed to his industry. During the year, CARE suffered a loss of P12,000.00.
Assuming that the losses were agreed upon to be shared by Carlos, Albert and Roland in the ratio of 1:2:3. What amount shall the partners incur as loss?
Carlos' share in the loss is P2,000.00; Albert, P4,000.00; and Roland, P6,000.00. Edwin will not share in the loss.
166
Carlos, Albert, Roland and Edwin are partners in CARE Company with Carlos contributing P20,000.00; Albert, P30,000.00; and Roland, P50,000.00. Edwin contributed to his industry. During the year, CARE suffered a loss of P12,000.00.
If the partners do not have a loss sharing agreement but have one as to profit in the ratio of 3:4:5:2. What amount shall the partners incur as loss?
The loss will be shared by Carlos, Albert and Roland in the ratio of 3:4:5 or P3,000.00, P4,000.00 and ε25,000.00, respectively
Edwin will not share in the loss being an industrial partner
167
Carlos, Albert, Roland and Edwin are partners in CARE Company with Carlos contributing P20,000.00; Albert, P30,000.00; and Roland, P50,000.00. Edwin contributed to his industry. During the year, CARE suffered a loss of P12,000.00.
If the partners do not also have a profit sharing, Carlos, Albert and Roland will divide the loss according to the ratio of their capital contribution of 2:3:5 What amount shall the partners incur as loss?
P2,400.00, P3,600.00 and P6,000,00,respectively.
Edwin will not share in the loss.
168
If aside from capitalist partners, there is also a capitalist-industrial partner (or there are capitalist-industrial partners)
a. Profits
How should the profit be divided to them?
1) The profits shall be divided according to their agreement
2) In the absence of any agreement thereon, profits shall be divided as follows:
a) The capitalist-industrial partner shall first receive a just and equitable share of the profits in his capacity as industrial partner;
b) Thereafter, each capitalist partner, including the capitalist-industrial partner. in his capacity as capitalist partner, shall share in the profits in proportion to his capital contribution.
169
Mark, Orland, Robert and Edgar are capitalist partners with contributions of P10,000.00;P20,000.00 and P30,000.00, respectively. Edgar is a capitalist-industrial partner with a capital contribution of P40,000.00. During the year, MORE realized a profit of P20,000.00.
Assuming that the partners have no profit sharing agreement. How should the profit be divided among the partners?
Edgar will first receive an equitable share in the profit in his capacity as industrial partner.
If the partners decide that such equitable share is P4,000.00, the balance of P16,000.00 will be shared by the partners including Edgar in his capacity as capitalist partner according to the ratio of their capital contribution of 1:2:3:4 or P1,600.00, P3,200.00, P4,800.00, and P6,400.00, respectively.
170
The capitalist and capitalist-industrial partners shall share in the losses as to what following?
1) Losses shall be divided among the partners, including the capitalist-industrial partner in his capacity as capitalist partner, according to their agreement.
2) In the absence of any agreement thereon, losses shall be divided among the partners including the capitalist-partner in his capacity as capitalist partner, according to the ratio of their capital contribution.
3) In both of the above cases, the capitalist-industrial partner shall not share in the losses in his capacity as industrial partner.
171
Sonia, Ursula, Rowena and Elsa are partners in SURE Enterprises with capital contributions of P10,000.00, P20,000.00, P30,000.00, and P40,000, respectively. Elsa is also an industrial partner being the manager of the partnership. The partnership sustained a loss of P14,000.00 during the year.
Assuming that the partners agreed to share in the losses in the ratio of 2:3:5:4. What amount will the partners incur as loss?
Sonia's share is P2,000.00; Ursula, P3,000.00; Rowena, P5,000.00; and Elsa, P4,000.00.
172
Sonia, Ursula, Rowena and Elsa are partners in SURE Enterprises with capital contributions of P10,000.00, P20,000.00, P30,000.00, and P40,000, respectively. Elsa is also an industrial partner being the manager of the partnership. The partnership sustained a loss of P14,000.00 during the year.
If the partners have no loss sharing agreement, the loss will be divided according to the ratio of their capital contribution of 1:2:3:4. What amount will the partners incur as loss?
P2,800.00; P4,200.00; P1,400 and P5,600.00.
In both cases, Elsa shall not share in the loss in her capacity as industrial partner. The partners should stipulate on a loss sharing ratio which will take into account the value of such partner's industry contribution to the partnership.
173
What is the GR about the stipulation of exclusions of
partners in any share in the profits and losses?
Any stipulation which excludes one or more partners from any share in the profits and losses is void
174
What is the exemption in the GR about the stipulation of exclusions of partners in any share in the profits and losses?
One which exempts an industrial partner from losses because the law provides that he shall not be liable therefor
175
Designation of share in the profits and losses by a third person or by a partner
If entrusted by the partners to a third person, is it binding?
Yes, the same shall be binding upon the partners and may be impugned only when it is manifestly inequitable.
176
Designation of share in the profits and losses by a third person or by a partner
1. If entrusted by the partners to a third person
The same shall be binding upon the partners and may be impugned only when it is manifestly inequitable.
When will it can no longer be impugned?
a. By a partner who has begun to execute it; or
b.By any partner if three months had already lapsed from the time he obtained knowledge thereof.
177
Designation of share in the profits and losses by a third person or by a partner
If entrusted to one of the partners, is it valid?
No, it is void.
The designation is void because it cannot be entrusted to one of the partners.
Accordingly, the profits and losses shall be divided among the partners as if there was no stipulation thereon.
178
Rules of management
1. When a partner has been appointed manager in the articles of the partnership
What is the scope of authority?
The managing partner may execute all acts of administration despite the opposition of his partners unless he acts in bad faith.
179
Rules of management
1. When a partner has been appointed manager in the articles of the partnership
How should the revocation of appointment of managing partner be done?
With just or lawful cause - His appointment can be revoked by the vote of the partners owning the non controlling interest.
Without just or lawful cause - His appointment can be revoked only with the consent of all the partners including the managing partner because such revocation would be a novation of the terms thereof.
180
Rules of management
When a partner has been appointed manager after the partnership has been constituted
What is the scope of authority?
He may execute all acts of administration but in case of opposition by the other partners, the partners owning the controlling interest may resort to voting for his removal. as manager.
181
Rules of management
When a partner has been appointed manager after the partnership has been constituted
How should the revocation of his appointment as managing partner be done?
He may be removed with or without just or lawful cause by the vote of the partners owning the controlling interest.
- This is so because such partner is only an agent whose authority may be revoked at any time by his principal which is the partnership.
182
Rules of management
When two or more partners have been appointed as managers
a. When there is a specification of their respective duties
What is the scope?
Each managing partner shall perform only the duties specified in his appointment.
183
A, B, C and D are partners with A and B having been appointed as managers of their trading business. A is to perform the operating function while B, the administrative function.
What are the scope of the partners?
The managing partners can perform only the function assigned to each of them.
184
Rules of management
When two or more partners have been appointed as managers
b. When there is no specification of their respective duties or there is no stipulation that one shall not act without the consent of the others.
What is the scope?
Each one may separately execute all acts of administration
185
Rules of management
When two or more partners have been appointed as managers
b. When there is no specification of their respective duties or there is no stipulation that one shall not act without the consent of the others.
What is the rule in case of opposition of the other managers?
a) The decision of the majority of the managing (per head)
b) In case of a tie, the decision of the managing partner/s owning the controlling interest shall prevail
186
MARILEN Company is owned by the following partners with their respective contributions: Mary, P10,000.00; Anna, P20,000.00; Rose, P30,000.00; Irma, P40,000.00; Liza, P50,000.00; Edna, P100,000.00, and Nora, P200,000.00. Except for Edna and Nora, all the rest are managers without any specification as to their respective duties.
Mary wants to buy goods from Excellent Company, Liza opposes it. Anna and Rose side with Mary, while Irma sides with Liza.
Who's group will prevail?
The group of Mary will prevail because they constitute the majority, i.e., 3 over 2.
187
MARILEN Company is owned by the following partners with their respective contributions: Mary, P10,000.00; Anna, P20,000.00; Rose, P30,000.00; Irma, P40,000.00; Liza, P50,000.00; Edna, P100,000.00, and Nora, P200,000.00. Except for Edna and Nora, all the rest are managers without any specification as to their respective duties.
Mary wants to buy goods from Excellent Company, Liza opposes it. Anna and Rose side with Mary, while Irma sides with Liza.
Suppose that Rose abstains thereby creating a tie.
Who's group will prevail?
In this case, the group of Liza will prevail because she and Irma represent the controlling interest among the managing partners.
188
Rules of management
When two or more partners have been appointed as managers
c. When there is a stipulation that none of the managing partners shall act without the consent of the others
What is the vote required?
The concurrence of all of them shall be necessary for the validity of the acts.
189
Rules of management
When two or more partners have been appointed as managers
c. When there is a stipulation that none of the managing partners shall act without the consent of the others
What is the rule in case of absence or disability of one of the managing partners?
The absence or disability of one managing partner cannot be alleged
I.e
> The other managing partners are not authorized to act for the partnership unless there is imminent danger of grave or irreparable injury to the partnership.
190
Rules of management
4. When the manner of management has not been agreed upon
All the partners shall be considered agents of the partnership, i.e.,. all of them are managers.
True or False?
True
191
Rules of management
4. When the manner of management has not been agreed upon
All the partners shall be considered agents of the partnership, i.e.,. all of them are managers.
However, none of them may, without the consent of the others, make any important alteration in the immovable property of the partnership, even if it may be useful to the partnership.
True or False?
True
192
Rules of management
4. When the manner of management has not been agreed upon
All the partners shall be considered agents of the partnership, i.e.,. all of them are managers.
However, none of them may, without the consent of the others, make any important alteration in the immovable property of the partnership, even if it may be useful to the partnership.
But if the refusal to give consent by the other partners is manifestly prejudicial to the interest of the partnership, the court's intervention may be sought.
True or False?
True
193
Rules of management
4. When the manner of management has not been agreed upon
Whatever any one of them may do alone shall bind the partnership.
True or False?
True
194
Rules of management
4. When the manner of management has not been agreed upon
What is the rule in case of opposition of the other partners?
1) The decision of the majority shall prevail.
2) In case of a tie, the decision of the partners owning the controlling interest shall prevail.
195
MARILEN Company is owned by the following partners with their contributions: Mary, P10,000,00; Anna, P20,000.00; Rose, P30,000.00; Irma, P40,000.00; Liza, P50,000.00; Edna, P100,000.00, and Nora, P200,000.00. The partners did not designate who among themselves shall be the manager. Accordingly, all partners are considered agents or managers of the partnership. Each one may thus execute acts of administration.
Mary wants to buy goods from Excellent Company. Liza opposes it. Anna, Rose and Irma side with Mary, while Edna and Nora side with Liza.
Who's group will prevail?
The group of Mary will prevail because they constitute the majority, i.e., 4 over 3.
196
MARILEN Company is owned by the following partners with their contributions: Mary, P10,000,00; Anna, P20,000.00; Rose, P30,000.00; Irma, P40,000.00; Liza, P50,000.00; Edna, P100,000.00, and Nora, P200,000.00. The partners did not designate who among themselves shall be the manager. Accordingly, all partners are considered agents or managers of the partnership. Each one may thus execute acts of administration.
Mary wants to buy goods from Excellent Company. Liza opposes it. Anna, Rose and Irma side with Mary, while Edna and Nora side with Liza.
Suppose that Rose abstains from võting thereby creating a tie.
Who's group will prevail?
In this case, the group of Liza will prevail because she,Edna and Nora represent the controlling interest among all the partners..
197
What is the general rule of the rights of the capitalist partner to engage in business?
Capitalist partner is allowed to engage in other business so long that it is not in the same line of business as to the partnership
- it does not compete with the partnership
198
What is the exemption to the general rule of the rights of the capitalist partner to engage in business?
Unless agreed by the partners
199
Is a Capitalist Partner also prohibited from engaging in another business apart from the partnership business?
NO
- There is a relative prohibition
- He is not to enter into a business that is in the same line of business as the partnership.
- Because of conflict of interest instances such as revealing trade secrets between the partnership
200
What are the remedies if capitalist partner engaged in the same line of business as the partnership?
(1) If he made profit in the other business, he should put it in the partnership
(2) If he made losses, he will personally bear it
201
What is the general rule in terms of liability of partners with respect to third persons?
Whether you are a capitalist partner or an industrial partner, you are liable for partnership debts to the third persons.
N: The liability is joint and secondary/ subsidiary
- Partners are only liable for partnership debts ONLY AFTER PARTNERSHIP ASSETS HAVE BEEN EXHAUSTED
- The reason for this provision is to protect third persons who are dealing with the partnership
202
What is the general rule in terms of liability of partners with respect to third persons?
Whether you are a capitalist partner or an industrial partner, you are liable for partnership debts to the third persons.
203
Is there any conflict between Article 1797 and 1816?
No, there is no conflict.
Art. 1797 talks about LOSS
204
Can an industrial partner may be made liable to third persons?
Yes, however the industrial partner may be made liable to third persons, he can get REIMBURSEMENT from the capitalist partners for the amount he has paid to third persons.
205
Can an industrial partner may be made liable to third persons?
Yes, however the industrial partner may be made liable to third persons, he can get REIMBURSEMENT from the capitalist partners for the amount he has paid to third persons.
206
What is the meaning of Pro-rata among the partners ?
Based on the number of partners in the partnership
207
What is the meaning of Pro-rata among the partners ?
Based on the number of partners in the partnership
208
A, B and C are partners of ABC Partnership. ABC Partnership contracted a debt. The creditor is X. Partnership borrowed 1M from X. When the debt has become due and demandable, partnership assets were not enough to pay off the debt.
Partnership assets only amounted to 100,000
Partnership paid X the partnership asset worth 100,000. Can X go after A and B (capitalist partners) and C (industrial partner) for the balance of 900,000?
Yes
- 300,000 each for the partners (900k/3)
209
Rules on sharing of partnership liabilities as to third persons
If the status of stipulation exempting a partner from pro rata and subsidiary liability after the exhaustion of partnership assets. Void or Valid?
a. Void as to third persons.
b. Valid among the partners.
- The stipulation, however, will not totally exempt a partner because his contribution will still be subject to the payment of partnership liabilities. This is to recoricile Art. 1817 with Art. 1799 which declares void any stipulation excluding a partner from losses, except in the case of an industrial partner.
210
Rules on sharing of partnership liabilities as to third persons
3. Status of stipulation exempting a partner from pro rata and subsidiary liability after the exhaustion of partnership assets
if there is such stipulation, how should the liabilities be paid?
a. The assets of the partnership shall first be used to pay the liabilities.
b. If the partnership assets are not sufficient, the liability shall be paid equally from the separate assets of the partners including any industrial partner.
c.Thereafter, the partnersonot exempted from pro rata and subsidiary liability shall reimburse according to the partners' profit and loss sharing agreement or in the ratio of their capital contribution, whichever is applicable, to the following partners the amount paid by them:
1) Industrial partner whom the law exempts from losses.
2) General partners exempted from pro rata and subsidiary liability.
211
Calixto, Hebron, Austria, Roxas and Mendez are partners in the firm CHARM Sales Company. Calixto is an industrial partner, while the rest are capitalist partners with Hebron contributing P20,000.00; Austria, P30,000.00; Roxas, P10,000.00; and Mendez, P40,000.00. The partners stipulated that Hebron shall not be liable for liabilities of the partnership after its assets are exhausted.
After several years of operational losses, CHARM's assets dwindled to P120,000.00, while its liabilities reached P160,000.00. How shall the liabilities be paid?
1. The assets of P120,000.00 shall first be exhausted. This application leaves a balance of P40,000.00 of the liabilities.
2. The amount of P40,000.00 shall be shared equally by the five partners at P8,000.00 each to be paid out of their separate assets.
3. Based on the ratio of the capital contributions of partners Austria, Roxas and Mendez of 3:1:4, the actual share of each in the balance of P40,000.00 is P15,000.00, P5,000.00, and P20,000.00, respectively, while none are due from Calixto and Hebron
- Austria, and Mendez are to give an additional amount of P7,000.00 and P12,000.00, respectively, to return Calixto's payment of P8,000.00, Hebron's payment of P8,000,00; and Roxas' overpayment of P3,000.00.
212
Calixto, Hebron, Austria, Roxas and Mendez are partners in the firm CHARM Sales Company. Calixto is an industrial partner, while the rest are capitalist partners with Hebron contributing P20,000.00; Austria, P30,000.00; Roxas, P10,000.00; and Mendez, P40,000.00. The partners stipulated that Hebron shall not be liable for liabilities of the partnership after its assets are exhausted.
After several years of operational losses, CHARM's assets dwindled to P120,000.00, while its liabilities reached P160,000.00. How shall the liabilities be paid?
1. The assets of P120,000.00 shall first be exhausted. This application leaves a balance of P40,000.00 of the liabilities.
2. The amount of P40,000.00 shall be shared equally by the five partners at P8,000.00 each to be paid out of their separate assets.
3. Based on the ratio of the capital contributions of partners Austria, Roxas and Mendez of 3:1:4, the actual share of each in the balance of P40,000.00 is P15,000.00, P5,000.00, and P20,000.00, respectively, while none are due from Calixto and Hebron
- Austria, and Mendez are to give an additional amount of P7,000.00 and P12,000.00, respectively, to return Calixto's payment of P8,000.00, Hebron's payment of P8,000,00; and Roxas' overpayment of P3,000.00.
213
Requirement to operate under firm na
We need to name the partnership because it has a personality SEPARATE and DISTINCT from that of the partners.
- It is treated as a person
True or False?
True
214
What is the General Rule in the requirement to operate under firm name?
If you are not a partner and you allow the use of your name in the partnership name, you will be liable as a partner
- To protect third persons who are dealing with the partnership
215
Can the surviving partners continue the use of the deceased partner’s name in the firm name?
YES, this is the exemption to the rule
Allowed by the Rule 3.02 Code of Professional Responsibility
As long as they indicate all their communicators that the partner is already deceased
216
Can you continue to use the name of a disbarred partner?
It is not allowed
- Based on the case of Kimteng vs. Young (G.R. No. 210554, August 5, 2015)
- If you use the name of a disbarred partner, this is considered as Contempt of Court
- A disbarred partner is not authorized to practice law
217
Can you continue to use the name of a disbarred partner?
It is not allowed
- Based on the case of Kimteng vs. Young (G.R. No. 210554, August 5, 2015)
- If you use the name of a disbarred partner, this is considered as Contempt of Court
- A disbarred partner is not authorized to practice law
218
Your firm name must not be similar or identical or confusingly similar to an existing partnership name or name of corporation in order to protect third persons.
True or False?
True
219
r
220
What is the GR in partners rights in specific partnership property?
GR:
- Partner is a co-owner of a specific partnership property
- Each partner has an equal right of possession over specific partnership property
- Specific property (TANGIBLE) eg. building or a car
221
What is the exemption on the GR in partners rights in specific partnership property?
Extent only for partnership use or purpose
222
What is the remedy if the partners exclude you in partners rights in specific partnership property?
Remedies
- You can demand formal accounting if partners exclude you from the use of specific property for partnership purposes
223
Can a partner’s interest in the partnership be assigned?
Yes
224
Equal right to possess. Right is NOT assignable to third persons (because it may deprive the partnership of its use in the partnership property)
True or False?
True
225
Equal right to possess. Right is NOT assignable to third persons (because it may deprive the partnership of its use in the partnership property)
The exemption is?
Exemption: All partners assign their right over specific partnership property
Right not subject to attachment only with respect to partnership debts
Rights not subject to legal support
226
What is the GR if a partner decides to assign his interest in the partnership?
Assignment of a partner’s interest in the partnership does not dissolve the partnership.
- It also does not make the assignee a partner
- Assignee cannot interfere in the management of the business
- His rights are only what they have agreed upon by that he can receive such share in the interest
227
What is the exemption to the GR if a partner decides to assign his interest in the partnership?
If there is fraud
- Ask for a formal accounting
- Inspect partnership books
- Because it would affect his share agreed upon by the partners who assigned the interest to him.
228
A separate judgment creditor of a partner can ask for a charging order from the court, over the partner’s interest in the partnership. The charging order is directed to the partnership.
True or False?
True
229
Instead of giving the share of the profits to the debtor-partner, the partnership is directed to give it to the judgment creditor.
- This is similar to garnishment (the debtor of my debtor is my debtor)
Charging Order
The court is now ordering the partnership that that particular partner should not be receiving his share in the profits because his share should now be given to the judgment creditor.
230
What are the other remedies of a creditor to a debtor-partner?
(1) Appointment of a receiver
(2) Sale of the partner’s interest
231
What would be the remedy of the other partners in case of sale of the interest of the partner indebted to this creditor?
The partnership can REDEEM the partner’s interest that was sold.
- If another partner will redeem the interest of the debtor-partner, the redeeming partner does not become the owner of the interest
He will hold it in the trust for the debtor-partner so that he can get back his interest in the partnership
