RFBT - PARTNERSHIP Flashcards
1
Q
What is a partnership?
A
A partnership is a contract of two or more persons who 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 a partnership for the exercise of a profession. It is both a CONTRACT and a BUSINESS ORGANIZATION. It is a JURIDICAL ENTITY which has a personality DISTINCT FROM THAT OF EACH OF THE PARTNERS. It BEGINS FROM THE MOMENT OF THE EXECUTION OF THE CONTRACT, unless otherwise stipulated.
2
Q
What are the essential requisites of a partnership?
A
- ) There must be a valid contract - there must be voluntary agreement among the partners.
- ) There must be a mutual contribution of money property, or industry to a common fund.
- ) It must have a lawful object or purpose.
- ) 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. However, if a partnership is formed for the PRACTICE OF A PROFESSION, ITS PRIMARY PURPOSE IS TO RENDER SERVICE TO THE PUBLIC.
3
Q
What are the required form of a partnership contract?
A
A partnership contract may be constituted in any form, except as follows:
1.) Where IMMOVABLE PROPERTIES are contributed:
a.) The partnership contract must be IN A PUBLIC
INSTRUMENT
b.) An inventory of the said property must be made,
SIGNED BY THE PARTIES AND ATTACHED TO THE
PUBLIC INSTRUMENT.
If a and b above are not complied with, the
partnership is VOID AND HAS NO JURIDICAL
PERSONALITY.
- ) Where the capital of partnership is P3,000.00 or more.
a. ) The partnership must be in a public instrument
b. ) Registered with SEC
If a and b are not complied with, it is still VALID and
has JURIDICAL PERSONALITY and the liability to 3rd
persons are not affected.
3.) If LIMITED PARTNERSHIP
a.) Certificate signed under oath by parties concerned
and recorded with SEC is required. Noncompliance
will render it a general partnership?
4
Q
Are corporations are allowed to enter into partnership agreements?
A
Yes, but corporations can only enter into partnerships in the form of joint venture agreements.
5
Q
What is a universal partnership of all present property?
A
It 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.
EVERYTHING IS INCLUDED except:
1.) Property acquired by each partner AFTER THE PARTNERSHIP FORMATION UNLESS STIPULATED.
2.) Property received by INHERITANCE, LEGACY, OR DONATION after partnership formation.
6
Q
What is a universal partnership of profits?
A
It comprises all that the partners may acquire by their work or industry during the existence of the partnership. It comprises:
a. ) Profits obtained by partners by their work or industry during the existence of the partnership, EXCLUDING those profits w/o exertion of efforts such as those acquired by chance/lucrative title.
b. ) USUFRUCT of property belonging to each partner at the time of the constitution of the partnership. Ownership of the property shall continue to pertain exclusively to each partner.
c. ) The profits and fruits of A and B.
d. ) Profits and fruits IF STIPULATED from property acquired AFTER partnership formation.
7
Q
What is the rule in case universal partnership is without any specification?
A
It will only constitute a UNIVERSAL PARTNERSHIP OF PROFITS because it transmits less rights and interests.
8
Q
Who are prohibited from entering into a universal partnership?
A
- ) Spouses during marriage.
- ) Persons guilty of concubinage
- ) Those guilty of the same criminal offense in consideration thereof.
- ) Public officers and his spouse, descendants or ascendants by reason of his office.
9
Q
What is a particular partnership?
A
A partnership which has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession.
10
Q
What is a general partnership?
A
Comprised of all general partners who are all liable to the extent of their separate property after the partnership assets have been exhausted.
11
Q
What is a Limited Partnership?
A
Partnership where there is at least one general partner and one or more limited partners.
12
Q
What is a partnership for a fixed term?
A
One whose duration is fixed by the partners.
13
Q
What is a partnership for a particular undertaking?
A
One which is organized for a certain undertaking, which when attained, causes the termination of the partnership.
14
Q
What is a partnership at will?
A
One where no period is fixed by the parties, hence, may be terminated at will by the partners.
15
Q
What happens when a partnership for a fixed term continues after the expiration of said term?
A
The partnership becomes a partnership at will, with the following effects:
a. ) The rights and duties of the partners remain the same as they were at such termination, so far as is consistent with a partnership at will.
b. ) The absence of settlement or liquidation of partnership affairs is prima facie evidence of the continuation of partnership.
16
Q
What is an ordinary partnership?
A
One which actually exists among the partners as well as to 3rd persons.
17
Q
What is a partnership by estoppel?
A
One which in reality is not a partnership but is considered one with respect to those, who by reason of their conduct or admission, are precluded from denying its existence.
18
Q
What happens if ALL the partners consent to a misrepresentation?
A
A partnership by estoppel is created between the actual partners and the person who made the representation. A partnership liability results and the partners and the person who made the representation are liable with their separate properties.
19
Q
What happens if NOT ALL the partners consented to misrepresentaion?
A
No partnership liability results. A partnership by estoppel is created only between the consenting partners and the person who made the misrepresentation. They shall be liable JOINTLY with their separate properties.
20
Q
What happens when persons misrepresent themselves as partners in a non-existing partnership?
A
Those who consented to the misrepresentation shall be liable jointly.
21
Q
What is a general partner?
A
One who is liable for partnership debts to the extend of his separate property after all assets of the partnership have been exhausted.
22
Q
What is a limited partner?
A
One who is liable for partnership debts only to the extent of his capital contribution only.
23
Q
What is a general-limited partner?
A
One who has all the rights and powers and is subject to the restrictions of a general partner, except that, in respect to his contribution, he shall have the rights against the other members which he would have had if he were not also a general partner.
24
Q
What is a capitalist partner?
A
One who contributes money or property to the common fund.
25
What is an industrial partner?
One who contributes services to the common fund.
26
What is a capitalist industrial partner?
One who contributes money or property and services to the common fund.
27
What is a managing partner?
One who manages the affairs of the partnership.
28
What is a liquidating partner?
One who takes charge of the winding up affairs of the partnership after it is dissolved.
29
What is a nominal partner?
One who is actually NOT A PARTNER but who may be liable as such to 3rd persons. (Partner by estoppel)
30
What is an ostensible partner?
One who is active and known to the public as a partner.
31
What is a secret partner?
One whose connection to the partnership is kept from the public.
32
What is a silent partner?
One who has no voice in the management of the business though he shares in the profits and losses. He does not take active part in the business but may be known as partner by 3rd persons.
33
What is a dormant partner?
One who does not participate in the management of the partnership and is not known to the public as a partner.
34
What is the rule on profit/loss division if all partners are capitalist partner?
1. ) P/L shall be divided according to their agreement.
2. ) If only the sharing of profits has been agreed on, the losses will also be divided in the same manner.
3. ) If no P/L agreement in place, it will be according to their contributed capital.
35
What is the rule on profit/loss division if there is an industrial partner?
1. ) P/L shall be divided according to their agreement.
2. ) In the absence of any agreement thereon, the industrial partner shall receive first a just and equitable share of the profits, thereafter the capitalist partners shall receive a share in proportion to their capital contribution. (IN THE OLD LAW, THE INDUSTRIAL PARTNER RECEIVED A SHARE EQUIVALENT TO THAT OF THE PARTNER WITH THE LEAST CAPITAL CONTRIBUTION.)
If it is a LOSS:
1.) The industrial partner does not share in the losses.
2. ) The capital partners shall share in the losses as follows:
a. ) Losses shall be divided according to their agreement.
b.) If only the sharing of profits has been agreed on,
the losses will also be divided in the same manner.
c.) If no P/L agreement in place, it will be according to
their contributed capital.
36
What is the rule on profit/loss division if there is also a capitalist-industrial partner?
As to profits:
1.) 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-industrialist shall receive first a just and equitable share in his capacity as an industrialist partner.
b.) Thereafter, the capitalists and capitalist-industrial partner shall divide the profits in proportion to their contributed capital.
As to Losses,
a.) Losses are divided according to their agreement
b.) In the absence of an agreement, losses are divided in proportion to their capital contribution.
c.) In a and b above, capitalist-industrial partner shall
not share in the losses in his capacity as an industrial
partner.
37
What happens when the profits and losses distribution is designated to a 3rd person?
It shall be binding upon the partners and MAY BE IMPUGNED ONLY WHEN IT IS MANIFESTLY INEQUITABLE. However, even if it is manifestly inequitable, 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.
38
What happens when the profits and losses distribution is entrusted to one of the partners?
The designation is VOID because it cannot be entrusted to one of the partners.
39
What are the rules of management when a partner has been appointed in the ARTICLES OF PARTNERSHIP?
1.) Scope of authority - managing partner may execute all acts of administration despite the opposition of his partners UNLESS HE ACTS IN BAD FAITH.
2. ) Revocation of appointment of managing partner
a. ) W/ lawful cause - appointment can be revoked by the vote of the partners owning the controlling interest.
b.) W/o lawful cause - appointment can be revoked ONLY WITH THE CONSENT OF ALL PARTNERS INCLUDING THE MANAGING PARTNER because such revocation would be a novation to the terms thereof.
40
What are the rules of management when a partner has been appointed AFTER PARTNERSHIP FORMATION?
1. ) Scope of authority - he may execute all acts of administration but in case of OPPOSITION BY OTHER PARTNERS, the PARTNERS OWNING CONTROLLING INTEREST may resort to voting for his removal as manager.
2. ) Revocation of his appointment as managing partner - he may be removed with or without just cause by the vote of the partners owning controlling interest.
41
What are the rules of management when two or more partners have been appointed as managers?
A.) When there is a specification of their duties - Each managing partner shall perform only the duties specified in his appointment.
B.) When there is no specification of their duties -
a.) Scope of authority - each one may separately execute all acts of administration.
b.) Rules in case of opposition of other managers -
1.) Decision of majority of managing partners shall
prevail
2.) In case of tie among managers, the decision of
the managing partners owning the controlling
interest shall prevail
C.) When there is a stipulation that none of the managing partners shall act without the consent of the others - CONCURRENCE OF ALL of them shall be necessary for the validity of the acts.
In case of absence or disability of one of the managing partners, the disability/absence cannot be alleged, thus the other managing partners are NOT AUTHORIZED UNLESS THERE IS IMMINENT DANGER/ IRREPARABLE INJURY TO THE PARTNERSHIP.
42
What are the rules of management when none has been agreed upon?
1. ) All partners shall be considered agents of the partnership
2. ) Whatever any one of them may do alone shall bind the partnership
3. ) Rule in case of opposition of other partners
a. ) Majority shall prevail
b. ) In case of tie, controlling interest shall prevail
43
May an industrial partner engage in business for himself? What are the effects if he does?
No, unless it has been expressly permitted by the partnership.
If he has engaged in business without being permitted, the capitalist partners may EITHER:
a. ) exclude him from partnership with right to damages
b. ) avail themselves of the benefits obtained from the business he engaged in with right to damages.
44
What kinds of business may a capitalist partner engage in?
1. ) Businesses different from the partnership business
2. ) Businesses the same with the partnership business, provided there is a STIPULATION allowing him to engage in that business.
45
What is the effect if a capitalist partner engages in the same business as the partnership without stipulation allowing him?
1. ) He shall bring to the common fund any profits accruing to him from his transaction AND
2. ) He shall personally BEAR ALL THE LOSSES.
46
What are the rules of partnership liabilities to third person?
Pro-rata among general partners
47
What are the rules on sharing of partnership liabilities to third persons when there is a stipulation exempting a general partner from pro-rata and subsidiary liability after the exhaustion of partnership assets?
1. ) Stipulation is void as to 3rd persons
2. ) Stipulation is valid among the partners
Liabilities in this case shall be paid as follows:
1. ) Assets of partnership shall be used first to pay liabilities
2. ) If partnership assets are not sufficient, liability shall be paid equally from the separate assets of the general partners.
3. ) Partners NOT exempted from pro-rata and subsidiary liability shall reimburse those who are exempted according to their P/L ratio or capital contribution, whichever is applicable.
48
What happens when a person not a partner in a partnership includes his/her name in the partnership?
He shall be subject to liability of a partner.
49
What are the obligations of the partners?
1. ) Contribution of capital
2. ) Obligations with respect to contribution of property
a.) Deliver the property to the partnership at the time
stipulated
b.) To take care of the property before its deliver to
the partnership with the diligence of a good father of
a family.
c.) To be liable for damages in case of default
d.) To answer for eviction in case the partnership is
deprived of the thing he has contributed.
e.) To be liable for the fruits of the thing from the time
they should have been delivered WITHOUT THE
NEED OF ANY DEMAND.
3.) Obligations with respect to contribution of money
a.) To deliver the partnership money he has promised
to contribute on the date stipulated.
b.) To pay interest on the amount promised he had
promised to contribute from the time he should have
complied with his obligation
c. ) To pay damages if he defaults
4. ) Obligations with respect to amount appropriated
a. ) To reimburse partnership amounts that he may have taken from partnership coffers.
b.) To pay interest on the amount he had converted
for his own use from the time of conversion
c.) To pay damages suffered by the partnership by
reason of the conversion
Others elaborated further in other questions.
50
What is the obligation of a partner who has received his share of partnership credit?
To bring to the partnership capital his share of partnership credit he received in whole or in part even if has already given his receipt when:
1. ) The other partners have not collected their shares
2. ) The debtor becomes insolvent after the partner has received the payment.
51
When is a partner obliged to contribute additional capital?
a. ) To contribute additional share to the capital in case of an IMMINENT LOSS of the business of the partnership EXCEPT:
1. ) IF HE IS AN INDUSTRIAL PARTNER OR
2. ) IF THERE IS AN AGREEMENT TO THE CONTRARY
b.) To sell his interest to the other partners if he refuses to contribute additional capital.
52
When is a partner obligated to pay damages?
A partner is obligated to pay damages when the partnership has suffered damages through his fault.
He CANNOT COMPENSATE THEM WITH PROFITS which he may have earned for the partnership by his industry. However the courts may equitably lessen this responsibility if through his extraordinary efforts, unusual profits have been realized.
53
Explain the partners' obligation to render information.
The partners have an obligation to render on demand true and full information of all things affecting the partnership to:
a. ) Any partner, or
b. ) Legal representative of any deceased partner or
c. ) Legal representative of any partner under legal disability
54
Explain the partners' obligation to account.
The partners have an obligation to account to the partnership for any benefit and hold as trustee for it any profits derived by him without the consent of the partners from any transaction connected with the partnership or from use by him of its property.
55
What is the liability of a newly-admitted partner for obligations of the partnership?
As to obligations EXISTING AT THE TIME OF HIS ADMISSION - new partner is liable but only to the extent of his contribution EXCEPT if there is a stipulation to the contrary.
As to obligations after his admission - liable with other partners pro rata with their separate property.
56
What are the rights of the partners?
1. ) To associate another person with him in his share of profits. Said associate shall not be admitted to the partnership without the consent of all partners.
2. ) To have access to and inspect and copy the partnership books at reasonable hours.
3. ) To have a formal account of partnership affairs:
a. ) If he is wrongfully excluded from partnership business or possession of its property by his co-partners.
b. ) If the right exists under the terms of any agreement
c. ) With respect to benefits or profits derived by a partner without the consent of the partners from any transaction
d. ) Whenever other circumstances render it just and reasonable.
4. ) Property rights of a partner
57
Does conveyance by a partner of his whole interest to an assignee dissolve the partnership?
No, it does not dissolve the partnership.
58
What are the rights of an assignee?
Assignee's rights are limited to the following:
1. ) Receive the profits to which the assigning partner would otherwise be entitled
2. ) To avail himself of the usual remedies in case of fraud in management.
3. ) To require an account from the date only of the last account agreed to by all the parties in case of dissolution.
59
Can the assignee interfere in the management of the business?
No.
60
Can the assignee require information of partnership transactions?
No.
61
Can the assignee inspect partnership books?
No.
62
Can a partner attach his interest in the partnership for his separate debts?
Yes, but partnership creditors will be preferred over his separate creditors.
63
Explain the application of payment when a person owes separate demandable debts to the partnership and to the partner AUTHORIZED TO RECEIVE PAYMENT.
1. ) If the authorized partner issues a receipt for the partnership, payment shall be applied to partnership credit.
2. ) If the authorized partner issues his own receipt, payment shall be applied to the two credits PROPORTIONATELY. This does NOT APPLY when:
a.) Debt owed to a partner is NOT AUTHORIZED to
receive payment.
b.) Debt to the partnership is NOT YET DUE
c.) The debt owed to the partner authorized is MORE
ONEROUS and the debtor exercises his right to apply.
64
What are the obligations of the partnership for the wrongful acts of partner/s?
The partnership shall be SOLIDARILY LIABLE with all the partners when:
1. ) Loss/injury is caused to 3rd persons by the wrongful act or omission of any partner acting IN THE ORDINARY COURSE OF BUSINESS of the partnership WITH AUTHORITY of his co-partners.
2. ) Where a partner acting within the scope of his authority receives money/property of a 3rd person and misapplies it.
3. ) Where the partnership in the ORDINARY COURSE OF BUSINESS receives money/property and is misapplied by any partner while it is in the custody of the partnership.
65
When is a partnership liable to 3rd persons for the acts of its partners?
Partnership is bound when:
1.) Partner is authorized to act for the partnership, even if not in the ordinary course of business.
2.) If partner is NOT authorized to act for the partnership, the partner is bound if:
a.) The act is apparently carrying on in the usual way
of partnership business, AND
b.) The 3rd person has no knowledge of partner's lack
of authority.
When partnership is not bound:
1. ) Even though the act is not in the usual way of business and the partner is not authorized, but the 3rd person has knowledge of such lack of authority.
2. ) When the partner is not authorized to act and the act is not in the usual way of partnership business.
66
What happens when title to real property in the NAME OF THE PARTNERSHIP is conveyed by a partner in the name of the partnership WITHOUT AUTHORITY?
Effect: The conveyance passes title to the transferee.
When the partnership may recover:
a. ) Act is not in the usual way of partnership business (not engaged in real estate)
b. ) 3rd person has knowledge of the lack of authority.
When partnership may NOT recover:
When the grantee has conveyed to a HOLDER FOR VALUE without knowledge that the partner in making conveyance has exceeded his authority.
67
What happens when title to real property IN THE NAME OF ONE OR MORE BUT NOT ALL PARTNERS is conveyed by a partner in the name of the partnership WITHOUT AUTHORITY?
Effect: The conveyance passes title to the transferee.
When the partnership may recover:
a. ) Act is not in the usual way of partnership business (not engaged in real estate)
b. ) 3rd person has knowledge of the lack of authority.
When partnership may NOT recover:
When the grantee has conveyed to a HOLDER FOR VALUE without knowledge that the partner in making conveyance has exceeded his authority.
68
What happens when title to real property is in the name of the partnership and the conveyance is executed by a partner IN HIS OWN NAME WITHOUT AUTHORITY?
Effect: Transferee does not become the owner of the real property. However, EQUITABLE INTEREST passes to him if:
1. ) The act is in the usual way of partnership business
2. ) The 3rd person has no knowledge of partner's lack of authority.
69
What is equitable interest?
Equitable interest means all the beneficial interests in the property like the use thereof and its fruits, BUT NOT THE TITLE.
70
What happens when title to real property is IN THE NAME OF ONE OR MORE BUT NOT ALL PARTNERS and the conveyance is executed by a partner IN HIS OWN NAME WITHOUT AUTHORITY?
Effect: Transferee does not become the owner of the real property. However, EQUITABLE INTEREST passes to him if:
1. ) The act is in the usual way of partnership business
2. ) The 3rd person has no knowledge of partner's lack of authority.
71
What happens when title to real property is IN THE NAME OF THE PARTNERSHIP and the conveyance is executed by ALL PARTNERS?
Conveyance passes all rights in the property.
72
What is the effect of notice to a partner?
Notice to any partner relating to partnership affairs is NOTICE TO THE PARTNERSHIP.
73
What is Dissolution?
Dissolution is the change in the relations of the partners caused by any partner ceasing to be associated in the carrying on of the business.
74
What is winding up?
Winding up is the process of settling the business affairs of the partnership after dissolution.
75
What are the causes of dissolution?
1. ) By the termination of the definite term or particular undertaking specified in the agreement
2. ) By express will of any partner or all the partners
3. ) By expulsion of any partner from the business
4. ) When any event makes it unlawful for the business to carry on
5. ) Loss BEFORE OR AFTER the delivery of property where the PARTNER CONTRIBUTED ONLY ITS USE OR ENJOYMENT
6. ) Loss BEFORE THE DELIVERY OF SPECIFIC THING which a partner promised to contribute
7. ) Death of a partner
8. ) Insolvency of a partner/partnership
9. ) Civil interdiction of any partner
10. ) By decree of court in the following cases:
a. ) application by a partner or his legal representative whenever a partner becomes
- INSANE
-INCAPABLE OF PERFORMING HIS PART IN
PARTNERSHIP CONTRACT
-GUILTY OF CONDUCT AFFECTING PARTNERSHIP
BUSINESS
-PARTNER BREACHES PARTNERSHIP AGREEMENT
-PARTNERSHIP CAN ONLY BE CARRIED ON AT A
LOSS.
76
What are the effects of dissolution?
Dissolution terminated all authority of any partner to act for the partnership, except:
a. ) Acts to wind up affairs
b. ) Acts to complete transaction begun before dissolution
77
When is the authority of a partner to enter into NEW TRANSACTIONS TERMINATED among the partners?
When the cause of the dissolution is:
1. ) NOT by the act/insolvency/death of a partner
2. ) Act of the partner and the partner who entered into the new transaction had knowledge of the dissolution
3. ) Insolvency/death of a partner and the partner who entered into the new transaction had notice or knowledge of such insolvency/death.
78
What is the general rule when partnerships dissolve and partners into transactions?
GR: Partners cannot engage into transactions because their authority to do so terminates upon dissolution
EX:
1. ) Transaction involving winding up of affairs
2. ) To complete unfinished transactions during the dissolution
If dissolution is NOT caused by an act/insolvency/death, the authority of the partners among themselves is TERMINATED.
79
When is the authority of a partner to enter into NEW TRANSACTIONS NOT TERMINATED among the partners?
1. ) If the cause of dissolution is the ACT of a partner and the acting partner had no knowledge of the dissolution.
2. ) If the cause of dissolution is the INSOLVENCY OR DEATH of a partner and the acting partner had no notice or knowledge of such insolvency/death.
80
When does the act of a partner after dissolution bind the partnership?
1. ) When the act is necessary for winding up of partnership affairs.
2. ) When the act is necessary to complete transactions begun before dissolution.
3. ) In case of a new transaction or business in the following cases:
a. ) If the other party to the transaction EXTENDED CREDIT to the partnership BEFORE DISSOLUTION and he had no knowledge or notice of dissolution. MERE PUBLICATION IS NOT NOTICE TO HIM. He can only be bound by the dissolution if:
1. ) He has read the publication
2. ) Had knowledge of the dissolution
b.) If the other party to the transaction had NOT EXTENDED CREDIT BEFORE DISSOLUTION, but had nevertheless known of the partnership before dissolution.
(This part is confusing. read page 684 again)
4. ) Where although the partner has no authority to wind up affairs, the other party to the transaction is one who:
a. ) Had extended credit to the partnership before dissolution and he had no knowledge and he had no notice or knowledge of the partner's lack of authority.
b. ) One who had not so extended credit before dissolution and having no notice or knowledge of the partner's lack of authority.
81
See the summary of rules on dissolution on page 686-695.
Read also page 700-708.
82
What is a Limited Partnership?
A limited partnership is one which has one or more general partners and one or more limited partners.
83
What are the requirements for formation of a Limited Partnership?
1. ) Name of partnership must indicate "Limited". Failure to do so will make the partnership a general partnership.
2. ) Indicate the name and place of residence of the general and limited partners.
3. ) File a record with SEC. Noncompliance will render the partnership a general partnership.
84
May additional limited partners be added later on after partnership formation?
Yes, provided that this right is stated in the original certificate.
85
What is required to be a general-limited partner?
His status as such must be stated in the certificate of the partnership.
86
What is the effect if a limited partner dies?
The partnership is not dissolved, except when there is no more limited partner because in such a case it will not be a limited partnership anymore and therefore become a general partnership.
87
What is a substituted limited partner?
A person who admitted to all the rights of a limited partner who has died or has assigned his interest in the partnership.
88
T or F
When the partnership assets are lesser than the liabilities to partnership creditors, the creditors may go after the industrial and general-limited partners for their separate personal assets.
True.
89
What is the order of payment of liabilities of a dissolved limited partnership?
1. Those owing to creditors including limited partners, except those to limited partners on account of their contributions and general partners.
2. Those owing to limited partners by way of their share in the profits and other compensation by way of income
3. Those owing to limited partners in respect to the capital of their contributions
4. Those owing to general partners other than for capital or for profits
5. Those owing to general partners in respect of profits
6. Those owing to general partners in respect of capital
90
Which of the following will not cause the automatic dissolution of a general partnership?
a. Death of a partner
b. Insolvency of a partner
c. When the partnership becomes unlawful
d. Insanity of a partner
D. Insanity of a partner
By decree of court in the following cases:
a.) application by a partner or his legal representative whenever a partner becomes INSANE
Needs court decree
91
T or F
| Any stipulation which excludes one or more partners from any share in the profits and losses is void.
True. Art 1799
92
A person admitted as a partner into an existing partnership shall be liable up to the extent of his separate assets for what obligations?
a. Obligations of the partnership existing at the time of his admission only if there was a stipulation
b. Obligations of the partnership incurred after his admission only if there was a stipulation
c. Obligations of the partnership incurred before and after his admission even if there was no stipulation
d. Obligations of the partnership incurred before his admission if there was a stipulation, and those incurred after his admission even if there was no stipulation.
d. Obligations of the partnership incurred before his admission if there was a stipulation, and those incurred after his admission even if there was no stipulation.
93
T or F
| An artificial person like a corporation may be a partner in a partnership
True.
94
T or F
All partners including industrial ones shall be liable pro rata with all their separate property after the partnership assets have been exhausted
True.
95
T or F
A newly-admitted partner is liable for partnership debts contracted before his admission to the extent of his contribution, unless there is a contrary stipulation
True.
96
T or F
| A general partnership is automatically dissolved by reason of insanity of a partner.
False.
97
As distinguished from a partnership, a joint venture
a. generally relates to a continuing business
b. is usually limited to a single transaction
c. does not allow corporations to become venturers
d. operates with legal personality
b. is usually limited to a single transaction
98
T or F
| A partnership can exist even before the existence of a common fund.
True.
99
Who among the following is not liable for losses?
a. Capitalist partner
b. Industrial partner
c. General partner
d. Limited partner
B. industrial partner
100
T or F
Limited partners shall not be bound by partnership obligations, and their personal assets shall not be used to satisfy partnership debts. Only their capital contribution may be used to satisfy partnership debts.
True.
101
T or F
Failure to file the certificate required for limited partnership with the SEC has the effect of the partnership becoming a general partnership, but only with respect to 3rd persons.
True, as to the partners they shall be limited
102
When an unlawful partnership is dissolved by judicial decree, the profits shall go to the state. T or F
True
103
In associations and societies whose articles are kept secret among the members and wherein any one of the members may contract in his own name with 3rd persons, they shall be governed by the rules on partnership.
False, rules on co-ownership
104
T or F
| All partnership contracts are consensual
False, some must be solemn such as those involving immovables
105
It is a principle which means that a partner has a right to choose those whom he wants to be associated with in the partnership
Delectus personae
106
A and B orally entered into a contract of partnership with A contributing land and B a building. The partnership is operating for 10 years now, and they divided equally the profits. What is the status of the partnership after 10 years of operation?
It may be considered valid as to the contracting parties on the basis of the doctrine of estoppel but it may be considered void as to third persons for failure to comply with the formality required by law.
107
Which of the following is generally not allowed to enter into a contract of partnership?
a. Natural person who is capacitated
b. Another partnership
c. Professionals
d. Corporations
D. Corporations.
108
What is the prescriptive period for a partner to file an action to impugn or question the manifestly inequitable sharing of partnership profits or losses designated by a 3rd person?
3 months from the knowledge of such designation but IT MUST BE BEFORE THE SAID PARTNER EXECUTES IT
109
What are the acts that require the unanimous vote of the partners since the acts are considered acts of strict ownership or dominion?
1. Assignment of partnership property in trust for creditors or on the assignee's promise to pay the debts of the partnership
2. Disposition of the goodwill of the business
3. Acts which would make it impossible to carry on the ordinary business of the partnership
4. Confession of judgment
5. Entering into a compromise concerning the partnership's claim or liability
6. Submission of a partnership claim or liability to arbitration
7. Renunciation of a claim of the partnership
110
What is the responsibility of a 3rd person who includes his name in a firm/partnership name?
He will be liable pro-rata and subsidiarily and will be treated as a nominal partner.
111
In the absence of partnership agreement, when shall juridical personality of the partnership begin?
From the moment SEC issues the Certificate of Registration
112
In the absence of stipulation to the contrary, what is the obligation of the partners as to the contribution of capital?
a. To contribute equally to the capital of the partnership
b. To ask the court for the amount of contribution
c. To ask 3rd party to designate the amount of contribution
d. To contribute in accordance with their respective age ratio
a. To contribute equally to the capital of the partnership
113
Who are the partners not required to contribute additional shares of capital to the partnership to save it in case of imminent loss?
1. Industrial partners and
| 2. Capitalist partners who are EXEMPTED BY AGREEMENT
114
T or F
| The partner's interest in the partnership is his share in the profits and surplus (net assets) of the partnership
True.
115
In case the partner's interest is attached or charged by a partner's separate or personal creditor for the payment of his personal debt, who has the right to redeem the said interest before the foreclosure to prevent the dissolution of the partnership?
a. by any one or more of the partners using their separate property
b. By any one or more of the partners with the consent of all the partners whose interest are not so charged or sold using partnership property
c. Either A or B
d. Neither A or B
c. Either A or B
116
If an existing partnership is sold by the incumbent partners to another person, what is the effect of the sale to the liability of the partnership to 3rd persons if the sale is without the consent of the third persons?
a. The previous partners are still liable to the old partnership creditors despite the sale
b. The new partners will become solely liable to the old partnership creditors even if the latter did not give consent to the sale
c. The old partnership creditors can no longer go after the old partners
d. The previous partners are already free from any partnership liability by reason of the sale.
a. The previous partners are still liable to the old partnership creditors despite the sale
Therefore, the old and new partners are liable to its creditors
117
What are the instances wherein a general partnership may be dissolved by a decree of court upon application by a partner also known as the NON AUTOMATIC CAUSES OF DISSOLUTION?
1. Partner has been declared insane in judicial proceeding
2. Partner becomes in any way incapable of performing his part in the partnership contract
3. Partner is guilty of such conduct as tend to affect prejudicially the carrying on of business
4. Partnership can only be carried at a loss
5. Other circumstances that render a dissolution equitable
118
What are the instances wherein the partnership may be dissolved by a decree of court upon the application of the assignee or purchaser of a partner's interest?
1. After the termination of the specified term or particular undertaking
2. At any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued
119
In the absence of any agreement to the contrary, when shall the right to an account of his interest accrue to any partner or his legal representative as against the winding uppartners or the surviving partners or the person or partnership continuing the business?
At the date of dissolution
120
What is the effect if a limited partner's name appears in the limited partnership name contrary to allowed instances provided by law?
The limited partner is liable pro-rata and subsidiarily to partnership creditors who extend credit to the partnership WITHOUT ACTUAL KNOWLEDGE THAT HE IS NOT A GENERAL PARTNER.
121
T or F
A limited partner who has made a loan to the partnership may receive or hold as collateral security any partnership property for his claim to the partnership or receive from a general partner or the partnership any payment, conveyance, or release from liability if at the time the assets of the partnership are not sufficient to discharge partnership liabilities to persons not claiming as general or limited partners.
False.
122
What is the status of the contract of security when a limited partner who has made a loan to the partnership receive or hold as collateral security any partnership property for his claim to the partnership?
Rescissible
123
Where there are several limited partners the members may agree that one or more of the limited partners shall have priority over the other limited partners as to the return of their contributions, or as to their compensation by way of income, or as to any other matter. What is the formality required by law for this agreement to be binding among the partners?
It must be stated in the certificate of limited co-partnership.
124
What is the requirement or precondition before a limited partner may receive from the partnership the share of the profits or the compensation by way of income stipulated in the certificate of limited partnership during the lifetime of the partnership?
The partnership's total assets must be in excess of the total liabilities to 3rd persons
125
T or F
The limited partner has the right to demand and receive cash in return for his contribution irrespective of the property contributed as a return of his capital in the absence of any statement in the certificate of limited partnership
True.
126
When may a limited partner demand the dissolution of the partnership and its subsequent winding up of partnership affairs?
1. When he rightfully but unsuccessfully demands the return of his contribution
2. When other liabilities of the partnership have not been paid, or the partnership property is insufficient for their payment, and the limited partner would otherwise be entitled to the return of his contribution
127
What are the instances wherein the certificate of limited co-partnership may be amended only but not cancelled?
1. There is a change in partnership name or in the amount or character contribution of any limited partner
2. A person is substituted as a limited partner
3. An additional limited partner is admitted
4. A person is admitted as a general partner
5. A general partner retires, dies, becomes insolvent or insane or is sentenced to civil interdiction and the business is continued under Art 1860
6. There is a change in the character of the business of the partnership
7. There is a false or erroneous statement in the certificate
8. There is a change in the time as stated in the certificate for the dissolution of the partnership or for the return of a contribution
9. A time is fixed for the dissolution of the partnership, or the return of a contribution, no time having been specified in the certificate
10. The members desire to make a change in any other statement in the certificate in order that it shall accurately represent their agreement
128
T or F
The retirement, death, civil interdiction, insanity, or insolvency of a limited partner always dissolve the limited partnership.
False, in general, amend only
