I. Concepts and Rules
Contract of Partnership
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.
o It may also be established in the exercise of the profession (General Professional Partnership).
o Contract of partnership is perfected by mere consent, a meeting of the minds as to the object and cause of the
contract.
o Any person capacitated to enter into a contract can be a partner.
From the perfection of the contract, partnership possesses juridical personality, separate and distinct from the partners. This
is called entity theory.
o Partnership has separate personality, regardless of the failure to comply with the formalities required by law
in establishing a partnership. In other words, third persons will not be prejudiced by non – compliance of the
partners as to the formalities in the formation of partnership.
o Secret associations or societies do not possess juridical personality; hence, no partnership is created but
only co-ownership.
o As a result of juridical personality, properties acquired or interest therein shall be in the name of the partnership.
Partnership can incur liabilities under its name. likewise, it may be sued or sue others.
Formalities: Partnership can be created in any form, except
o Public instrument must be executed and submitted to the SEC when there is a contribution of personal property amounting
to P 3,000 or more, or a real property or real rights is contributed thereto. Likewise, inventory of real properties must be attached to public
instrument. Non-compliance of these provisions will make the partnership VOID.
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Partnership must be established for lawful object or purpose and for the common benefit of the partners.
o When unlawful partnership is dissolved by a judicial decree, the profits shall be confiscated by the State
without prejudice to provisions of the Penal Code.
No partnership, under the following:
Persons not partners to each other are not partners to third persons, except partners by estoppel; - Co – ownership or co –
possession;
Mere sharing of gross returns;
Share in profits in lieu of: (1) debt, (2) wages or rent, (3) annuity, (4) interest on a loan, (5) consideration of the sale of
goodwill.
Kinds of Partnership –
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As to object
o Particular Partnership
o Universal Partnership (either “all the present property” or “all the profits”); •
As to liability
o General Partnership
o Limited Partnership
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As to duration
o partnership at will
o partnership with a fixed term
Partnership of all present property –
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Partners contribute all the present property that belongs to them at the time of the constitution of the partnership, to a common
fund, as well as the profits that may be acquired therewith.
Except: those properties will be acquired through inheritance, legacy, or donation EXCEPT the fruits thereof.
Partnership of all the profits –
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Profits that the partners may acquire by their industry or work during the existence of partnership shall be part of
their contribution;
Property that belongs to them shall be the exclusive property of the partners; ONLY THE USUFRUCT PASS to the
partnership.
Note:
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If not clear whether universal or particular, then it is universal.
Persons who are prohibited to give donation cannot enter into a universal partnership.
Spouse cannot enter into a universal partnership with the other spouse.
o But he or she can enter into a limited partnership with the other spouse.
Particular partnership –
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Its object is determinate things, their use or fruits or a specific undertaking, or the exercise of a profession or vocation.
Partnership for a fix term –
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When the partnership reaches its fix term and continued by the partners without the express agreement, the rights and
duties of the partners remain the same.
It turns to partnership at will (without a fix term).
General Partnerships –
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A partnership that comprise of general partners, who are liable to the liability of the partnership beyond their capital contribution
to the partnership.
Limited Partnerships –
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A partnership that has general partners and limited partners. Limited partners are not liable to partnership debts beyond their
personal contribution to the partnership.
Kinds of Partner
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Capitalist partner – one who contributes money, or property.
o Unless otherwise stipulated, he has the obligation to contribute additional capital to save the partnership from
imminent losses. If he does not, he will be obliged to sell his interest to other partners.
• Industrial partner – one who contributes industry. o He is not liable
for losses inter se;
o He is liable to third persons for partnership obligations but he has the right to ask for reimbursement from the capitalist
partner.
o He cannot engage in business unless expressly provided in the agreement of the partners.
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General partner – controls and manages the business and liable to partnership obligations.
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Limited partner – not involved in the management of the business and not liable to partnership debts beyond his personal
contribution. A limited partner who is involved in the management of the business, he will be liable as general partner.
o He is not a proper party in the proceedings by or against a partnership, except what is being enforced is his right
against liability or to the partnership.
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Managing partner – one who manages the business.
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Liquidating partner – one who winds up the affairs of the business.
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Associate or sub partner – one who has a partner who shares in the profit in the partnership.
QUERY: Can a corporation be a partner in the partnership?
Answer: Yes, provided I meets the following conditions: (1) expressly provided in the Articles of incorporation and align with the
purpose of the corporation; (2) the partnership must be a limited
partner and the corporation is a limited partner (3) if it is a foreign corporation, it must have license to transact business in the country.
Obligations of the Partners Among Themselves
Contribution: All partner must contribute EQUAL shares to the capital of the partnership, unless otherwise stipulated. The
contributions may either be:
a. Money
The partner becomes the debtor from the time of execution of the partnership. The partner is
liable to pay interest and damages, even not stipulated and
without demand, from the time of the execution of the partnership, unless otherwise stipulated.
b. Property – it must be delivered from the time of execution.
The partner is liable to damages in case of non-delivery. - He who fails to
deliver shall bear the risk of loss.
He is liable to warranty against eviction and hidden defects. c. Industry
Cannot be agreed that all partners will contribute services. The
limited partner cannot contribute services.
Fiduciary Duties (LODI): The partners have (1) duty of loyalty; (2) duty of obedience; (3) duty of diligence and (4) duty to inform.
a. Duty of loyalty.
Giving preference to own credit is prohibited.
i. For instance, A (debtor) is indebted to the partnership for P1,000 and to the managing partner B for P2,000. B was able to collect
from A P600 issuing a receipt showing that P 600 was deducted from the P 2,000. B must give the partnership P 200 (1:2 or 1/3) of
the amount that he collected.
- Industrial partner cannot engage in any business, unless permitted by the partnership. Violations thereof:
i. He will exclude from the partnership plus damages; OR
ii. Avail of the benefits derived by the industrial partner plus damages. Capitalist partner competing with the
partnership without permission.
i. Violation, the profits of that partner belongs to the partnership while the loss shall beat by the said partner.
-Secret profits.
i. Account the profits to the partnerships. - Misuse of partnership property.
i. Account the profits to the partnership with interest and damages.
b. Duty of obedience
Adherence to the agreement and decision of the partners.
c. Duty of diligence
Partners shall be exercise diligence in dealing with other in behalf of the partnership
BUSINESS LAWS AND REGULATIONS – CONTRACT OF PARTNER
d. Duty to inform
Information on the partnership affairs
Notice to the partner is notice to the partnership, unless there is fraud. books and records.
Rights of Partners
Inspection
of
1. Right to participate in the management
Unless otherwise agreed, each partner may separately execute all acts of administration. 2. Right to share in profits
- Stipulations which excludes one or more from any share in the profits or losses is void. - Allocation of profit and
losses shall be based on agreement of the partners, in the
absence thereof, in proportion to their capital contributions.
For industrial partner, he shall receive just and equitable share under circumstances. If he contributes money or
property, he shall receive share in proportion to his contribution.
3. Right to compensation
Partners are not entitled unless agreed upon by the parties. 4. Right to
reimbursement
Entitled reimbursement for expenses incurred in behalf of the partnership. 5. Right to return of
advances
Reimbursed for the advances or loans extended to the partnership, however, in case of dissolution, outside creditors
are given preference.
6. Right to return of capital
It occurs in case of dissolution after satisfying the claims of the creditors. 7. Right to information
It includes right to inspect and copy of the partnership’s book and records at any reasonable hour; and the
right to demand true and full information and things affecting the partnership.
8. Right to accounting
An action for formal accounting when: (1) Partner excluded from the partnership business or profession of its
property by his co-partners; (2) rights exists under the terms of any agreement; (3) he derives secret profits
pertaining to the partnerships; (4) whenever other circumstances render it just and reasonable.
Property Rights of the Partnership and Partners
1. Specific Partnership Property
A partner is a co-owner of other partners in the properties of the partnership subject to the following limitations:
i. The partner can possess the properties not for his own purposes unless with consent of the other
partners.
ii. The partner who has the possession of the properties cannot exclude other partners in doing so.
iii. Properties cannot be assigned except when all partners are consented thereto. iv. Properties cannot be
attached and executed except on a claim against the
partnership.
v. Not subject to legal support.
2. Interest in the Partnership Itself
A partner’s interest in the partnership is his share in the profits and surplus. - A partner may assign
his rights.
i. His interest can be assigned without dissolution of the partnership. The assignee does not acquire all the
right of the partners.
ii.
Rights acquired by the assignee are: (1) share in the profits; (2) share in the surplus in case of
dissolution; (3) limited right to accounting upon dissolution – from the date of last account agreed upon by
the partners.
iii. Rights NOT acquired by the assignee are: (1) the right to interfere in the management; (2) right to
information or account; (3) the right to inspect books; or (4) to file a petition for dissolution.
iv. When the partner assigns his rights to the other partners, the latter acquires all the rights of the former.
A partner may associate another person in his share, but that associate does not become a partner.
The judgement creditor may ask for a “charging order” if a decision in a case is rendered against a partner. However,
the creditor does not become a partner.
i. Charging order – an order from the court charging the interest of the debtor partner with payment of
the unsatisfied amount of such judgement debt with interest thereon.
ii. Appointment of Receiver – one who will receive the payment and fulfill the orders of the court.
iii. Right of redemption – the partners with their separate property, or the partnership thru its
property with the consent of all partners whose interest are not so charged or sold.
Management of the Partnership
The designated manager can perform all acts of administration, his decision is irrevocable even objected by other partners unless
he acted in bad faith.
When two or more managers are designated:
o Specific duties may be designated in which case one can perform such duties without the consent of the others.
o Unanimity may be agreed upon in which case all must consent to actions, except there is grave or irreparable injury.
o When no specific duties are designated and unanimity is not agreed upon, each managing partner may
separately perform acts of administration. In case of conflict, the majority prevails. In case of tie, the partners owning
controlling interest shall decide.
When manager is not designated, all partners are considered agent of the partnership and whatever any one of them
do alone shall bind the partnership. However, important alienation of immovable property is not allowed, even it is useful to
the partnership, without the consent
of other partners. If the refusal of the consent of the partners is prejudicial to the partnership, the court’s intervention may be
sought.
Liability of the Partners to Third Parties
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All partners are pro rata liable to the liability of the partnership based on contract to the third person even up to the extent of
their personal assets. Any stipulation to the contrary is VOID.
o Exception: limited partners.
Mutual Agency Rule: Every partner is an agent of the partnership for the purpose of its business.
The partnership is liable to the acts of the partner if it is performed in the exercise of the partner’s authority (express,
implied and apparent authority).
o Third person is not duty bound to inquire or investigate the limits of the apparent authority of the partner.
Unanimity approval of all the partners are required under the following situations:
o Assign the partnership property in trust for creditors or on the assignee’s promise to pay the debts of the partnership.
o Dispose of the goodwill of the partners.
o Do nay other act which would make it impossible to carry on the ordinary business of a partnership.
o Confess a judgement.
o Enter into a compromise concerning a partnership claim or liability. o Submit a partnership
claim or liability to arbitration.
o Renounce a claim of the partnership.
Sale or mortgage of real property by the partner is binding if it is in the exercise of his express, implied and apparent authority,
and the title is in the name of the partnership. But if it is in the name of the partner, equitable title will be transferred to the
buyer because a buyer in good faith and for value is always protected.
The partnership is also bound by the acts of the partners thought acted beyond his authority if ratified by the other partners.
Partners are joint liable for contracts and debts of the partnership. Joint liability means that the plaintiff must name the
partnership, and all the partners are defendant. If the plaintiff is successful, he can recover the entire amount of judgement
from any or all of the partners.
The partnership is also liable for the wrongful acts or omission (TORT) done by the partners in exercise of his authority,
or in the ordinary course of business of the partnership, for misapplication of money in partnership custody, and
misappropriation of funds received by the partner acted within his authority.
All the partners are joint and solidary liable with the partnership in all cases of tort liability.
Partners by Estoppel. A person who is not a partner but who represent himself as a partner (or who consented to such
representation being made public) is liable to third persons who relied on his representation. One can be a partner by estoppel
even if there is no partnership.
o Person who is not a partner is liable to the partnership obligation if his name appears in the partnership name.
o Those who consented to the partner by estoppel and the partner by estoppel are pro rata liable to third person.
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Liability of the incoming partner. He is liable to the antecedent partnership debts up to the extent of his personal
contributions. After becoming a partner, he is now personally liable to for debts and obligations incurred by the partnership.
Liability of the outgoing partner. If the partnership is dissolved and continued by other partners, the retiring partner still be liable
to third person who had no notice that he is no longer part of the partnership.
Dissolution, Winding Up and Termination of the Partnerships
Effect of Delectus Personae. The continued existence of partnership is dependent on the constancy of mutual resolve, along with
each partner’s capability to give it, and the absence of cause for dissolution provided by the law itself.
Dissolution – the change in the relation of the partners caused by any partner ceasing to be associated in the carrying of
the business.
Winding up – the administration of the assets of the partnerships for the purpose of terminating the business and discharging
the obligations of the partnership.
Termination – end of the process of winding-up of the partnership.
Types of Dissolution.
1. Judicial dissolution
2. Extrajudicial dissolution
With or without violation of the agreement 3.
of law
Operation
Extrajudicial dissolution – includes all dissolution without any court action.
1. Without contravention of the agreement
a. By the termination of the definite term or particular undertaking specified in the agreement.
b. By the express will of any partner, who must act in good faith, with no definite term or particular undertaking.
c. By the express will of all the partners who have not assigned their interests or suffered them to be charged for their
separate debts, either before or after the termination of any specified tern or particular undertaking.
d. By the expulsion of any partner from the business bona fide in accordance with such a power conferred by the
agreement between the partners.
2. With contravention of the agreement
Dissolution is allowed despite of the violation in lieu of the principle of involuntary servitude.
Dissolution by Operation of Law
a. Illegality of the partnership business.
b. Specific thing promised to be contributed by the partner perishes before the delivery. c. Death of any partner.
d. Insolvency of any partner or the partnership. e. Civil
interdiction of any partner.
Judicial Dissolution
a.
b.
c.
d.
A partner has been declared insane in any judicial proceeding or is shown to be of unsound mind.
A partner in any other way incapable of performing his part of the partnership contract.
A partner has been guilty of such conduct as tends to affect prejudicially the carrying on the business.
A partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters
relating to the partnerships business that it is not reasonably practicable to carry on the business in partnership with him.
e. The business of the partnership can only be carried on at a loss. f.
Other
circumstances render a dissolution equitable.
Right of Purchaser to File a Court Action.
a. After the termination of the specified term or particular undertaking.
b. At any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued.
Wrongful Dissolution
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A partner who wrongfully terminates the partnership in contravention of the agreement may be held liable for damages by the
innocent partners.
Effect of Dissolution on Authority
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It terminates the mutual agency. The dissolution is binding even without notice to all partners if the dissolution is NOT due
to any act, death or insolvency of the partner (e.g. business becomes illegal, insolvency of the partnership). If the
dissolution is due to any act, death, or insolvency of the partner, notice should be given to the partners, otherwise,
the acts the unnotified partner binds the partnership and other partners.
However, even if the partners are not bound because there was notice, the partners may be held liable by creditors but subject
to the right of reimbursement from the partner who transacted.
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Partner’s Authority to Bind the Partnership
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After dissolution, the following acts are binding: (1) winding up of business; (2) contracts with creditor without notice
(actual or constructive).
Effect of Dissolution on Existing Credits
Credit should be satisfied out of partnership assets, in case of insufficiency, the partners are liable with their personal assets.
Continuation of the Partnership After Dissolution
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The surviving partners may continue the partnership after dissolution. In effect, the old partnership is dissolved and a
new partnership is created.
Creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.
Winding Up and Distribution of Assets
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Partnership assets are distributed in the following order: 1. Those owing
to creditors other than partners.
2. Those owing to partners other than for capital and profits. 3. Those owing to
partners in respect of capital.
4. Those owing to partners in respect of profit.
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A partner is liable if partnership properties are insufficient. Where a partner has become insolvent or his estate is
insolvent, the claims against his separate property shall rank in the following order:
1. Those owing to separate creditors.
2. Those owing to partnership creditors.
3. Those owing to partners by way of contribution.
LIMITED PARTNERSHIP
Formation: Substantially comply in good faith the following, otherwise limited partnership is not formed.
1. Sign and swear to a certificate which shall state the stipulations provided for under Art. 1484. 2. File for record the certificate
in the SEC.
Art. 1484 – The certificate shall contain the following:
a. Name of the partnership, adding the word “limited”; b. Character of the
business;
c. Location of the principal place of business;
d. Name and place of residence of each member, general and limited partners being respectively designated;
e. The term for which the partnership exists;
f. Amount and description of the contribution by each limited partner;
g. Additional contributions, if any, to be made by each limited partner and the times at which or events on the happening of which
they shall be made;
h. The time, if agreed upon, when the contribution of each limited partner is to be returned;
i. The share of the profits or the other compensation by way of income which each limited partner shall receive by reason of his
contribution;
j. The right, if given, of a limited partner to substitute an assignee as contributor in his place, and the terms and conditions of the
substitution.
k. The right, if given, of the partners to admit additional limited partners.
l.
The right, if given, of one or more of the limited partners to priority over other limited partners, as to contributions or as to
compensation by way of income, and the nature of such priority.
m. The right, if given, of the remaining general partner or partners to continue the business on the death, retirement, civil interdiction,
insanity or insolvency of a general partner; and
n. The right, if given, of a limited partner to demand and receive property other than cash in return for his contribution.
Effect of False Statement
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One who suffers loss by reliance on such statement may hold liable any party to the certificate who knew the statement to be
false at the time he signed the certificate or subsequently, but within a sufficient time before the statement was relied upon
to enable him to cancel or amend the certificate, or to file a petition for its cancellation or amendment.
Certificate vs. Limited Partnership Agreement
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Limited Partnership Agreement is a document that sets forth the rights and duties of general and limited partners, the
terms and conditions regarding the operation, termination and dissolution of the partnership and the like. It is separate
from the certificate and is not required for the creation of a limited partnership.
Cancellation of Certificate
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When the partnership is dissolved or all limited partners cease to be such.
Amendment of Certificate
a. There is a change in the name of the partnership or in the amount or character of the contribution of any limited
partner.
b. A person is substituted as a limited partner. c. An additional
limited partner is admitted. d. A person is admitted as a
general partner.
e. A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil interdiction and the business is continued
under Art. 1860.
f. There is a change in the character of the business of the partnership. g. There is a false or
erroneous statement in the certificate.
h. 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.
i. A time is fixed for the dissolution of the partnership, or the return of a contribution no time having been specified in the
certificate.
j. The members desire to make a change in any other statement in the certificate in order that it shall accurately represent the
agreement among them.
Rules on the Limited Partnership Name
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The surname of the limited partner shall not appear in the partnership name unless o It is also the surname of
the general partner;
o Prior to the time when the limited partner became such, the business has been carried on under the name in which his surname
appeared
If the surname of the limited partner appears, he will be liable as general partner to the creditor who extended debts to the partnership not
knowing that he is not a general partner.
Liability for Unpaid Contribution
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The limited partner is liable to the difference between the actual contribution and that stated in the certificate; and the unpaid
contribution which he agreed in the certificate to make in the future at the time and on the conditions stated in the certificate.
When Return can be Demanded. A limited partner may rightfully demand the return of his contribution:
On the dissolution of a partnership; or
When the date specified in the certificate for its return has arrived; or
- After he has six months’ notice in writing to all other members, if no time is specified in the certificate, either for the return of
the contribution or for the dissolution of the partnership.
Conditions for Return of Contribution. A limited partner shall not receive from a general partner or out of partnership property any part
of his contribution until:
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All liabilities of the partnership, except liabilities to general partners and to limited partners on account of their contributions,
have been paid or there remains property of the partnership sufficient to pay.
The consent of all members is had, unless the return of the contribution may be rightfully demanded under the provisions
of the second paragraph; and
The certificate is cancelled or so amended as to set forth the withdrawal or reduction.
When Consent or Ratification of Limited Partner
1. Do any act in contravention of the certificate;
2. Do any act which would make it impossible to carry on the ordinary business of the partnership; 3. Possess partnership property,
or assign their rights in specific partnership property, for other
than a partnership purpose;
4. Admit a person as a general partner;
5. Admit a person as a limited partner, unless the right so to do is given certificate.
6. Continue the business with partnership property on the death, retirement, insanity, civil interdiction or insolvency of a
general partner, unless the right to do is given in the certificate.
Loan to Partnership. A limited partner may loan money to and transact other business with the partnership, and, unless he is
also a general partner, receive on account of resulting claims against the partnership, with general creditors, a pro rata share of the
assets. No limited partner shall in respect to any claim on loan he or she extended:
1. Receive or hold as collateral security and partnership property; or
2. Receive from a general partner or the partnership any payment, conveyance, or release from liability if at the time the assets
of the partnerships are not sufficient to discharge partnership liabilities to persons not claiming as general or limited partners.
The receipt of those constitute fraud on the creditors of the partnership.
Assignment of Interest. The interest of the limited partner is assignable. The assignee may or may not become a substituted limited
partner.
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Substituted limited partner (SLP) – one who admitted to all the rights of a limited partner who has died or has assigned his
interest in a partnership. He can become an SLP provided: (1) all members consent thereto; or (2) if the assignor is
empowered in the certificate to assign his rights.
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SLP has all the rights and powers, and is subject to all the restrictions and liabilities of his assignor, except those
liabilities of which he was ignorant at the time he became a limited partner and which could not be ascertained from the
certificate.
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Substitution does not release the assignor (limited partner) from liability to partnership for any false statement in the certificate
and if he takes part in the control of the business.
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NOT SLP – he only acquires the right of the limited partner to receive share and return of the contribution which the assignor
is entitled to.
DISSOLUTION.
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The partnership is dissolved when:
o Retirement, death, insolvency, insanity, or civil interdiction of a GENERAL PARTNER except when
continued by the remaining general partners under a right to do so in the certificate and with the consent of all
members.
A partnership may be dissolved at the instance of LIMITED PARTNER when:
o He rightfully but unsuccessfully demands the return of his contribution; or
o The other liabilities of the partnership have not been paid, or the partnership property is insufficient for the payment
of his demanded contribution.
Preference of Credits. The liabilities of the partnership shall be paid in the following order:
1. Those to creditors other than partners on account of their contributions and general partners; 2. Those to limited partners in
respect to their share of the profits and other compensation by way
of income on their contributions;
3. Those to limited partners in respect to the capital of their contributions; 4. Those to general
partners other than for capital and profits;
5. Those to general partners in respect to profits; 6. Those to
general partners in respect to capital.
10. Subsidiary liability
IV. Activity 1
20. General partner
1. X and Y are partners in a certain business, X being the managing partner. Z owes X P 5,000 and the partnership P 10,000,
and both credits are demandable. Z pays X P 3,000 and the latter issues a receipt in his name. Should X collect the entire
amount? Would the results be the same if the receipt is in the name of the partnership? Explain.
2. Joe and Rudy formed a partnership to operate a car repair shop in Quezon City. Joe provided the capital while Rudy contributed
his labor and industry. On one side of their shop, Joe opened and operated a coffee shop, while on the other side, Rudy put up
a car accessories store. May they engage in such separate businesses? Why?
3. Kristina brought her diamond ring to a jewelry shop for cleaning. The jewelry shop undertook to return the ring by February 1,
2013. When the said date arrived, the jewelry shop informed Kristina that the job was not yet finished. They asked her to return
five days after. ON February 6, 2013, Kristina went to the shop to claim the ring, but she was informed that the same was
4.
5.
6.
7.
stolen by a thief who entered the shop the night before. Kristina filed an action for damages against the jewelry shop which
put up the defense of force majeure. Will the action prosper or not? Why?
Pauline, Patricia, and Priscilla formed a busines partnership for the purpose of engaging in neon advertising for a term of five
years. Pauline subsequently assigned to Philip her interest in the partnership. When Patricia and Priscilla learned of the
assignment, they decided to dissolve the partnership before the expiration of its term as they had an unproductive business
relationship with Philip in the past. On the other hand, unaware of the move of Patricia and Priscilla but sensing their
negative reaction to his acquisition of Pauline’s interest, Philip simultaneously petitioned for the dissolution of the partnership.
a. Is the dissolution done by Patricia and Priscilla without the consent of Pauline or Philip valid? Explain.
b. Does Philip have any right to petition for the dissolution of the partnership before the expiration of its specified term?
Explain.
A, B, and C formed a partnership under the following terms: (1) participation: A – 40%; B – 40%; C – 20%. (2) A and B would
supply the entire capital. C would contribute his management expertise and be manager for the first five years without
compensation. (3) C shall be liable for losses. The partnership became bankrupt.
a. Could A alone, opposed by B and C have C removed as manager. Explain.
b. Could C be personally held liable for debts of the partnership not satisfied with the assets of the partnerships?
Amplify.
A, B, and C formed a general partnership with the following contributions to the common fund: A, P 2,000; B, P 4,000; C, P
6,000. There was no agreement on the division of profits or apportionment of losses. After some years of business
operations, the assets of the partnerships dwindled to P 3,000, so the partners agreed to stop their business. The partnership
is indebted to Corpuz for a loan of P 12,000. Under the circumstances, from whom Corpuz demand satisfaction of his
credits and to what extent?
Tomas, Rene and Jose entered in a partnership under the firm name “Manila Lumber”. Subsequently, upon mutual
agreement, Tomas withdrew from the partnership and the partnership was dissolved. However, the remaining partners,
Rene and Jose, did not terminate
the business of “Manila Lumber.” Instead of winding up the business of the partnership and liquidating the assets, Rene
and Jose continued the business in the name of “Manila Lumber” apparently without objection from Tomas. The withdrawal
of Tomas from the partnership was not published in the newspaper.
Could Tomas be held liable for any obligation or indebtedness Rene and Jose might incur while doing business
in the name of “Manila Lumber” after his withdrawal from the partnership? Explain.
8. A, B, and C formed a partnership for the purpose of contracting with the Government on the construction of one of its bridges.
On June 30, 2013, after completion of the project, the bridge was turned over by the partners to the Government. On August
30, 2013, D, a supplier of materials used in the project sued A for collection of the indebtedness to him, A moved to
dismiss the complaint against him on the ground that it was the ABC partnership that is liable for the debt. D replied that ABC
partnership was dissolved upon completion of the project for which purpose the partnership was formed. Will you dismiss
the complaint against B if you were the judge?
9. Tomas, Rene and Jose entered into a partnership under the firm name “Manila Lumber”. Subsequently, upon mutual
agreement, Tomas withdrew from the partnership and the partnership was dissolved. However, the remaining partners,
Rene and Jose, did not terminate the busines of “Manila Lumber” apparently without objection from Tomas. The withdrawal of
Tomas from the partnership was not published in the newspapers. Could Tomas be held liable for any obligation or
indebtedness Rene and Jose might incur while doing business in the name of “Manila Lumber” after his withdrawal from one
partnership? Explain