FINAL EXAMINATION in Partnership

Vallejos, Emmanuel P.
JD-C
FINAL EXAMINATION
Partnership, Agency and Trust
1. Yes, Partnership is a consensual contract, hence, it is valid even though not in

writing. However, if it involves a contribution of an immovable property or a real
right, an oral contract of partnership is void. In such case, the contract to be valid,
must be in public instrument and the inventory of said property signed by the
parties must be attached to said public instrument.
2. Yes, under Philippine law, a joint venture is understood to mean an organization
formed for some temporary purpose and is hardly distinguishable form a
partnership since its elements are similar which are: community of interest in
business, sharing of profits, and losses, and a mutual right of control
3. A.) P280,000. Since after deducting the P100k share of P there remains P700k, the
three partners L, M, N will each have 1 share and O will have two shares (2:1) three
shares plus two shares, the balance of P700k will be divided by 5 which will yield
the result of P140k multiplied by 2 (for O)
B.) P200,000 Article 1797 share in profits and losses is proportionate to contribution
C.) (A) Yes. The stipulation exempting P from losses is valid only among the
partners. L is liable because the agreement limiting his liability to his capital
contribution is not valid insofar as the creditors are concerned. Having taken part in
the management of the partnership, 0 is liable as capitalist partner.
Article 1799 a stipulation which excludes one or more partners from any share in
profits and losses is void. P, industrial partner may be exempt but that is only
with respect to the partners but not the creditors. O, by taking part in the
management even if he is a limited partner becomes liable as a general partner
(Article 1848)
4. Yes, he is not entitled to the return of his contribution to the capital of the
partnership business, but only to the net profits from the partnership business
during the life of the partnership period. If he is a limited partner, however, he may
ask the return of his contributions as provided in Art. 1856 and 1857, Civil Code.
5. A. The two remaining partners, A and B are liable. When any partner dies and the
business is continued without any settlement of accounts as between him or his
estate, the surviving partners are held liable for continuing the business despite the
death of C.
B. Creditors can file the appropriate actions, for instance, an action for collection of
sum of money against the partnership at will and if there are no sufficient funds,
the creditors may go after the private properties of A and B. Creditors may also sue
the estate of C. The estate is not excused from the liabilities of the partnership
even if C is dead already but only up to the time that he remained a partner.
However, the liability of Cs individual properties shall be subject first to the
payment of his separate debts.
6. Joe, is a capitalist partner, may engage in the restaurant business because it is not
the same kind of business the partnership is engaged in. On the other hand, Rudy,
Vallejos, Emmanuel P. JD-C
may not engage in any other business unless the partnership expressly permits him
to do so because as an industrial partner he has to devote his full time to the
business of the partnership.
7. A. No, a conveyance by a partner of his whole interest in a partnership does not of
itself dissolve the partnership in the absence of an agreement. (Art. 1813, Civil
Code).
B. Justine cannot interfere or participate in the management or administration of the

partnership business or affairs. She may, however, receive the net profits to which
Una would have otherwise been entitled. In this case, P120,000. (Art. 1813, Civil
Code)
8. Yes. The death of a partner will terminate the partnership, by express provision of
par. 5, Art. 1830 of the Civil Code.
9. A. Under Art. 1830 (1) (c) of the NCC, the dissolution by Patricia and Priscilla is valid
and did not violate the contract of partnership even though Pauline and Philip did
not consent thereto. The consent of Pauline is not necessary because she had
already assigned her interest to Philip. The consent of Philip is not also necessary
because the assignment to him of Paulines interest did not make him a partner,
under Art. 1813 of the NCC.
B. No, Philip has no right to petition for dissolution because he does not have the
standing of a partner (Art. 1813 NCC).
10.Yes. While spouses cannot enter into a universal partnership, they can enter into a
limited partnership or be members thereof.
11.As a general rule, a corporation may not form a general partnership with another
corporation or an individual because a corporation may not bound by persons who
are neither directors nor officers of the corporation. However, a corporation may
form a general partnership with another corporation or an individual provided the
following conditions are met:
The Articles of Incorporation of the corporations expressly allows the
corporation to enter into partnerships;
The Articles of Partnership must provide that all partners will manage the
partnership, and they shall be jointly and severally liable; and
In case of a foreign corporation, it must be licensed to do business in the
Philippines.
12.No. A corporation may not be a general partner because the principle of mutual
agency in general partnership will violate the corporation law principle that only the
board of directors may bind the corporation
13.As Judge, I would not dismiss the complaint against A because A is still liable as a
general partner for his pro rata share of 1/3 (Art. 1816, CC). Dissolution of a
partnership caused by the termination of the particular undertaking specified in the
agreement does not extinguish obligations, which must be liquidated during the
winding up of the partnership affairs (Art. 1829 and 1830 par. 1a, Civil Code).
14.The agency couched in general terms comprised only acts of administration (Art.
1877, Civil Code). The lease contract on the Manila parcel is not valid, not
enforceable and not binding upon A. For B to lease the property to C, for more than
one (1) year, A must provide B with a special power of attorney (Art. 1878. Civil
Code). The lease of the Caloocan City property to D is valid and binding upon A.
Since the lease is without a fixed term, it is understood to be from month to month,
since the rental is payable monthly (Art. 1687, Civil Code). The sale of the Quezon
City parcel to E is not valid and not binding upon A. B needed a special power of
attorney to validly sell the land (Arts. 1877 and 1878, Civil Code). The sale of the
land at a very good price does not cure the defect of the contract arising from lack
of authority.
15.A should be hired as Secretary. The decision for the hiring of A prevails because it is
an act of administration which can be performed by the duly appointed managing
partners, w and X.
B cannot be hired, because in case of a tie in the decision of the managing partners,
the deadlock must be decided by the partners owning the controlling interest. In
this case, the opposition of X and Y prevails because Y owns the controlling interest
(Art. 1801, Civil Code).
16.Co-ownership is distinguished from an ordinary partnership in the following ways:
As to creation: Whereas co-ownership may be created by law, contract, succession,

fortuitous event, or occupancy, partnership is always created by contract.
As to purpose: Whereas the purpose of co-ownership is the common enjoyment of

the thing or right owned in common, the purpose of a partnership is to obtain
profits.
As to personality: Whereas a co-ownership has no juridical personality which is
separate and distinct from that of the owners, a partnership has.
As to duration: Whereas an agreement not to divide the community property for
more than ten years is not allowed by law such an agreement would be perfectly
valid in the case of partnerships. This is so, because under the law, there is no
limitation upon the duration of partnerships.
As to power of members: Whereas a co-owner has no power to represent the co-
ownership unless there is an agreement to that effect, a partner has the power to
represent the partnership, unless there is a stipulation to the contrary.
As to effect of disposition of shares: If a co-owner transfers his share to a third
person, the latter becomes automatically a co-owner, but if a partner transfers his
share to a third person, the latter does not become a partner, unless agreed upon
by all of the partners.
As to division of profits: Whereas in co-ownership the division of the benefits and
charges is fixed by law, in a partnership the division of profits arid losses may be
subject to the agreement of the partners.
As to effect of death: Whereas the death of a co-owner has no effect upon the
existence of the co-ownership, the death of a partner shall result in. the dissolution
of the partnership.
17.Yes. Tomas can be held liable under the doctrine of estoppel. But as regards the
parties among themselves, only Rene and Jose are liable. Tomas cannot be held
liable since there was no proper notification or publication.
In the event that Tomas is made to pay the liability to third person, he has the right
to seek reimbursement from Rene and Jose (Articles 1837 to 1840; Goquiolay vs.
Sycip, 9 SCRA 663).
18.a.) No. C's power is irrevocable without just or lawful cause, hence, to remove him
without just cause or unjust cause there must be unanimity (including his own vote)
This represents a change in the will of the parties: a change in the terms of the
contract; a novation, so to speak, requiring unanimity. (Article 1800, Civil Code)
b.) Yes. While an industrial partner is exempted by law from losses (as between the
partners), he is not exempted from liability (insofar as third persons are concerned).
This means that the third person can sue the firm and the partners, including the
industrial partner. Of course, the partners will be personally liable (jointly or pro
rata) only after the assets of the partnership have been exhausted. Even the
industrial partner would have to pay, but of course he can recover later on what he
has paid, from the capitalist partners, unless there is contrary agreement. (Delos
Reyes v. Lukban & Borja, 35 Phil. 757; Compania Maritima v. Muoz, et al., 9 Phil.
326).
19.Distinguish General Partner from a Limited Partner
General Partner Limited Partner

Personally liable for partnership obligations Liability extends only to his
capital contributions
When manner of management is not agreed upon, No participation in the
all general partners have an equal right in the management
management of business
Contribute cash, property or industry Contribute cash, property or
industry
Proper party to proceedings by/against partnership Not proper party to proceedings
by/against partnership
Interest not assignable without consent of other Interest is freely assignable
partners
Name may appear in firm name Name must appear in firm name
Prohibition against engaging in business No prohibition against engaging
business
Retirement, Death, Insolvency, insanity of general Does not have the same effect;
partner dissolves partnership rights transferred to legal
representative
20.The contractual relationship between Timothy and Kristopher is a contract of
partnership as defined under Article 1767 of the Civil Code, since they have bound
themselves to contribute money, property or industry to a common fund, with the
intention of dividing the profits of the partnership between them. With a seed
money of P500, 000.00 obtained by Timothy through a bank loan, they agreed to
divide the profits, 70% for Kristopher and 30% for Timothy.
However, to be more specific, theirs is a limited partnership as defined under Article

1843 of the Civil Code because Timothy does not take part in the control of the
business pursuant to Article 1848, Civil Code. Nevertheless, Timothy is entitled to
monthly sales reports in connection with the business, a right enshrined in Article
1851 of the Civil Code.

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Vallejos, Emmanuel P.

Partnership, Agency and Trust

1. Yes, Partnership is a consensual contract, hence, it is valid even though not in

B. Justine cannot interfere or participate in the management or administration of the

16.Co-ownership is distinguished from an ordinary partnership in the following ways:

As to creation: Whereas co-ownership may be created by law, contract, succession,

As to purpose: Whereas the purpose of co-ownership is the common enjoyment of

19.Distinguish General Partner from a Limited Partner

General Partner Limited Partner

However, to be more specific, theirs is a limited partnership as defined under Article

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