PARTNERSHIP BAR QUESTIONS In 2006, the partnership earned a net profit of 

P800,000.
In the same year, P engaged in a different business with
2014 the consent of all the partners. However, in 2007, the
partnership incurred a net loss of P500,000. In 2008,the
Timothy executed a Memorandum of Agreement (MOA) partners dissolved the partnership. The proceeds of the
with Kristopher setting up a business venture covering sale of partnership assets were insufficient to settle its
three (3) fastfood stores known as "Hungry Toppings" obligation. After liquidation, the partnership had an
that will be established at Mall Uno, Mall Dos, and Mall unpaid liability ofP300,000.
Tres.
V. (l) Assuming that the just and equitable share of the
The pertinent provisions of the MOA provides: industrial partner, P, in the profit in 2006 amounted
to P1 00,000, how much is the share of 0, a limited
1. Timothy shall be considered a partner with thirty partner, in the P800,000 net profit? (1%)
percent (30%) share in all of the stores to be set up by
Kristopher; (A) P160,000.
(B) P175,000.
2. The proceeds of the business, after deducting (C) P280,000.
expenses, shall be used to pay the principal amount of (D) P200,000.
P500,000.00 and the interest therein which is to be (E) None of the above.
computed based on the bank rate, representing the
bank loan secured by Timothy; V. (2) In 2007, how much is the share of 0, a limited
partner, in the net loss of P500,000? (1%)
3. The net profits, if any, after deducting the expenses
and payments of the principal and interest shall be (A) P 0.
divided as follows: seventy percent (70%) for (B) P1 00,000.
Kristopher and thirty percent (30%) for Timothy; (C) P125,000.
(D) P200,000.
4. Kristopher shall have a free hand in running the (E) None of the above.
business without any interference from Timothy, his
agents, representatives, or assigns , and should such V. (3) Can the partnership creditors hold L, 0 and Pliable
interference happen, Kristopher has the right to buy after all the assets of the partnership are exhausted?
back the share of Timothy less the amounts already (1%)
paid on the principal and to dissolve the MOA; and
(A) Yes. The stipulation exempting P from losses is valid
5. Kristopher shall submit his monthly sales report in only among the partners. L is liable because the
connection with the business to Timothy. agreement limiting his liability to his capital contribution
is not valid insofar as the creditors are concerned. Having
What is the contractual relationship between Timothy taken part in the management of the partnership, 0 is
and Kristopher? (4%) liable as capitalist partner.

(B) No. P is not liable because there is a valid stipulation

2013
exempting him from losses. Since the other partners
allowed him to engage in an outside business activity,
V. In 2005, L, M, N, 0 and P formed a partnership. L, M the stipulation absolving P from liability is valid. For 0, it
and N were capitalist partners who contributed P500,000 is basic that a limited partner is liable only up to the
each, while 0, a limited partner, contributed P1 ,000,000. extent of his capital contribution.
P joined as an industrial partner, contributing only his
services. The Articles of Partnership, registered with the
(C) Yes. The stipulations exempting P and L from losses
Securities and Exchange Commission, designated L and 0
are not binding upon the creditors. 0 is likewise liable
as managing partners; L was liable only to the extent of
because the partnership was not formed in accordance
his capital contribution; and P was not liable for losses.
with the requirements of a limited partnership.
(D) No. The Civil Code allows the partners to stipulate No, a conveyance of partner of his whole interest
that a partner shall not be liable for losses. The in a partnership does not itself dissolve the partnership
registration of the Articles of Partnership embodying in the absence of an agreement (Article 1813).
such stipulations serves as constructive notice to the
partnership creditors. b. What are the rights of Justine, if any, should she
desire to participate in the management of partnership
and in the distribution of a net profit of P360,000 which
(E) None of the above is completely accurate.
was realized after her purchase of Una’s interest?
2010 Justine cannot interfere or participate in the
management or administration of the partnership
5. A, B, and C entered into a partnership to operate a business or affairs. She may, however, receive the net
restaurant business. When the restaurant had gone past profits to which Una would have otherwise been entitles.
break-even stage and started to garner considerable In this case, 120,000 (Article 1813).
profits, C died. A and B continued the business without
1997 BAR EXAM
dissolving the partnership. They in fact opened a branch
of the restaurant, incurring obligations in the process. Will the death of a partner terminate the partnership?
Creditors started demanding for the payment of their
obligations. Yes. The death of a partner will terminate the
partnership, by express provision of Par. 5, Article 1830.
a. Who are liable for the settlement of the
1995 BAR EXAM
partnership’s obligations? Explain? (3%)
b. What are the creditors’ recourse/s? Explain. (3%) Pauline, Patricia and Priscilla formed a business
partnership for the purpose of engaging in neon
2001 BAR EXAM advertising for a term of 5 years. Pauline subsequently
assigned to Phillip her interest in the partnership. When
1. Joe and Rudy formed a partnership to operate a car Patricia and Priscilla learned of the assignment, they
repair shop in Quezon City. Joe provided the capital decided to dissolve the partnership before the expiration
while Rudy contributed his labor and industry. On one of its term as they had an unproductive business
side of their shop, Joe opened and operated a coffee relationship with Phillip in the past. On the other hand,
shop, while on the other side, Rudy put up a car unaware of the move of Patricia and Priscilla but sensing
accessories store. May they engage in such separate their negative reaction to his acquisition of Pauline’s
businesses? Why? interest, Phillip simultaneously petitioned for the
Joe, the capitalist partner, may engage in the restaurant dissolution of partnership.
business because it is not the same kind of business the a. Is the dissolution done by Patricia and Priscilla
partnership is engaged in. on the other hand, Rudy may without the consent of Pauline or Phillip valid? Explain.
not engage in any other business unless their partnership
expressly permits him to do so because as an industrial Under Article 1830 (1) (c), the dissolution by
partner he has to devote his full time to the business of Patricia and Priscilla is valid and did not violate the
the partnership (Article 1789). contract of partnership even though Pauline and Philip
did not consent thereto. The consent of Pauline is not
1998 BAR EXAMINATION necessary because she already assigned her interest to
Philip. The consent of Philip is not also necessary
1. Dielle, Karlo and Una are general partners in a
because the assignment to him of Pauline’s interest did
merchandising firm. Having contributed equal amounts
not make him a partner, under Art. 1813.
to the capital, they also agree on equal distribution of
whatever net profit is realized per fiscal period. After b. Does Philip have any right to petition for the
two years of operation, however, Una conveys her dissolution of the partnership before the expiration of
whole interest in the partnership to Justine, without is specified term?
the knowledge and consent of Dielle and Karlo.
No, Philip has no right to petition for dissolution
a. Is the partnership dissolved? because he does not have the standing of a partner
(Article 1813).
1994 BAR EXAMINATION 1987 BAR EXAM

1. Can a husband and wife form a limited partnership to Tomas, Rene and Jose entered into a partnership under
engage in real estate business, with the wife being a the firm name “Manila Lumber”. Subsequently, upon
limited partner? mutual agreement, Tomas withdrew from the
partnership and the partnership was dissolved.
Yes. The Civil Code prohibits a husband and wife from However, the remaining partners, Rene and Jose, did
constituting a universal partnership. Since a limited not terminate the business of Manila umber. Instead of
partnership is not a universal partnership, a husband and winding up the business of the partnership and
wife may validly form one. liquidating its assets, Rene and Jose continued the
2. Can two corporations organize a general partnership business in the name of Manila Lumber apparently
under the Civil Code of the Philippines? without objection from Tomas. The withdrawal of
Tomas from the partnership was not published in the
No. A corporation is managed by its board of directors. If newspapers. Could Tomas be held liable for any
the corporation were to become a partner, co-partners obligations or indebtedness Rena and Jose might incur
would have the power to make the corporation party to while doing business in the name of Manila Lumber
transactions in an irregular manner since the partners after his withdrawal from the partnership?
are not agents subject to the control of the Board of
Directors. But a corporation may enter into a joint Yes, Tomas can be held liable under the doctrine of
venture with another corporation as long as the nature estoppel. But as regards the parties among themselves,
of the venture us un line with the business authorized by only Rene and Jose are liable. Tomas cannot be held
its charter. liable since there was no proper notification or
publication.
3. Can a corporation and an individual form a general
partnership? In the event that Tomas is made to pay the liability to 3 rd
persons, he has the right to seek reimbursement from
Same answer with no. 2 Rene and Jose (Articles 1837 to 1840).
1992 BAR EXAM 1981 BAR EXAM
W, X, Y and Z organized a general partnership with W A, B and C formed a partnership under the following
and X as industrial partner and Y and Z as capitalist terms and Conditions:
partners. Y contributed P50,000 and Z contributed 20,
000 to the common fund by unanimous vote of the a. Participation: A- 40% B- 40% C-20%
partners, W and X were appointed managing partners, b. A and B would supply the entire capital. C
without any specification of their respective powers would contribute his management expertise
and duties. and be manager for the first five years without
A applied for the position of Secretary and B applied for compensation.
the position of Accountant of the partnership. The c. C shall not be liable for losses.
hiring of A was decided upon by W and X, but it was
opposed by Y and Z. the hiring of B was decided upon The partnership became bankrupt.
by W and Z, but was opposed by X and Y. who of the
1. Could A alone, opposed by B and C, have C removed
applicants should be hired by the partnership? Explain
and give your answers. as manager? Explain.
A alone, opposed by B and C cannot have C
A should be hired as Secretary. The decision for
the hiring of A prevails because it is an act of removed as manager of the partnership. According to
the Civil Code, the vote of the partners representing the
administration which can be performed by the duly
appointed managing partners, W and X. controlling interest shall be necessary for such
revocation of power. Under the partnership agreement,
B cannot be hired, because in case of a tie in the it is crystal clear that the vote of A does not represent
decision of the managing partners, the deadlock must be the controlling interest.
decided by the partners owning the controlling interest.
In this case, the opposition of X and Y prevails because Y
owns the controlling interest (Article 1801).
2. Could C be personally held liable for debts of the
partnership not satisfied with the assets of the
partnership? Amplify.
Yes, C can be held personally, although jointly,
liable for debts of the partnership not satisfied with the
assets of the partnership.
Under our partnership law, as among
themselves, the industrial partner is always excluded
from any participation in the losses in the absence of an
agreement to the contrary. Hence, the agreement that C,
the industrial partner, shall not be liable for losses is
valid. It merely affirms the law. The rule that a stipulation
which excludes one or more partners in the profits or
losses is void, is applicable only to capitalist partners, not
industrial partners. However, as far as 3rd persons are
concerned, the rule is different. Of course, this is without
prejudice to his right to hold his co-partners
proportionately liable for what he paid to partnership
creditors.
Thus, in the instant case, the liability of A, B and
C is joint and subsidiary. The facts merely state that that
their participation is: A-40% B-40% C-20%. Therefore,
since by agreement, C is excluded from any participation
in the losses, the agreement that C’s participation in the
losses, the agreement that C’s participation is 20%
applies only to his participation in the profits. In the case
of A and B, the agreement applies to both profits and
losses. Despite the exclusion of C in the losses, such
agreement is not applicable insofar as partnership
creditors are concerned. Consequently, the liability of
the 3 partners for partnership debts shall also be: 40%
for A, 40% for B and 20% for C. hence, C can now be
compelled to pay 20% of the partnership debts. After
payment, he can then proceed against his co-partners A
and B for reimbursement of the amount paid by him
(articles 1816 in relation to 1791 and 1799).