SURVEY ON FREQUENTLY ASKED QUESTIONS IN PARTNERSHIP

Year Article Description Bar Question Percentage

No Credit
2010 1816, 1829 and All partners shall XV (b) 3%
1835 be liable pro rata,
On dissolution the
partnership is not
terminated.
2010 1841 When a partner XV (a) 3%
dies and the
business is
continued
surviving partners
are liable
2011 1816 All partners shall No. 16
be liable pro rata
2012 1856 and 1857 A limited partner X(b) 5%
may ask for the
return of his
contribution

2010 Bar Examinations

XV
A, B, and C entered into a partnership to operate a restaurant business. When the restaurant
had gone past break-even stage and started to garner considerable profits, C died. A and B
continued the business without dissolving the partnership. They in fact opened a branch of the
restaurant, incurring obligations in the process. Creditors started demanding for the payment of
their obligations.

a. Who are liable for the settlement of the partnership’s obligations? Explain? (3%)
b. What are the creditors’ recourse/s? Explain. (3%)
SUGGESTED ANSWER:
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 death of C ( Article 1841, 1785,
par. 2 and 1833 of the New Civil Code )
b. Creditors can file the appropriate actions, for instance, an action for the 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 ( Article 1816, New Civil Code ). 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 (
Article 1829, 1835, par. 2; New Civil Code, Testate Estate of Mota vs Serra, 47 Phil 464
{1925}). However, the liability of C’s individual property shall be subject first to the payment
of his separate debts. ( Article 1835, New Civil Code )

2011 Bar Examinations

(16)
The liability of the partners, including industrial partners for partnership contracts entered into in
its name and for its account, when all partnership assets have been exhausted is

(A) Pro-rata.
(B) Joint.
(C) Solidary.
(D) Voluntary.

ANSWER: PRO RATA

Art. 1816. All partners, including industrial ones, shall be liable pro rata with all their
property and after all the partnership assets have been exhausted, for the contracts which may
be entered into in the name and for the account of the partnership, under its signature and by a
person authorized to act for the partnership. However, any partner may enter into a separate
obligation to perform a partnership contract.

2012 Bar Examinations

b) A partner cannot demand the return of his share (contribution) during the existence of a
partnership. Do you agree? Explain your answer. (5%)

SUGGESTED ANSWER:

YES. I agree, he is not entitled to the return of his contribution to the capital of the
partnership, 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 for the return of his
contributions as provided under Article 1856 and 1857.