ONS1 ANDANSWERS2

QUESTI

I
N

PARTNERSHI
P

(
ForBusi
nessLaw St
udent
s)

BY:

ATTY.CHRI STOPHERR.HERNANDEZ
I
nstructorofBusinessLaw
Pol
ytechnicUniversi
tyofthePhil
ippi
nes/
Pamant asanngCabuyao

Copyri
ght2013
Atty.Chri
stopherR.Hernandez

(
Stri
ctl
yfortheeyesoftheSt
udentsofAtty
.ChristopherR.Hernandezonl
yORuponhis
appr
oval. Thus,bear
eri
sherebyenjoi
nedfrom distr
ibut
ingthi
snoteswit
houtt
he
consentofAt
ty.Hernandez)

1
Quest
ionscamef
rom t
heBookofAt
ty.Fi
del
i
toSor
ianoonPar
tner
shi
p.
2
I
niti
alAnswerswer
e preparedbythefol
lowingstudent
softheundersi
gnednamely:
Antoni
noBayson,Gr
aceLeonorFalogme,NorminaGenesis,
Claudet
hMar t
il
lanoand
DanicaRust
il
a. Assuch,
specialt
hanksisherebybeingmadeupont hem.

1 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
1.Acontr
actwher ebyt woormor
epersonsbi
ndthemselvest
ocontri
but
emoney,
pr
oper
tyori ndustrytoacommonfundwiththei
ntent
ionofdi
vi
dingthepr
ofi
ts
amongthemsel vesisa:
a.Par tner
ship
b.Cor porati
on
c.SolePr opriet
orshi
p
d.JointSt ockCompany

Theabov eist
hedef i
niti
onofPar t
nershipinaccordancewithArt
icle1767ofthe
New Ci v
ilCode.Inaddition,otheratt
ri
but esofPartnershipi
si ti
saconsensual
contr
actsoi ti
sperfect
edbyt hemer eagr eementofparties. I
tisalsoonerousas
theybindthemselvestocont r
ibutemoney ,proper
tyorindustr
ytoacommonf und
withthepurposeofdivi
dingprofit
samongt hemsel
ves.

2.Apar
tner
shipis:
a.acontract
b.abusinessorgani
zat
ion
c.both(a)and(b)
d.neit
her(a)nor(b)

UndertheCivi
lCode,apar t
nershi
pisbothacontractandabusi nessorgani
zat
ion.
Asacont ract,part
ner
shipexi st
swhent woormor eper sonsagr eetoplacethei
r
money ,
propertyandskil
li
nl awfulcommerce,withunderstandi
ngthatthereshal
lbe
a proport
ionate shar
ing ofpr ofit
s and losses among t hem.As a busi ness
organi
zati
on,ithasajuri
dicalpersonal
i
tyseparateanddi st
inctf
rom thatofeachof
thepart
ners.

3.Apar
tner
shipi saconsensual ,pri
nci
palandbi
l
ater
al/
mul
ti
lat
eralcont
ract
.Iti
s
al
sot
hefoll
owi ng,exceptthati
tisnot
:
a.aprepar at
orycont r
act
b.anomi natecont r
act
c.anoner ouscont r
act
d.analeatorycont r
act

Apar t
nershipisnominate(hasaspeci alnamegivent oitbylaw)
,prepar
atory
(ot
hercont r
actswil
lbeenteredint
oast hepartner
shi
ppur suesi
tsbusi
ness)andan
onerous (part
ners cont
ri
bute money ,pr
opertyorindustryto a common fund).
Therefor
e,itisnotanaleat
orycontractsi
nceitisnotdependentonchance,l
uck,or
anuncertainoutcome.

4.When,
asar ule,
doesapartnershi
pbegi ntoexist
?
a.On the date ofthe recor
ding oft he partnershi
p agr
eementwi t
ht he
Securit
iesandExchangeCommi ssi
on.
b.Upont heexecut
ionofthepar t
nershipagreementbyt hepart
ners.
c.On t he date when al lthe capital
ist part
ners have deli
ver
ed thei
r
contri
buti
onstothepartner
ship.
d.Ont hedat ewhent hepartnershi
pagr eementi sacknowledgedbef
orea
notarypubli
c.

2 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 Art
icl
e1784deal swiththecommencementofapar t
nershi
p.Asarule,apart
nershi
p
commencestoexi stfrom theti
meoft heexecuti
onoft hepart
nershi
pcont r
actor
agr
eementbyt hepartners.Thepartner
s,however
,mayst i
pul
ateforadi f
fer
entdate
whenthepar
tnershi
pbeginstoexistandanysuchsti
pul
ati
onisval
id.

5.Whi
chofthefol
lowingisnotanessent ialr
equi
sit
eofapar tner
shipcont
ract
?
a.Itmustbeest abl
ishedforthecommonbenef i
toft hemember swhichist
o
earnprof
itsanddi vi
dethepr of
it
samongt hemember s.
b.Thearti
clesarekeptsecr etamongt hemembers.
c.Theremustbeamut ualcontr
ibuti
onofmoney ,propert
yorindustr
ytoa
commonf und.
d.Itmusthav ealawfulobjectorpurpose.

Theessenti
alrequisit
esofpar t
ner
shipincl
udes:a)ther
emustbeav al
idcontr
act;
b)
ther
emustbeamut ualcontributi
onofmoney ,proper
tyori
ndustr
ytoacommonf und;c)
ther
emusthav eal awf ulobjectorpurpose; andd)mustest abl
ishedforthecommon
benefi
toft hepar t
nerswhi chi stoobt ai
npr ofi
tsandt odivi
det heprofi
tsamong
themselves.Ther
efore,keepi ng t
hearti
clessecr etamong themember sisnotan
essent
ialrequi
si
teofapar t
ner shi
pcontr
act.

6.Who/
whichofthef oll
owi
ngmaynotbeapar
tneri
napar
tner
shi
p?
a.NaturalPerson
b.Part
nership
c.Corporati
on
d.Noneoft hef or
egoi
ng

Acorporat
ionmaynotbeapar t
nerinapart
nershi
pbecausethelawprovi
desthata
cor
porat
ioncannotactwi thouttheauthori
tyoftheBoardofDir
ectors.Acontr
aryrul
e
wil
lmaket hecor por
ati
onliablefortheactoftheotherpar
tner
sev enift
herewasno
aut
hori
tyfrom theboardofdirect
ors.

7.Thedoct r
ineofdelect
usper
sonae/personar
um refer
stother i
ghtofaper
sonto
choose:
a.Theper sonswhom hewantstobeassociatedinpart
nershi
p.
b.Thebusi nessinwhi
chhewi shestoengagewi thanotherper
sonorot
her
per
sons.
c.Bot h(a)and(b)
d.Nei t
her(a)nor(
b)

Nopersoncanbef orcedtobecomeapar t
nerofanot herduet othefiduci
ary
rel
ati
onshi
p(rel
ati
onshi
pbasedont r
ustandconfi
dence)betweenpartner
s. Assuch,
personisf
reetochooseaspartnersthoseinwhom hehast rustandconfi
dence.This
ri
ghtofapersontochoosethepersonswhom hewant stobeassociat
edinpartner
ship
i
sr ef
err
edtoasthedoctr
ineofdel
ectuspersonae(orper
sonarum).

8.Thef
oll
owi
ngmaybecont
ri
but
edbyapar
tnert
oapar
tner
shi
p,except
:
a.Money

3 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 b.Tangibl
epropertysuchasapieceofland
c.I
ntell
ect
ualindustry
,suchasthatofachemi
st,
ormanuali
ndust
rysuchas
thatofamechani c.
d.Poli
ti
calconnecti
onorcredi
t.

Si
nce a partnershi
pi s onerous,t
he part
ners ar
er equi
red to make a mutual
contr
ibuti
oninmoney( cash),proper
ty(
real
,per
sonalori
ntangi
ble)ori
ndust
ry(phy
sical
ormanual )
.Thus,anypoli
ti
calconnecti
onorcredi
tmaynotbecont ri
butedbyapartner
toapartnershi
psinceiti
sneithermoney,pr
opert
yorservi
ce.

9.I
nwhi choft hefollowingcasesi sthereapr imaf acieev i
dencet
hatoneisa
par
tneri
nabusi ness?
a.Hi srecei
ptofashar einthegr ossretur
nsder ivedfrom apr
opert
ywhere
hehasaj ointorcommoni nterestwithanother.
b.Hi sr
eceiptofashar eoft hepr ofi
tsreal
izedfrom theuseofproper
tyt
hat
heco-ownswi t
hanother.
c.Hi sr
eceiptofashar eofthenetpr ofi
tsofabusi ness.
d.Hi sr
eceiptofshar eofthepr ofit
sreali
zedfrom t heuseofaproper
tyt
hat
heco-possesseswi t
hanot her
.

Arti
cle1769pr ovidesfortherulesindet er
mi ni
ngwhet herapartnershipexi
sts.I
n
accordancewi t
hAr t
icle1769(4),t
her eceiptofashareoft henetprofi
tsofabusiness
i
sapr i
maf acieevi
dencet hatheisapar tnerinthebusiness.Thi
sisbasedont herul
e
thatonewoul dnotbeshar i
ngintheprofit
sofabusi nessunlessheisapar tnert
herei
n.

Also,Ar
ti
cl
e1769( 2)providesthatco-owner
shi
porco- possessi
ondoesnotit
sel
f
est
abli
shapartner
shi
pev eniftheco-ownersorco-
possessorsshareanypr
ofi
tsmade
bytheuseoft
hesaidpropert
y.

10.
Av olunt
aryassoci ati
onorsoci et
ywhosear ticl
esarekeptsecr
etamongit
s
member sandwher eanyoneoft hemember smayt r
ansacti
nhisownname
possesseswhichoft hef ol
lowingcharacteri
sti
cs?
a.Itisgovernedbyt her ul
esonco- ownership.
b.Ithasaj uri
dicalpersonali
ty.
c.Themember saret r
eatedaspartners.
d.Itshal
lbegov er
nedbyt heprovi
sionsonpar t
ner
ship.

Arti
cle1775stat
esthatav ol
untaryassoci
ati
onorsoci
etywhosearticl
esarekept
secretamongitsmembersandwher eanyoneoft hemembersmaytransactinhi
sown
name,shal lhaveno j
uri
dicalpersonal
it
y,andshallbegover
nedbyt hepr ov
isi
ons
rel
atingtoco-
ownershi
p.

11.
A,B,C,D,E,F,G,H,IandJaremember sof“
AlphaAssociat
ion”whosear ti
cles
arekeptamongt hemselv
esandwhereinanyoneoft hemember smayt ransact
inhisownname.
a.Theassociati
onmaysueunderthename“AlphaAssociati
on”.
b.Theassociati
onmaybesuedunderthename“ AlphaAssociat
ion”
c.Both(a)and(b).

4 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 d.Nei
ther(
a)nor(
b).

Ar t
icl
e1775st at
esthatwhenarti
clesarekeptsecretamongthemembersand
wherei
nanyoneoft hemember smaytr
ansactinhi
sownname,shallhav
enojur
idi
cal
per
sonalit
y,andshal
lbegov
ernedbyt
hepr ov
isi
onsr
elat
ingtoco-
owner
shi
p.

Suchassociat
ionCANNOTSUEanot herper
sonorfil
eacaseagai
nstaper
sonunder
thenameoft hesaidassoci
ation. Howev er
,wit
hr espectt
oasuit/
casebyat hi
rd
personagai
nstsuchassociat
ion,thesamemaybef il
edagainstt
hesai
dassoci
ati
onin
i
tscommonname.

Therefor
e,althoughAlphaAssoci
ati
onmaynotfi
leasuit/
caseusingthename
“Al
phaAssoci at
ion”,anyt
hir
dpersonmayfi
l
eacaseagai
nstt
hecorpor
ationundert
he
name“ AlphaAssociati
on”
.

12.
Three years ago,Benj ami n and Bi envenido,br others,i nheri
ted a fi
ve-f
loor
commer ci
albuildi
ngandt hel otonwhi chitwasconst ructed,from Facundo,t
heir
fat
her,whodi edwithoutawi l
l.Fort hepastt hreey ears,thebrothershavedivi
ded
betweenthet wooft hem thepr ofitont her ent
aloft heproper t
y.AreBenjami n
andBienvenidopartners?
a.Yes, becauseoft heirreceiptoft heprof i
tfr
om t heuseoft hepropert
y.
b.No, theyaremer elyco- owner softhewhol epr operty.
c.No, eachonei sasol epr oprietorofone- halfoft hewhol epropert
y.
d.No, theyareconsi deredasst ockholdersoft hewhol epr opert
y.

BenjaminandBi envenidoar enotpar tnerseveni ftheyshareinthepr of

itont he
rent
aloft hepropertybutconsi deredasmer elyco-ownersofthewholeproperty.They
merelyinheri
tedthepr opertyfr
om t heirf
ather. ThereisNOAGREEMENTt ocontri
bute
money ,propert
yorser vi
cei nacommonf undi nordertodivideprof
it
s. Asar ule,
basedonAr ti
cle1769,co- ownershiporco- possessiondoesnotofi t
selfestabli
sha
part
nership,whetherornotsuchco- ownersorco-possessorssharei
nanypr of
itsmade
bytheuseoft hepr operty
.

Not e:Int heaboveexample,ifafterBenj aminandBienvenidoinheri

tedtheproperty
,
theysubsequent l
ymadeanagr eementt hatt heywil
lcontr
ibutethepropert
ywhicht hey
receivedf rom theestat
eoft heirfatherinacommonf undf orthepurposeofdi v
iding
profits,then,PARTNERSHI PWI LLEXI STi nt hesai
dsituat
ionsincealltheelementsof
partner shi
pexi st
. Inotherwor ds,partnershipcanstil
lexistevenbetweenco-owner s
aslongast heelementsofagreementt ocont ri
but
etoacommonf undanddi st
ri
bution
ofpr ofitsarepresent
.

13.
SanchezandSuar ezarebot hr ealest
atebrokers.Thet wohavenotent eredinto
anypartnershipagreement ,butt osaveoncosts,t heyshar eattheAv enueTwi n
Towersthesameof ficespaceont hefr
ontdoorofwhi chisthesignage“ Sanchez
andSuar ez
, RealEstateBrokers”.Theyalsouset hesamest ati
oneryshowi ngthe
nameappear ing on thesi gnageand onet el
ephonenumber ,and shar ethe
ser
vicesoft hesamesecr et ar
y.Sanchez,usingt hest ati
oner
y,orderedal aptop
computerwor thP100,000. 00f r
om CyberComput ersownedbyCamar i
no,who

5 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 hi
msel fdeli
veredt hecomput ert ot heof fi
ce.Camar i
noal soi ssuedar eceipt
acknowledgingthedownpay mentofP40,000. 00f r
om “ SanchezandSuar ez”
withoutanyobjecti
onf rom Suar ez.Sanchezl aterfail
edtopayt hebal anceofP60,
000.00.Camar i
nonow seekst orecov ertheamountofP60,000. 00f rom bot h
SanchezandSuar ezaspar tners.
a.Onl ySanchezcanbehel dl i
ablebyCamar inosincet hepur chaseoft he
l
aptopcomput eristheper sonaltransactionofSanchez.
b.Onl ySanchezcanbehel dl i
ablebyCamar i
nosi nceSanchezandSuar ez
didnotenterintoanypar t
nership.
c.Bot hSanchezandSuar ezcanbehel dliablebyCamar i
nosi ncethetwoar e
consi
deredaspar tnersinsof arasCamar i
noisconcer ned.
d.Onl y“SanchezandSuar ez,RealEst ateBr okers”,asaj uri
dicalenti
tyi s
l
iabl
et oCamar inosinceanact ualpartnershipexists.

Thepr obl
em stat
est hatSuarezdi dnotobjectont hetr
ansactionmadebetween
Camar i
noandSanchezev enifther ecei
ptwasi ssuedinthenameofSanchezand
Suarez. Assuch,ast oCamar i
no,theyareconsideredaspartner
sandt hatt
hethi
ng
waspur chasedf
orthebenef i
tofthepar t
nershi
p. Assuch,bothpartner
saretobehel
d
l
iableontheunpaidbalanceofP60, 000.00.

Note: Whati fSuarezobjectedorhedidnothav etheopportunitytoobject

?Itwill
thendependont hecircumstance. Ifthecomputersetwasi ncurredforthebenefi
tof
thepartnershi
p,then,thepar t
nershi
pandt hepar t
ner
sar el i
able. Howev er
,ifthe
comput ersetwassolelyf
orthebenef i
tofSanchez,t
hen,thepartnershi
p,norSuarez,i
s
NOTliable.

14.
Bel
indapur chasedCut -N-Curl
,abeaut ysalonownedbySophi a,forP100, 000.00.
Tof i
nancet heacqui siti
onoft hebusi ness,Bel indaobt ainedf rom Cr i
stinaal oan
ofP60,000. 00(at12% i nterestperannum)whi cht hepar t
iesagr eedwoul dbe
pai
dbyBel i
ndai nanamountequi valentto20%oft hemont hl ynetpr ofit
soft he
sal
onunt i
lt heloanandt hei nterestthereonar ef ull
ypai d.Bel i
ndat hengav ethe
P60,000.00t oSophi aasdownpay ment ,promi singt opayt hebal anceofP40,
000.00atanamountequi v
alentt o10%oft hemont hlynetpr of i
tsunt i
litisfully
pai
d.
a.Cr i
stinai sapar t
nerofBel indaunt ilBel i
ndahaspai di nf ullherl oan
obl
igat i
onofP60, 000.00andt heinterestt hereont oCr i
stina.
b.Sophi ai sapar tnerofBel i
ndaunt ilBelindahaspai di nf ullherbal anceof
P40,000. 00ont hepur chasepr i
ceoft hebeaut ysalon.
c.Bot hCr isti
naandSophi awhor eceiv
eashar eoft henetpr ofitsaret he
par
tner sofBel i
ndaunt i
lthelatterhasf ullypai dherobl igationst ot hem.
d.No par tnership exists between Bel inda,Cr isti
na and Sophi a whet her
bef
or eoraf terthepay mentofBel i
nda’sobl igationstoCr i
st i
naandSophi a.

Ther ei
snoagr eementf orthemut ualcontr
ibut
ionofmoney ,proper
tyori
ndust
ryto
acommonf undbet weent hethreeofthem thatiswhynopar t
nershipshal
lexi
stonthe
gi
vencase.Fur ther,thepay mentt oCr i
sti
naoutoft heprof
itsar i
sesNOToutofa
par
tnershi
pobligationbutoutofal oanobl i
gati
on.Beli
ndaisl i
abletopaythesame
whetherornotthebusi nessobtainsprofi
ts.
6 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 15.
BudsandBl ossomsi sapar t
nershi
pengagedi ntheflowershopbusinesswhi ch
isoperatedbyf r
iendsBeatrizandBethli
z.Thef lowershopislocat
edonal ot
whichBeatrizandBet hli
zleasedfrom Oprahat10%oft heyearl
ygrossr evenues
ofthebusi ness.Amal i
awashi redasaccount antatamont hlysal
ar yofP10,
000.00plus5% oft heyearlynetprof
itsasbonus.Whoar ethepartnersi nthe
business?
a.Beat ri
zandBet hli
zonly.
b.Beat ri
z,Bethli
zandOpr ah.
c.Beat ri
z,Bethli
zandAmal ia.
d.Beat ri
z,Bethli
z,OprahandAmal ia,
sinceallofthem r
ecei
veashar einthe
netprofi
ts.

OnlyBeatri
zandBet hli
zarethepartnersinthebusinesssincet heyaretheoneswho
organizedandcont ri
butedthef undstof orm BudsandBl ossoms.Opr ahisj ustthe
l
essoroft heleasedl otandAmal i
aisj ustanempl oyeebei nganaccount antoft he
partnershi
p.Althought heyhavepar ti
nt hepr of
itofthepar tnership,t
heyar enotst i
l
l
partnersbecauset hepr of
it
stheyhav ereceivedweremer el
yar entt oalandlordanda
waget oanempl oy ee.Thepartnershi
pisl i
abletopayt hem whet herornoti tobt
ains
profit
s.

16.
Oli
viaist heownerofacommer cialspace.Shel easedt hepr emisestoTer esa, a
dealerofmot orcycl
esandbi cyclesusi ngTr i
kesandBi kesast radename.Thei r
contractpr ovi
dest hatTer esashal lpayOl i
via10% oft henetpr ofi
tsasr ent.
Teresahasal oanobligationt o Carmel aamount ing t o P500,000. 00 whi ch
Teresausedi nexpandingt hebusi ness.Thel oanwasnotpai donduedat e,so
Carmel anowseekst orecov ertheamount .
a.Car melacangoaf tert heasset sofTr ikesandBi kes.Ifsuchasset sarenot
enough,Car mel
acangoaf terthesepar ateasset snotonl yofTeresa,but
alsot hoseofOl i
viawhoi sconsi deredasTer esa’spar t
nerbyr easonof
Olivi
a’sreceivi
ngashar eoft hepr ofi
ts.
b.Car mela can go af terTer esa alone si nce the l at
teri s a mer e sole
propr i
etor.
c.Car melacangoaf terTr i
kesandBi keswhi chi sconsi deredapar tnership
andt heonl yoneli
able.
d.Car melacangoaf terTer esaandOl i
viaaspar t
nerswhowi llbel iable
joint
ly,butnotagainstTr ikesandBi kes.

Ther ei
snopar t
nershi
pexi
sti
ngbetweenTer
esaandOli
viasincet
het wodidNOT
ent
erintoanagreementtomutual
lycont
ri
but
esum ofmoney ,
proper
tyorindustr
yto
acommon f und.Whatexistbetween t
hem isalessor-
lesseerelat
ionshi
p,not
par
tnershi
p.Therefor
eCarmelacanonlygoaft
erTeresasi
ncet helatt
erisamer e
sol
epropri
etorshi
p.

17.
Anunlawfulpartnershi
pwhichconst
it
utesacr i
meprocedureswhichofthe
fol
l
owingeff
ects?
a.Thepart
ner shi
pisvoi
d.
b.Theproceedsoft hecr
imeandi
nstrument
sort
oolsthroughwhichi
twas

7 Questi
onsandAnswer si
nPartnership
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edbyAt t
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istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 committ
edshallbeconf
iscat
edi
nfavouroft
hegov
ernment
.
c.Thepart
nerswil
lbecri
minall
ypr
osecut
ed.
d.All
ofthefor
egoi
ng.

Arti
cle1770statesthatwhenanunl awf
ulpartnershi
pconst i
tutesacr ime,the
partner
shipi
sv oi
d,thepartner
swillwil
lbecriminal
lyprosecut
edandt heproceedsof
thecrimeandtheinstr
ument sort
oolswithwhichitwascommi ttedshallbeforf
eit
edin
favour oft hegovernment.Ther
efore,al
laretheef f
ectsofanunl awfulpart
nershi
p
constit
uti
ngacrimeprocedure.

18.
Wher eani mmovabl
epr opert
yorr ealrightsarecontri
but
edt oapartnership,t
he
partnershi
pcont
ractmustbei napubl i
cinstr
umentt owhichshall
beat t
achedan
inv
ent oryoftheimmov abl
epr opertycont ri
buted and si
gned bythepar ti
es.
Fail
uret ocompl
ywiththesaidr equirement s:
a.makest hepartnershi
pv oid
b.makest hepartnershi
punenf orceable
c.makest hepartnershi
pvoi dable
d.doesnotaf f
ecttheacqui sit
ionbyt hepar t
nershi
pofaj ur
idi
cal
per sonali
ty

Art
icl
e1773stat est hatacont r
actofpartnershi
pi svoid,wheneveri
mmov abl
e
propert
yiscont
ri
butedt hereto,ifaninvent
oryofsaidpropert
yisnotmade,signedby
theparti
esandattachedt ot hepublicinst
rument.So,fai
lur
et ocomplywit
hthesaid
requi
rement
smakest hepartnershipvoi
d.

Note:Whatisneededtobeinapubl
icinst
rumenti
sthecontractofpar
tner
ship.The
wri
tt
eninvent
oryneednotbeinapubli
cinstr
ument.I
tissuf
fi
cientthatt
heinventor
yis
i
nwr i
ti
ngandsignedbythepar
tner
s.

Art
icl
e1773i
stheonl
yinst
ancewher
ethepar
tner
shi
pisv
oidi
fnoti
npubl
i
c
i
nst
ruments.

19.Ifthecapit
alofthepar t
nershipisP3, 000.00ormore,i
nmoneyorpr operty,
the
partner
shipmustbei npublicinstr
umentwhi chmustberecordedintheof f
iceof
the Securit
ies and Exchange Commi ssion.Fai
lureto compl y wi th such
requir
ements:
a.makest hepar t
nershi
pv oid
b.makest hepar t
nershi
pv oidable
c.makest hepar t
nershi
pr escissi
ble
d.doesnotaf fecttheacquisit
ionbyt hepart
ner
shipofajuridi
cal
per sonal
ity

Arti
cle1772statesthatever
ycontractofpartnershi
phavi
ngacapitaloft hr
ee
t
housandpesosormor e,inmoneyorpr oper
ty,shallappeari
napubl
i
ci nstrument,
whi
chmustberecordedi
nt heOff
iceoft
heSecuri
ti
esandExchangeCommission.

Howev er
,fai
l
uretocomplywi ththerequi
rementssti
llmakesthepar
tner
shipvali
d
anditsti
l
lacquir
esjur
idi
calpersonali
ty. Thus,itshal
lnotaff
ectthel
iabi
l
ityofthe
par
tner
shipandthemembersthereoftothi
rdpersons.

8 Questi
onsandAnswer si
nPartnership
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y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 20.
Ifthepartnershi
pintendedt obef ormedi sal i
mit
edpar t
ner ship,acerti
fi
cate
mustbesi gnedandswor nt obythepartners,
whichcert
if
icatemustber ecorded
intheoff
iceoft heSecurit
iesandExchangeCommi ssi
on.Failuret ocomplywith
suchrequirements:
a.makest hepart
nershipvoi
d
b.makest hepart
nershipvoi
dable
c.makest hepart
nershipageneralpart
nershi
p
d.precludestheacquisit
ionbythepartnershi
pofajur
idical personal
i
ty

Ifthepar t
nershi
pisal i
mit
edpar tnershi
p,acer
tif
icatemustbesi gnedandswor nto
bythepar t
nersandmustber ecordedwi ththeSecuri
tiesandExchangeCommi ssi
on.
Howev er
y,fai
lur
et ocomplywit
hsuchr equi
rement
swi llNOTaf f
ecttheexi
stenceofthe
par
tnershi
p.Thepar t
nershi
psti
llexi
standhasaj uri
dicalpersonal
it
y.

Whatwil
lbeaf f
ect
edi
sthenat
ureoft
hepart
nershi
psincei
twillbeconsi
der
edasa
gener
alpar t
nershi
p and NOT a li
mit
ed one as contempl
ated by the par
ti
es.
Consequent
ly,
thepart
ner
swil
lbel
iabl
easgener
alpart
ner
s.

21.
Whichoft hef oll
owing par t
nership agreementi srequir
ed to beinapubl i
c
inst
rumentandani nventoryofthepr opertycontr
ibutedmustbemade, signedby
theparti
esandat t
achedt othepubl i
cinstruments?
a.A gener alpar t
nership wher et he capi talamount st o P80,000. 00
consist
ingofP30, 000.00cashandP50, 000.00wor thofcomputers.
b.A gener alpartnership wher et he capitalamount sto P150,000. 00
consist
ingofcashofP100, 000.00andav acantl otwort
hP50, 000.00
c.A gener alpartnershipwher et hecapi t
alamount stoP1,000,000. 00in
cash.
d.Agener al part
nershipwher ethecapi t
alamount st oP500,000.
00incash.

Articl
e1771st atesthatapar tnershipmaybeconst it
utedinanyf or
m,exceptwhere
i
mmov ablepr opert
yorr ealrightsar econtri
buted theret
o,in which caseapubl i
c
i
nstrumentshal lbe necessar y.Accor di
ngly
,among t he par
tnershi
p agreement,a
generalpar t
nershi
pwher ethecapi talamount stoP150,000. 00consisti
ngofcashof
P100, 000.00andav acantlotworthP50, 000.
00requirestobeinpubl i
cinstr
umentand
aninvent orysi
ncet heagr eementi ncludesani mmov ablepropert
yofv acantlotwort
h
P50,000. 00.

22.
Apar t
nershipinwhichal lt
hepartnerscontr
ibuteallt
hepropert
ieswhichact
ual
l
y
belongtothem toacommonf undwi ththeintent
ionofdi
vidi
ngt hesameamong
themselves,aswellasthepr of
it
swhi chtheymayacqui r
etherewith.
a.Par t
icul
arpartnership
b.Uni ver
salpartner
shipofallpresentpropert
y
c.Uni ver
salpart
nershipofprofit
s
d.Gener alpar
tnership

Arti
cle1778st
atesthatapart
nershipi
nwhichallt
hepart
nerscontr
ibuteallt
he
pr
opert
ieswhichactual
l
ybelongtot hem t
oacommonf undwiththeintent
ionof
di
vi
dingthesameamongt hemsel
ves,aswellastheprof
it
swhichtheymayacqui r
e
9 Questi
onsandAnswer si
nPartnership
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y.Chr
istopherR.Her
nandez
Pol
ytechni
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sit
yofthePhili
ppines
t
her
ewi
thi
sconsi
der
eduni
ver
salpar
tner
shi
pofal
lpr
esentpr
oper
ty.

23.
A andBf ormedauni ver
salpartner
shipofal lpr esentpr opert
y.Thepar t
ners
agreed thatpr opert
y acqui r
ed by each par t
neraf tert he format i
on oft he
partner
shipshal lbelongt ot hepart
nership.Whi choft hef oll
owingdoesnot
bel
ongt othepar tner
ship?
a.Agr i
cult
ur all
otinheri
tedbyAbef oretheformat i
onoft hepartnershi
p.
b.Cr opshar v
ested fr
om t heagricul
turallotdur ing thef i
rsty earoft he
part
nership.
c.Fishponddonat edtoBdur i
ngthef i
rstyearoft hepar tnership.
d.Fishhar vestedfrom thefi
shponddur i
ngt hefirsty earofthepar t
nershi
p.

Thepartnershipisauni ver
salpartner
shipofal lpresentpr opert
y.Asar ule;any
proper
tywhicht heparti
esmayacquiresubsequent l
ybyi nher
it
ance, l
egacy,ordonation
CANNOTbei ncludedinsucht ypeofpar tner
ship. Onl ythef r
uit
st her
eofmaybe
i
ncludedaspar tnershi
ppropert
y.Therefor
e,thefishponddonat edt oBduringt hefir
st
yearofthepartnershi
pdoesnotbelongt ot
hepar t
nership.

24.
Apar t
nershipt hatcompr i
sesal
lthatthepartner
smayacqui
rebyt
hei
rwor
kor
indust
ryduringt heexist
enceoft
hepar t
nershi
p.
a.Indust ri
alpart
nershi
p
b.Par t
icularpartner
ship
c.Univer salpart
nershi
pofprofi
ts
d.Univer salpar
tnershi
pofal
l pr
esentpart
nershi
p

Ar
ticl
e1780st atesthatapartner
shi
pthatcompr i
sesallt
hatthepar
tnersmay
acqui
rebyt hei
rwor korindustr
yduri
ngtheexi
stenceofthepar
tner
shi
pisconsi
der
ed
uni
versalpart
nershipofprof
it
s.

25.
X and Y formed a uni versalpartnershi
p ofpr ofi
ts.Which oft he foll
owi
ng
proper
ti
esbelongt ot hepartner
ship?
a.Coconutpl antati
oninheri
tedbyXbef oret
hef ormat
ionofthepartnershi
p.
b.SalaryreceivedbyYaspr ofessorofacol legeinMani l
adur i
ngt hefi
rst
yearofthepar tnershi
p.
c.LottoprizewonbyXdur i
ngt hefi
rstyearofthepart
nershi
p.
d.Agricul
turall
otdonat edtoYdur ingthefir
styearofthepartner
ship.

Art
icle1780 st
atest hatuniv
er salpart
nershi
p ofprofi
tscompr i
sesallthatthe
part
nersmayacquirebyt heiri
ndust r
yorwor kduri
ngtheexistenceofthepartner
shi
p.
Proper
tiesacqui
redthroughinheri
tance,donati
onorthroughot hermeanswi t
houtthe
eff
ortofthepart
nerscannotbeconsi der
edpartofthepart
nershippropert
y.

Int hecasement i
onedabove,thesalaryofYasprofessorwasreceiv
edthr
oughhis
exerciseherindustryasapr ofessor.Thus,thesamewi llbeconsider
edpartofthe
partnershipproper
ty. Theotherpr opert
ieswereacquir
edeithert
hroughi
nheri
tance,
donationorbyl uck. Assuch,t hesaidpropert
iesarenotconsideredpart
nershi
p
properties.

10 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 26.
Whatkindofuniv er
salpartnershipisent er
edi ntobythepar
tner
sifther
eisno
speci
fi
cati
onast oit
snat ur
e?
a.Univer
salpartnershi
pofal lpresentproperty
.
b.Univer
salpartnershi
pofpr ofi
ts.
c.Eit
herofthetwoatt heopt ionoft hepart
ners.
d.None,becauset hepartnershipisv oi
dsi ncether
eisnomeeti
ngofminds
amongt hepar t
ners.

Ar
ti
cle1781pr ov
idesthat,ar
ticl
esofuniversalpar t
nershi
p,enteredintowi t
hout
speci
fi
cati
onofitsnature,onlyconsti
tut
eauni versalpar t
ner
shi
pofpr ofi
ts.Thisis
consi
deri
ngthatt
hisisl
essonerousthanuniv
ersalpartnershi
pofallpresentproper
ti
es.

27.
Thef
ollowi
ngaredisquali
fi
edtof or
m auniversal
par
tner
shi
p,except:
a.Husbandandwi f
e.
b.Manandwomanl i
vingtogetherashusbandandwif
ewi thoutthebenef
it
ofmarri
age.
c.Br ot
herandsist
er.
d.Thosegui l
tyofadult
eryorconcubinage.

Arti
cle1782stat
esthatpersonswhoar eprohi
bit
edf r
om giv
ingeachotherany
donat
ionoradv ant
agecannotenterint
ouni v
ersalpart
nership.Assuch,t
hefoll
owing
arepr
ohibi
tedtoenteri
ntouni
ver
salpartner
ship,t
hus:

a.Donat i
onsbetweenspousesdur i
ngt hemar ri
age,exceptmoderategi fts
givenont heoccasionoft hefami l
yr ej
oicing.Thepr ohi
bit
ionappli
est o
persons li
vi
ng togetheras husband and wi fe withoutthe benefitof
mar ri
age.
b.Thosemadebet weenper sonswhower eguilt
yofadul t
eryorconcubinage
atthet i
meofthedonat i
on.
c.Thosemadebet weent wo personsf oundgui l
tyoft hesamecr i
mi nal
offense,i
nconsi
derationther
eof.
d.Thosemadet oapubl i
coffi
cerorhiswi fe,descendantsorascendants, by
reasonofhisoff
ice.

Theref
ore,notbeingenumerat
edt
her
ein,br
otherandsi
sterar
enotdi
squal
i
fiedi
n
f
ormingauniver
salpart
nershi
p.

28.
Whi
chofthef oll
owingpartnershi
pcont ract
sisvali
d?
a.Apar t
ner shi
pbet weenahusbandandwi f
efortheexerci
seofapr ofessi
on.
b.Auni versalpar
tnershipofal
l presentpr
opertybet
weenapubl icoffi
cerand
apr i
vateindivi
dual.
c.A universalpartnershipofpr ofi
tsbetweenapubl icoffici
alandat hi
rd
person.
d.Auni versalpart
nershipofallpresentproper
tybetweenamanandwoman
l
ivi
ngt ogetherashusbandandwi fewit
houtthebenefi
tofmar r
iage.

Allofthe ot
herchoicesment
ioned above ar
e prohi
bit
ed f
rom enter
ing i
ntoa
uni
ver
salpar
tnershi
p.The pr
ohi
bit
ion does notextend t
o a par
tner
ship bet
ween
11 Questi
onsandAnswer si
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istopherR.Her
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sit
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ppines
husbandandwi f
efortheexerci
seofprofessi
onbecausethesai dpartnershipi
sNOTa
uni
v er
salpar
tner
ship.Therul
eappli
cableisArti
cle1767whichstatest hattwoormor
e
personsmayalsoform apart
nershi
pfortheexerci
seofaprofession.

29.
Huber tandWendyf ormedapar tnershi
p.Twoy earsaft
ertheformati
onofthe
partnership,t het wo gotmar r
ied.Themar r
iagebetweenHuber tand Wendy
dissolvedt hepar t
nershiptheyearlierfor
medifitwere:
a.Auni versalpart
nership
b.Apar ti
cular partnershi
p
c.Ei ther( a)or(b)
d.Nei ther( a)nor( b)because t hei
rmar ri
age has no bear
ing on t
he
par t
ner shiptheyhadear l
ierformed.

Arti
cle1782prohibi
tsper
sonli
vi
ngtogetherashusbandandwi f
etoform auniver
sal
par
tner
ship.Thereasonforthi
sprohi
bit
ionisthat,theymaymakei tappearthatthey
ent
eredintoauniver
salpart
ner
shi
ptohidet hei
ractuali
ntent
ionofdonat
ingpropert
ies
orr
ight
st oeachother.

30.
Apartner
shipwhichhasf oritsobjectdeter
mi natethi
ngs,t
hei
ruseoff
rui
ts,or
speci
fi
cundertaki
ng, ortheexerci
seofapr ofession.
a.Univer
salpartnershi
pofal lpr
esentproperty.
b.Univer
salpartnershi
pofpr ofi
ts
c.Part
icul
arpartnership
d.Noneoft heforegoing

Arti
cle1783defi
nespar
ti
cul
arpar
tnershi
pasapar
tner
shipwhichhasf
orit
sobject
determinat
et hi
ngs,t
hei
ruseoffrui
ts,orspeci
fi
cunder
taki
ng,ortheexer
ciseofa
professi
on.

31.
Whi
chofthef ol
lowi
ngi sapar
ticul
arpar
tnershi
p?
a.Anaudi ti
ngfir
m composedofCertif
iedPubli
cAccount
ant
s.
b.Apar tnershi
pf ormedforthepurposeofselli
ngallt
helot
sinacer
tai
n
subdivisi
on.
c.Both( a)and(b)
d.Neither(a)nor(b)

Bot haandbf al
lsunderparti
cul
arpartner
shi
pbecausebot harepar
tnershi
pwhich
hasf orit
sobjectdet
erminatethi
ngs,t
heiruseoffrui
ts,orspeci
fi
cundert
aking,ort
he
exerciseofpr
ofessi
onaspr ovi
dedbyArti
cle1783.

32.
Apartnershi pwher eallthepart
ner
sar
egener
alpar
tner
swhoar
eli
abl
etot
he
ext
entoft heirseparateproper
ty.
a.Gener alpar
tnership
b.Li mi tedpartnership
c.Par ti
cularpartnershi
p
d.Uni v ersalpart
nership

Gener
alpar
tner
shi
pisapar
tner
shi
pwher
eal
lthepar
tner
sar
egener
alpar
tner
swho
12 Questi
onsandAnswer si
nPartnership
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istopherR.Her
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Pol
ytechni
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sit
yofthePhili
ppines
ar
eli
abl
etot
heext
entoft
hei
rsepar
atepr
oper
ti
es.

33.
Ifapar
tnershi
pcomposedofsi x(6)partnersisfor
medasal i
mitedpartnershi
p:
a.Allthepart
nersmustbel imitedpartners.
b.Threemustbel imitedpart
ner sandthree(3)mustbegeneralpar
t ners.
c.Fivemustbel i
mitedpartnerswhileone( 1)mustbeageneralpartner.
d.Iti
senought hattherei
satl eastone( 1)l
imit
edpart
nerandatleastone( 1)
generalpart
ner.

Li
mi t
edpartnershi
pisonewheret
hereisatl
eastonegeneralpartnerandatl east
onel i
mi t
edpartner.Thegener
alpar
tner
sar el
i
abletotheext entoft hei
rsepar ate
propert
ies,whi
l
et heli
mit
edpart
ner
sareli
abl
eonl
ytotheext
entoft hei
rcontr
ibut
ions.

34.Whi chofthef ol
l
owi ngstatement sisfalse?
a.Agener alpartnermaycont r
ibut
emoney ,propertyand/ orser vi
ces.
b.Al imitedpartnermaycont ri
butemoneyand/ orpr operty,butnotservices.
c.Apar tnermaynotbeagener alandl i
mitedpartneratt hesamet i
me.
d.Agener alpartnermayei therbeacapi tali
storindust r
ialpartner.
Ther ei
snopr ohibi
tionagainstagener alpartnerbeingal soal i
mi t
edpartner.If
sti
pulated,apersonmaybegener alpartnerinasenset hathei sl i
abletot hecreditors
up tot he extentofhi s per sonalpr operty. On t he ot herhand,he can al so
si
mul taneousl
ybeconsi deredasal i
mi t
edpar tneri
nasenset hathecanaskt heot her
part
ner storei
mbur setheamountwhi chhepai dinexcessofhi scont r
ibution.

Thi
ssituat
ionmayar i
seiftheparti
esagreedt hatthepart
nersareliabl
etothe
thi
rdpersontotheextentoft
hei
rpersonalproper
ti
esbutoneormor e(butnotal
l)oft
he
part
nersareentit
ledtoberei
mbursedfrom theotherpartner
sforanypay mentmadein
excessofthecontri
buti
on.

35.
JessicaandSi ennawantt oputupani nt
ernetcafébusiness.Jessi
caisanexpert
ininformat iontechnol ogyandcomput er
sbuthasnof undsorpr opert
ytoinvest
.
Sienna knows not hing aboutinter
netand comput er s butshe is wil
l
ing to
contributet hefundsandpr opert
yneeded.IfJessicaandSi ennadecidetoenter
intoal i
mi tedpar tnershi
p,whobet weent het wooft hem willbet heli
mited
partner?
a.Jessi caonl y
.
b.Si ennaonly .
c.Bot hJessi caandSi enna.
d.Nei therJessi ca norSi enna;hence,they cannotent eri nt
oal i
mited
partnershi
p.

Siennaist heonlyonewhowi llbet hel i

mitedpar tnerbecausei naccordancet o
Art
icle1845, t
hecontribut
ionofal i
mi t
edpar tnermaybecashorot herproper
ty,butnot
ser
v i
ces.From theforegoi
ng, i
tisclearthatapur eindustri
alpart
nerCANNOTbecomea
l
imitedpar t
ner. SinceJessicaisapur ei ndustri
alpartnersincehercontri
buti
oni nthe
par
tner shi
pisservi
cesonly ,
Jessicacannotbecomeal i
mi tedpart
nerinthepartnershi
p.

Not
e: I
fasi
def
rom herser
vices,sheal
socont
ri
but
edpr
oper
tyormoney
,Jessi
ca
13 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
canbecomeal
i
mit
edpar
tner
.

36.
Refertot heprecedingnumber .SupposeJessi
caandSiennaaresist
ersandthey
decidetoputupagener alpartnership,
whobetweenthetwoofthem maybet he
generalpar t
ner?
a.Jessi caonly.
b.Si ennaonly.l
c.Bot hJessi
caandSi enna.
d.Nei t
herJessicanorSienna, t
heybei
ngsist
ers;
hence,t
heycannotputupa
gener al
partner
ship.

BothJessicaandSiennamaybegeneralpart
ners.ThereisNOlimi
tat
ionsast
othe
numberofgener alpar
tnerinapar
tner
shi
p.Ani ndustri
alpart
nercanal
sobecomea
generalpar
tnerifhecontri
but
esmoneyasi
defrom serv
ices.

37.
Apartnerwhoi sactiveandknownt othepubl
i
casapar
tner
,suchasbyal
l
owi
ng
hisnametobei ncludedinthefi
rm name.
a.Nomi nalpartner
b.Ostensiblepartner
c.Managi ngpar t
ner
d.Partnerbyest oppel
s

Managingpar t
nerisonewhomanagest
hebusi
nessoraff
air
softhepart
nershi
p.A
managingpart
ner’
sidenti
tyi
smadeknownt
othepubl
icaspart
nerandsuchnamemay
bei
ncludedinthefi
rm name.

Note:Ihav
ereser
vati
ontothi
squestionandanswer . Notev erypart
nerwhois
madeknowntothepubli
casapartnerandallowedhimselftobei ncl
udedinthefi
rm
namecanbeconsi
deredasmanagingpartner
. Thedef i
nit
ionofmanagi ngpart
neri
s
l
imit
edtoonewhomanagest
heaffair
softhebusiness/
part
nershi
p.-CRH

38.
Onewhoisnotact ual
lyapar
tnerbutmaybecomel
i
abl
eassucht
othi
rdper
son
a.Ostensibl
epar tner
b.Nomi nalpartner
c.Sil
entpartner
d.Secretpartner

Anominalpart
neri
sonewhoisnotactual
l
yapar t
nerbutwhomaybecomel
i
abl
eas
suchtot
hirdpersons(
suchasapar
tnerbyestoppel
s).

39.
Onewhohasnov oi
ceoractiv
eparti
nthemanagementoft
hebusi
nessoft
he
partnership(thoughheshar esint
heprof
it
sandl
ossesandmaybeknowntot
he
publicasapar tner).
a.Dor mantpar t
ner
b.Secr etpartner
c.Si lentpar t
ner
d.Ost ensiblepartner

14 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 Sil
entpar
tneri
sonewhohasnov oi
ceofacti
vepar
tinthemanagementoft
he
businessofthepart
ner
shi
p(thoughheshar
esi
ntheprof
it
sandlossesandmaybe
knownt ot
hepubli
casapart
ner).

40.
One who does notpar t
ici
pateint he managementoft
he busi
ness oft
he
par
tner
shipandisnotknownt othepubli
caspartner
.
a.Silentpart
ner
b.Secr etpar
tner
c.Dor mantpartner
d.Liquidati
onpartner

Dor
mantpartneri
sonewhodoesnotpart
ici
pat
einthemanagementofthebusi
ness
andisnotknowntothepubl
i
caspart
ner,
i.
e.,
heisasecretandsi
l
entpar
tner.

41.
Thesestatement sarepr esent edtoyou:
I. Ali
mi t
edpar t
nermayal sobeagener alpart
neratthesametime.
II
. Ani ndustri
alpar tnermayal sobeacapi tal
i
stpart
neratthesameti
me.
Inyourevaluati
onoft hef oregoingstatements:
a.Bothst atement sar etrue.
b.Bothst atement sar efalse.
c.Onlyst at
ementIi strue.
d.Onlyst at
ementI Iistrue.

St
atementIi
scor
rect(
Pleaseseeexpl
anat
ioni
nNo.34)
.

Stat
ementIIi
salsocor
rect
.Ther
eisnopr
ohi
bit
ionf
orapar
tnert
ocont
ri
but
ebot
h
moneyandpr
operty
.

42.
Ageneralpartnershi
pmay ,att
hesamet
ime,
beanyoft
hef
oll
owi
ngpar
tner
shi
ps,
except
:
a.Parti
cularpartnership
b.Limitedpar t
nership
c.Universalpartnershi
p
d.Noneoft heforegoing

Arti
cle1776pr ovi
dest hatallt
hepart
ner
singener alpart
nershipmustbeagener al
par
tner
.Theref or
e,t
herecanbeNOl i
mit
edpart
nerinagener alpartner
ship.Byr
eason
oft
hisprovi
sion,ageneralpartner
shi
pcannotbeal i
mitedpartner
shipatthesameti
me
si
nceinali
mit edpar
tnership,t
hereshoul
dbeatleast1limit
edpar t
ner.

43.
Ifapart
nershipi
sfor
medt oexistf oraper i
odoff i
ve( 5)years,suchpar t
nershi
p,
ifi
tsbusi
nessiscont
inuedupont heexpirationofthefive-
yearper i
od:
a.Remai nst
obeapar t
nershipf orafixedter
m unt i
lanotherfive(5)years.
b.Becomesapar tnershi
patwi l
l.
c.Becomesapar tnershi
pf orapar ti
cularundert
aking.
d.Isdeemeddissolved,notwithstandingthecontinuati
onofi tsbusiness.

Ar
ti
cle1785st
atest
hatwhenapar
tner
shi
pforaf
ixedt
erm orpar
ti
cul
arunder
taki
ng
15 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
i
scont inuedaftertheterminati
onofsucht erm orpar ti
cularunder
taki
ngwi thoutany
expressagreement ,t
herightsanddutiesofthepartnersremainthesameast heywere
atsucht ermi
nation,sofarasisconsistentwit
hapar t
nershipatwil
l.Aconti
nuat i
onof
thebusinessbyt hepart
nersorsuchoft hem ashabitual
lyactedther
einduri
ngt heter
m,
withoutanysettlementorliqui
dationofthepart
nershipaffair
s,i
sprimaf aci
eev i
dence
ofacont i
nuati
onoft hepartner
ship.

Apart
nershi
patwil
lisonewhichhasnof
ixedper
iodofexi
stence. I
tsexi
stence
dependsuponthewi
l
lofthepar
tners.

44.
In which oft he f oll
owing instances is a par
tnershi
p consider
ed to be a
partner
shipatwi l
l?
a.Onewher et hepar tnersdidnotagr eeonadef i
niteter
m oraspeci fi
c
undert
aking.
b.Onewher et hepar tnersagreedonadef ini
tetermforthepartner
ship,but
thebusinessi scontinuedbyt hepart
nersaft
ertheexpir
ati
onofsucht erm.
c.Onewher ethepar tnersagr eedonaspecifi
cundertaki
ng,butthebusiness
i
scontinuedaf t
ertheat t
ainmentofsuchundertaki
ng.
d.Al loft
hef oregoing.

Al
lofthe choi
ces menti
oned abov
e ar
einst
ances wher
ethe par
tner
shi
pis
consi
der
edt
obeapar t
nershi
patwil
l
.

45.
Thef oll
owing areobl igat
ionsofa par tnerwho haspr omised t
o cont r
ibute
speci
ficpropert
ytot hepar t
ner ship,except :
a.Todel iv
ertot hepar tnershipatt het i
mei twasconst it
utedoront hedat e
sti
pul
atedthepr opertyhehaspr omi sedtocont r
ibute.
b.Tot akecareoft hepr opertybef or
ei tsdel i
veryt
ot hepartner
shipwi t
ht he
di
li
genceofagoodf atherofaf amily.
c.Toanswerf orev ict
ioni ncaset hepar tnershipi
sdepr i
vedoft heproper t
y
hehascontributed.
d.Tobel i
ablef ordamagesonl yaf terhef ail
stodeliverthepropertyupon
demandbyt heot herpar tners.

Ar
ti
cle1786providesthat
,everypartnerisadebt
oroft
hepart
nershi
pf orwhatev
er
hemayhav epromisedtocontri
butethereto.Apart
neri
sli
abl
etothepartnershi
peven
wit
houtthedemandbyt heotherpart
ners.

46.
Whooft hef ollowingmayengagei nbusi nessev enwi t
houttheconsentoft he
otherpar tners?
a.acapi tali
stpar tnerifthebusi nesshewi llengagei nisofthesamelineas
thepar tnershipbusi ness.
b.Acapi talistpartneri fthebusi nesshewi llengagei nisofakinddif
ferent
from t hepar tner shipbusiness.
c.Ani ndust ri
alpar tnerifthebusi nesshewi llengageinisofthesamel ine
ast hepar tnershipbusi ness.
d.Ani ndust ri
alpar tnerifthebusi nesshewi llengageinisofakinddif
ferent
from t hepar tner shipbusiness.

16 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 Beingacapital
i
stpartner
,hecanengageinsuchbusi
nessforhi
sownaccountev
en
wi
thouttheconsentofthepart
nershi
pprovi
dedthatt
hebusinesshewoul
dbeengage
i
nisdiff
erentf
rom t
hatofthepart
nershi
p.

47.
JackandJohnputupapar t
nershi
pt oengageinthecomputerrepai
rbusiness.
Jackcont r
ibut
edP200,000.00,whileJohnhisservi
ces.Onthev acantstallon
theleftsi
deoft hecomputerrepai
rshop,Jackint
endstoputuphi sowneat er
y
business,whil
eont hevacantstal
loni t
sr i
ghtsi
de,Johnplanst oestabl
isha
bakery.Whooft hetwomayv al
i
dlyestabli
shhisownbusi nesswi t
houtt he
consentoftheotherpar
tner?
a.Jack
b.John
c.Bot hJackandJohn
d.Nei t
herJacknorJohn

OnlyJacki sal
lowedtoestabli
shhisownbusinessevenwi t
houtt
heconsentofthe
otherpartnerbecauseheisacapi t
ali
stpar
tner
.Acapital
istpart
nermayengagedi n
anotherbusinessprovi
dedthatitnotthesamewiththebusinessoft
hepart
nershi
phe
i
si nvol
ved.

John,howev er,i
snotal lowedt oestabl
ishhisownbusi nessbecausehei san
i
ndust r
ialpar
tner(si
ncehiscontri
buti
onisonlyhi
sservi
ce).Art
icl
e1789statesthat,an
i
ndust r
ialpartnercannotengage i n busi
ness f
orhimself,unless t
he part
nership
expresslyper
mi tshi
mt odoso.Thisprohibi
ti
onisabsol
utewhetherornott
hebusi ness
i
sr el
atedtothebusinessofthepartner
ship.

48.
HerbertandWandaar ehusbandandwi fe.Theyintendt oputupacof feeshop
businessaspar tners.Basedont heforegoi
ng,whichoft hef ol
lowingst
at ement s
isi
ncor r
ect ?
a.Her bertandWandamayv ali
dlyputupacof feeshopbusi nessaspar tners.
b.Her bertandWandamayadoptaf i
rm name“ Wanda’ sWaf fl
esandCof f
ee
Shop”whi chincludesthenameofonl yoneoft hem.
c.I fthecapi taloft hepart
nershi
pi sP400,000.00,HerbertandWandamust
cont r
ibute equal lythe amount of P200, 000.
00,unl ess t
hey agr ee
otherwi se.
d.Her bertshallbet hemanager,hebeingthehusbandandheadoft hefami ly.

Whenthereisnostipul
ati
onast owhowi l
lbethemanagerofthepart
nershi
p,i
tis
presumedthatal
lofthepartner
sshallbethemanageroragentf
oral
lthetr
ansacti
ons
underthenameoft hepartner
ship.Hence,Wandacanal sobethemanageri nthe
absenceofanycont
rarysti
pulat
ion.
.

49.
DowesXP4, 000.
00.Heal soowesP6, 000.00toXYZCompany ,
apartnershipof
whichXi sthepart
neraut horizedtocollectt
hecr edi
tsofthepart
nershi
p.Bot h
debtsaredue.DgivesXP4, 000.00inf
ormingXt hattheamountisi
npay mentof
hisdebttothelat
ter.Accor di
ngly,Xissueshisownr ecei
pt.Towhichcreditwil
l
bethepaymentapplied?

17 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 a.Tothecr
edi
tof X.
b.Tothecr
edi
tofXYZCompany .
c.Tothecr
edi
tofXandt hatofXYZCompanyproport
ionatel
yatP1,600.00
andP2,
400.
00respect
ively
.
d.Tothecr
edi
tofXandt hatofXYZCompanyequal
lyatP2,000.00each.

Accor dingtoArti
cle1792,incaseapar tnerauthori
zedt ocollectpartnershipdebti s
al
so,att hesamet ime,t hecredit
oroft heperson/entitywhohasobl i
gationt ot he
partnership,anyamountcol l
ectedbyt hesaidpar t
nerf r
om t hesai ddebt or,shallbe
appliedpr oporti
onat
elytot hedebt sowingt ohim personally,andt ot hepar tnership
debt. Thi sr ul
ealsoappliesevenifthedebtorexpresslystatedt hatt
hepay mentshal l
beappl iedt otheobl i
gationowi ngtothepar t
nerinhi sper sonalcapaci t
y .X,ast he
partneraut hori
zedtocollectthecredi
toft hepart
nership,shouldnotpl acehi sinterest
beforeoft hatofthepartnershi
p.

Note:Thef oregoingr uleisappl i

cableonlyifthepar t
nerist heoneaut horizedto
coll
ectdebt( eit
herasamanagi ngpar t
neror,ifnotmanagi ngpar t
ner,apar t
nerduly
authorizedtocol l
ectdebt sbyt heot herpart
nerst hroughar esoluti
on).Incaset he
partnerisNOTaut horizedt oreceivepaymentforpar tnershi
pdebt ,hehasnoobl igati
on
toshar ewit
ht hepartnershiptheamount col lect
edf rom amut ualdebtorUNLESSt he
debtorparti
cularl
ystatedt hatthepay mentshallbeappl iedtothepar tner
shipdebt.I n
thel at
tercase,thepar tnerhast heobligat
iontor emi ttheamountwhi chthedebtor
expresslyst
atedt obeappl iedtohi sobli
gati
ontothepar tnershi
p.

50.
DowesXP4, 000.00. Heal soowesP6, 000.00toXYZCompany ,apartnership.
Bot
hdebt saredue.D gi v
esX P4, 000.00i nf
ormingX t hattheamounti sin
pay
mentofhisdebtt othelatter
.Howev er,XissuesareceiptofXYZCompanyi n
par
ti
alpaymentofi t
scredit
.Towhi chcreditwil
lthepaymentbeappl ied?
a.Tot hecreditofX.
b.Tot hecreditofXYZCompany .
c.Tot hecreditofXandt hatofXYZCompanypr oporti
onatelyatP1,600.00
andP2,
400.00r especti
vely
.
d.Tot hecreditofXandt hatofXYZCompanyequal lyatP2,000.00each.

Ifthedebtorspeci
ficall
yst atedthatt
heamountwhi chhepaidshouldbeappl i
edto
thepar t
nershi
pcredit
,ori fthepar t
nerauthori
zedtorecei
vepay
menti ssuedrecei
ptof
thepar t
nershi
p,thepay mentshal lbefort hesolebenefi
tofthepartnershi
p. I ti
s
becauseAr ti
cl
e1792pr ovidesthatifthepartneraut
hori
zedtor
eceivepaymentissues
thereceiptofthepart
ner ship,paymentshallbeappli
edinit
sent
iret
ytot hepart
nershi
p
credit
.

51.
DowesXP4,000. 00,whichisint
erestbeari
ng.Heal soowesP6,000. 00toXYZ
Company ,apar tnershipofwhichXi sthepartneraut hori
zedtocoll
ectthecredi
ts
ofthepar t
nership,whi chdebtisdueisnoni nterestbear i
ng.Bothdebtsaredue.
Dgi v
esXP4, 000.00i nfor
mingXt hattheamounti si npay mentofhisdebttothe
lat
ter.Accordi
ngl y,Xissueshisownr ecei
pt.Towhi chcr edi
twil
lthepaymentbe
appli
ed?
a.Tot hecr editofX.

18 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 b.Tothecr
editofXYZCompany .
c.Tothecredi
tofXandt hatofXYZCompanyproport
ionatel
yatP1,600.00
andP2,
400.00respect
ively
.
d.Tothecr
editofXandt hatofXYZCompanyequal
lyatP2,000.00each.

ThepaymentofDisappli
edinitsenti
ret
ytoX’screditsi
nceD’
sdebttoXismor e
oneroustoDforiti
sint
erest
-bear
ingwhilehisdebtt
ot hepart
ner
shipisnon-
inter
est
beari
ng.Dchoosestoapplythepay menttosuchmor eonerousdebt,whi
chrightis
avai
labl
etohi
m underAr
ti
cle1252.

Not e:Thef oregoingisbasedont heAnswerofAtty.Fidel

it
oSor i
ano.Ijusthav ea
reservationont hef oregoingAnswer.Theruleonappli
cationofpaymentisappl i
cabl
e
onlyincaset herei saconcur renceofdebtbyonedebtorinfavorofonecredi t
or.I
nthe
i
nstantcase,al thought hereisonly1debt or,t
her
ear et wocredit
orsinvolved. As
betweent heruleonappl icati
onofpay mentandtheexpressmandat einArticl
e1792,I
prefertoappl ythel at
ter. Assuch, f
orme, Cist
hecorrectanswer. Thecr editshoul
d
beappl iedpropor t
ionatel
y.-CRH

52.
DowesXP4,000. 00whi chi
sdueonMar ch15.Heal soowesP6, 000.00toXYZ
Company ,apar tnershipofwhi chXi sthepartneraut
horizedtocoll
ectthecredit
s
ofthepar tnership,whi chdebti sdueonMar ch30.OnMar ch20,D Gi vesX
P4,
000. 00informi ngXt hatt
heamounti si npay mentofhisdebtt othelat
ter.
Accordingl
y,Xi ssueshi sownr eceipt.Towhichcreditwi
llpaymentbeappl i
ed?
a.Tot hecr editofX.
b.Tot hecr editofXYZCompany .
c.Tot hecr editofXandt hatofXYZCompanypr oporti
onatel
yatP1,600.00
andP2, 400.00respectively
.
d.Tot hecr editofXandt hatofXYZCompanyequal lyatP2,000.00each.

ThepaymentofDonMar ch20i sappl

iedtoX’scredi
t becausethecr edi
tofXis
al
readydueonMar ch15whichispri
ortothepaymentismade.Ont heotherhand,t
he
part
nershi
pcredi
twil
lbedueonlyonMarch30.So,thepart
nershi
pcredi
tcannotyetbe
demandedf r
om D evenifX ist hepart
nerauthori
zedto coll
ectthecreditofthe
part
nershi
p.TheRuleinAr t
icl
e1792i sappli
cableonlyifbothdebtsar edueand
demandable.

Note: Ev enifthecredi
tinfavorofthepar t
nershipisnoty etdueanddemandable,
thedebtorcanst il
lapplythepay mentinf avoroft hepartnershi
p. Inthatcase,t
he
debtor-
partnercannotaskf orproport
ionateshare. Buti fthedebtorappliedt
he
paymentsol el
yont hecreditinfavorofthepartner-debt
orandt hedebtinfav
orofthe
partner
shipisnoty etdueanddemandabl e,thent hepartnershipisNOTentit
ledtoa
proport
ionateshareofthepay ment.

53.
DowesX,P4, 000.00.HealsoowesP6,000.
00toXYZCompany ,apart
ner
ship
composedofX,YandZ,ofwhi chZi sthepart
nerauthor
izedtocoll
ectthe
credi
tsofthepartnershi
p.Bot
hdebtsaredue.Dgi
vesXP4,000. 00i
nfor
mingX
thatt
heamounti si npaymentofhi
sdebttothel
att
er.Accor
dingl
y,Xi
ssueshis
ownr ecei
pt.Towhichcredi
twil
lbepay
mentbeappli
ed?

19 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 a.Tothecr
editofX.
b.Tothecr
editofXYZCompany .
c.Tothecredi
tofXandt hatofXYZCompanyproport
ionatel
yatP1,600.00
andP2,
400.00respect
ively
.
d.Tothecr
editofXandt hatofXYZCompanyequal
lyatP2,000.00each.

Thepay mentofDi sappli

edi nit
senti
retytoX’scredi
tsinceXisnotthepartner
aut
hori
zedtocoll
ectt
hecreditofthepar
tnershi
p.So,Xcannotbeaccusedofpr
efer
ring
hi
sint
erestt
othatoft
hepartnership.

54.
Demet ri
oowedHOT Company ,apartnershipcomposedofpar t
nersHor nil
la,
Ortal
ezaandTanchangco,t hesum ofP6,000. 00.Thepar t
nersagreedthateach
onemaycol l
ecti ndi
viduallyhisshareofP2, 000.00oft hecreditfr
om Demet ri
o.
Hornil
l
a was abl et o col lecthis shar e ofP2, 000.00.When Or tal
eza and
Tanchangcower edemandi ngpay mentoft heirrespectiveshares,Demetri
owas
alr
eadyinsol vent.Inthiscase:
a.Hor ni l
l
amustbr i
ngt ot hepartnershipt heamountofP2, 000.
00t hathe
coll
ect edfrom Demet r
iosothatOr talezaandTanchangcomaybeabl eto
sharei nit.
b.Hor ni l
l
ai snotobl iguedt obri
ngt othepar tnershiptheamounthecol lected
becauset hepar tnershadanagr eementt hateachaonemusteachbear
hisloss.
c.Or talezaandTanchangcomusteachbearhi sloss.
d.Theamountcol lectedbyHor nil
l
ashal lbeconsi deredasanadv ancereturn
ofhiscapi talcontributi
onbyt hepar tnership.

Art
icl
e1793pr ovidesfortheruleincaseofi nsolvencyoft hedebtoraft
erapartner
has receivedhisshareofpar t
nershipcreditwhi
letheotherpar t
nershavenotcol
lected
thei
rs. Inthatcase,thepartnerwhohasr ecei
vedhisshar ehast heobli
gat
iontobring
tothepartner
shipcapitalwhather ecei
vedev enthought hereceiptwhi
chhegav eisfor
hishar
eonl y.

I
nt heinstantcase,Hornil
l
a,Or tal
ezaandTanchangcohav eagreedt odiv i
dethe
part
nershi
pcredi tamongthem.Hor nil
l
ahascol l
ect
edhisshareoft
hecr edi
t,after
which,
thedebtorbecamei nsol
vent. SinceOr t
alezaandTanchangcohavenotcollectedtheir
sharesbyther easonofDemetrio’
sinsolvency,
Horni
ll
ahastheobli
gationtobringtothe
part
nershi
pwhathehascol l
ectedsot hathecanshareitwi
ththeotherpart
ners.

55.
Thesestatementarepr esent
edt oy ou:
I
. A newly-admitt
edpar t
nershal lbeli
abl
ef orpar tner
shipdebt sincur
red
beforehisadmi ssiononlyiftherewasastipulat
iont othateffect.
II
. A newly-admitt
edpar t
nershal lbeli
abl
ef orpar tner
shipdebt sincur
red
beforehisadmi ssionevenift herewasnostipul
ationtot hateffect
.
I
II
. A newly-admitt
edpar t
nershal lbeli
abl
ef orpar tner
shipdebt sincur
red
afterhi
sadmi ssioniftherewasast i
pul
ati
ont othateffect.
I
V. A newly-admitt
edpar t
nershal lbeli
abl
ef orpar tner
shipdebt sincur
red
afterhi
sadmi ssioneveni ftherewasnostipulat
iont othateffect.

20 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 Whi
choftheforegoi
ngSt
atement
sar
etr
ue?
a.IandII
.
b.IIandI
V.
c.IandIV.
d.IIandI
II.

A newly-
admitted par tnershallbe l iablefort he partnership debtswhi ch were
i
ncurr
edbef oreandaf t
erhi sadmissionev enift hereisnost ipul
ation.Itisst at
edi n
Art
icl
e 1826 thatt he newl y
-admit
ted par tnershal lbe liableforpar t
nership debts
i
ncurr
edbef orehi
sadmi ssionevenift herewasnost i
pulationbecausesuchi ncomi ng
par
tnerstandstobenef i
tf rom analreadyest abl i
shedbusi nesswithal ltherightsofa
par
tner.Forthepar tnershipobl i
gati
onscont ractedaf terhi sadmi ssion,theincomi ng
par
tneri sli
able pror ata wi ththe ot herpar tnersf ort heirsepar ate assetsift he
par
tnershi
passetshav ebeenexhaust ed.

Not e:Arti
cle1826onl ymeanst hatthecontributi
onsmadebyt henewl yadmi t
ted
par
tnercanal sobeusedi nordertosettl
et heobli
gationsofthepar t
nershi
p–whet her
ornott hesai dobli
gationswer eincurr
edbef oreoraf t
ertheadmi ssi
onoft henew
par
tner.Howev er,t
henewl yadmi t
tedpar t
nercannotbemadel iabl
eupt ot heextentof
hi
sper sonalpropert
iesinordertopayt hepar t
ner shi
pobligat
ionsincurredpriortohis
admissiontot hepar t
nershi
p. Hi sper sonalproperti
escanonl ybeusedt opayt he
par
tnershipobli
gati
onswhi chwer eincur
redAFTERhi sadmissi
ont hereat
.

56.
Whi
chl
ossoft hefoll
owingproperti
eswill
bebornebythepart
nerconcer
ned?
a.Fungibl
ethingsorthosethatcannotbekeptwit
houtdeter
ior
ati
ng.
b.Thingsbroughtandappraisedintheinv
entor
y.
c.Thingscontri
butetobesold.
d.Thingsonlytheuseandf ruitsofwhichwerecontr
ibut
edbyapar tnerf
or
thecommonbenef i
t.

Accor dingt o1795,ifthethi

ngscontri
but
edar efungibleorcannotbekeptwi t
hout
deteriorat
ing,oriftheycontr
ibut
edt obesol
d,orelsetheywereboughtandappr ai
sedin
theinv entoryintheabsenceofst ipul
ati
on,t
her i
skshallbebor nebyt hepart
nershi
p.
Thisi s consi der
ing thatthe ownershi
p oft hose thi
ngs weret ransf
err
ed tot he
partnership.As such,t he doctr
ine ofres peritdomi no appl
ies and the owner
(partnership)shallbeart
heloss.

57.
FINECompanyi sapar tnershipcomposedofFel isa,I r
mina,Ner i
ssaandEl oisa.
Thepartnershav ecapi talcont ri
buti
onsofP10, 000. 00,P20, 000.
00,P30, 000.00
andP40,000.00,r espectively,andshar einthepr ofit
si nt her ati
oof2: 1:2:5.In
2008,t
hepar tnershipsust ainedal ossofP12, 000.00.t heshar eofeachpar t
ner
inthel
ossesshal lbe:
a.Equalforeachpar tneratP3,000.00sincet hepar tnersdonothav eal oss
shari
ngagr eement .
b.Feli
sa,P1,200. 00;I r
mi na,P2,400.
00;Ner i
ssa,P3, 600. 00;andEl oisa,P4,
800.00,basedont heircapit
alcontri
buti
onsoft hepar tners.
c.basedont heirprofitsharingrati
o.
d.Thepar tnersneedt ohav eanagr eementont heshar ingoft helossbef ore

21 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 i
tcanbedi
vi
dedamongt
hepar
tner
s.

Iti
sbasedont heprofi
tshar
ingrati
obecauseunderar t
icl
e1797,ift
hereisno
agreementast otheshareofl
ossesandonl yprof
itshar
ingrat
ioi
sagreedupon,t
he
shareonlossesshal
lbebasedontheprof
itshar
ingrat
io.

58.
Whi
choft
hefol
lowi
ngsti
pul
ati
onsisv al
id?
a.Asti
pul
ati
onexcl
udi
ngacapitali
stpar t
nerfr
om pr ofi
ts.
b.Asti
pul
ati
onexempti
ngacapitali
stpartnerfr
om losses.
c.Asti
pul
ati
onexcl
udi
nganindust r
ialpart
nerfrom profit
s.
d.Asti
pul
ati
onexempti
nganindustrialpart
nerfrom losses.

Therul
eisthatast i
pulat
ionexempti
ngapar tnerfr
om shari
ngi
nt heprofi
tsand
l
ossesisVOID. Theexcept i
onisincaseofaindustri
alpart
ner
. Aindust
rialpart
ner
canbeexemptedfrom shar
inginthel
ossesasstatedinArt
icl
e1797i
ndustr
ialpart
ners
areonl
yint
endedtoshareintheprof
it
sandnotinlosses.

59.
Thesest atement sarepr esentedt
oy ou:
I
. Thedesi gnat
ionoft heshar eofthepar t
ner
sint
hepr
ofi
tsandl
osses
entrustedtoat hirdpersonisvoid.
II
. Thedesi gnat
ionoft heshar eofthepar t
ner
sint
hepr
ofi
tsandl
osses
entrustedtooneoft hepartnersisval
i
d.
Inyourev aluati
onoft hef or
egoingstatements:
a.Bot hst atement saretrue.
b.Bot hst atement sarefalse.
c.Onl ySt atementIi sTrue.
d.Onl ySt atementI Ii
st r
ue.

Bothstatementsarefalsebecausethedesignati
onoftheshar
eoft hepart
nersin
t
heprofi
tsandlossesentrustedtoat hi
rdpersonisval
i
dbutitmaybei mpugnedand
wheniti
smani fest
lyi
nequitabl
e.Also,t
hedesignati
onoftheshar
eoft hepart
nersin
t
heprofi
tsandlossesent r
ustedtoonepar t
nerisnotvali
dasexpressl
ystatedinthe
l
astpar
agraphofArti
cl
e1798.

60.
Thesest atement sarepr esent edtoy ou:
I
. A par tnerappoi ntedasmanageri nt hearticl
esofpar tner
shi
pmaybe
remov ed f ora l awfulcause byt he vote oft he par
tnersowning the
cont r
olli
ngi nt
erest.
II
. Apar t
nerappoi ntedasmanageraf tertheconstitut
ionofthepart
nership
mayber emov edev enwi thoutjustcausebyt hev ot
eoft hepartners
owni ngt hecont r
olli
ngi nter
est.
Inyourev aluati
onoft hef oregoingst atements:
a.Bot hst atement sar etrue.
b.Bot hst atement sar efalse.
c.Onl yst atementIi strue.
d.Onl yst atementI Iistrue.

Thosest
atement
sar
esuppor
tedbyt
heAr
ti
cle1800.I
fthepar
tneri
sappoi
ntedas
22 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
themanageri nthearti
clesofpar
tnershi
p,hisappoi
ntmentcanberevokedONLYwith
l
awf ulcauseandAFTERav oteofthepartner
sowningthecontr
oll
i
nginter
est.Itcan
alsobewi t
houtlawfulcauseprovidedthatsuchrevocat
ionhast heconsentofal
l
part
nersincludi
ngthemanagingpartner
.

I
fthepartneri
sappointedaf t
erthepartner
shi
phasbeenconsti
tuted,hemaybe
removedwithorwithoutl
awfulcausebecausesuchpar
tneri
sconsi
deredmer el
yasan
agentwhoseaut hori
tymayber ev
oked atanytimebyhi spri
nci
palwhi ch i
sthe
part
nershi
p.

It
ems61and62ar ebasedont hef ol
lowi
ngi nfor
mat i
on:
BAROQUE Company ,a par t
nershi
p engaged i nt he tradi
ng ofar tsupplies,is
composedoft hef ol
lowingpartner
swi t
ht hei
rrespectivecapit
alcont
ri
butions:Bernardo,
P10,000.
00;Ant onio,P20,000.00;Renato,P30, 000.00;Or l
ando,P50,000.00;Qui nti
n,
P80,000.
00;Ul pi
ano,P200, 000.00;and Eust aquio,P300,000.00.Bernardo,Ant onio,
Renato,Orl
ando, andQui nt
inwer eappointedasmanager swi t
houtanyspecifi
cationof
thei
rrespecti
vedut ies.InOctober2008,Ber nardopr oposedt obuyartsuppl i
esf rom
XYZCor por
ati
on, butQuinti
nopposedi t.

61.
Av oti
ngt ookpl aceandAnt oni
oandRenat osidedwi thBernardo,whil
eOr l
ando
sidedwi t
hQui ntin.Howshal lt
heconf l
i
ctber esol
ved?
a.Thegr oupofBer nardo,AntonioandRenat owi llprev ai
lbecauset hey
constitutethemaj ori
tyofthemanagi ngpartners.
b.t hegr oupofOr l
andoandQui nti
nwi l
lpreavailbecauset heyconsti
tut
et he
controlli
ngi nt
erestamongt hemanagi ngpartners.
c.Nei theroft hetwogr oupswi l
lprev
ailbecauset hepart
ner sshoul
dactwi th
unanimi ty.
d.Thev otesofUl ipi
anoandEusat aquioarenecessar yt
or esolvet
heconf l
ict
.

Arti
cle1801isappl i
cabl
eintheinstantcasebecauset her
ear e2ormorepartners
whichwer eappointedasmanager s. Accor dingtothesaidart
icl
e,i
ncase2ormor e
partner
swer eentrustedtomanaget hepar tner
shipwit
houtspecifi
cat
ionastot hei
r
respecti
vefunct
ion,eachoneoft hepartner
scanbi ndthepart
nershi
pinanyactf
ort he
admi ni
str
ati
onofthepar t
nershi
p.

Howev er
,ifanyoneofthemanagi
ngpart
neropposes,t
hen,t
hedeci
sionoft he
majorit
yoft hemanagi
ngpart
ner
sshal
lpr
evai
lWITHOUTconsider
ingt
hei
rrespect
ive
i
nterest.

Int
heinst
antcase,t
hegr oupofBernar
do,Antoni
oandRenat oshal
lprev ai
l
.Thisis
trueev
enifthegroupofQuintinownthecontrol
l
ingint
erestoft
hepartnershipamong
themanagingpart
nersbecauseBernar
do,Antoni
oandRenat oconst
it
utedt hemajori
ty
ofthemanagingpart
ner
s.

Not
e:Arti
cle1801isappl
icabl
eonlyincaset hemanagi ngpart
ner
swereappointed
wit
houtspecifi
cat
ionastotheirr
espectiveduti
es. Ifeachoft hemanagi
ngpartners
wereappointedtoperfor
m specifi
cf uncti
on(ex.ifonepar tnerwasappoi
ntedf or
pur
chasing,oneforHumanResour ce,onef oroper
ations,etceach.
,
)thedeci
sionof
23 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
eachofthem wi
thi
nthepur
viewoft
hei
raut
hor
it
yshal
lpr
evai
lev
eni
ftheot
herpar
tner
s
object
ed.

62.
Supposingthatwhent hev oti
ngtookplace,Ant oni
osi dedwit
hBernardo,Or
lano
sidedwithQui nt
in,whil
eRenat oabstai
nedt herebyresult
inginatieamongt he
managingpar t
ners.Inthi
scase:
a.The gr oup ofQui ntin wi
llprevailbecause he and Orlando own the
controll
ingint
erestamongt hemanagi ngpartners.
b.Thegr oupofBer nardowill
prevai
lbecauset hereisati
e.
c.Neitheroft het wogr oupswillprevailbecauseoft heequalnumberof
votes.
d.Anot hervoti
ngshoul dbeconductedtor esol
vetheconfl
ict
.

Art
icl
e1801provi
desthati
ncaseat iebet
weent hemanagi ngpart
ners,t
hevot
eof
t
hemanagingpar
tnersowningthecontr
oll
i
ngint
er estshal
lprevail
.Si
ncethegr
oupof
Qui
nti
nownsthemajori
tyi
nter
est,
then,
thei
rdeci
sionshallpr
ev ai
l.

63.
STARBOX Ent erpr
ises,apar t
nershipengagedi nt hetradingofv i
deof il
msis
composed oft he fol
lowing partnerswitht hei
rcapitalcont r
ibutions:Simon,
P20,000.00;Tr oy.P40, 000.00;Ar iel
,P50,000.00;Roger ,P60, 000.00;Benny,
P80,000.00;Oscar ,P300, 000.
00;and Xav i
er ,P700,000.00.Ther e was no
agr
eementamongt hepar t
nersast owhoshall bethemanager .
a.Xav iershallbethemanagerbecauseheownst hecont r
oll
inginterest
.
b.OscarandXav i
erwi l
lbethemanager sbecauset hetwooft hem ownthe
control
linginter
est.
c.Al lofthepar t
nerswi ll
bemanager s.
d.Thepar tner
swi llhavetoagr eeastowhoshal lbet hemanager .

UnderArti
cl
e1803,iftherewasnoagreementregar
dingtobeamanagi
ngpartner
,
al
lpartnersar
econsider
edagent sandwhat
everanyofthem maydo,ev
enwit
houtthe
approvaloft
heother
s,arebindi
ngonthepar
tner
ship.

Intheinst
antcase,becauset herewasNOagreementast owhowi l
lmanaget he
partner
shi
p,allofthem willbeconsi
der
edasmanagingpar
tnerandanyactofeachof
them shal
lbindt hepar t
nershi
p. Thef actt
hatoneofthepartner
shascont rol
l
ing
i
nterestdoesnotent it
lehimt obecomethemanagingpar
tnerofthefi
rm absentany
agreementbetweent hepartner
s.

64.
Referto No.63.Assume t hatSi mon desi
res to buy v ideo fil
ms from Z
Dist
ri
but
orsCompany ,butBennyopposesit.Av oti
ngt ookpl aceandt r
oy,Ar i
el
andRogersidedwi thSimon,whil
eOscarandXav iersidedwi t
hBenny .
a.TheGr oup ofSi mon,Troy,Arieland Rogerwi l
lprev ai
lbecauset hey
consti
tut ethemaj ori
ty.
b.Thegr oupofBenny ,OscarandXav i
erwillprevailbecauset heyownt he
contr
ollinginterest.
c.Nonewi l
lpr evai
lbecausenoonewasappoi nt
edasmanager .
d.Theconf l
ictshouldberesolv
edbyaunani mousv oteamongt hepartners.

24 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 UnderArti
cl
e1803,al lpar t
nersareconsideredanagentoft hepar tnershipsince
ther
ei snoagreementappoi nti
ngapar tnerasamanagi ngpartner .Ont heot herhand,
Arti
cle1801st at
est hati
ncase2ormor epartnerswer eent rustedtomanaget he
part
nershi
p withoutspecifi
cation astot hei
rr especti
vef unction,each one oft he
part
nerscanbindt hepartnershipinanyactf ortheadmi ni
strationoft hepar t
nershi
p.
Andi fanyoneoft hemanagi ngpar t
neropposes,then,thedeci sionoft hemaj or
ityof
themanagingpartner
sshallprev ai
lWITHOUTconsi deri
ngtheirrespectiv
ei nt
erest.

Assuch,t
hegroupofSi
monwi
l
lpr
evai
lsi
ncet
heyconst
it
utet
hemaj
ori
tyoft
he
managi
ngpart
ner
s.

65.
Refert
oNo.63Assumet hev oti
ngresul
tedinthefol
lowi
ngTroyandAr ielsi
ded
wit
hSi mon,OscarandXav iersidedwi t
hBenny ,whil
eRogerabstainedf r
om
vot
ingther
ebyr esult
inginatie.
a.Benny,OscarandXav i
erwillprevai
lbecausetheyownt hecont rol
li
ng
int
erest.
b.Nonewi l
l prevai
lbecauseoft heequalnumberofvot
es.
c.Thet i
eshoul dberesolvedbyaunani mousvoteamongallpar
tners.
d.Thedeci sionwillbehel dinthemeant i
meuntilt
hepart
nershav eagreed
onwhoshal lbethemanager .

I
nthi
scase,
becauset
her
ewasat i
ebetweent hemanagingpar
tner
s,t
hedeci
sionof
t
hepar
tner
swhichownst
hecont
rol
l
ingint
erestshallpr
evai
l

66.
Wilma,Irma, Nor
ma, DonnaandYv onnear epar t
nersi
nthef ir
m WI NDYCompany .
Theyhav econt r
ibuti
onsofP40, 000.00,P30, 000.
00,P15,000.00,P10,000.
00and
P5,000.00.Noonewasnamedasmanager .Twopr oposedcont ract
swer evot
ed
uponbyt hepar t
nersduringameet i
ngwhi chwet ookplaceasf oll
ows:
I
. ContractNo.1– Vot ingf orappr ov alwereWi l
maandI rma;Votingfor
rej
ectionofthecontractwer eNorma, DonnaandYv onne.
II
. ContractNo.2– Vot ingf orappr ov alwereWi l
maandI rma;Votingfor
rej
ectionwereNor maandDonna; Whi leYvonneabst ai
ned.
a.Bot hcontractsareconsi deredappr ov ed.
b.Bot hcontractsareconsi deredrejected.
c.Onl ycontractIisconsideredappr ov ed.
d.Onl ycontractIIi
sconsi deredappr ov ed.

Thefi
rstcontr
actwasnotdul yapprov edsinceitdoesnotgett hemaj orit
yv ot
eof
thepart
ners.Thesecondcontracti
sappr ov edbecausether
ewasrat iesot hepar t
ners
whoownt hecontrol
li
nginter
estwil
lprevail.Wil
maandI r
mav otefortheappr ovalofthe
contr
actandthei
rint
erestconsist moret han50%oft hepartnershi
pcapital.

67.
Thesestatementsarepresentedt
oy ou:
I
. A partnermayassoci ateanotherper sonwi t
hhimi nhisshar
ewi t
hor
withouttheconsentoftheotherpartners.
II
. Ift he part
nerhav ing an associatei st he manager
,the associ
ate
automat i
cal
lybecomesapar tnerevenwi thoutt
heconsentoftheother
partners.

25 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 I
nyourev
aluati
onofthef or
egoingst
atement
s:
a.Bothstatementsaretrue.
b.Bothstatementsarefalse.
c.Onlystat
ementIi str
ue.
d.Onlystat
ementI Ii
strue.

Thefi
rstst
atementissuppor
tedbytheArti
cle1804whichstatest
hatapartnermay
associ
ateanotherpersonwithhiminhissharewi t
horwi thouttheconsentofthei
r
part
ners.Howev er
,thatassoci
atecannotautomatical
lyconsi
deredashav i
ngbeen
admitt
edinthepartner
shi
p.That
’swhythesecondstatementisfal
se.

68.
Theassi
gneeofapar tner’
sint
eresti
snot ent i
tl
edt oanyri
ght
,exceptt
her
ight
to:
a.Parti
cipat
einthemanagementoft hepart
nership.
b.Requireanyinf
or mati
onofpartner
shiptr
ansaction.
c.Inspectpart
nershipbooks.
d.Receivehisassignor’
sshareoftheprof
it
s.

Theot herthreechoicesar eexcl

usiv
elyr i
ght
soft hepartner
s.Assigneeofthe
par
tner
’sshareisnotconsideredapart
nerunlesstheot
herpar
tnersconsent
edther
eto.
So,heshal
lnotenjoyt
he r ightswhi
ch partnershave.

69.
Formor ethan10y ears, Pal
maandPl azahav ebeenpar tner
si nt heculti
vati
onof
anagricul
t urallotplantedwi thsweetcor n.Attheendoft helasthar vestseason,
Palmaassi gnedhi sinteresttoToledo,butPl azaobj ect
edont hegr oundthathe
didnotwantTol edot obehi spart
ner.
a.Pal ma,wi thoutPl aza’sconsent,cannotconv eyhisinterestt oToledoor
anyot herper son.
b.Thepar tnershipbet weenPal maandPl azawasaut omat icall
ydissolv
ed
whenPal maassi gnedhisinter
estt oToledo.
c.Tol edoaut omat i
cal l
ybecamePl aza’
spar t
nerwhenPal maassi gnedhi s
inter estinthepar tnershi
ptohim.
d.Pal mar emai nsasapar t
nerofPlazawi thalltheri
ghtsandobl igat
ionsofa
par tner.

UnderAr ti
cl
e1813,assi gningpartner
’sinter
estt oat hir
dpersondoesnotofi tsel
f
dissol
vet hepar t
nershipsincenoadmi ssi
onaspar tnerstookplace.So,Toledodoesnot
becomeapar tnerofPl azasinceassignmentonl ytookpl aceanditdoesnotdi ssolve
thepar tnershi
p.Partnershav etherighttoconv eyhi si
nteresttoanyonewi t h/
without
theconsentoft heotherpartners.Howev er
,suchassi gnmentdoesnotaut omaticall
y
maket heassi gneeasapar tneront hepar t
nership. Hewi llonl
yhav et her i
ghtt o
receiv
edf rom theassignoralltheamountst owhicht heassignori
sentit
led.

70.
Theconveyancesuchasbyassignmentbyapar t
nerofhiswholei
nteresti
nthe
par
tner
shipproducesthefol
lowi
ngeffect
s,except
:
a.Thepar tner
shipsti
l
l r
emains.
b.Theassi gneebecomesapar t
ner.
c.Theassi gneeisent i
tl
edtoreceiv
et heassignor
-par
tner
’si
nter
estinthe

26 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 prof
it
s.
d.Theassi
gneecannotpar
ti
cipat
eint
hemanagementoft
hepar
tner
shi
p.

I
twasstatedintheArt
icl
e1813t hatassi
gneedoesnotbecomeapar
tnersi
nce
t
her
eisnoconsentbyt
heotherpar
tner
stoadmithi
m asapar
tner
.

71.
Thesestatement sarepr esent edtoy ou:
I
. Apar t
ner,beingaco- ownerofspeci fi
cpart
nershi
ppropert
y,hasanequal
r
ighttopossesssuchpr opert
yf orothert
hanthepart
nershi
ppurpose.
II
. Apar t
ner’
srighti nspeci fi
cpar t
nershippr
opert
yissubjectt
olegalsuppor
t.
Inyourevaluati
onoft hef oregoi ngstatements:
a.Bot hstatement sar etrue.
b.Onl ystat
ementIi strue.
c.Onl ystat
ementI Iistrue.
d.Bot hstatement sar efalse.

Bothstatementar efal
sebecauset heyaret heopposi t
estatementsst at
edAr t
icle
1811.Itwasst atedt hateachpar tnerhasequalr ighttopossesandusespeci f
ic
partner
shipforpartnershi
ppur poses. Howev er,theycannotusei tforanyot her
purposes(suchasfort hei
rpersonaluseorf ortheuseofot herperson/
enti
tyot hert
han
thepartner
shipwher ei
nNOact ualbenefi
twillber eceiv
edbyt hepartnershi
p)unless
otherpart
nersconsentedthereto.

Fur
ther,t
hesai
darti
clestatesthatapartner
’sri
ghti
nspeci
fi
cpartnershippropert
yis
notsubjecttol
egalsupportunderAr ti
cle291.Itmeansthatthepartnershi
ppr opert
y
cannotbeusedinordert
ogiv esupporttothedependent
sofanindi
vi
dualpar tner
.

Note: Al t
hought hesaidart
icl
est atest hatspeci f
icpart
nershippropertycannotbe
att
achedorbesubj ectofl
egalsuppor tbyt hei ndivi
dualpart
ner’
scr edi
tors,t
hesamei s
onlyapplicable asl ong ast he propertyi sst i
l
lowned byt he partners. Thi sis
consi
dering thatt he debtwasowned byt he indiv
idualpartner
sand NOT byt he
part
nership and t aking i
nto considerati
on t hatt he par
tner
ship has a per sonal
it
y
separat
eanddi stinctf r
om eachofthepar tners.

Howev er
,anyamountwhi cht hepartnerisentit
ledtor ecei
vef r
om thepartnershi
p
canbesubj ecttoattachmentandsuppor tconsideri
ngt hatthesamei salr
eadyt he
propert
yoftheindivi
dualpart
ners.Thus,incaseofdi st
ributi
onofpr of
it
s,theprofi
tsto
whicheachoft hepartner
sar eentit
ledt oreceivecanbeat tachedbyt hepar t
ners’
respect
ivecredi
tor
ssincethesamei snol ongerthepropertyofthepart
nershi
p.

Fur
thermore,saidprohi
biti
onisonlyappli
cabl
eifthepersonmakingt
heatt
achment
ofpartner
shippr oper
tyist hecredi
torofI NDI
VIDUALPARTNERS.Thepr ohi
biti
onin
Art
icl
e1811i sNOT appl icabl
ei ncaset heperson/ent
it
yattachi
ngthepart
nershi
p
pr
opertyisthecredit
orofthepartner
shipi
tself
.

72.
Thesest
atementsarepr
esent
edtoyou:
I
. Apartner
’sri
ghti
nspecif
icpart
ner
shi
ppr
oper
tymaybeat
tachedbyhi
s

27 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 separatecreditors.
I
I. Apar t
ner’srightinspeci fi
cpart
ner
shi
pproper
tymaybeassi
gnedbyhi
m
forhi
ssepar atedebt s.
I
ny ourev al
uati
onoft hef oregoingst
atement
s:
a.Bot hstatement sar etrue.
b.Bot hstatement sar efalse.
c.Onl ystatementIi strue.
d.Onl ystatementI Iistrue

Bothstatementsar efalsebecausei topposest hestatementunderArt

icl
e1811.A
part
ner’
srightinspecifi
cpar tner
shi
ppr opertyisnotsubjecttoat
tachmentorexecuti
on
bythepersonal,credit
oroft hepart
ner.Apar tner’
sri
ghtinspecif
icpart
ner
shippropert
y
i
sal sonotassignable.Thisisconsideri
ngt hatthepart
nershipproper
ti
esareownedby
thepart
nershipandNOTbyt heindi
vidualpartner
s.

73.
Thesest atement sar epr esent edtoy ou:
I. Ift he cour tissues a char ging orderon a par tner’
si nterestint he
partnership obt ai
ned by t he separ ate cr
editorofsuch par tner
,such
separ atecr edi
t orenj oy spreferenti
alri
ghtov erpartner
shipcr edit
orson
suchi nterestchar ged.
II
. Whensuchi nt
er estischar ged,t hesamemayber edeemedwi thseparate
proper t
yofanyoneormor eoft hepartner
s,orwithpartnershipproperty
,
byanyoneormor eoft hepar tners,wi
t ht
heconsentofal lthepar t
ners
withi nt
erestar enotsochar gedorsol d.
Inyourev aluati
onoft hef or
egoi ngst atements:
a.Onl yst atementIi strue.
b.Onl yst atementI Ii
str ue.
c.Bot hst atement saret rue.
d.Bot hst atement saref alse.

The creditor
soft he par t
nership hast he preferentialr i
ghtsov ert he indiv i
dual
credi
tor
soft hei ndivi
dualpar t
ners.Thesepar atecr editorscannotenj oypref erential
ri
ghtsovert hepar t
nershipcr edit
orsoni nterestchar gedi ssuedbyt hecour tsincei t
wouldprejudicethepr eferredr i
ghtsoft hepar tnershipcr edit
or sundert heArticl
e1827.
Thisisconsideringt hatwhatt hecr edi
torsoft heindi vi
dualpar tnerscanchar gef r
om
thepartnership aret hoseWHI CH THE I NDI VIDUALPARTNERS ARE ENTI TLED TO
RECEIVE AFTER ALL THE CLAI MS OF THE PARTNERSHI P CREDI TORS hav ebeen
sati
sfi
ed.Inshor t,sai
dcr editorsofthei ndivi
dualpar tnerscanonl yreceivesomet hingi f
therearer emainingamount /properti
est o whi chani ndividualpar t
ner swillst il
lbe
enti
tl
edaftert hepay mentt oallcredit
orsoft hepar t
ner ship.Thusasepar at
epar tner’
s
j
udgmentcr edit
orwi l
lr eceivepay mentonl yaf t
erpar tnershipliabili
ti
eshav ebeen
sati
sfi
ed.

74.
Zanderand Fr i
endsi sa par t
nership composed ofpartnersAr t
hur,Bernard,
CharlesandDenni s,
allfr
iendsofZander .Alt
houghnotapar t
ner,Zanderoff
ered
tohav ehisnamei ncludedint hef i
rm namet ohelphisf r
iendsstart
st heir
business.Zander isknowni nt hebusinesscommuni t
yast henicknameof
AlexanderCruz,andhasmanybusi nessesbearinghi
snicknamesuchasZander

28 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 Forwarders’,Inc.,ZanderReal tyCorporati
on,ZanderFoodsCor por
ati
on,and
ZanderEnt erpri
ses.Dur i
ngitsfir
stthr
eey earsofoperati
ons, ZanderandFr i
ends
i
ncurredliabili
ti
eswhi chwer emoret hanitsassets.Insuchascase,mayt he
credi
torsgoaf terthesepar ateassetsofAl exanderCruzaf terthepartnershi
p
asset
shav ebeenexhaust ed?
a.No, becauseAl exanderCr uzisnotinreali
tyapartner
.
b.Yes,becauseAl exanderCruzisent i
tl
edt oallri
ghtsandi ssubjecttoal l
l
iabil
iti
esofapar t
ner.
c.Yes,becauseAl exanderCr uzissubjecttoallli
abil
it
ies,butisnotentitl
ed
t
ot her i
ghtsofapar tner.
d.No, becauseAl exanderCr uzdidnotinvestinthecapitalofthepart
nership.

SinceAl exander
,asathirdper
son,all
owshisnamet obeincl
udedinthefi
rm name
heissubj ectedtotheli
abi
lit
yofapar t
nerbuthedoesnothav et
heright
sofapar t
ner
.
Therefore,havingnoseparatei
denti
tywitht
hepartner
shiphi
sseparateasset
smaybe
subjectaspay menttothecredi
tor
s.

75.
Thesest atement sarepr esent edtoy ou:
I. Ani ndust r
ialpartnercannotbehel dli
ablebypartner
shipcredi
tor
saf t
er
thepar t
nershi
passet shav ebeenexhaust edbecauset helaw exempts
himf rom sharingint hel ossesoft hepartner
ship.
II
. Ast ipulati
onexempt i
ngacapi tali
stpart
nerfrom l
iabi
l
itytothi
rdpersons
shall bevali
damongt hepar tners,butvoi
dast othi
rdpersons.
Inyourev aluati
onoft hef oregoingst atements:
a.St atementIi strue; StatementI Iisfal
se.
b.St atementIi sfalse; StatementI Iistr
ue.
c.Bot hst atement saret rue.
d.Bot hst atement saref alse.

St
atementIust rueassinceArt
icl
e1816st atesthat
,al
lpar
tners,
includingindust
ri
al
part
nersshallbeli
ableprorat
awithallthei
rproper
tyandaft
erallt
hepar tnershi
passets
havebeenexhaust edforthecont
ractswhi chmaybeent er
edintointhenameandf or
theaccountofthepar t
nershi
punderitssignat
ureandbyapersonaut horizedtoactfor
thepart
nership.

However,t
heindustr
ialpar
tnerwillhavetherighttocol
lectf
rom t hecapit
ali
st
par
tner
stheamountwhichhemayhav epaidsi
nce,beingmer
elyanindustr
ialpar
tner
,
hei
sNOTl i
abl
etoshareonthelossesofthepar
tner
ship.

76.
BRAVOEnt er
pri
sesi sapar tner
shipownedbyBet t
inawhoi nv estedP20,000. 00;
Rowena,P40,000. 00;Ar mida,P10,000.00;Vi
olet
a,P30,000. 00;andOl i
via,who
contri
buted herser vi
ces.Thepar t
nershav estipulated t
hatBet ti
na shallbe
exemptf r
om obligations tothird per
sons.Af t
ert hree years ofl osses,t he
businesshadl i
abil
it
iesofP90,000. 00,whil
eitsasset sdwindledt oP50,000. 00.
Inthepay mentoft hel i
abil
it
ies,theassetsoft hepar t
ner ship wil
lfirstbe
exhausted,andthereafter:
a.Theunpai dliabili
ti
esofP40, 000.
00wi l
lbepai dequallybyal lthepartners
fr
om t heir separate assets at P8,000. 00 each wi th no r i
ght t o

29 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 reimbur sement .
b.Theunpai dli
abi l
it
iesofP40, 000.00willbepai dequall
ybyallthepar tner
s
from t heir separ ate asset s at P8, 000.00 each wi th a r i
ght to
reimbur sementont hepartofBet ti
na,whowasexempt edfrom liabil
i
tyto
thirdper sonsbyagr eement,andOl i
via,whoi sanindustri
alpartnerwho
mustnotshar ei nt helosses.
c.Theunpai dli
abilit
iesofP40, 000.00willbepai dequall
ybyRowena, Armida,
Violeta,andOl iviaatP10, 000.00eachwi thnor i
ghttor ei
mbursementon
thepar tofOlivia.
d.Theunpai dli
abilit
iesofP40, 000.00willbepai dequall
ybyBetti
na, Rowena,
Ar midaandVi oletaatP10, 000.00eachwi t
hnor ighttorei
mbur sementon
thepar tofBet ti
na.

Namesoft he Paymentto Act

ualShareont he Over
(Under)
Partners Credi
tors Payment * Payment
Betti
na P8,
000.00 none P8,
000.00
Rowena P8,
000.00 P20,000.00 (
P12,000.
00)
Ar mida P8,
000.00 P5,000.00 P3,
000.00
Viol
eta P8,
000.00 P15,000.00 (P7,
000.00)
Oli
vi
a P8,
000.00 none P8,
000.00
*
onthebasi softhei
rcapi
talcontr
ibuti
on

RowenaandViol
etashoul
dpayP12,
000.00andP7,
000.
00respect
ivel
y,t
ocov
erup
t
heover
paymentofArmi
daandtorei
mbursethepay
mentofBet
ti
naandOl i
vi
a

77.
ACME Ent erpri
sesi sownedbypar t
nersAl onso,Cor tes,Mal v
ar ,andEl nor a.
Alonsocont ri
but edP50,000. 00;Cor tes,P30, 000.00;andMal v
ar ,P20,000.00.
Elnora,t hemanagi ngpar t
ner,cont ri
butedhi sser vi
ces.Thepar tnersstipulated
thatAl onsoshal lbeexemptf rom obl i
gati
onst othirdper sons.Thef i
rmincur red
obligationsofP70, 000. 00whi chi tcannotpayasi thasasset sofP40, 000.00onl y.
Af t
ert heexhaust ionoft hepar tnershi
passet sandt hepay mentbyt hepar tner s
from t heirsepar atepr opertyoft hepar tnershipdebt sandset tlementamong
themsel ves,how muchul ti
mat elyistheshar eofeachpar tnerint heremai ning
li
abi l
i
tyofP30, 000. 00?
a.Al onso, P15, 000.00;Cortes, P9,000.00; Malvar,P6, 000.00;Elnora,none.
b.Al onso,P10,000. 00;Cor t
es,P10,000. 00;Mal var,P12,000. 00;Elnor a,
none.
c.Al onso, none; Cortes,P18, 000.00;Malv ar,
P12, 000. 00;Elnora,none
d.Al onso,P7,500. 00;Cor tes,P7,500. 00;Mal var,P7,500. 00;Elnora,P7,
500. 00.

Namesoft he Paymentto Act

ualShareonthe Over
(Under)
Part
ners Credi
tors Payment* Payment
Al
onso P7,
500.00 None P7,
500.00
Cor
tes P7,
500.00 P18,000.
00 (
P10,500.
00)
Malvar P7,
500.00 P12,000.
00 (P4,
500.00)
El
nora P7,
500.00 None P7,
500.00
*onthebasi
soft
hei
rcapit
alcont
ri
but
ion

30 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
Thest ipulationt hatAlonzowi llbeexemptf r
om shar eofl osseswi llbebindingonly
betweent hepar tners.Asst atedinAr ti
cle1816, “Allpar tners,i
ncludingindustri
alones,
shallbel i
ablepr or at
awithal lt
heirpropert
yandafterallthepar t
nershipassetshav ebeen
exhausted,f orthecont r
actswhi chmaybeent er
edintoint henameandf ortheaccountof
thepartner ship,underit
ssi gnatureandbyaper sonaut horizedt oactf orthepar t
nershi
p.”
Anyagr eementt ot hecont raryisNOTv al
i
dorbi ndi
ngasagai nstt hir
dper sonsBUT
bindingbet weent hepartners.

Ont heot herhand,asbet weent hepartners,ElnorashallNOT shareforanyl oss

becauseshei sani ndust
ri
alpartner. Assuch,shecanaskf orrei
mbursementfor
whatevershewillbemadeliabl
et opaytoat hir
dper son. Howev er
,bei
nganindust
rial
part
nerwillnotexemptherfrom beingpr
or ateli
abletothi
rdpersonasapar t
nerofthe
part
nershi
p.

SinceAlonsoandEl
nor
ahastherightt
orei
mbur sethei
rpayment ,Cort
esandMalvar
ulti
matel
yhasashareofP18,
000.
00andP12,000.00respect
ivel
yont hepar
tner
shi
p’s
l
iabil
it
y.

78.
Canut o,Ambr osio,Romual do,and Egmi dio ar
e partnersin CARE Company ,
whosebusi nessi stradingofher balproducts.Canutocont ri
butedP60, 000.
00,
Ambr osio,P30,000.
00, Romual do,
P20,000.00 and Egmi di
o,P10,000.
00. The
par
t nersfail
edt oagreeonwhoshal lmanaget hepartnership.
a.Canut oshallbet hemanagerbecauseheownst hecont r
olli
nginter
est.
b.Canut o and Ambr osio wil
lbe t he manager s because they own t he
contr
oll
inginterestandt hereshouldbeatl eastt womanager swhocan
di
scussanddeci deforthepartner
ship.
c.Al lthe partners willbe considered the manager s oragent s oft he
part
nership.
d.Nooneamongt hepar t
nerscanmanaget hepartnershi
pbecausei tisvoid
whenthepar tnersfai
ledtodesignatethemanager .

AccordingtoAr t
icle1818,ev er
ypartnerisanagentoft hepartnershipforthe
purposeofi t
sbusi
ness.Therefore,nomatterhowsigni
fi
cantthecontr
ibutionmadeby
apar tnerorv i
ceversa,i
tenti
tleshimtoactasanagentf orthepartnershi
punless
otherwisether
eisast i
pul
ati
ononwhowi llactfort
hepart
nership.

79.
Ref ert ono.78.Assumet hatCanut owasdesi gnat
edasmanager .Noot her
part nerwasgi venanaut hori
tytoactf orthepartnershi
p.Whi chofthef ol
lowing
transact i
onsent er
edintoinbehalfoftheCARECompanywi llnotbebindingoni t
?
a.Thesal ebyCanut oofherbalpr
oduct s.
b.Thepur chasebyCanut oofherbal product
s.
c.Thepur chaseofadel i
veryvanbyAmbr osio.Thesell
erwasnotawar ethat
Ambr osiohadnoaut hori
tytopur chaseav anforthepartner
ship.
d.Thesal eofher balproductsbyRomual do.Thebuy erhadnoknowl edge
thatRomual dowasnotaut hori
zedt osellf
orCARE.

Thepurchaseofv
anbyAmbr
osi
oforCARECompanywi l
lnotbebindingupont
he
par
tner
shi
pbecauseAmbr
osi
owasnotaut
hor
izedt
otransactsuchbusinessandt
he

31 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
actisnotf orappar entlycarryingoni nt heusualwayoft hepar t
nershi
pbusi ness.
Whet herornott hesell
erwasawar eofAmbr osi
o’slackofauthor i
tyisofnoi mpor tance.
Thisisinaccor dancewi thArt.1818whichpr ov i
desthat “Ev
er ypartnerisanagentoft he
part
nershipf orthepur poseofi tsbusiness,andt heactofev erypartner,i
ncludingt he
executi
oni nthepartner
shipnameofanyi nstr
ument ,f
orapparentlycarryi
ngoni ntheusual
wayt hebusinessoft hepartnershipofwhi chhei samemberbi ndst hepar t
nership,unless
thepar t
nersoact inghasi nf actnoaut horit
yt oactf ort
hepar t
nershi
pi nthepar ticul
ar
matter,andt hepersonwi t
hwhom hei sdeal i
nghasknowl edgeoft hefactthathehasno
suchaut hori
ty”
.

Ontheotherhand,al
thoughRomual doisnotaut
hori
zedbyt
hepar
tner
shi
p,hi
sactis
val
idandbi ndi
ngupont hepartnershipbecausehisactwasAPPARENTLY forthe
carr
yingoft
heusualwayofpar tnershipbusi
nessandthatt
hebuy
erwasNOTawar eof
thewantofauthori
tybyRomualdo.

Note: Ifthebuyerknowsthewantofauthor
it
yofRomualdo,thesaidt
ransact
ion
wi
llNOTbebi ndi
nguponthepart
ner
shipal
thoughitwasappar
entl
yforthepurposeof
t
hebusinessofthepar
tner
shi
p.

80.
PRISM Companyi sownedbypar t
nersPalermo,Redondo,I nterno,Sarenas,and
Melendez. Mel endezi st he manageroft he companywhose busi ness is
import
at i
on and t r
ading ofopt icalequipment .Dur i
ng t hey ear,thepar tners
author
izedPal ermot obuyadel iver
yv anfort hepartnership.Noot heraut hori
ty
wasgiv ent otheot herpartners.Thef ol
lowingar etransact ionsent er
edi ntoby
thepartner sfort hey ear
:
I. I
mpor t
ationofopt i
cal equipmentbyMel endez.
II
. Sal eofopt icalequipmentbyRedondot oABCVi sionsCompanywhose
owner ,AntonioB.Car l
os,wasnotawar ethatRedondohasnoaut hor i
ty.
II
I. Pur chaseofadel iveryvanbyI nter
nof rom RT Mot orswhoseowner ,
Ricar doTor r
es,wasnotawar ethatInt
er nohadnoaut hority
.
IV. Pur chaseofadel iveryvanbyPal ermo.
Whichoft heabov etransactionsarebindingonPRI SM Company ?
a.IandI I
.
b.IandI V.
c.I, I
IandI V.
d.I, I
IIandI V.

Transact
ionIisbi
ndingsinceMel endezi sthemanagerofthepart
nershi
p,hence
everyactdonebyhimforthepartner
shipisbindi
ngtoPRISM Co.
Transact
ionIIi
sbindi
ngsinceABCVi sionsCo.isnotawarethatRedondohasno
authori
tyandtheacti
sforapparentl
ycarryi
ngoni nt
heusualwayofthebusi
nessofthe
partner
ship.
Transact
ionI
Visbindi
ngsincePalermoi sgiv
entheauthor
it
ytodoso.

81.
GREAT Enter
pri
sesCompany ,apartner
shipdealingincomput ersoftwar
e,is
composedofGr ace,Rose,Elma,Aida,andTrina.Grace,Rose,Elam andAida
contr
ibut
edP10,000.
00,P20,000.
00,P30,000.
00,P40,000.00,r
especti
vel
y;whil
e
Tri
nawho i sacomput erexpert,contr
ibut
edherser vicesandmanagest he

32 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 partnership.Thepar t
ner shav enopr ofi
tandl ossshar i
ngagr eement .Basedon
theforegoi ngf act s,thef ollowingst atement sarepresent edtoy ou:
I
. Trinamayengagei nt heaut osuppl ybusinesswi thoutt heconsentoft he
capi tali
stpar t
ner ssi ncei tisabusi nessthatisofaki nddi f
ferentfrom the
partner shi pbusi ness.
I
I. I fGr acesel lscomput ersoftwar etoBlesil
da, athir
dper son, t
hesal ewi l
lbe
bindi ngont hepar tner shipaslongasBl esil
dawasnotawar eoft hel ackof
author it
yofGr ace.
I
II. I ncaseofpr ofits,Tr i
nawi l
lbegi venanequi t
ableshar et hereof,andt he
balancewi llbedi videdamongGr ace,Rose,El ma,andAi daequal l
y,since
theyhav enopr of i
tshar ingagreement .
I
ny ourev aluat i
onoft hef oregoi ngfactsandst atement s:
a.IandI Iar ef al
se.
b. IandI IIaref alse.
c. I IandI IIaref alse.
d.Al lar efal se.

Stat
ementIi sf
alsesinceTr ina,beingani
ndustri
alpart
ner,shoul
dal l
ocatehert i
me
ful
lyontheGREATEnt erprisesCo.si nceherser
viceisheronlycontr
ibuti
on,whet heror
notthebusinessisdif
fer
entf rom thepar t
ner
shi
p’sbusiness,suchbusinesswi l
lnotbe
all
owed.Ifasidefr
om herser vice,Trinaal
socontri
butedcapit
altothepar t
nershi
p,she
couldhaveengagedinthesai dbusi ness.

Stat
ementIIIi
sfalse. Althoughi
tistruethatTr i
nawil
lbegiv
enanequit
abl
eshare
as an indust
ri
alpartner,the remai
ning shallbe shared bythe ot
herpart
nersin
accordancetotheratiooftheircapi
talcont
ri
bution. Thisistheef
fectoft
helackof
agreementbetweenthepartiesastotheprofi
tsharing.

Not
e: I tcanal
sobear guedthatSt at
ementIIi
sal
soFALSE.Sincethereisno
appoi
ntedmanagerofthepartner
ship,allpart
ner
scanactasmanager s. Assuch,
Gracei
sauthori
zedtosel
lcomputersoftware. Noneedfort
hethi
rdpartytobecome
awareoftheabsenceoft heauthorit
yoft hesai
dpart
nerSINCESHEI SIN FACT
AUTHORIZEDTOACTONBEHALFOFTHEPARTNERSHI P.

82.
Whichofthef ol
lowingisanactt hatisnotforapparentl
ycarryi
ngnint heusual
waythebusinessoft hepartnership?
a.Assi gning the partnership propert
yint rustforcr edi
tors oron t he
assignee’
spr omisetopayt hedebtsoft
hepar t
nershi
p.
b.Ent eri
ngintoacompr omi seconcerni
ngapar t
nershi
pclaim orl
iabi
li
ty.
c.Renounci ngacl aim ofthepar t
nershi
p.
d.Al loftheforegoing.

Thest
atedchoicesarei
ncl
udedintheact
sthatt
hepart
ner
sar
enotaut
hor
izedt
odo
sot
hati
sstipul
atedint
heArti
cle1818whi
chstat
esthat
:
“Exceptwhenaut
hori
zedbytheotherpart
ner
sorunlesstheyhav
eabandonedt
hebusi
ness,
oneormor ebutl
essthanal
lthepart
nershavenoauthor
ityt
o:

33 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
(
1)Assi
gnt
hepartner
shipproper
tyi
ntr
ustf
orcr
edi
tor
soront
heassi
gnee’
spr
omi
set
opay
t
hedebt
softhepart
nershi
p;

(
2)Di
sposeoft
hegood-
wil
loft
hebusi
ness;

(3)Doanyotheractwhi
chwoul
dmakei
timpossi
blet
ocar
ryont
heor
dinar
ybusi
nessofa
part
ner
ship;

(
4)Conf
essaj
udgment
;

(
5)Ent
eri
ntoacompr
omi
seconcer
ningapar
tner
shi
pcl
aim orl
i
abi
l
ity
;

(
6)Submi
tapar
tner
shi
pcl
aim orl
i
abi
l
ityt
oar
bit
rat
ion;

(
7)Renounceacl
aim oft
hepar
tner
shi
p.”

83.
Aparceloflandi nthenameofCompt echCompany ,apart
nershi
pengagedi nt
he
saleand ser viceofcomput er
s, wassoldbyA, oneofthepartners,i
nt hename
ofCompt echCompany ,wit
houtexpressauthori
ty,toX,whowasnotawar eofA’
s
lackofauthorit
y .
a.Theconv eyancebyAt oXpassedt hetit
letot hepar
celoflandtoX.
b.Compt echCompanycannotr ecoverthepar celofl
andfrom X.
c.Bot h(a)and( b)arei
ncorrect
.
d.Theconv eyancebyA t o X passed onlyt heequitableinterestinthe
pr
opertyt oX.

Forasaleofarealpropert
yonbehal foft
hepar tnershiptobev ali
d,t
hesal
emustbe
madeby :a)apartnerwhoi sauthorizedbythepar t
nershi ptomaket hesal
e;b)byt he
ManagingPartner
;andc)byanypar t
nerPROVI DEDTHATTHEACTI SAPPARENTLY
MADEFORTHEBUSI NESSOFTHEPARTNERSHI P.Si ncet hesaleisNOTappar entl
y
madef orthebusinessoft hepar tnership(sincet hebusi nessoft hepart
nershipis
sell
i
ngeandser vi
cingofcomput ersandNOTsel l
ingofl and),t
hesaledoesNOTbi nd
thepart
nershi
pandt hepart
nershi
pcanr ecoverthepr operty.

Note:Theonlyt
imet hatt
hepartner
shipcannolongerr
ecovertheproper
tyi
sifthe
t
it
lepr opert
yhasal
readybeent r
ansfer
redtothenameoft hebuyerandthebuyerhas
t
ransferred/
sol
ditt
oat hir
dpersonwhowasi ngoodfai
th.

84.
Refertothefactsintheprecedi
ngnumber,exceptthatAsoldt heparcelofland
inhisownnamewi thoutexpr
essaut
hori
tytoXwhowasnotawar eofA’slackof
author
it
y.
a.Theconv eyancebyAt oXpassedtheti
tletot
hepar celoflandtoX.
b.Theconv eyancebyAt oXpassedtheequi t
ableinter
esti ntheparcelof
l
andtoX.
c.Bot h(
a)and( b)arecorr
ect
.

34 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 d.Nei
ther(
a)nor(
b)i
scor
rect
.

Neit
hertheti
tl
enortheequit
ableint
eresti
ntheparceloflandenti
tl
esXsi
ncet
heacti
s
notforappar
entl
ycarr
yingonintheusualwayofbusinessofthecompany
.

Note: I ftheacti sappar entl

ymadet ocar rytheusualcourseofbusi nessoft he
part
nershi
p( ex.Ifthepartnershi
pisengagedi nbuyandsel lofl
ands),
theanswerwoul d
havebeenB. I twillt
ransfertheequi
tableinterestontheproper
ty. Onlytheequit
able
i
nterestwouldhav ebeent ransferr
edi
nt hesai dcasebecauseAsol dthepr
oper t
yusing
hi
sownname( i
.e.intheDeedofSal e,insteadofput ti
ngthepartner
shipast hesel
ler
,
heputhimsel fastheonewhowassel l
ingthepr opert
y).

85.
Thef ol
lowingst atement
sconcer ni
ngnoti
ceandknowledgeofapartner:
I. Noticet oanypart
ner .
II
. Knowl edgeofapar tneractingonaparti
cularmat t
erobtainedbyhim
whilealreadyapartner.
II
I. Knowl edgeofapar tnernotacti
ngonthepar t
icul
armatterobtainedby
him beforehebecameapar tner
.
Whichoft heabov enoti
ce/ knowl
edgeisalsonoti
cet oorknowl edgeoft he
partner
ship?
a.IandI I
.
b.IandI I
I.
c.IIandI II
.
d.I, I
IandI II
.

Asnot edonAr t
icle1821,”Not icetoanypar tnerofanymat terrel
atingtopar t
nershi
p
aff
air
s,andt heknowledgeoft hepar tneracti
ngint heparti
cularmat t
er,acquir
edwhi lea
part
nerort henpresenttohismi nd,andt heknowledgeofanyot herpartnerwhor easonabl
y
coul
dandshoul dhav ecommuni catedi tt
ot heact ingpar
tner,operateasnot i
cet oor
knowledgeoft hepartnershi
p,excepti nthecaseoff raudonthepar t
nership,commi t
tedby
orwiththeconsentoft hatpart
ner”

86.
Berroy aisapar t
neri nExcel l
entCompany .Bef orehebecameapar tner,he
acquiredknowl edgeaboutt hecreditreputati
onofTer mulowhohadst ringsof
coll
ect i
on cases agai nsthi m.Lat er,Termul o boughtgoods on cr editf r
om
ExcellentCompanyt hroughAct on, t
hepar t
neraut hori
zedtoactont hepar ti
cul
ar
mat t
er .During allthe t i
me t hatthe t r
ansaction was being conduct ed with
Termul o,Ber r
oy anev errelayedt heknowl edget hathehadaboutTer mul oto
Actonal t
houghhecoul dhav edoneso.Lat er
,ExcellentCompanycoul dnot
coll
ectTer mul o’saccount .Wast heknowl edgeofBer r
oyaonTer mulo’
scr edi
t
reputationalsoknowl edgeoft hepar t
nership?
a.Yes, becausehecoul dandshoul dhav erelayedtheinformationtoAct on.
b.Yes, becauseher emember edt heinfor
mat ion.
c.No, becausehewasnott hepartneracti
ngont hepar t
icularmatter.
d.Yes,becauset heknowl edgeofanypar t
neronanymat t
eraffectingthe
part
nershipisknowl edgeoft hepar t
nership.

Asst
atedi
nAr
ti
cl
e1821,knowl
edgeofapar
tnernotact
ingonapar
ti
cul
armat
ter
,

35 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
whet
herornotobtai
nedbyhi m befor
ehebecameapartner
,operat
easknowledgeof
thepar
tner
ship,PROVIDED t
hatt hesai
dpart
nercoul
dhav ereasonabl
yrel
ayedthe
sametotheacti
ngpart
ner.

I
nt hei
nstantcase,Berroya,al
thoughnottheacti
ngpart
ner,hast
hedutyt
orel
ayhi
s
knowledgetoTermul o,theactingpartner.Heal
sohadnumer ousopport
uni
tyt
odoit.
Assuch,ev enifhef ail
edt orelayittot heact
ingpar
tner
,theknowledgeofBer
roy
a
oper
atedast heknowledgeoft hepartnershi
p.

87.
Thefol
lowingsour cesofobl igati
onsar epresent edt oy ou:
I. Liabil
it
yar i
si ngf r
om torts(quasi -del
icts)andcr i
mesf ort
hei
ndi
vi
dual
act
s
ofthepar tner s.
II
. Li abil
it
yforcont ractualobligati
onoft hepar tnership.
Theli
abil
it
yoft hepar tnersandt hepar tnershipar e:
a.I-soli
dary( par t
nersandpar tnership);II
-joint(partners)
b.I-j
oint(partner s);I
I-soli
dary( partnersandpar tnershi
p)
c.Solidar
y( par tnersandpar tnership)forbot hIandI I.
d.Joint(partner s)forbothIandI I.

I
n accor dance t o Ar ti
cle 1824,al l partners ar el i
able soli
daril
y with t he
part
ner shipf orev eryt
hing chargeabl etot hepar t
ner ship underArti
cle1822 whi ch
providest hat“ Where,byanywr ongf ulactoromissionofanypar t
neracti
ngintheor dinary
courseoft hebusi nessoft hepar t
ner shi
porwi t
htheaut horit
yofco-part
ners,l
ossori njury
i
scausedt oanyper son,notbeingapar t
nerinthepar tner shi
p,oranypenaltyisi
ncur red,
thepar t
ner shipisli
abletherefortothesameext entast hepar tnersoacti
ngoromi t
tingto
act”
.
Partner sar emer elyprorataliableforthecont ractualobl i
gati
onsoft hepart
ner ship.
Assuch, eachpar tnercannotbemadet opayinexcessofhi sli
abli
li
tyunderthelaw.

88.
DOW Enterpr
isesisapar t
nershi
pcomposedofDamor t
iz,
Ortega,andWenceslao.
Damorti
zwasdr i
vingt hef i
rm’svanbeyondt hespeedli
mittodeli
v ersomegoods
tocust
omerwheni thitanddamagedt hecarofCampos.
a.DOW Ent erpr i
sesandt hethreepartnersmaybehel dsolidari
lyl
iabl
eby
Camposf ordamages.
b.OnlyDamor tizmaybehel dli
ablebyCamposf ordamagesbecauseoft he
former’snegl i
gencef ordri
vi
ngbey ondt hespeedli
mit.
c.OnlyDOW Ent erpr i
sesmaybehel dliablebyCamposbecauset hedamage
wassust ainedbyCamposwhi leDamor t
izwasper f
orminganacti nthe
courseofbusi ness.
d.OnlyDOW Ent erpri
ses and Damor ti
zmaybe hel d sol
idaril
yli
able by
Campos.

UnderArt
icle1824inrel
ati
onwi t
h1822,l
ossori nj
urycausedtoat hi
rdpersonor
anypenalt
yi sincurr
edbyreasonofnegli
genceofanypar tneract
ingintheordinar
y
courseofbusiness, t
hepar
tnershi
pshal
lbesol
idar
il
yli
ablewithal
lthepar
tner
s.

Not
e: Thepar
tnermustacti
ntheor
dinar
ycour
seofbusi
nesssot
hatt
heot
her

36 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
part
nercanbemadel iabl
e. I fthepart
nerwasnotact
ingi ntheordi
narycourseof
busi
nessand theactwaswi thouttheconsentoftheot herpart
ners,nei
therthe
part
ner
shipnortheotherpart
nerswi l
lbel
iabl
e. Thel
i
abi
lit
yinthatcasewil
lbeforthe
SOLEaccountoftheerri
ngpartner.

89.
Nathan,Edgar ,AlbertandTr evorar epar t
nersinNEATDr yCleaningCompany .
Nathanusedi napar t
yheat tendedacoatbr oughttotheshopbyCust odi
o,a
customer,f ordrycleaning.Thecoatwasacci dental
l
yst ainedwi t
hf oodduri
ng
thepartythatNathanat tended.Whom mayCust odi
oholdl i
able?
a.Nat hanonl y.
b.Al lt
hepar tner
sj oi
ntl
y.
c.Al lt
hepar tner
sandpar t
ner shi
psolidari
l
y .
d.Nei therthepar t
nersnort hepar t
nershi
pbecauset hestaincauseont he
coatwasduet oaf ort
uitousev ent.

OnlyNathanwil
lbeli
abl
esincehisactofbri
ngi
ngt
hesamet
othepar
tyi
snotf
ort
he
or
dinar
ycourseofbusi
nessofthepart
nershi
p.

90.
Whi
chofthefoll
owi ngisapar t
nershipbyestoppel?
a.Whenaper sonr epresentshimself,orconsent stoanot herrepr
esenting
hi
mt oany one, asapar t
nerinanexi st
ingpar t
nership,andallt
hepartners
gavetheirconsentt osuchmi srepr
esentati
on.
b.Whenaper sonr epresentshimself,orconsent stoanot herrepr
esenting
hi
mt oany one,asapar tnerinanexi st
ingpartnership,andnotallt he
part
nersgav etheirconsentt osuchmi srepresent
ation.
c.When a per son r epresents himselfas a par t
neri n a non-exi
sting
part
nership.
d.All
ofthef oregoing.

Allofthef oregoi
ngisconsi deredaspar tnershipbyest oppelsinceitfal
lsundert he
kindsofpartnershipbyest oppelstatedinArti
cle1825whi chstatesthat“Whenaper son,
bywor dsspokenorwr i
ttenorbyconduct ,representshimsel f
,orconsent stoanot her
represent
inghimt oanyone,asapar tneri
nanexi sti
ngpar t
nershiporwi t
honeormor e
personsnotact ualpar
tners,heisliabletoanysuchper sonst owhom suchr epresentation
hasbeenmade,whohas,ont hef ait
hofsuchr epresentat
ion,givencredi
ttotheact ualor
apparentpartnershi
p,andi fhehasmadesuchr epresent
at i
onorconsent edtoi t
sbei ng
madei napubl i
c.”

Inshort,i
fbyr epresentat
ionofaper son,athir
dper sonwasmadet obel i
evet hatt
here
i
sapar tnershiporseveralpersonsarepartners,
partner
shipbyestoppel
sexist
.
Note:Apar t
nershipbyest oppel
scanonl ybeconsi deredassucht otheper sonswho
beli
evedt heexi st
enceoft hepar t
nershi
porbel ievedt hatsev
eralpersonsar eactual
ly
partner
swi theachot her. Ast ootherpersonsorent i
tywhohav enodeal i
ngwi ththem,
theycannotbeconsi deredaspar t
ners.Neit
hercani tbeconsideredthatpartnershi
pby
estoppel
sexi st.

91.
A,BandCar epart
ner
sinXEnter
prises.Theywanttoobtai
nal
oanf
rom Z,butZ
doesnotknow anyofthem,sotheyaskedD,whoi sknownt
oZ,torepr
esent
himsel
fasapar t
nerinX Ent
erpri
ses.Z,beli
eving t
hatD i
sapartnerinX
37 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 enter
prises,thusgr antst hel oanofP90,000. 00t oXEnt er
pri
ses.Lat er,howev er
,
XEnterprisesisunabl et opayt heloanasi tsasset samountonl ytoP60, 000.00.
Inpaymentoft heloan:
a.Theasset sofXEnt erpri
sesshallfi
rstbeexhaust ed.Thereaft
er ,
A, BandC
maybehel dliablebyZf rom thei
rsepar ateassetsatP10,000.00each.
b.Theasset sofXEnt erprisesshal
lf i
rstbeexhaust ed.Thereaf t
er,A,B,C
andDmaybehel dl i
ablebyZf rom t heirseparat
easset satP7, 500.00
each.
c.A, B, CandDshal lshar einthepaymentofP90, 000.
00f r
om theirsepar ate
assetsatP22, 500. 00each.
d.A,BandCshal lshar ei nthepaymentofP90, 000.00from theirsepar ate
assetsatP30, 000. 00each.

Thisi
ssobecauseapartner
shipbyestoppeliscr
eat
edbet
weentheactualpar
tners
andD.Assuch,astoZ, Dwil
lbeconsi
deredasmemberofthepar
tnershi
pandDwi llbe
l
iableasi
fhei
sanact ualmemberofthepartner
ship.

However
,asinordi
narypart
nership,t
heassetsofthepartner
shipshallbeusedf
ir
st
topaythedebt. Af
tertheexhausti
onoft hepar
tner
shippropert
ies,A,B,C,andDshal
l
beli
ablewit
hthei
rsepar
atepropert
ies.

92.
Refertot hepr ecedi
ngnumber .Assumet hatonlyAandBgav econsenttothe
misrepresentationmadebyD.Supposet hatlateront hel
oanobl i
gati
oncouldnot
bepaid.Agai nstwhom mayZpr oceed?
a.Agai nstt hepart
nershipfori t
sasset sofP60, 000.
00.Thereafter
,Zcango
afterAandBf orP15,000.00eachf orthebal anceofP30,000.
00.
b.Agai nstt hepart
nershipfori t
sasset sofP60, 000.
00.Thereafter
,Zcango
afterA,BandDatP10, 000. 00eachf orthebalanceofP30,000.00.
c.Agai nstA, BandZatP30, 000.00eachf orthewholeamountofl i
abil
it
yof
P90,000.00.
d.Agai nstt hepart
nershipfori t
sasset sofP60, 000.
00.Thereafter
,Zcango
afterA,B,CandDatP7, 500. 00eachf orthebalanceofP30, 000.00si
nce
thepar t
nershi
pandChav ealsobeenbenef i
tedbytheloan.

SinceAandBar etheonl
ypartner
swhoconsent edthemisr
epresentat
ionofDthey
aretheonlypart
nerswhomadeapar t
nershi
pbyest oppelt
her
efor
et hethreeoft
hem
shallbehel
djoi
ntl
yli
ablewi
ththei
rseparat
eproper
ti
es.

Not e: TheforegoingAnsweri sonl ytr

ueIFAandBar eNOTaut hori
zedtobindthe
partnershipi
ncontracti
ngt hesaidloan.Ifei
therAorBi saut
hor
ized, thepar
tnershi
pare
sti
llli
abletopayfort hedebt .Thi
si sconsideri
ngthatthr
eisanact ualpart
nershipand
thattheloanwasmadef orthebenef i
tofthesaidpart
nershi
p. Inthatcase,A,B, Cand
Dwi llsti
l
lbeli
ablepror ata.

93.
Whi
chofthefollowingstatementistr
ue?
a.Partnership cr
edit
or s shal
lbe pr
eferr
ed t
othose ofeach part
neras
regardsthepar t
nershipproper
tyr
egardl
essoft
heamountsofclai
ms.
b.Partnership cr
edit
or s shal
lbe pr
eferr
ed t
othose ofeach part
neras

38 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 regardst hepartnershippr opertyi
ft hepar tnershi
pdebti smor et hanthe
amountofcl aimsoft hesepar atecreditor
soft hepar tners.
c.The separ at
e cr edit
or s ofa par tnershal lbe pr eferred tot hose of
partnershipcreditorsasr egardst hepar tnershipproper tyifthef ormer
obtainedanor derofat tachmentandpubl icsal eoftheshar eoft hedebtor
partner.
d.The separ at
e cr edit
or s ofa par tnershal lbe pr eferred tot hose of
partnershipcr
edi t
orsasr egardst hepar tnershipproper tyifthef ormer’
s
clai
msar emoret hant heamountoft hecl
ai m ofpart
ner shipcredit
ors.

Thisi sinaccordancet othestipul

ati
onofAr t
icle1827abouttheprefer
enti
alrightof
part
ner ship’
scr edit
orswhi ch statest hat“ The credi
tor
s ofthe par
tner
ship shallbe
pref
erredt othoseofeachpar tnerasregardsthepar t
nershi
pproper
ty.Wi
thoutprej
udiceto
thi
sright ,t
heprivat
ecr edi
tor
sofeachpar tnermayaskt heat
tachmentandpublicsaleof
theshar eofthelatt
erinthepartner
shipassets”.

94.
Itr
efer
st othechangeintherel
ati
onofthepart
ner
scausedbyapar
tnerceasi
ng
tobeassociatedinthecar
ryi
ngonthebusi
ness.
a.Wi ndingup
b.Liquidati
on
c.Ter minat
ion
d.Dissoluti
on

Thi
sisst
atedi
nAr
ti
cle1828.

95.
Whichofthef oll
owi nglossesofpr opertieswi llnotcauset hedissol
uti
onofthe
par
tner
ship?
a.Lossbef oredeliv
er ytothepar t
ner shi
pofpr opert
ywher ei
nonlytheuseof
whichwascont ri
but edbyt hepar tnerwhoownedi t.
b.Lossaf teri t
sdeliverytot hepar tnershipofpr opertyonlytheuseofwhich
wascont r
ibutedbyt hepar tnerwhoownedi t.
c.Lossbef oreitsdeliverytot hepar tnershipofpr opert
ywhichapar t
nerhad
promisedt ocontributetot hepar tnership.
d.Lossaf teritsdeli
v erytot hepar tnershipofpr opertywhichapar t
nerhad
promisedt ocontributetot hepar tnership.

I
ft he l
oss happens af
terthe deli
veryoft he pr
opertytot he part
nershi
p,the
part
nershi
pisnotdissol
vedprovi
dedt hatthedeli
v er
yisforthepurposeoftransfer
ri
ng
theownershipoftheproper
tytothepar t
nership. Inthatcase,t
hepar t
nershiphavi
ng
acqui
redownershipupondeli
ver
ybearst heloss.

However
,ifthedel
i
veryisonlyf
ort heuseoft
hepar
tner
shi
p,t
hel
ossoft
hesai
d
pr
oper
tywil
lcauset
hedissol
uti
onofthepart
ner
shi
p.

Thisisi
naccor dancewi t
hAr t
icl
e1830( 4)whichstat
esthatdissol
utioni
scaused
“Whenaspeci f
icthingwhi chapar t
nerhadpr omisedtocontr
ibut
et othepartner
ship,
peri
shesbefor
et hedeliv
ery;i
nanycasebyt helossofthethi
ng,whent hepart
nerwho
contr
ibut
edi
thavingreservedtheownershi
pther
eof,hasonl
ytr
ansfer
redtothepar
tnershi
p

39 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
t
heuseorenj
oymentofthesame;butthepart
nershi
pshal
lnotbedissol
vedbythel
ossof
t
hethi
ngwhenitoccur
saft
erthepar
tnershi
phasacquir
edt
heownershipther
eof
”

96.
Whichoft hef oll
owingwi l
lnotcauset heautomati
cdissol
uti
onofagener
al
par
tner
ship?
a.Insolv encyofthepartnershi
p
b.Insani tyofapartner
c.Ci v
ilinterdi
cti
onofapar tner
d.Ter minat i
onofthedef i
nitet
erm ofthepar
tner
shi
p

Artcle1830enumerat
edt hegroundsf ortheAUTOMATI C DI
SSOLUTION oft he
partnershi
p. Itmeanst hatinthegr oundsstatedtherein,thepar
tnershipwillbe
automat i
call
ydi
ssol
vedevenwit
houtacour tor
der.Incl
udedi nt
heenumerat i
ontherei
n
i
sA, CandD.Thefol
lowi
ngarethegroundsforautomaticdissol
uti
onasstatedinArtcl
e
1830:

Ar
t.1830.Di
ssol
uti
oni
scaused:

(
1)Wi
thoutv
iol
ati
onoft
heagr
eementbet
weent
hepar
tner
s:

(a)Bythet
ermi
nat
ionoft
hedef
ini
tet
erm orpar
ti
cul
arunder
taki
ngspeci
fi
edi
nthe
agreement
;

(b)Bytheexpr
esswil
lofanypar
tner
,whomustacti
ngoodf
ait
h,whennodef
ini
tet
erm or
part
icul
ari
sspeci
fi
ed;

(c)Bytheexpr
esswillofallthepartnerswhohav enotassi
gnedthei
rint
erestsorsuf
fer
ed
them t
obechar gedf
ort heirsepar
atedebts,ei
therbefor
eoraft
ertheterminati
onofany
speci
fi
edterm orpar
ticularundert
aking;

(d)Byt
heexpulsi
onofanypart
nerf
rom t
hebusi
nessbonaf
idei
naccor
dancewi
thsucha
powerconf
err
edbytheagreementbet
weenthepar
tner
s;

(2)I
ncontrav
ent i
onoftheagr
eementbetweenthepar
tners,
wher et
hecircumstancesdo
notper
mitadi ssol
uti
onunderanyot
herprovi
si
onofthisart
icl
e,bytheexpresswil
lofany
part
neratanyt i
me;

(3)Byanyeventwhi
chmakesitunl
awfulf
orthebusi
nessoft
hepar
tner
shi
ptobecar
ri
ed
onorforthememberst
ocarryitoni
npartner
shi
p;

(4)Whenaspeci fi
cthi
ngwhi chapar t
nerhadpr omisedtocont r
ibut
et othepar t
nership,
peri
shesbeforethedeli
very;inanycasebyt helossofthet hing,whent hepartnerwho
contri
but
edithavingreservedtheowner shi
pthereof,
hasonl ytr
ansferredtothepar t
nershi
p
theuseorenjoymentoft hesame; butthepartner
shipshallnotbedi ssolvedbyt helossof
thethi
ngwheni toccursafterthepart
nershi
phasacqui redt heowner shipther
eof ;

40 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
(
5)Byt
hedeat
hofanypar
tner
;

(
6)Byt
hei
nsol
vencyofanypar
tneroroft
hepar
tner
shi
p;

(
7)Byt
heci
vi
li
nter
dict
ionofanypar
tner
;

(
8)Bydecr
eeofcour
tundert
hef
oll
owi
ngar
ti
cl
e. 

Ontheot herhand, Art

icle1831pr ovidesforthedissolutionoft hepar t
nershi
pUPON
APPLICATI ON AND DECREE byt he court
. The gr ound st ated therei
n willNOT
automaticall
ydissolv
et hepar tner
ship. Ther eissti
llaneedf orpetit
ionfordissolut
ion
and actualcour tor derdi ssolvi
ng the partnershi
p bef oret he partnership can be
consi
dereddi ssolv
edont hosegr ounds.Insanit
yofapar tnerareoneoft hosegr ounds
enumerat edtherei
n.Thef oll
owingar ethegr oundsf ordissolutionunderAr ti
cle1831,
thus:

Ar
t.1831.Onappl
i
cat
ionbyorf
orapar
tnert
hecour
tshal
ldecr
eeadi
ssol
uti
onwhenev
er:

(1)Apart
nerhasbeendecl
aredi
nsanei
nanyj
udi
cialpr
oceedi
ngori
sshownt
obeof
unsoundmind;

(2)Apar
tnerbecomesi
nanyot
herwayi
ncapabl
eofper
for
minghi
spar
toft
hepar
tner
shi
p
contr
act
;

(3)Apart
nerhasbeengui
l
tyofsuchconductast
endst
oaf
fectpr
ejudi
cial
l
ythecar
ryi
ngon
ofthebusi
ness;

(4)Apartnerwil
ful
lyorpersi
stent
lycommitsabreachofthepar
tnershi
pagr eement
,or
otherwi
sesoconduct shimselfi
nmat t
ersr
elat
ingtothepart
ner
shipbusinessthati
tisnot
reasonabl
ypracti
cabletocarr
yont hebusi
nessinpart
nershi
pwit
hhi m;

(
5)Thebusi
nessoft
hepar
tner
shi
pcanonl
ybecar
ri
edonatal
oss;

(
6)Ot
herci
rcumst
ancesr
enderadi
ssol
uti
onequi
tabl
e.

Ont
heappl
i
cat
ionoft
hepur
chaserofapar
tner
’si
nter
estunderAr
ti
cle1813or1814:

(
1)Af
tert
het
ermi
nat
ionoft
hespeci
fi
edt
erm orpar
ti
cul
arunder
taki
ng;

(2)Atanyt
imeifthepar
tner
shi
pwasapar t
ner
shi
patwi
l
lwhent
hei
nter
estwasassi
gned
orwhenthechargi
ngorderwasi
ssued.(
n)

41 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 97.
Thr
eeoft hef ollowingmaybeusedasagr oundforthefi
l
li
ngofapet it
ionbya
par
tnerf ort he di ssol
ution ofa par t
nership by cour
tdecr ee,while one
aut
omat i
call
yr esultsini
tsaut omati
cdi ssoluti
on.Whichonerefer
st ot
helatt
er?
a.incapaci t
yofapar tnertoperform hispar toft
hepart
nershi
pcontract
b.par tner’
sconductaf f
ectsprejudici
allythecarryi
ngonoft hepartner
ship
business
c.t hepar tnershipbusinesscannotbecar ri
edonexceptataloss
d.insol vencyofapar tner

Articl
e1831pr ovi
dest hatapar tnermayseekj udici
aldissolutionoft hepar t
nership
throughcour tdecreeont hefoll
owi nggr ounds:(1)insanityofapar tner;(2)incapacityof
apar tnertoperform hispartoft hepar t
nershipcont ract;(
3)par tner ’
sconductaf f
ecting
prejudici
all
yt hecar r
yingonoft hebusi ness;( 4)wi ll
fulorper sistentbr eachoft he
partnershi
pagr eementbyapar tner;(5)thepar t
ner shipcannotbecar ri
edonexceptata
l
oss;and,( 6)ot hercircumstancesr enderi
ngadi ssoluti
onequi table.Basedont he
topicsment i
onedear li
er,theinsolvencyofapar tnercannotbeusedasagr oundf orthe
dissoluti
onoft hepar tnershi
pt hroughcour tdecr ee,buti nsteadi twoul dr esul
tint he
automat i
cdissolutionofthepar tnershi
p.

98.
Whomayf i
let hepeti
ti
onf orthedissol
uti
onofapartnershi
p?
a.thepartnersthemselves
b.thepurchaserofapar tners’
inter
est
c.eit
her(a)or( b)
d.anyperson, whetherornothehasani nt
eresti
nt hepart
ner
shi
p

Accor dingtothel
aw,di
ssol
utioncanbefi
l
edbyanypar
tnerort
hepur
chaserofa
par
tner’
si nter
est
.Ther
efor
e,ei
ther(a)or(
b)mayfi
l
ethepetit
ionf
ort
hepartner
shi
p
di
ssolut
ion.

99.
The following act s ofpartner s afterthe di
ssoluti
on oft he part
ner
shi
p ar
e
presentedt oyou:
I
. Act stowi nduppartner shi
paf fai
rs
II
. Act stocompl et
etr
ansact ionsbegunbef oredissolut
ion
I
II
. New t r
ansact i
onsenter edi ntobyt hemanagi ngpar t
nerwhowasnot
awar et hatthepart
ner shiphadbeendi ssolvedbecauseoft hedeat
hofa
gener alpartner
Whichoft hefollowingact
sar ebi ndingonthepar t
nership?
a.IandI I
b.IandI II
c.I IandI I
I
d.I ,II
,andI I
I

Dissolutionterminat
esal
laut hori
tyofanypart
nertoactforthepartnershi
p,except
fortheact sinwi ndi
nguppartnershi
paffai
rs,
actsincomplet
ingthetransacti
onsbegun
beforedi ssoluti
on,and ift
hecausesofdi ssol
uti
onaretheactofapar tnerand,
i
nsolvencyordeat hofapartner,provi
dedthattheacti
ngpartnerhadnoknowl edgeof
suchdi ssoluti
on.

42 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 100. I
n whi ch ofthe f ol
lowing cases i s a par
tner’
s authorit
yto actaf t
er
di
ssoluti
ont erminat
edamongt hepar tnersalt
hought heactingpartnerhadno
not
iceofthecauseofdi ssoluti
on?
a.Whent hepart
ner shipisdissol v
edbyr easonoftheexpirati
onofitster
m
b.Whent hepartnershipisdi ssolvedbecauseoft heinsolvencyofageneral
par
tner
c.Whent hepartnershipisdi ssolvedbecauseoft hedeat hofagener al
par
tner
d.Whent hepartnershipisdi ssolvedbecauseofther esi
gnationofageneral
par
tner

I
fthecauseofthedissol
uti
onistheexpir
ati
onofterm orbyacourtdecr
ee,noti
ceor
knowledgeoftheactingpar t
neroft hecauseofdi ssol
uti
oni sdeemedi mmateri
al.
Therefor
e,amongthecasesment ioned,apart
ner
’sauthori
tytoactaft
erdissol
uti
onis
al
readytermi
natedwhent hepart
nershipi
sdissol
vedbyt hereasonoftheexpir
ati
onof
i
tsterm.

101. I
nwhi choft hefoll
owingcasesisthepart
nershi
pnotboundbyanyactof
apar
tnerafterdissol
uti
on?
a.Wher ethepartnershi
pisdissol
vedbecausei ti
sunl
awfult
ocarr
yont he
business
b.Wher etheacti
ngpar t
nerhasbecomeinsolvent
c.Wher etheacti
ngpar t
nerhasnoauthor
ityt
owi nduppar
tner
shi
paffai
rs
d.Al loftheabove

Arti
cle1834enumer atest hei nstanceswhent heactofapar tnerafterdi
ssol
uti
on
doesnotbi ndthepar
tnership,t hus:(1)wher et hepar t
nershipi
sdissolvedbecauseiti
s
unlawfultocar
ryonthebusiness; (2)wher etheact i
ngpar tneri
sinsolv
ent ;(
3)wher
ethe
partnerhadnoaut horit
yt owi nduppar tnershipaf fai
rs;and,(4)wher eapar t
ner’
s
authori
tyisalr
eadyterminat edamongt hepar tners.Therefor
e,alloft hecaseabove
cannotbindthepart
nershipaf teritsdissoluti
onf oranyactofapar tner.

102. A partnershipi sdi ssolved byr eason oft hedeat h ofa par t
ner.The
di
ssol uti
on oft he par t
nership was publ ished in a newspaperofgener al
ci
rculation.PC,apr eviouscr editor,andNC,anewcr edi
tor,bothtransactednew
businesswi tht hepar tnershipaf t
erdissol
ution,butneit
heroft hem readthe
publicati
onoft hefirm’ sdissolutionnorlearnedofitinsomeot herway .Whois
deemedt ohav eknowl edgeoft hedi ssol
uti
onoft hepart
nership?
a.PConl y
b.NConl y
c.Bot hPCandNC
d.Nei t
herPC norNC because nei t
herone has come t ol earn ofthe
di
ssoluti
onoft hepar tnership

SincePCi sapr evi

ouscr edi
torofthepar t
ner
shipandhav i
ngnoknowl edgeofthe
di
ssolut
ion,hemustbeent i
tl
edt oaspecialattent
ion;hence,hemustbespeci all
y
not
if
iedofthedissolut
ion.Themer epubl
icat
ionofthedissol
uti
onisnotanoticet
ohim.
Wit
houtt hepresenceofaspeci alnoti
fi
cat
ionfrom thepar t
ner
ship,PC wouldhave
43 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
assumedt hatt hepartnershi
pstil
lcontinuestoexi st.Ont heot herhand,NC,anew
credit
orandal sohavingnoknowl edgeoft hedissoluti
on,shallnotbeent i
tl
edt oany
specialattent
ion;hence,themerepublicati
onoft hedi ssol
uti
oni saconstructi
venoti
ce
toNCal thoughhehadnotr eadit.Thef actthatthepar tner
shiphadpubl i
shedthei
r
di
ssol uti
on on a newspaper ,t
heywoul d have assumed t hatNC knows t hatthe
partnershipisnow di ssolved.Theref
ore,NC i sdeemedt o haveknowl edgeoft he
di
ssol uti
onoft hepart
nership.

Thef
oregoi
ngi
sbasedonAr
ti
cle1834whi
chpr
ovi
dest
hat
:

Art
icl
e1834. 
Aft
erdi
ssol
uti
on,
apar
tnercanbi
ndt
hepar
tner
shi
p,exceptaspr
ovi
dedi
nthe
thi
rdpar
agraphoft
hisar
ti
cl
e:

(
1)Byanyactappropri
atef
orwindi
nguppar
tner
shi
paf
fai
rsorcompl
eti
ng
t
ransact
ionsunf
ini
shedatdi
ssolut
ion;

(2)Byanytransacti
onwhi chwoul
dbi
ndthepartner
shi
pifdi
ssol
uti
onhadnott
aken
place,
prov
idedt heotherpart
ytot
hetr
ansact
ion:

(a)Hadextendedcredi
ttot
hepartnershi
ppr
iort
odi
ssol
uti
onandhadno
knowledgeornoti
ceofthedissol
uti
on;or

(b)Thoughhehadnotsoext endedcr edi

t,hadnever
thelessknownofthe
partnershi
ppr iortodissoluti
on, and,havi
ngnoknowl edgeornot i
ceof
dissoluti
on,thef actofdissolutionhadnotbeenadv ert
isedinanewspaperof
generalcirculati
onint heplace( orineachplaceifmoret hanone)atwhi
ch
thepar t
nershipbusi nesswasr egular
lycarri
edon.

NOTE: Incasethecredi t
orfallunderpar2( a)ofAr t
icle1834( whent hecredit
orhasa
pri
ordealing/swiththepar tnership),thepartnerswi l
lNOTbel i
ableupt otheext entof
thei
rpersonalpropertyincaset hepar tner
shipwi l
lbecomei nsolv
entIFsuchpar t
nerhad
been,pri
ortodissol
ution:(1)Unknownasapar tnertot hepersonwithwhom t hecontractis
made; or(
2)Sof arunknownandi nacti
veinpartnershipaffai
rsthatthebusinessreputati
on
ofthepartner
shipcouldnotbesai dt ohavebeeni nanydegr eeduet ohisconnectionwithit.

103. BLOCK Ent erpri

ses i s a par t
nership engaged i nt he busi ness of
constr
uct i
onwi thBaldoz, Lopez, Olandez, Cri
solandKi nt anaraspartner s.Baldoz
i
st he manager .Af ter5 y ears ofoper ati
ons,Ki ntanarr esi
gned f rom t he
part
nership.Thedi ssoluti
onwaspubl i
shedi nanewspaperofgener alcir cul
ati
on.
Nonetheless,Bal doz,despi t e hav ing knowl edge oft he dissol
ution oft he
part
nershipbyr easonofKi ntanar’swithdrawal,sti
llent eredi ntothef oll
owing
tr
ansactions:
I
. Pur chaseofcementoncr editf r
om RamosCementCompany ,asol e
propri
etorship whose owner ,Jose Ramos,was not awar e of t he
di
ssolutionoft hepar tnershipandhadnotr eadt hepubl i
cation.Ramos
CementCompanyhadbeenacr editorofBLOCKf orthepastf oury ears.
II
. Pur chase of st eelon cr editf rom Sanchez St eelWor ks,a sol e
propri
etorship whose owner ,Al berto Sanchez,was notawar e oft he
di
ssolutionoft hepar tnershipandhadnotr eadt hepubl i
cati
on.Sanchez
44 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 wasdeal i
ngforthefi
rstt
imewi
thBLOCK.
Whi
choftheabov etr
ansact
ionsar
ebi
ndi
ngonBLOCK?
a.BothIandI I
b.NeitherInorI
I
c.Ionly
d.IIonly

RamosCementCompany ,havingnoknowl edger egardingt hedi ssol utionoft he

part
nershi
pandbei ngt hecr edit
orofBLOCKf orthepastf oury ears,mustbegi vena
speci
alnotif
icat
ionr egardingthedi ssol
uti
on.Themer epubl icati
onoft hedi ssolut i
oni n
anewspaperi snotconsi deredasanot i
cetohim.Ther efore,BLOCKi sst i
llliablebyt he
acti
onmadebyBal doz.Ont heot herhand,SanchezSt eelWor ks,dealingf ort hef i
rst
ti
mewi thBLOCK,shal lnotbeent it
ledtoanyspecialnotif
icationoft hedi ssol uti
on.The
publi
cati
onoft hedi ssoluti
oni nanewspapershal lbeconsi deredasaconst ruct i
vet o
SanchezSteelWor kswhet herhehadnotr eadit.Therefore,thepar t
nershi pwoul dhav e
assumedt hatSanchezSt eelWor kswouldhav eknownr egar dingthedi ssol ution.Thus,
notmakingthepart nershipli
abletoSanchezSt eelWorks.

104. RefertoNo.103.Theauthori
tyofBaldoztoactforthepart
nershipis:
a.Terminat
edamongt hepartnersbutnotterminat
edwi t
hr especttobot
h
RamosandSanchez
b.Terminat
edamongt hepartnersbutnotter
minatedwithrespecttoRamos
c.Terminat
ed among t he part
ners butnott erminat
ed withr espectt
o
Sanchez
d.Terminat
edamongt hepartnersaswellastoRamosandSanchez

SinceBal
dozhav
etheknowledgeoft
hedissolut
ionduetoKi
ntanar
’swi
thdrawal,
his
authori
tyisdeemedtobet er
minatedamongt hepartner
sbuthei ssti
llli
ablewith
RamosCementCompany .RamosCementCompanycannotgoaf t
erthepart
nershi
p’s
assets.

105. Cortez ,Rodr i

guez ,Unt al
an,Mor al es,Bur gosandSamont ewer epar tners
ofCRUMBSCompany ,abakeshop,wi t hMor alesasmanager ,whowasal so
gi
ventheaut horit
ytowi nduppar tnershipaf fair
si ncaseoft hedissol uti
onoft he
fi
rm.OnAugust5,2008,Samont eresignedf rom t hef i
rm bygi vingawr i
tten
noti
cetoal lthepar tners.Thedi ssoluti
onoft hef ir
m byr easonoft her esignation
ofSamont ewaspubl i
shedi nt heMani l
aBul letin.Thereaf t
er,fort her estof
August
, Mor alesenteredi ntothef ol
lowingt r
ansact ionsinbehal fofthecompany :
I
. Thesal eof5oft hecompany ’s6del iv
eryv anst opayt hel i
abi li
ti
esoft he
partner ship.
II
. Thedel iveryof100l oavesofbr eadt oHi Way Supermar tforAugust ,t he
lastdel iveryi
na3- mont hcontractbet weenCRUMBSandHi Way .
I
II
. Thepur chaseoff louroncr editf rom Pr udencioCor r
ales,pr oprietorof
PrudenceCompany ,whohasbeent hesuppl i
erofCRUMBSf ort hepast5
years.Cor ral
esdi dnotr eadt hepubl i
cationoft hedi ssoluti
onandhadno
noticeorknowl edgeoft hef i
rm’sdi ssolution.
I
V. Thepur chaseoncr editofbaki ngi ngredientsf r
om Nor bertoCanci o,a
propr i
et orofNor t
hCr eamer y,whowast ransacti
ngf ort hefirstt i
mewi th

45 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 CRUMBS.Canci odidnotr
eadthepublicati
onoft hedissol
uti
onandhad
nonot iceorknowl
edgeoft
hefir
m’sdissolut
ion.
Basedont hef or
egoi
ng,whi
chofthet
ransact
ionswi l
lbebindi
ngonCRUMBS?
a.I
,IIandI II
b.I
I,IIIandIV
c.I
,IIandI V
d.I
,IIIandI V

SinceMor aleswasgi ventheaut hori

tytowi nduppar t
nershipaf fai
rsi
ncaseof
dissolut
ion,thesal eof5deli
veryvanst opaythepar tnershi
p’sl
iabili
ti
esisst
illbi
nding
toCRUMBSCompany .Thi
sisconsideri
ngthatthef actthatt
hesal ewasmadei norder
topayt heliabil
itiesoft
hepart
nershipshowst hatitwasmadei nwi nding-
uptheaffai
rs
ofthepar t
ner ship.

Ontheotherhand,thedeli
veryof100loavesofbr eadtoHiWaySupermartwasan
actto completet he tr
ansact
ions al
ready begun befor
et he di
ssolut
ion,is st
il
l
consi
deredasabindingtr
ansacti
onfort
hepartnershi
p.

WithRespecttoPr udenci
oCorral
es, si
ncehehasnoknowl edgeregar
dingthe
di
ssol
uti
onoft hepart
nershi
pandhadbeenasuppli
erofCRUMBSforthepast5years,
wi
thoutspeci
alnoti
cegiven,
thepar
tner
shi
pwil
lst
il
lbeli
abl
etohi
m.

Onthecontr
ary,Nor
bert
oCanci o,dealingforthefir
stti
mewi thCRUMBSandhav ing
noknowledgeregardi
ngthedi ssol
utional t
houghi ti
spubli
shedi ntheMani l
aBull
etin,
ther
eisno need f orspecialnotif
icati
on and CRUMBS woul d have assumed that
Norber
toCancioalr
eadyknowst hedissolutionofthepart
nershi
p.Thepublicat
ionofthe
noti
ceofdissol
uti
onconsti
tuteconstruct
ivenoticetohim.

Ther
efor
e,onl
yst
atement
sI,
IIandI
IIwi
l
lbebi
ndi
ngont
hepar
tner
shi
p.

106. FORTEnt er
pr i
sesi sapar tnershipengagedi ntheconst ruct i
onbusi ness
withFl ores,Orlina,Rubi oandTal loaspar t
ner s.Fl
oreswasappoi ntedmanager .
On August31,2008,t he f i
vey eart erm oft he part
nershi
p expi red thereby
resul
tingi nitsaut omat i
cdi ssol
ution.OnSept ember5,2008,Fl or es,without
knowl edgeoft heexpi r
at i
onoft hef ir
m’st erm,pur chasedoncr editgr av
eland
sandwor thP50, 000. 00f r
om Palanza, acr editorwhohadgr ant
edchar gesal esto
FORTbef oreAugust31,2008.Pal anzawasnotawar eoft heexpi rationoft he
term oft hepartner ship.
a.Theaut hor i
tyofFl oreswasnott ermi natedamongt hepar tner sandwi th
respecttoPal anza
b.The aut hor ityofFl ores was nott erminated among t he par t
ners but
terminatedwi t
hr especttoPal anza
c.Theaut hor ityofFl oreswast ermi natedamongt hepar t
ner sandwi th
respecttoPal anza
d.Theaut hor i
tyofFl oreswast ermi natedamongt hepartner sbutnotwi th
respecttoPal anza

I
nthi
scase,t
hecauseoft
hepar
tner
shi
p’
sdi
ssol
uti
oni
stheexpi
rat
ionoft
erm,
46 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
hence,not i
ce orknowl edge oft he act
ing par
tnerisimmat er
ial.Such notices or
knowledgei sonlymat eri
alift hedissol
uti
onwascausedbyanact ,deathorinsolvency
ofapar tner.Ift
hecauseoft hedi ssol
uti
onisotherthanbyact ,
deathorinsolvency,the
authori
tyofapar t
nertobi ndt heOTHERPARTNERSi sterminated. Itmeanst hatthe
otherpar tnerswillnotbel iablet otheextentoft hei
rper sonalpropert
iesf orany
l
iabil
it
iesoft hepartner
shipent eredbyapar t
neraft
erthesaiddissoluti
on.

Howev er
,the part
nershi
p can sti
l
lbe li
abl
e astoat hi
rd person who hasno
knowledgeornoticeofthedissol
uti
oninaccor
dancewi
tht
hepreviousdiscussi
on(See
discussi
onsinIt
ems102upt o105).

Theref
ore,t
heauthorit
yofFlorest oactforthepartnershi
pisdeemedt er
minated
amongthepart
nersbutnottoPalanzatowhom t hepart
nershiphasapr ev
iousdeali
ng.
Pal
anza musthav e been prev
iously not
if
ied orhas pr evi
ous knowledge oft he
di
ssol
uti
onbeforesothatthepar
tnershi
pcannotincurl
i
abi l
i
tytoPalanza.

Incaset hepar
tner
shi
pcannotpayi
tsobl
i
gat
ionwithPal
anza,onlyFlor
eswillbe
l
iabletoPalanza. Theot
herpar
tner
swi
llNOTbeli
abl
etotheextentofthei
rper
sonal
proper
ties.

107. D,E and F ar e par t

nersi n DEF Company each one cont ribut
ing
P100,000.00andwi thFasmanagi ngpar tner.OnApr il1,2009,D di ed.The
fol
l
owi ngday ,
F, unawar eoft hedeat hofDcont ractedadebtofP180, 000.00toC,
apr evi
ouscr editoroft hepar t
nershi
pwhoal sodi dnotknow ofD’ sdeat h.
Assumi ngt hatther emai ni
ngasset soft hepartnershi
pamount edt
oP120, 000.00,
Ccancol lectP120, 000. 00from DEFCompanyand:
a.P60, 000. 00from EorP60, 000.00f r
om F
b.P30, 000. 00from EandP30, 000.00from F
c.P20, 000. 00fr om theest ateofD, P20,000.00from E,andP20,000.00f r
om
F
d.P60, 000. 00 f rom F al one because he cont r
act
ed t he debtaf terthe
partnershiphasbeendi ssolved

Since,boththemanagi ngpar tnerandthet hi

rdper sonact edingoodf ait
hand
wit
houtknowi ng t
he dissol
ution oft he part
nership. t he tr
ansact
ion shal
lbe
consideredval
idbetweenthepar t
nershipandthethir
dper son.Furt
her
,thepart
nerswi
l
l
beliabletot
heextentofthei
rrespectiv
epersonalpropert
ies.

108. Thesest atement sarepr esentedtoy ou:

I. Whent hebusi nessoft hepar tnershipaf terdi
ssoluti
oni scontinued,
the reti
ring par tnerort he representati
v e ofthe deceased par tner
enjoyspr eferenti
al r
ightasr egardst heclaim ofthereti
redordeceased
partner’
si nterestint hedissolvedpar tnershipoverthecr edit
orsoft he
dissolv
edpar tnership.
I
I. Theusebyt heper sonorpar tnershipcont i
nui
ngthebusi nessoft he
partnershipname,ort henameofadeceasedpar t
neraspar tt
hereof,
shallofi tselfmaket hei ndi
vidualpr opertiesofthedeceasedpar tner
l
iableforanydebt scontractedbysuchper sonorpartnership.

47 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 I
nyourev
aluati
onofthef or
egoingst
atement
s:
a.Bothstatementsaretrue.
b.Bothstatementsarefalse.
c.OnlyStatementIistr
ue.
d.OnlyStatementIIi
strue.

Arti
cle1840st at
est hatwhent hebusinessofapar t
ner
shipaf terdissol
utionis
conti
nued,thecredit
orsoft hedissolv
edpar t
nershi
penj oy
spreferenti
alri
ghtov erthe
separatecredi
torsoft heretir
ingordeceasedpar tnerorther epresent
ativeoft he
deceasedpartnerasregardstheirclai
m ofthereti
redordeceasedpar tner
’sinter
estin
thedissol
vedpartner
shi
pov erthecredit
orsofthedissolv
edpart
ner shi
p.

Furt
hermore,theusebyt hepersonorpartner
shipcont
inuingthebusinessoft he
par
tner
shipname,orthenameofadeceasedpar t
neraspar
tt her
eof,shal
lnotofitsel
f
maketheindivi
dualpr
opert
iesofthedeceasedpartnerl
i
abl
ef oranydebtscontracted
bysuchpersonorpart
ner
ship.

Ther
efor
e,bot
hst
atement
sar
efal
se.

109. Thefollowingst at
ement sar epr
esentedt oyou:
I
. Al imited partnershipisonecomposed ofatl eastonel i
mited
partnerandatl eastonegeneral part
ner.
II
. Al i
mitedpar t
nermaycont ri
butemoneyorpr oper
tybutnotser
vices.
I
II
. Thedeat hofal i
mi t
edpart
nerdissolvesthepart
nershi
p.
I
nyourevaluationoft heforegoingstat
ement s:
a.IandI Iar etr
ue
b.IandI IIaretrue
c.IIandI IIaretr
ue
d.Al l
aret rue

Al i
mit
edpart
ner
shipisonefor
medbyt woormor epersonshavi
ngasmember sat
l
eastonegener
alpart
nerandatleastonel i
mitedpart
ner(Art
icl
e1843).Moreover,a
l
i
mi t
edpart
nermaycontr
ibut
ecashorotherproper
ty,
butnotservi
ces(Ar
ti
cle1845)
.

Thedeat hofali
mi t
edpartnerwil
lnotaut
omatical
lydi
ssol
vethepart
nershi
psi
ncet
he
estat
eoft hesaidLimi
tedpartnerwil
lbesubst
itut
edastheli
mitedpar
tneri
n
accordancewithArti
cle1861whi chpr
ovi
des,t
hus:

“
Onthedeathofal i
mitedpartnerhi
sexecutororadmini
str
atorshal
lhav
eallt
heright
s
ofali
mitedpart
nerfort
hepur poseofsetti
nghisestat
e,andsuchpowerasthedeceased
hadtoconsti
tut
ehisassigneeasubst i
tut
edli
mitedpart
ner.

Theestat
eofadeceasedl
i
mit
edpar
tnershal
lbel
i
abl
eforal
lhi
sli
abi
l
iti
esasal
i
mit
ed
par
tner
.”

Ther
efor
e,onl
yst
atement
sIandI
Iar
etr
ue.

110. John,
Edwar
dandThomasarepar
tner
sinJETCompany.Johni
sageneral
par
tner
,Edwardalimi
tedpar
tner
,andThomas,agener
al-
li
mitedpar
tner
.The
48 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 par
tner
ship has l iabil
i
ties ofP70, 000.00 and asset s ofP40, 000.00.Int he
pay
mentofl iabil
i
ties:
a.Theasset soft hepar tnershipamount ingt o P40, 000.00shallfir
stbe
exhausted.Ther eafter
,JohnandThomasshal lpayf r
om theirseparate
assetsthebal anceatP15, 000.00eacht ot hecr edit
ors.
b.Theasset soft hepar tnershipamount ingt o P40, 000.00shallfir
stbe
exhausted.Ther eafter
,JohnandThomasshal lpayf r
om theirseparate
assetst hebal anceatP15, 000.00eacht othecr editor
sbutThomascan
recovertheamountofP15, 000.00fr
om John.
c.Theasset soft hepar tnershipamount ingt o P40, 000.00shallfir
stbe
exhausted.Ther eafter
,thet hreepar tnersshal lpayf r
om theirseparate
assetst hebal anceatP10, 000.00eacht ot hecr editor
s,butEdwar dand
Thomascanr ecov erP10,000.00eachf r
om John.
d.John and Thomas wi l
lpayt he li
abili
ties from t heirseparate assets.
Thereafter,
Thomascanr ecoverP35,000.00f rom John.

Agener alpartnerinal i
mi t
edpar tnershipshallbesubj ectt oallther est
ricti
onsand
l
iabil
it
iesofapar tnerinagener alpartnership.Thus,hecanbehel dl iabl
etot heextent
ofhisseparatepr opertyaft
erpar t
nershipasset shav ebeenexhaust ed.Al i
mitedpartner
shallnotbecomel i
ableasagener alpar t
nerunl ess,inaddi t
iontot heexerciseofhi s
ri
ghtsandpower sasal imitedpar t
ner,het akespar tinthecont r
oloft hebusiness.A
general-
li
mitedpar t
nershallbesubj ectt oal lther estr
icti
onsofagener alpar t
ner.
Howev er,i
nr especttohi scontri
bution,heshal lhavet herightsagai nstothermember s
ofthepar t
nershipwhi chhewoul dhav ehadi fhewer enotalsoagener alpar
tner.

Therefor
e,part
ner
ship’
sassetsamount
ingtoP40, 000.
00shallfi
rstbeexhausted.
John,beingthegener
alpart
ner,
andThomas,beingthegeneral
-l
imi
tedpart
nerwouldbe
l
iableforP15,000.
00each,butThomascanrecoverwhathehaspai dfr
om thegeneral
part
ner,John.

111. Al imit
edpar t
neri
sli
abl easageneralpar
tner:
I. I fheisalsoagener alpar
tner.
I
I. I fhepar t
ici
pat
esint hemanagementoft hepar
tnership.
II
I. I fheallowshissurnamet obeincl
udedinthepartnershi
pname.
Thestatementist r
uewithrespectto:
a.IandI I
b.IandI I
I
c.I IandIII
d.I ,IIandII
I

Ali
mitedpartnerwoul dal
sobeliableifhei salsoagener alpar
tner(l
imit
ed-general
part
ner
).Alimitedpartnerwhoknowi ngl
yal lowshissurnamet obeincludedinthefir
m
nameshallalsobeliableasageneralpar tnertothepartner
ship’
scredit
ors.Li
kewise,a
l
imit
edpar t
nershallbel i
abl
easagener alpartnerifhetakespartinthecontrolofthe
busi
ness.Therefor
e,statementsI
,I
IandI IIaretrue.

112. Libr
o Ent
erpri
ses,Limi
tedisapartner
shi
pengagedi
nt hebookst ore
busi
ness,wit
hLydia,
Indi
ra,Bl
esi
l
da,Romi
naandOprahaspar
tners.Ly
diai
st he

49 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 onlyli
mi t
edpar t
nercontributingP200, 000.
00.I
ndi r
acont r
ibutedherser v
icesby
managingt hefi
rm,whi l
eBl esi l
da,Romi naandOpr ahcont r
ibut
edP50, 000.00,
P100,000.00,P150,000.00,r especti
vely.Thepar tnershav east ipulati
on that
Oprahshal lnotbel i
ablef oranyobl igati
onsoft hepartnershipbecauseoft he
goodwillshebroughttot hebusi ness.Whoamongt hepart
nersmaycr edi
torsgo
againstf orthei
rsepar ate pr opert
yaf terthe partner
ship assets have been
exhausted?
a.Al lofthepart
ners
b.Bl esil
daandRomi naonl y
c.Indi r
a,Bl
esil
daandRomi naonly
d.Al lofthepart
ners,exceptLy dia

Thecredi
tor
scannotgoagai
nstLydiabecauseasar ule,ali
mitedpar
tnershal
lnot
beli
ableasageneralpar
tnerunl
essheal l
owst heinclusionofhissurnamei nthe
par
tner
shi
pname,orifhet
akespar
tinthecontr
oloft
hebusi ness.

Oprahcannotbeconsi der
edasal i
mitedpartnerbecausei tisnotsti
pulatedi nthe
par
tnershi
parti
cl
e.Thest i
pulat
ionthatshewi l
lnotbel iablef oranyobli
gationoft he
par
tnershi
pisNOT v al
idast othir
dper son. Howev er,itisv al
i
dasbet weent he
par
tners. Assuch,al
thoughOpr ahisli
avblet
ot hecreditorsoft hepar
tnership,sheis
ent
it
ledtorei
mbursementsf r
om theotherpart
nersofwhat everamountthatshewi l
lbe
madetopay .

I
ndir
a,althoughanI ndust
ri
alPar t
ner,i
sal soli
avbletothecredi
tor
s. However
,she
canalsoaskf orrei
mbur sementfrom theotherpartnersofanyamountthatshewi
l
lpay
si
nceani ndustri
alpar
tnershallnotsharei
nt heloss.

113. Wit
houtthewr it
tenconsentorther ati
fi
cat
ionbyallthelimitedpartner
s,a
generalpart
neroral lthegener
alpartners,havenoaut hor
itytoper form anyof
thefoll
owingacts,exceptto:
a.Admi tapersonasagener alpartner.
b.Cont i
nuethebusi nesswit
hpar t
ner shi
pproper
tyont hedeat h,reti
rement
,
i
nsanit
y,civ
ili
nterdi
cti
onorinsol
v encyofageneralpartner.
c.Admi tapersonasal i
mit
edpartner.
d.Cont i
nuethebusi nesswit
hpar t
ner shi
pproper
tyont hedeat h,reti
rement
,
i
nsanit
y,civ
ili
nterdi
cti
onorinsol
v encyofalimi
tedpar t
ner.

Wi t
houtt hewr i
ttenconsentort her atif
icationbyal lthel i
mi t
edpar t
ners,agener al
partnerorallthegener alpartners,havenoaut hor i
tytoperfor
m anyoft hefoll
owingact s:
(1)doanyacti ncont r aventi
onoft hecer t
ifi
cat e;(2)doanyactwhi chwoul dmakei t
i
mpossi bletocar r
yont heor dinar
ybusi nessoft hepar t
nership;(3)conf essaj udgment
againstthepar t
nershi p;( 4)possesspar t
ner shippr operty
,orassi gnt hei
rr i
ghtsi n
specifi
cpar t
nershippr operty,forothert hanapar t
nershi
ppur pose;( 5)admitaper son
asagener alpar t
ner;( 6)admi tapersonasal i
mi tedpartner,unlesst herighttodosoi s
giveninthecer ti
fi
cat e;and,( 7)Cont inuethebusi nesswi t
hpar t
nershi ppropertyont he
death,ret
irement,insani t
y,civi
lint
erdicti
onori nsol vencyofagener alpartner,unlessthe
ri
ghtt odosoi sinthecer t
if
icate.

50 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 Theref
ore,agener
alpart
nerhast heaut
horit
yconti
nuet hebusi
nesswit
hpar
tner
ship
propert
yont hedeath,ret
ir
ement,insani
ty,ci
vili
nter
dict
ionorinsol
vencyofali
mited
partner
,evenwit
houttheconsentoftheli
mitedpart
ners.

114. Whichoft hefoll

owingri
ghtsofagener alpar
tneris/ar
ealsotheri
ghtsofa
l
i
mitedpartner?
a.Righttoinspectandcopypartnershipbooksatar easonabl
ehour
b.Righttohav eondemandt rueandf ul
linf
ormationofallthi
ngsaff
ecti
ngthe
part
nership
c.Righttohav edissol
uti
onandwi ndi
ngupbydecr eeofcourt
d.Alloftheforegoing

Art
icl
e1851enumeratestheri
ghtsofalimitedpart
ner,suchastheri
ghtt
oi nspect
andcopypartner
shi
pbooksatar easonabl
ehour ;t
heri
ghttohav eondemandtrueand
ful
linf
ormati
onofallt
hingsaff
ecti
ngthepartnershi
p;andtherightt
ohavedissol
uti
on
andwindingupbydecr
eeofcourt.

Theref
ore,al
loft
hef
oregoi
ngst
atement
sabov
ear
eal
sot
her
ight
sofal
i
mit
ed
par
tner
.

115. Whichoft hefol

lowi
ngr i
ghtsi
sal i
mi t
edpar t
nerenti
tledto?
a.Grantaloantothepartnershi
p
b.Transactbusi
nesswiththepartnershi
p
c.Eit
her(a)or(b),
orboth(a)and( b)
d.Neither(a)nor( b)because a limited part
neris pr ohi
bit
ed f r
om any
businessdeali
ngwiththepar t
nershipexceptasr egardsther eturnofhi
s
contri
buti
onorthepaymentofcompensat iontohi
m bywayofi ncome

Ali
mitedpart
nerisenti
tl
edtoloanmoneytothepartner
shi
paswellastot
ransact
busi
nesswithpart
nershi
p,asstat
edinar
ti
cle1854.Ther
efor
e,bot
h(a)and(
b)arealso
theri
ght
sofalimitedpar
tner.

116. Thesest atement sar epr esentedtoy ou:

I
. Al i
mi t
edpar tnercannotr eceiv
eorhol dascol l
ateralsecuri
tyany
partnershippr operty
II
. A l imited par tner cannot r eceivef r
om generalpar tner or t
he
partnership anyconv eyanceorr el
easefrom l
i
abili
ty,ifpart
nershi
p
asset sarenotsuf fici
entt odischargepart
ner
shi
pliabil
it
iestooutsi
de
creditors.
I
nyourevaluat i
onoft hef oregoingst at
ement s:
a.Bot hst atement sar etrue
b.Bot hstat ement sar efalse
c.Onl yStat ementIi st r
ue
d.Onl yStat ementI Iistrue

Accordi
ngtoAr ti
cl
e1854,l
imit
edpartner
sarepr ohi
bitedonaccountofthei
rclaims
againstthepart
nershipf
rom r
ecei
vingorholdi
ngascol later
alsecur
it
yanypartnershi
p
propert
y.I tisalsonotall
owedtorecei
vefrom generalpartnerort
hepart
nershipany
51 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
convey
anceorrel
easefr
om l
iabi
l
ity
,ifpar
tner
shi
passet
sar
enotsuf
fi
cientt
odi
schar
ge
part
nershi
pli
abi
li
ti
est
ooutsi
decredit
ors.

Ther eceivi
ngofcollat
eralsecur
it
y,orofconveyance,orrel
easef
rom l
i
abi
l
ityin
v
iol
ati
onoft hisprov
isi
oni saf r
audont hepar
tnershi
pcr edi
tor
swhomayseekt he
r
esci
ssionoft hetr
ansact
ion.

117. Whobet weenal i

mitedpar tnerandagener alpart
nermayreceiv
eon
accountofresulti
ngclaimsagai nstt hepartnershi
p,withgener
alcr
edi
tor
s,apr
o
rat
ashareoft hepartnershi
passet s?
a.Bothl i
mitedpartnerandgener alpar
tner
b.Limitedpar t
neronly
c.Gener alpart
neronly
d.Neithergeneralpartnernorlimi t
edpartner

Oneoft herightsofalimitedpart
nerist orecei
veonaccountofresul
ti
ngclaims
againstthepar tner
shi
p,wit
hgener alcredit
ors,apr orateshar
eofthepar t
nershi
p
assets.Hisreceiptofthepaymentshouldnotbepr ej
udici
alt
opart
nershi
pcredi
tors.
Therefor
e,onlytheli
mit
edpartnerhasthi
sr i
ght.

118. Whichoft hefol

l
owi ng willnotcauset
heaut
omat
icdi
ssol
uti
onofa
l
i
mitedpartner shi
p?
a.Insani tyofageneralpartner
b.Civilinterdi
cti
onofal i
mi t
edpartner
c.Deat hofagener alpartner
d.Insolv encyofageneral part
ner

Thereti
rement,death,insolv
ency,insanit
y,orciv
ili
nterdi
cti
onofagener alpar
tner
di
ssolves t
he partnershi
p whi l
et he ret
ir
ement,death,insolvency
,insani
ty,orcivi
l
i
nterdi
cti
onofal i
mi tedpartnerdoesnotdi ssol
vethepartner
shipexceptwhenther
ei s
nomor eli
mitedpartner.

119. I
ft hereareseveralli
mitedpartner
s,whichofthefoll
owingmaybeagr eed
uponbyt hemember soft hepart
nership?
a.Priori
tyofoneorsomeoft helimi
ted part
nersov ertheotherlimi
ted
partnersastother et
urnoftheircont
ri
buti
ons
b.Priori
tyofoneorsomeoft helimi
ted part
nersov ertheotherlimi
ted
partnersastotheircompensat i
onbywayofi ncome
c.Eit
her( a)or(b)
,orbot h(
a)and( b)oranyotherpri
ori
ty
d.Noneoft heforegoing si
nceanyagr eementast o anypr i
ori
tyisvoid
becauset heli
mitedpartner
smusthav eequal ri
ght
sandpr i
vi
leges.

I
fther
ear esever
allimi
tedpart
ner
s, t
hemembersmayagr eet hatoneormor eofthe
l
imit
edpar tner
sshallhaveapri
ori
tyoverotherl
i
mitedpart
nersast otheret
urnoftheir
cont
ribut
ions,astotheircompensat
ion,orastoanyothermat ter.Theref
ore,bot
h(a)
and(b)maybeagr eeduponbyt hemember soft hepar
tnership,incaseofsev eral
l
imit
edpar t
ners.

52 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines
 120. Thesest atementsar epr esentedt oy
ou:
I. Asar ule,al i
mitedpar tnerisnotapr operpart
yt opr
oceedi
ngsbyor
againstapar t
nership
I
I. Al imitedpartnermay ,howev er,beapr operpartyift
heobjectofthe
proceedingistoenf orceal i
mitedpartner
’sri
ghtagai
nstt
hepart
nershi
por
alimitedpartner’
sliabili
tytothepar t
nershi
p.
I
nyourev al
uat i
onofthef oregoingst atements:
a.Bot hst atementsaret rue
b.Bot hst atementsaref alse
c.Onl ySt atementIistrue
d.Onl ySt atementIIi
st rue

Asagener alrul
e,al i
mitedpartnerisnotapr operpart
ytoproceedingsbyoragai
nst
apar t
nershi
p,howev er,alimit
edpar tnershallbeapr operpart
yifhei sal
soageneral
part
ner,orwher etheobj ectoft hepr oceedi
ngsist oenforceal i
mi t
edpar
tner
’sri
ght
againstt
hepar t
nershiporal i
mitedpar tner
’sl
iabi
li
tytothepart
nership.

53 Questi
onsandAnswer si
nPartnership
Answersprepar
edbyAt t
y.Chr
istopherR.Her
nandez
Pol
ytechni
cUniver
sit
yofthePhili
ppines