PARTNERSHIP AND CORPORATION LAW

Name:________________________________ 1st exam Fernandez AC

Course and Year:_______________________

Instructions:

Each questions are independent of each other although it may be dependent on the same set of
data.

Provide your answers immediately after the questions, indicating the law on which the answer
was based and the justification or explanation as to how or why said law was the basis of the
answer.

Situation I.

Mr. Unod, Bukog, Pakdol and Sabaw agreed to form a partnership on January 15, 2020. Mr.
Unod contributed his car to the partnership worth Php 500,000.00, Mr. Bukog contributed his
services as a mechanic which is valued at Php 100,000 as agreed by the partners; Mr. Sabaw
contributed the use of his building valued at Php 250,000 as agreed by the partners; and Pakdol
with cash in the amount of Php 150,000. The actual contribution happened on July 25, 2020.
They agreed that their business is “buy and sell” of used cars. The actual operation of the
partnership started on August 28, 2020.

In addition, the partners agreed that it is prohibited for the partners to go out of the country for
the whole duration of the partnership. Contravention to such agreement would automatically
dissolve the partnership.

They further agreed that they would be dividing the gross profit instead of the net profit. The
expenses in turn would be divided equally from their share in the gross profit. It is likewise
expressly agreed that Mr. Bukog should not be liable for any liability from any person including
third persons, resulting from partnership transactions or acts of the partners which would bind
the partnership.

The actual worth of the services of Bukog is valued at Php 80,000, the use of the building of
Sabaw is valued at Php 300,000 and the contributed car at Php 600,000. Such information is
available to the partners from the moment the contract of partnership was executed.

They further agreed that the sharing of profits would be equal among the partners; and Bukog,
Pakdol and Sabaw would be the managing partners. Such agreements are reflected in the Articles
of partnership. Unod is unknown and inactive in partnership affairs that the business reputation
of the partnership would not be in any way affected by him.
The Partnership operated under a firm name of HUBOG PARTNERSHIP.

1. In a partnership meeting, Mr. Bukog brought out a legal question as to whether or not the
partnership exists. Mr. Bukog was concerned that a juridical person was not formed due
to the stipulation in the articles of partnership that what is to be divided was “gross
profit” instead of the “net profit”. Mr. Bukog points to Article 1769 paragraph 3 which
provides that sharing of gross returns does not establish a partnership.

If you are the legal counsel of Hubog Partnership, what would be your answer to Mr.
Bukog’s inquiry as to whether or not a partnership exists?

_________

2. In the same meeting, Mr. Unod likewise inquired as to the necessity of the “Articles of
Partnership” for the existence of Hubog partnership. Mr. Unod would like the partnership
to be kept simple. If the articles of partnership is unnecessary, then such document should
not be executed.

If you are the legal counsel of Hubog Partnership, what would be your answer?

__________

3. The son of Mr. Unod, Baby Tambok asked you, the legal counsel of Hubog partnership
as to whether or not a partnership could exist even prior to the actual contribution of
capital.

Could a partnership actually exist prior to the actual contribution of capital?

_________

4. Pakdol, after 2 years of business operations, demanded that entry of the contributions be
revalued to reflect the actual market value of the contributions. Pakdol contends that
when the investments or capital was recorded in the books some investments were
recorded below or higher that its actual worth.

Is it within the right of Pakdol to demand such revaluation of contributions?

____________
 5. Hubog partnership was sued by Mr. Inom for collection of money. Notice of such suit
was given to Mr. Sabaw. The latter read such notice and understood very well its
implication. To assure of a win, Mr. Inom bribed Mr. Sabaw in order that the latter would
not forward said notice to the partnership. The partnership subsequently lost the case due
mainly to the fact that the partnership did not participate in the legal proceeding despite
having been given notice of the suit.

When the partnership ultimately gained knowledge of the suit, you were asked, is notice
in this instance knowledge of the partnership?

__________

Situation II.

Ms. Sexy, Gwapa, Cute, Lami, Humot, and Hamis, formed Sayon, Kaayo and Exam
Partnership on December 12, 2015. Ms Sexy is an industrial partner assisting the other
partners whenever and wherever she can; the others are capitalist partner. At the
beginning of the partnership and in the Articles of Partneship, Ms Lami is appointed as
Managing partner for purchasing. Subsequently, on December 12, 2016, as business
improved, Ms Gwapa, Cute, Humot and Hamis were appointed as Managing partners for
sales. It is agreed that except if expressly authorized by any and/or all of the managing
partners in their respected areas of responsibility, no partners may transact business
without the consent of the former. Mr Sayon and Mr Kaayo gave their consent to use
their name in the Firm name of the partnership, Mr. Exam however did not.

Contributions of the Partners as well as profit and losses are as follows:

Partner Contribution Profit Losses
Ms Sexy industry 10% 0

Ms Gwapa Php 1,000,000 10% 10%

Ms Cute Php 2,000,000 20% 20%
Ms Lami Php 3,000,000 20% 20%
Ms Humot Php 3,500,000 20% 20%
Ms Hamis Php 10,500,000 20% 30%

The business of the Partnership is retail of used socks. The principal office of the
Partnership is in Mandaue City, the principal place of business of the partnership is in
Cebu City.

6. Mr. Baho Tiil met Ms Sexy by chance in a golf course which business was discussed.
The former, in good faith, was so impressed by the sales pitch of Ms Sexy that a contract
 was drafted and signed by the parties which Ms Sexy, representing Sayon Kaayo and
Exam Partnership obliges itself to deliver 10,000 pairs of used socks to Mr. Tiil.

When said contract was presented by Ms. Sexy to the other partners, Ms. Gwapa got
angry stating that Ms. Sexy should not have done that because she needs the prior consent
of the managing partners.

As legal counsel for Sayon Kaau and Exam Partnership, you were asked, would the
partnership be bounded by the unauthorized act of Ms. Sexy?

_________

7. One of the debtors of the Partnership is Mr. Yagit in the amount of Php 50,000.00. As it
turned out Mr. Yagit was also indebted to Ms Sexy in the amount of Php 50,000.00. The
Mr. Yagit paid Ms. Sexy the amount of Php 50,000.00 without any specification as to
what debt should it be applied. Ms Sexy issued her personal receipt and applied the whole
amount to her personal credit.

Ms. Lami protested on such application of payment by Ms. Sexy insisting that the
payment should be applied in proportion to the two debts.

You, as legal counsel for the partnership was asked, what is the proper application of
payment?

___________

8. In the first year of operation, the Partnership incurred liability amounting to Php
1,000,000.00. The assets of the partnership equals the partners contribution.

In a meeting attended by all the partners, you as legal counsel for the partnership were
asked, “will the separate properties of the partners be liable for this debt including Ms.
Sexy?”. What would be your answer?

____________

9. Ms Humot would like to enter into a contract with Mr Way Klaro which would obligate
the Partnership to sell 20,000 pieces of socks to Mr. Klaro. Ms Lami disagrees with Ms
Humot.
 As legal counsel for the partnership, you were asked on how would the matter be resolve
having in mind that both Ms. Lami and Ms. Humot are managing partners.

__________

10. Ms Gwapa, on 2016, transferred possession to the partnership firewood to be used as

display stands for the socks. Upon the transfer of possession, there was no stipulation as
to whether or not ownership would be transferred to the partnership.

You were asked, there being a transfer of possession of fungible goods without
stipulation on matters of ownership, who is the owner of the firewood?

_______

Situation III.

Long time friends Hospicio, Ciriaca, Elinita, Socoro, Felisa and Luciana decided to
engage together in a business in the retail of handbag coming from Hong Kong and
selling it in the Philippines. It is agreed that Hospicio would be in-charge of purchasing,
Ciriaca would be in sales and collection, Elinita would be in inventory and storage
maintenance, Socoro with delivery, and Felisa with accounting and advertising.
All of the friends are Certified Public Accountants.

The friends agreed to contribute the following amounts of money and further agreed to
divide whatever results in the following manner:
Names Contribution Profit Losses Liabilities
Hospicio Php 0.00 10% 0 0
Ciriaca Php 1,000,000 10% 10% 30%
Elinita Php 2,000,000 20% 20% 20%
Socoro Php 3,000,000 20% 20% 20%
Felisa Php 3,500,000 20% 20% 20%
Luciana Php 10,500,000 20% 30% 10%

Furthermore, it is agreed that they would transfer possession to the following items for
the business and the agreed worth of such items.

Names Items Use Worth to parthership

Hospicio Bags Included in inventory Php 1,000,000
Ciriaca Firewood To be used as display rack Php 1,000,000
Elinita Car For Delivery of Stock Php 1,000,000
Socoro Office supplies For Office Use Php 1,000,000
 Felisa Office equipment For office Use Php 1,000,000
Luciana Storage Van For Storage of Stocks Php 1,000,000

Lastly, it is agreed by the friends that all properties, which is bought by the business
would be co-owned by all of them and the business would last for 5 years and cannot be
terminated within 5 years and automatically dissolves after such term.

Special instructions for situation III only:

The subsequent numbers are more or a statement rather than questions. Indicate in your
answer whether said statements are “true” or “false” then provide an explanation for
your answer including the law which your explanation was based.

11. From the above data, there is no partnership for the following reasons: a. there is no
partnership name, b. it is not clearly stated that there is a partnership formed by the
individuals, and c. they are co-owners of the property

_______________

12. Since millions of pesos were contributed to the business, to constitute a partnership, it
must be registered with the SEC otherwise the partnership will not exist for non
compliance of form.

_______________

13. Assuming that a partnership exists, looking at the data above, Hospicio must be an
industrial partner as he did not contribute money or property to the partnership

_______________

14. Assuming that a partnership exists ; a fire razed the office of the partnership and
destroyed all the items delivered for the business. Since firewood and office supplies are
fungible goods, loss should be shouldered by the partnership
________________

15. Assuming that a partnership exists ; a fire razed the office of the partnership and
destroyed all the items delivered for the business. Since bags, car, office equipments and
storage van is non fungible goods, then loss should be shouldered by the contributing
partners.
________________