Group Activity in Partnership

Instructions :

You will be divided into groups. You will be given the chance to make a
presentation/discussion of certain legal provisions and problem/s that cover the
provisions you will be discussing.

You are given 30 minutes to discuss with your group members re your presentation.
You may appoint one rapporteur to present the salient points of the provisions
assigned to you including the answer to the problem given. Or you may have creative
ways of presenting and answering your problem (it may be a skit, a talk show,etc.) But
be sure that you will NOT exceed the 15 minutes for your presentation. There will be
another 5 minutes allotted for Q and A.

Then all the members of the group will be interpellated by another group. The number of
questions would depend on the number of group members who made the presentation.
The questions may dwell on the provisions assigned to you or on the problems given.

Both the presentation, the Q and A and the written report will be graded. The group
interpellating another group will also be graded on the quality of questions asked.
Rubrics for grading the presentation and the Q and A include :
Clarity – 15%
Substance -15 % (comprehension of the law and the problem)
Logic – 20%
Teamwork –10%
Total = 60%

Note : Do not forget to write the names of your members in your report and presentation

I. Group I ( Arts. 1769, 1770, 1771)

Problem 1

Claire entered into a verbal agreement with Pia to form a partnership for the
purchase of kitchen utensils for a proposed food catering business. It was agreed that
Claire would buy the kitchen utensils and each partner is to furnish such amount of
money as she could and that the profits will then be divided proportionately. After Claire
purchased the kitchen utensils with the money advanced by Pia, they undertook to draft
the articles of partnership and embody the same in an authentic document. However,
they did not come to an agreement. So, Claire returned the money advanced by Pia,
which the latter received with an express reservation of all her rights as a partner.

a) Was there a partnership formed between Claire and Pia ?

b) If such partnership existed, was it terminated by the receipt of Pia of the
money she advanced?
Problem 2

Jose conveyed his lots in favor of his four sons in order for them to build their
residences. His sons sold the lots since they found the lots impractical for residential
purposes because of high costs of construction. They derived profits from the sale and
paid income tax. The sons were required to pay by the BIR corporate income tax and
income tax deficiency, on the theory that they formed an unregistered partnership or
joint venture taxable as a corporation.

Did the siblings form a partnership?

Group II ( Arts. (1772, 1773 & 1774)

Problem 3

Romeo and Amil are brothers. Romeo filed a case against his brother Amil and
another alleged partner, Kevin for specific performance and accounting. In his
complaint, Romeo alleged that since 2018, he, Amil and Kevin entered into a joint
venture/partnership arrangement for the setting up of two studio apartment buildings
for rental. Romeo is said to contribute 2 parcels of land – a 2,500 square meter lot and
another 3,000 square meter lot. Amil and Kevin who are both civil engineers and
building contractors are to provide the funds and their labor for the construction of the 2
building. So, the intention was to engage in the realty leasing business. The building
promised never saw the light of day. Romeo as proof of his complaint presented a
document showing typed entries that he has contributed his two lots – a 2,500 square
meter lot and a 3,000 square meter lot. But the said document is unsigned and even
undated.

a) Do you think Romeo’s legal action will prosper?

b) Is your answer the same if only Romeo has signed the document ? What if there
was partial execution of the contract for instance, Amil and Kevin started
constructing the building but was unable to continue the construction for some
reason?

Problem 4

A partnership was entered into between Roger and Rafa to operate a fishpond. Neither
partner contributed a fishpond or a real right over any fish pond. Their capital
contributions were in cash in the amount of P100,000 each with the right to receive 50%
of the profits. While the partnership contract was done in a public instrument, no
inventory of the fishpond to be operated was attached in the said instrument. The
partners actually used a public land in operating a fishpond. Rafa handled the
partnership funds for four years and rendered yearly accounts of the operations of the
partnership. On the fifth year however up to the 10 th year, Rafa failed to give an
accounting to Roger. Hence, the latter filed an action against Rafa for accounting of
funds, the dissolution of the partnership and the appointment of a receiver. Rafa
admitted the formal allegations of the complaint but denied the existence of said
partnership, upon the ground that the contract therefor had not been perfected for the
lack of inventor.

Is there a valid contract of partnership despite the lack of inventory ?

Group III – Articles 1777, 1778, 1779 and 1780

Problem 5: A and B formed a universal partnership of all present property. At the time of
the establishment of the partnership, A owned a fleet of taxis which he had purchased
and an agricultural lot which he had inherited. B, on the other hand, owned an
apartment which he had earlier acquired by exchange and shares of stock which were
donated to him. The partners agreed that property acquired by each partner after the
formation of the partnership shall belong to the partnership. During the first year of
operations of the partnership, the following transactions took place:

 Fare revenues of P200,000 were realized from the operation of the fleet of taxis
 Crops amounting to P100,00 were gathered from the agricultural lot.
 Rentals of P150,000 were collected from the apartment.
 Dividends of P50,000 were received from the shares of stock.
 A coconut plantation was purchased by A from his own funds.
 Coconuts worth P80,000 were gathered from the coconut plantation.
 A fishpond was received by B by way of donation from a rich uncle.
 Fish valued at P70,000 were harvested from the fishpond.

a) Which of the foregoing belong to the partnership?

b) Which of the foregoing belong to the individual partners, respectively?

Problem 6

a) May a corporation enter into a partnership with another corporation?

b) What are the legal consequences for failure of a partnership to register with
SEC?

Group IV – Arts. 1780, 1781, 1782 and 1783

Problem 7:
A and B formed a universal partnership of profits. At the time of the establishment of the
partnership, A owned a fleet of taxis which he had purchased and an agricultural lot
which he had inherited. B, on the other hand, had an apartment which he had earlier
acquired by exchange and shares of stock which were donated to him. The parties
stipulated that fruits of future property shall belong to the partnership. During the first
year of operations of the partnership, the following transactions took place:

 Fare revenues of P200,000 were realized from the operation of the fleet of taxis
 Crops amounting to P100,00 were gathered from the agricultural lot.
 Rentals of P150,000 were collected from the apartment.
 Dividends of P50,000 were received from the shares of stock.
 Salary of P200,000 was received by A as professor of certain college
 P1,000,000 was won by B in the lotto draw.
 A coconut plantation was purchased by A from his own funds.
 Coconuts worth P80,000 were gathered from the coconut plantation.
 A fishpond was received by B by way of donation from a rich uncle.
 Fish valued at P70,000 were harvested from the fishpond.

a) Which of the foregoing belong to the partnerships, A, and B, respectively?

b) If common law spouses engage in a business, can they enter into any kind of
universal partnership?

Problem 8 – Limited Partnership

J, P and B formed a limited partnership called Suter Co., with P as the general partner
and J and B as limited partners. J and B contributed P18,000 and P20,000 respectively.
Later, J and B got married and P sold his share of the partnership to the spouses which
was recorded in the SEC. Has the limited partnership been dissolved by reason of the
marriage between the limited partners?

Group V

Problem 9 – Profit Sharing Arrangement

A, B and C are partners. They had a hard time agreeing on the profit-sharing and loss
sharing arrangement as between them. But these are the contributions made by the
partners : A- 50% [P500,000]; B-35% [P 350,000] and C -15% [150,000] out of the P 1
Million contributions. C is both a capitalist partner and an industrial partner. Since the
three partners cannot agree as to how much would be their share in the profits, they
assigned T, an accountant to A, B and C assigned T, an accountant, to designate
their profit sharing ratio who made this arrangement :

A – gets 30%; B- gets 20% and C-50%.

Both A and B objected because they say that the designation of the profit sharing is just
inequitable. T, countered that while C contributed only 50% of the capital, this is an
equitable sharing because he is the only industrial partner,

a) Comment on the profit-sharing ration made by T. Is this arrangement applicable

as well to the loss sharing ratio of the partners.
b) If you were C what are you going to do?

Problem 10 - Settlement of Accounts

Huey, Duey and Louie are partners with the following contributions: P 20,000,P30,000
and P 50,000, respectively. On dissolution, the assets of the partnership amounted to P
P 1,000,000. The partnership owes the following amounts to these creditors : Harry – P
100,000; Ronald- P 200,000 and Hermione – P 50,000 and to Louie – P 50,000.00. In
this particular case, Louie’s death caused the dissolution of the partnership

a) Explain and illustrate how the accounts of the partnership shall be settled
detailing the payment to creditors, the sharing of profits and the return of
contributions if any.
b) What if in the example given above the liabilities of the partnership amounted to
P 1.5 million, how will the partnership accounts be settled?

Group VI – Dissolution of a Partnership

Problem 11 – Expulsion of a Partner

Let us say there are three law partners who started as friends but, as time goes by, two
of the partners want nothing more to do with the third. This third partner is Rody who
apparently got a windfall when he received a P15 million professional fee from a 15
year old expropriation case resolved in his favor. These three law partners used to be
associates of one of the big law firms in Cebu. Rody, at that time was the counsel in
charge of an expropriation case handled by the law firm. When Rody and his two
colleagues, decided to put up their own law firm, the client decided to stick out with
Rody as his personal counsel.
The partnership agreement provides that “Any member may be expelled from the law
firm with or without cause by a majority vote of the partners representing the controlling
interest. ” Among the causes of expulsion mentioned are as follows :

 the partner engaged in wrongful conduct that adversely and materially affected
the partnership business
 the partner materially and willfully breached the partnership agreement, or
 the partner’s conduct makes it not reasonably practicable to carry on the
partnership business with that partner.
In this case, each of the partner of Rody had 30% interest, while the latter had 40%
interest.
Unfortunately, there was no agreement among the three regarding the expropriation
case that Rody handled. The other two presumed that since the case continued to be
handled by Rody using the facilities and staff of the firm, he will also share with them the
boon according to the profit sharing agreement. Alas, Rody gave them only a million
each.
The two partners voted to expel Rody from the partnership.
a) Rule of the validity of the expulsion. If you were Rody what are your next legal
moves?
b) Is there a basis also on the part of Rody’s partners to resort to judicial
dissolution? If so, explain.

Problem 12 - Conviction of a crime by a partner

MAROSA Company, is a registered general partnership business engaged in the

cosmetics distribution business with a term of 10 years. It is comprised of May, Rona
and Sam. Rona and Sam are both capitalist partners in the business.

On the sixth year of MAROSA, May, a capitalist-industrial partner was charged by her
husband, Dick, for adultery. She was later on convicted for the crime of adultery with
the penalty of prision correccional in its maximum period.

To add to her woes, May also received a charging order for her interest in the
partnership from the court in favor of X Corp. for her unpaid loan. Apparently, she
needed much funds to spend for her clandestine tryst and expensive rendezvous with
her paramour. She even misappropriated the collection of P 500,000 received from ABC
Inc., one of their creditors.

When she was already behind bars, her two other partners proceeded with applying for
the judicial dissolution of MAROSE Company despite the non –expiry of its ten year
term. It cited as basis the conviction by final judgment of the court in the adultery case.

ABC Inc., a judgment creditor of May also initiated a judicial dissolution of the
partnership citing the charging order issued by the court in his favor.

a) Do you think Rona and Sam has basis for the judicial dissolution of the
partnership? Can they also proceed with extrajudicial dissolution?
b) How about ABC Inc., the judgment creditor, is there a legal basis for the
application of judicial dissolution?