STUDY GUIDE

I. DEFINITIONS

1. Partnership -By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of dividing
the profits among themselves. Two or more persons may also form a partnership for
the exercise of a profession.

2. Element of delectus personae - a person has the right to select persons with whom
he wants to be associated with in partnership.

3. Particular partnership – a particular partnership has for its object determinate things,
their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.

4. Secret Partnership - one wherein the existence of certain persons as partners is not
avowed or made known to the public by any of the partners.

5. Universal Partnership of profits - A universal partnership of profits is one w/c

comprises all that the partners may acquire by their industry or work during the
existence of the partnership and the usufruct of movable or immovable property w/c
each of the partners may possess at the time of the celebration of the contract.

6. Partnership with a fixed term – in one which the term of its existence have been
agreed upon expressly or impliedly. The expiration of the term thus fixed or the
accomplishment of the particular undertaking specified will cause the automatic
dissolution of the partnership.

7. Subpartnership - Person for a division of the profits coming to him from the
partnership enterprise is termed subpartnership. It is a partnership within a partnership
and is distinct and separate from the main or principal partnership.

8. Industrial partner - is one who contributes his industry or labor in the partnership

9. Eviction – Eviction shall takes place whenever by a final judgment based on a right
prior to the sale or an act imputable to the vendor, the vendee (partnership) is deprived
of the whole or a part of the thing purchased.

10. Future partnership - Partners may stipulate some other date for the commencement
of the partnership; it can be in future time or based on happening of some future
contingency; it has no juridical personality at the moment.

11. Partner’s interest in a partnership - consists of his proportional share in the

undistributed profits during the life of the partnership and his share in the undistributed
surplus after its dissolution
12. Profit - excess of returns over expenditure in a transaction or series of transactions,
the net income of the partnership for a given period of time

13. Surplus - assets of the partnership of after partnership debts and liabilities are paid
and settled and the rights of the partners among themselves are adjusted; excess
of assets over liabilities

14. Partnership capital - PARTNERSHIP CAPITAL IS CONSTANT, and is not affected by

fluctuations although it may be increased or diminished by unanimous consent of the
partners. Partnership capital represents the AGGREGATE OF THE INDIVIDUAL
CONTRIBUTIONS made by the partners.

15. Pro rata liability -equally or jointly (not proportionately) - Basis of pro-rating liability:
No. of the members of the firm and NOT the amount of their contributions

16. Subsidiary liability -because they become PERSONALLY LIABLE ONLY after the
partnership assets have already been EXHAUSTED

17. Equitable interest or title - One that is not recognized in law but only in EQUITY; one
that is IMPERFECT OR UNENFORCEABLE in law but because of equitable
principles, may be converted into a legal title or interest

18. Estoppel - Estoppel is a BAR which precludes a person from DENYING OR

ASSERTING ANYTHING contrary to that which has been established as the TRUTH
by his own deed or representation, either EXPRESS OR IMPLIED

19. Dissolution – is the change in relation of the partners caused by any partner ceasing
to be associated in the carrying on the business. It is the point in time when the
partners cease to carry on the business together. It represent demise of a partnership

20. Termination – is that point in time when all partnership affairs are completely wound
up and finally settled. It signifies the end of the partnership life.

21. Knowledge of a fact –when he has actual knowledge thereof, but also when he has
knowledge of such other facts as in the circumstances show bad faith

22. Notice of a fact – when a person claims the benefit of the notice: a) states the fact to
such person or b) delivers through the mail or other means of communication, a
written statement of the fact to such person or to a proper person at his place of
business or residence

23. Assets of the partnership -The assets of the partnership are: a.) the partnership
property.
b.) the contributions of the partners necessary for the payment of all the liabilities
specified in No. 2.

24. Limited partnership -A limited partnership is one formed by two or more persons
under the provisions of the following article, having as members one or more general
 partners and one or more limited partners. The limited partners as such shall not be
bound by the obligations of the partnership.

25. Substituted limited partner - A substitute limited partner is a person admitted to all
the rights of a limited partner who has died or has assigned his interest in a
partnership

26. Presumption of general partnership – a partnership transacting business is, prima

facie, a general partnership

27. Contributor -A stranger in limited partnership whose liability is limited to his interest in
the firm without any right and power to participate in the management and control of
the business

28. Preferred limited partner - Where there are several limited partners the members
may agree that one or more of the limited partners shall have a priority over other
limited partners as to the return of their contributions, as to their compensation by way
of income, or as to any other matter.
If such an agreement is made it shall be states in the certificate, and in the absence of
such a statement all the limited partners shall stand upon equal footing.

II. DISCUSSIONS

1. Enumerate the five essential features of a partnership contract. Why is a

partnership characterized as a preparatory contract?

1. There must be a valid contract

2. The parties must have legal capacity to enter into the contract
3. There must be a mutual contribution of money, property or industry to a common
fund
4. The object must be lawful
5. The primary purpose must be to obtain profits and to divide the same among
parties

preparatory- which means that other contracts will be entered into as the
partnership pursues its business.

2. Explain and illustrate: a partnership is a juridical person.

As an independent juridical person, a partnership may enter into contracts, acquire

and possess property of all kinds in its name, as well as incur obligations and bring
civil or criminal actions. Thus, a partnership may be declared insolvent even if the
partners are not. It may enter into contracts and may sue and be sued in its firm
name or by its duly authorized representative. It is sufficient that service of
summons be served on any partner.
3. Give the cases when a person who is not a partner has a right to share in the
profits of a partnership.

The receipt by a person of a share of the profits of a business is prima facie

evidence that he is a partner in the business, but no such inference shall be drawn
if such profits were received in payment:
a. As a debt by installments or otherwise.
b. As wages of an employee or rent to a landlord.
c. As an annuity to a widow or representative of a deceased partner.
d. As interest on a loan, though the amount of payment vary with the profits of the
business. e. As the consideration for the sale of a goodwill of a business or other
property by installments or otherwise.

4. What is the importance of giving publicity to the articles of partnership?

It is essential that the arts of partnership be given publicity for the protection not
only of the members themselves but also 3rd persons from fraud and deceit. A
member who transacts business for the secret partnership in his own name
becomes personally bound to 3rd persons unaware of the existence of such
association. Partnership liability may still result, however, in cases of estoppel.

5. Give the effects where a partnership is formed for an unlawful purpose. (ME)

1. The contract is void and the partnership never existed in the eyes of the law;
2. The profits shall be confiscated in favor of the government;
3. The instruments or tools and proceeds of the crime shall also be forfeited in
favor of the government;
4. The contributions of the partners shall not be confiscated unless they fall under
#3.

6. Illustrate the relations created by a contract of partnership.

1. Relations among the partner themselves;

2. Relations of the partners with the partnership;
3. Relations of the partnership with third persons with whom it contacts; and
4. Relations of the partners with such third persons.

7. State the 5 obligations of a partner with respect to property he promised to

contribute. (ME)

Obligations of partners to contribute:

1. To contribute at the beginning of the partnership or at the stipulated time the
money, property or industry which he have promised to contribute;
2. To answer for eviction, in case the partnership is deprived of the determinate
property contributed;
3. To answer to the partnership for the fruits of the property the contribution of
which he delayed, from the date they should have been contributed up to the time
of actual delivery;
 4. To preserve said property with the diligence of a good father of a family pending
delivery to the partnership;
5. To indemnify the partnership for any damage caused to it by the retention of the
same or by the delay in its contribution.

8. Give the requisite before a capitalist partner may be obliged to sell his
interest in a partnership to the other partners.

1. There is an imminent loss of the business of the partnership

2. The majority of the capitalist partners are of the opinion that an additional
contribution to the common fund would save the business
3. The capitalist partner refuses deliberately to contribute an additional share to the
capital
4. There is no agreement that even in case of an imminent loss of the business the
partners are not obliged to contribute.

9. Why is appraisal of the value of the goods or property contributed by a

partner required? How shall it be made?

Appraisal is necessary to determine how much has been contributed by

the partners-
The appraisal is made by:
a. Stipulation
b. If there is no stipulation - experts chosen by the partners and according to
current prices

10. State the liability of a partner if he fails or delays his obligations with respect
to contribution of property. What is the reason of the rule?

No demand is necessary- From the time the partner ought to deliver up to the time
of actual delivery
From the mere fact that the contribution which a partner ought to deliver does not
pass to the common fund on time, the partnership fails to receive the benefits
which the said contribution ought to produce thus prejudicing the common purpose
of obtaining from them the greatest possible profits through some means of
speculation or investment. The injury to the partnership is constant.

11. What are the property rights of a partner in a partnership? (ME)

EXTENT OF PROPERTY RIGHTS OF A PARTNER

Principal Rights
a. His rights in specific partnership property
b. His interest in the partnership
c. His right to participate in the management
 Related Rights
a. Right to reimbursement for amounts advanced to the partnership and to
indemnification for risks in consequence of management
b. Right of access and inspection of partnership books
c. Right to true and full information of all things affecting the partnership
d. Right to a formal account of partnership affairs under certain circumstances
e. Right to have the partnership dissolved under certain circumstances

12. What rights are not acquired by an assignee or transferee of a partner who
conveys all his interest in a partnership?

The assignment made to the third person does not grant the assignee the right:
1. To interfere in the management
2. To require any information or account
3. To inspect any partnership books

13. What are the only rights acquired by said assignee or transferee?

RIGHTS OF THE ASSIGNEE

1. To receive in accordance with his contract the profits accruing to the assigning
partner
2. To avail himself of the usual remedies provided by law in the event of fraud in
the management
3. To receive the assignor’s interest in case of dissolution
4. To require an account of partnership affairs, but only in case the partnership is
dissolved, and such account shall cover the period from the date only of the last
account agreed to all by the partners

14. What is considered as the extent of a partner’s interest in a partnership?

Nothing is to be considered as the share of a partner but his proportion of the

residue or balance after an account has been taken of the debts and credits,
including the amount paid by several partners in liquidating firm debts or in making
advances to the partnership, and until that occurs, it is impossible to determine the
extent of his interest. This interest alone is available for the satisfaction of the
separate debts of the partners.

15. May a partnership continue to use in its firms name the name of a partner
who has died?

Cannot use the name for it will counter 1815 but they can continue the use of name
of deceased partners as long as it is indicated that said partner is already
deceased
16. In what cases are partners’ solidarily liable with the partnership to third
persons?

SOLIDARY liability of the partners and the partnership for the WRONGUL ACT OR
OMISSION (tort) or BREACH OF TRUST by any partner ACTING within the
SCOPE OF THE PARTNERSHIP BUSINESS OR WITH AUTHORITY FROM THE
OTHER PARTNERS

All partners are liable solidarily with the partnership for everything chargeable to the
partnership under Articles 1822and 1823.

17. Can W who is not a partner in a partnership be held liable as a partner?

Explain.

Persons who are not partners to each other are not partners as to 3 rd persons.
Hence, one may not be liable or claim any right as a partner UNLESS he consent
to his being a partner

A person, not otherwise a partner may be held liable as a partner by estoppel and
thus may be held liable to 3rd persons relying on such representation when:

1. He DIRECTLY REPRESENTS himself as a PARTNER of an EXISTING

PARTNERSHIP or of a NON-EXISTINGPARTNERSHIP (with one or more
person who are not actual partners)
2. He INDIRECTLY REPRESENTS himself by consenting to another representing
him as a partner in an existing partnership or in a non-existing partnership

18. Give the rule governing the liability of a partner for partnership contract.

After all the partnership assets have been exhausted, all the partners, including the
industrial ones, shall be liable for all the contracts which may have been entered
into in the name, for the account of the partnership and under its signature and by a
person authorized to act for the partnership
However, any partner MAY ENTER INTO A SEPARATE OBLIGATION to perform a
partnership contract

19. Give the effect if the specific property to be contributed by a partner is lost:

(a) before delivery – the partnership is dissolved because there is no

contribution inasmuch as the thing to be contributed cannot be substituted with
another. There is a failure of a partner to fulfill his part of the obligation.

(b) after delivery – the partnership is not dissolved, but it assumes the loss
of the thing having acquired ownership thereof. The partners may contribute
additional capital to save the venture.
20. Enumerate the rights of a partner who has not causes the dissolution of a
partnership wrongfully when such dissolution is in violation of partnership
agreement.

1. To have partnership property applied for the payment of its liabilities and to
receive in cash his share of the surplus
2. To be indemnified for damages caused by the partner guilty of wrongful
dissolution
3. To continue the business in the same name during the agreed term of the
partnership, by themselves or jointly with others
4. To possess partnership property should they decide to continue the business

21. Who are authorized to wind-up the affairs of a dissolved partnership?

1. Partner designated in the agreement.

2. In absence of agreement, the part that did no wrongfully dissolved the
partnership.
3. If all partners died, the legal representative of the last surviving partner provided
that the partner is not insolvent.

22. Give the rights of an injured partner when a partnership is rescinded or

annulled on the ground of fraud or misrepresentation committed against him.

1. Right of a lien on, or retention of, the surplus of the partnership property after
satisfying the partnership liabilities to third persons for any sum of money paid by
him for the purchase of an interest in the partnership and for any capital or
advances contributed by him.
2. Right to subrogation in place of partnership creditors after payment of
partnership liabilities
3. Right of indemnification by the guilty partner against all debts and liabilities of the
partnership.

23. Give at least 4 grounds for the judicial dissolution of a partnership.

1. A partner has been declared insane in any judicial proceeding or is shown to be

of unsound mind.
2. A partner becomes in any other way incapable of performing his part of the
partnership contract.
3. A partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business.
4. A partner willfully or persistently commits a breach of the partnership
agreement, or otherwise so conducts himself in matters relating to the
partnership business that it is not reasonably practicable to carry on the
business in partnership with him.
5. The business of the partnership can only be carried on at a loss.
6. Other circumstances render a dissolution equitable.
24. What are the characteristics of a limited partnership?

Characteristics of limited partnership

1. Must be formed by compliance with the statutory requirements

2. There must be one or more general partners who control the business and
personally liable to creditors.
3. There must be one or more limited partners contributing to the capital and share
in the profits but do not participate in the management of the business and are not
personally liable for partnership obligations beyond their capital contributions.
4. The limited partners may ask for the return of their capital contributions under the
conditions prescribed by law.
5. The partnership debts are paid out of the common fund and the individual
properties of the general partners.

25. Give the cases when a limited partner is liable as a general partner.

The contributions of a limited partner may be cash or property, but not services.
Otherwise, he shall be considered an industrial and general partner, which in case,
he shall not be expected from personal liability.
The surname of a limited partner shall not appear in the partnership name unless:
1. It is also the surname of a general partner. 2. Prior to the time when the limited
partner became such, the business has been carried on under a name in which his
surname appeared.
A limited partner whose surname appears in a partnership name contrary to the
provisions of the first paragraph is liable as a general partner to partnership
creditors who extend credit to the partnership without actual knowledge that he is
not a general partner.

1. Prompt renunciation of interest and/ or income upon ascertaining the mistake.

2. Non-inclusion of limited partner’s name in the firm name.
3. Non-participation in the management of the business.

26. Give at least 4 differences between a general partner and a limited partner.
General partner
Personally liable for partnership obligations
Have equal right in management of partnership
May contribute money, property or industry
Proper party to proceedings
Interest cannot be assigned to make new
partner
His name may appear in the firm name
Prohibited from engaging in a business like
partnership’s
His retirement, insolvency and death dissolves
the partnership
Limited partner
Liability extends only to his capital
contribution.
No share in management of partnership.
May contribute money and property
Not proper party to proceedings
Interest is assignable with assignee acquiring
all rights of the limited partner
Name not included in firm name
No prohibition
His retirement, insolvency and death does
not dissolve the partnership
 27. What conditions must exists before the contribution of a limited partner may
be returned to him?

A limited partner shall not receive from a general partner or out of partnership
property any part of his contributions until:

1. All liabilities of the partnership, except liabilities to general partners and to limited
partners on account of their contributions, have been paid or there remains
property of the partnership sufficient to pay them.
2. The consent of all members is had, unless the return of the contribution may be
rightfully demanded under the provisions of the second paragraph.
3. The certificate is cancelled or so amended as to set forth the withdrawal or
reduction.

28. Give at least 4 specific rights of a limited partner.

1. To require that the partnership books be kept at the principal place of business of
the partnership
2. To inspect a copy at reasonable hour partnership books or any of them
3. To demand true and full information of all thing affecting the partnership
4. To demand a formal account of partnership affairs whenever circumstances
render it just and reasonable
5. To ask for dissolution and winding up by decree of court
6. To receive a share in profits or other compensation by way of income
7. To receive the return of his contribution, provided the partnership assets are in
excess of all its liabilities
III. PROBLEMS

1. X, a limited partner in a partnership with Y and Z as general partners, lawfully

received the return of his contribution in the amount of P20,000, the assets of
the partnership are insufficient to pay the firm’s indebtedness to W. State the
liability of X if the claim of W arose:

(a) before X received his contribution

X is liable to the partnership whose claim arose before such return.
(b) after X received his contribution
The claim of X should be directed against the general partner

2. Same partnership. X contributed property to the partnership. In case X is

entitled to a return of his contribution, has he the right to demand the return
of the same property?

It depends; X only has the right to demand and receive cash for such his
contribution. The exceptions are: a) when there is stipulation to the contrary in the
certificate or b) where all the partners consent to the return other than in the form of
cash.
3. Same partnership. W, a partnership creditor, brought an action against the
partnership. May X be included as a party defendant?

It depends; X is not a proper party to proceedings by or against a partnership,

except where the object is to enforce a limited partner's right against or liability to
the partnership.

4. After X, Y, and Z executed and signed an articles of limited partnership, with

X as limited partner, they entered into a contract with W which created a
partnership liability in excess of the total contributions of the partners. Has
W the right to go also after the separate property of X?

It depends; X, limited partner, is not liable of the partnership liability up to his

separate property unless stated in Art 1844: (g) the additional contributions, if any,
to be made by each limited partner and the times at which or events on the
happening of which they shall be made.

5. Same partnership. Give the effect in case:

(a) Y dies
The retirement, death, insolvency, insanity or civil interdiction of a general partner
dissolves the partnership, unless the business is continued by the remaining
general partners: 1. Under a right so to do stated in the certificate. 2. With the
consent of all members.

(b) X dies
The death of a limited partner does not cause the dissolution of the firm, unless
there is only one limited partner.
On the death of a limited partner his executor or administrator shall have all the
rights of a limited partner for the purpose of settling his estate, and such power as
the deceased had to constitute his assignee a substituted limited partner. Law on
Business Organizations Reviewer 38 The estate of a deceased limited partner shall
be liable for all his liabilities as a limited partner.

6. X, Y, and Z are partners engaged in the grocery business. Each contributed

P50,000. It was stipulated that the liability of X shall not exceed his capital
contribution. After partnership assets have been exhausted, the partnership
has an unpaid balance of P12,000 in favor of W. Settle the rights of the
parties.

A stipulation among partners contrary to pro rata and subsidiary liability is void and
no effect insofar as it affects the risk of third persons. W can still recover P4,000
each from the partners as their stipulation cannot adversely affect him. However, X
is entitled to credit from Y and Z for the amount P4,000 paid by him to W. X,
however, cannot recover his contribution of P50,000
7. Same partnership. Is the sale of the automobile of the partnership by X who
is the manager of the partnership binding on the partnership?

It depends; an act of a partner which is apparently for the carrying on of the

business of the partnership in the usual way does not bind the partnership unless
authorized by the other partners.

8. Same partnership. X and Y, controlling partners, after informing Z, agreed to

reduce the debt of W to the partnership from P10,000 to P9,000 otherwise W
would not pay any amount. May Z question the reduction?

It depends where Z may question the reduction. One or more but less than all
partners have no authority to enter into a compromise concerning a partnership
claim or liability. But in the absence of an agreement to the contrary, all partners
have equal rights in the management and conduct of partnership business.

9. Same partnership. Y and Z contributed P15,000 each to the partnership. X

was subsequently admitted as a partner with a contribution of P10,000. The
partnership has an obligation of P45,000 in favor of W. Compute the liability
of the X, Y, and Z in case the obligation was contracted.

(a) before X was admitted – x is also liable to the obligation but up to

his share in the partnership property, unless there is a stipulation to the contrary.
(b) after X was admitted – all of them will be personally liable. Their
capital contribution amounts to P40, 000 versus P45, 000 liability the difference of
P5, 000 excess which will be the pro rata liability of the partners. 5000/3= 1666.67
Y and Z 15/40 of 5000= 1875 each; X 10/40 of 5000= 1250. Y and Z will be liable
for 208.33 each to D for the excess of 416.67 to cover for X, 1666.67- 1250

10. X, Y, and Z are partners in a partnership which owns a parcel of land. May X
transfers his rights as a partners to said property to Y?

It depends; X right in specific property is not assignable except in connection with

the assignment of rights to all the partners in the same property. Only the retiring
partner can assign his rights to the partners continuing the business.

11. Same partnership. X is liable to W, creditor, who obtained a court judgment

against X for a sum of money. What remedy is given by law to W for the
satisfaction of his credit against X?

The remedy given by the law to W is that he may charge (charging order) X with
payment of unsatisfied amount of such judgement debt with interest thereon.

12. Same problem. What may the other partners, Y and Z, do to protect the
interest of the partnership?

Y and Z may redeem or purchase the interest of X before the disclosure sale or
before the redemption period is fixed by the court without dissolving the
 partnership, with the consent of all the partners. (in case the sale being directed by
court)

13. X, Y, and Z are partners in a partnership which was dissolved by the

withdrawal of X. Y who has notified by Z of X’s withdrawal, entered into new
transaction with W in the name of the partnership.

(a) Is the partnership liable to W?

Yes, Y had merely notice. X and Z are bound to contribute their share in liability.

(b) Are X and Z liable to Y for their share of the liability?

No, only if Y has knowledge of the dissolution. In the end, only Y will assume the
entire liability.

14. Same partnership. X, acting for the partnership, bought a car from W which
car was being claimed by C. Y acquired knowledge of the claim of C. Neither
W nor Y informed X of the claim. C was able to recover the car. Is W liable to
the partnership under Article 1821?

It depends; W is not liable because Y’s knowledge is knowledge of the partnership.

15. Same partnership. The term of existence of the partnership expired. This
notwithstanding, X enters into a contract with W in the name of the
partnership.

(a) Is the partnership liable to W?

It depends; upon dissolution, the power of one partner to act and bind the other is
effectively terminated unless a third person who subsequently extend credit on the
assumption that the partnership is still existing. The partnership is liable to W.

(b) What right, if any, given to Y and Z?

Y and Z are entitled to indemnify from X. innocent partners can always recover
from the acting partner.

16. Same partnership. The partnership was dissolved. Assume the following
information:
Partnership assets – P320,000; Advances by X to partnership – P20,000;
Capital contribution of each partner – P30,000
Liability of partnership – to M – P150,000.

Compute the share of each partner in the profits.

Assets----------320,000 Net assets------150,000
Liabilities-----(150,000) Capital returned
Credit bal.-----(20,000) X, Y and Z (30,000 x 3) ------------(90, 000)
Net assets------150,000 Bal 60, 000
Divide by 3
Share in profit 20, 000 each
17. Same example. Suppose the liability of the partnership to W is P335,000; Y is
indebted to C (separate creditor) – P15,000; Z is indebted to D (separate
creditor) – P10,000.

Separate property of Y and Z each amounts only to P20,000 and P10,000,

respectively; and advance by X to partnership – P30,000.

Settle the accounts of the parties.

18. X, a partner in a partnership, upon arriving from abroad, demands a formal

accounting of partnership affairs. As X the right to insist on his demand if the
other partners Y and Z refuse?

It depends; as long as the purpose of demand with respect to partnership books

can be exercised at any reasonable hour. He can be restrained from using the
information gathered for other than partnership purpose.

19. Same partnership. The partnership is engaged in the grocery business.

(a) Can X also engage in the same business?

It depends; x can also engage in the same business if his partners gave
permission. But he cannot carry on a business or activity connected or competing
with that of the partnership.

(b) Give the reason why X may be prohibited from engaging in a business for
himself.
to prevent availing himself personally of information obtained by him in the course
of transaction of the partnership business or by reason of hiss connection with the
firm regarding the business secrets and clientele of the firm to its prejudice.

20. Same partnership. X is appointed manager in the articles of partnership. May

Y and Z who represent the controlling interest, revoke the power given to X if
the latter insists on executing a contract for the partnership which Y and Z
oppose?

it depends; x may execute all acts of administration despite the opposition of his
partners, Y and Z, unless he should act in bad faith and his power is irrevocable
without just or lawful cause. Y and Z have the power for such revocation.
21. Same partnership. The liabilities of the partners are as follows: X – P50,000;
Y - P30,000; and Z - P 20,000.

(a) How shall the profits of P15,000 be distributed?

there is no such agreement, the share will be proportion to their capital
contribution.

(b) Suppose W is an industrial partner. What shall be his share?

W share in profit is not fixed as in the case of capitalist. Industrial partner get a
share each that is just and equitable under the circumstances.

22. Same partnership. The partners stipulate that Z shall not be liable for losses.
Is the stipulation valid?

It depends; a stipulation which exclude no one or more partners from any share or
losses is void. Only industrial partner shall not be liable for losses.

23. X, Y, and Z formed a partnership to which they contributed a total capital of

P30,000. The partnership is not registered with the Securities and Exchange
Commission. Does the partnership have a juridical personality?

Yes, the partnership has a juridical personality even in case of failure to comply
with the requirements of Art 1772

1772- failure to comply with the requirements of the preceeding paragraph shall not
affect the liability of the partnership and the members thereof to third person.

24. Same partnership. The partners agreed on the sharing of profits but not of
losses. Is there a valid partnership?

Yes; losses shall be shared according to art 1799. Absent to such agreement, the
share of losses shall be in accordance of profit- sharing ratio or losses shall be
borne by partners in proportion to their capital contribution.

25. Same partnership. Among the purposes of the partnership is the promotion
of social and religious ends. Will this prevent the creation of a valid
partnership in view of Article 1767?

No; the realization of pecuniary profit need not to be the exclusive aim of a
partnership. It is sufficient that it is the principal purpose even if there are
incidentally moral, social and religious ends.
26. Same partnership. The partnership was orally formed without the contract
being out in writing signed by the partners. Is the contract of partnership
valid?

It depends; an orally- formed partnership is valid when it has the essential features
of partnership. But having a capital of P3000 or more in money, industry or
immovable property must appear in public instrument which is in writing.

27. N donated a condominium unit to X, Y, and Z who agreed among themselves

to lease it to W and share in the rentals. Are X, Y, and Z partners?

X, Y and Z are not partners. There is a co-ownership in the scenario. Co-

ownership of property does not of itself establish the existence of partnership. This
is true though the co-owners share in the profits derived therefrom incident to the
joint ownership of property. The profits must be derived from the operation of the
business or undertaking by the members of the association and not merely from
property ownership.