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, the
property of X & Co. is not A and B’s property and
I. Definitions likewise, A and B’s property is not X & Co.’s
Why is a partnership characterized as a (1) The contract is void ab initio and the
preparatory contract? partnership never existed in the eyes of
the law
Because it entered into as a means to an end, the (2) Profits shall be confiscated in favor of the
realization of profits. government
(3) Instruments or tools and proceeds of the
2. Explain & illustrate: a partnership is a crime shall also be forfeited in favor of the
juridical person government
Art 1772 states that failure to comply with the 2. State 5 obligations of a partner with respect
requirements of the preceding paragraph shall to property he promised to contribute
not affect the liability of the partnership and the
members thereof to third persons, therefore the (1) To contribute at the beginning of the
contract is still void. When the property is partnership or at a stipulated time the
immovable, then the contract of partnership is money, property, or industry which he
void. may have promised to contribute
(2) To answer for eviction in case the
partnership is deprived of the
2. Same partnership. The partners agreed on determinate property contributed
the sharing of profits but not losses. Is the (3) To answer to the partnership for the fruits
partnership valid? of the property the contribution of which
he delayed, from the date they should be
Yes losses shall be shared according to Article contributed up to the time of actual
1799. Absent to such agreement, the share of delivery
losses shall be in accordance of profit-sharing (4) To preserve such property with diligence
ratio. Absent to profit-sharing ratio, losses shall of a good father of a family pending
be borne by partners in proportion to their capital delivery to the partnership
contribution. (5) To indemnify the partnership for any
damage caused to it by the retention of
Chapter 2 the same or by the delay in its
contribution
I. Definitions
3. Give the requisites before a capitalist
Partner with a fixed term – is one in which the partner may be obliged to sell his interest in a
term of its existence has been agreed upon partnership to the other partners
expressly (there is a definite period) or impliedly.
The following are the requisites before a capitalist
Subpartnership – Art 1804: Every partner may partner may be obliged to sell his interest to the
associate another person with him in his share, others:
but the associate shall not be admitted into the (1) There is an imminent loss of the
partnership without the consent of all the business of the partnership
partners, even if the partners having an associate (2) The majority of the capitalist partners are
should be a manager of the opinion that an additional
contribution to the common fund would
Industrial partner – is one who contributes his save the business
industrial labor, or services to the partnership (3) The capitalist partner refuses
(deliberately not because of his financial
II. Discussion inability to do so) to contribute an
additional share to the capital
1. Illustrate the relations created by a contract (4) There is no agreement that even in case
of partnership. of an imminent loss of the business the
partners are not obliged to contribute
A contract of partnership gives rise to at least four
distinct juridical relations, namely:
(1) Relations among the partners
themselves
(2) Relations of the partners with the
partnership
4. Why is appraisal of the value of the goods accounting without bringing about dissolution is
or property contributed by a partner required? necessary result to his right to share in the profits.
How shall it be made?
2. Same partnership. The partnership is
The appraisal of the value of the goods engaged in the grocery business.
contributed is necessary to determine how much (a) Can X also engage in the same
has been contributed by the partners. business?
(b) Give the reason why X may be
Their appraisal must be made in a manner prohibited from engaging in business
prescribed in the contract of partnership. Without for himself
stipulation, it shall be made by experts chosen by
the partners, and according to current prices, the Yes, X can also engage in the same business if
subsequent changes thereof being for the he is with the partnership.
account of the partnership.
Article 1789: X may be prohibited from engaging
5. State the liability of a partner if he fails or in the business for himself when he is an
delays his obligation with respect to industrial partner unless the partnership
contribution of property. What is the reason expressly permits him to do so.
for the rule?
3. Same partnership. X is appointed manager
Obligations: in the articles of partnership. May Y and Z who
To answer to the partnership for the fruits of the represent the controlling interest, revoke the
property the contribution of which he delayed, power given to X if the latter insists on
from the date they should have been contributed executing a contract for the partnership which
up to the time of actual delivery Y and Z oppose?
To indemnify partnership for any damage caused
to it by the retention of the same or by the delay Yes, his power is revocable only upon just and
in its contribution lawful cause and upon vote of the partners
representing the controlling interest.
Effect:
Partners becomes ipso jure “by operation of law” 4. Same partnership. The liabilities of the
a debtor of the partnership even in the absence partnership as follows:
of any demand X – P50,000 Y – P30,000 Z – P20,000
Remedy of the other partner is not rescission but (a) How shall the profits of P15,000 be
specific performance with damages from distributed?
defaulting partner (b) Suppose W is an industrial partner.
What shall be his share?
III. Problems
The partners share the profits according to their
1. X, a partner in a partnership, upon arriving agreement without violating Article 1799.
from abroad, demands a formal accounting of
partnership affairs. Has X the right to insist on Absent to such agreement, share shall be
his demand if the other partners Y and Z proportioned to their capital contribution.
refuse?
The share of W shall be satisfied first before the
Yes because according to Article 1809, an capitalist partners divide the profits.
example under No. 4:
5. Same partnership. The partners stipulate
“Whenever other circumstances renter just and that Z shall not be liable for losses. Is the
reasonable” stipulation valid?
Where a partner has been assigned abroad for a No because Article 1799 states:
long period of time in connection with the
partnership business and the partnership books A stipulation which excludes one or more
during such period being in the possession of the partners from any share in the profits or losses is
other partners. The right of a partner to demand void.
The partnership must exist for the common (2) To avail himself of the usual remedies
benefit and interest of the partners but the provided by law in the event of fraud in
partnership is still valid. the management
(3) To receive the assignor’s interest in case
Section 2 of dissolution
(4) To require an account of partnership
I. Definitions affairs in case the partnership is
dissolved
Partner’s interest in a partnership
4. What is considered as the extent of a
DURING operations, the partner’s interest is his partner’s interest in a partnership?
share in profits and losses
It is impossible to determine the extent of interest.
AFTER
operations/LIQUIDATION/DISSOLUTION, his Nothing is to be considered as the share of a
interest is in the surplus of partnership assets partner but his proportion of the residue or
after all debts have been cleared. balance after an account has been taken of the
debts and credits.
Profit – excess of returns of expenditure in a
transaction or series of transactions III. Problems
Partnership capital
II. Discussions
1. What are the property rights of a partner in
a partnership?
2. Same partnership. X is liable to W, creditor,
(1) His rights in specific partnership property who obtained a court judgment against X for
(2) His interest in the partnership a sum of money. What remedy is given by law
(3) His right to participate in the to W for the satisfaction of his credit against
management X?
Estoppel
II. Discussions
1. May a partnership continue to use in its firm 4. Same partnership. Y and Z contributed 15k
name the name of a partner who has died? each to the partnership. X was subsequently
admitted as a partner with a contributed of
No because the Supreme Court has ruled that a 10k. The partnership has an obligation of 45k
partnership cannot continue to use in its firm in favor of W. Compute the liability of X, Y, and
names of deceased partners for such use will run Z in case the obligation was contracted.
counter to Article 1815. (a) before X was admitted
(b) after X was admitted
2. In what cases are partners solidarily liable
with the partnership to third persons?
5. Give at least four grounds for the judicial 2. Give the cases when a limited partner is
dissolution of a partnership. liable as a general partner.
Liability
GP – Personally liable for partnership
obligations
LP – Extends only to his capital contribution
Management
GP – Equal right in the management of the
business
Whether or not has made any capital
contribution
LP – Has no share in the management
Rights limited to Article 1851
Contribution
GP – Money, property, industry
LP – Cash or property not services
Prohibition
GP – Prohibited from engaging in the same kind
of partnership business if he is a capitalist
partner or any business for himself if an
industrialist partner
LP – No prohibition who is considered as a mere
contribution to the partnership