2. Partnership

Which of the following is not a characteristic of a contract of partnership?

• Onerous

• Preparatory

• Real

• Principal

Answer explanation

Characteristics of a contract of partnership:

1. Consensual - it is perfected by mere consent

2. Principal - it does not depend upon any other contract for its validity or existence.

3. Bilateral - it is entered into by two or more persons whose rights and obligations are reciprocal

4. Nominate - it has a special name given to it by law.

5. Preparatory - it is a means by which the other contracts will be entered into as the partnership pursues its business.

6. Onerous - the partners contribute money, property or industry to a common fund.

A partnership which has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation

• Universal partnership of present property

• Universal partnership of profits

• Particular partnership

• Limited partnership

Answer explanation

ARTICLE 1783. 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. (1678)

A universal partnership is void, except:

• An inventory is not made when an immovable property is contributed.

• If the purpose or object is against the law, morals, public order, public policy and custom.

• When made by persons who are prohibited in giving each other donation.

• When there is no agreement as to profits and losses

Answer explanation

Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property is not made, signed by the parties, and attached to the public instrument.

The object is unlawful when it is contrary to law, morals, good customs, public order, or public policy. (Art. 1306.) As in other kinds of contract, the purpose of a partnership must be lawful (Art. 1770.); otherwise, no partnership can arise as the contract is void ab initio (Art. 1409[11].), i.e., void or without force and effect from the beginning

Art. 1782. Persons who are prohibited from giving each other any donation or advantage cannot enter into a universal partnership. (1677)

Statement 1: In the absence of stipulation, the share of industrial partner in the profits shall be equal to the share of a capitalist partner with the smallest share.

Statement 2: The industrial partner shall not share in the losses unless stipulated

• First statement is false, the second is true.

• First is true, second is false.

• Both are true.

• Both are false.

Answer explanation

ARTICLE 1797

The losses and profits shall be distributed in conformity with the agreement. If only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion.

In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he may have contributed, but the industrial partner shall not be liable for the losses. 

As for the profits, the industrial partner shall receive such share as may be just and equitable under the circumstances. If besides his services he has contributed capital, he shall also receive a share in the profits in proportion to his capital.

Based on the facts in the preceding question, in 2022, how much is the share of Jihyo, a limited partner, in the net loss of P500,000? (1%)

• 0

• P100,000

• P125,000

• P200,000

Answer explanation

ANSWER: D - Article 1797 share in profits and losses is proportional to contribution

X, Y, and Z are partners who contributed equally to the capital of the partnership. A owes the partnership P9,000.00 Z collected from A P3,000.00 before X and Y could receive anything from A, who later became insolvent and therefore they could not collect their shares.

• Partner Z shall share the P3,000.00 with his co-partners X and Y.

• Z cannot be required to share what he already received from A.

• X and Y should first exhaust all remedies to collect from A.

• X and Y can automatically deduct from the capital contribution of Z in the partnership their respective shares in the P3,000.00.

Answer explanation

ARTICLE 1793. A partner who has received, in whole or in part, his share of a partnership credit, when the other partners have not collected theirs, shall be obliged, if the debtor should thereafter become insolvent, to bring to the partnership capital what he received even though he may have given receipt for his share only.

M, J, and G formed a general partnership with a capital of P100,000 and the partners contributing 50%. 30%, and 20%, respectively. O has a claim of P160,000 against the partnership. If O files a suit to collect her claim, which of the following is not correct?

• All the partners are liable to the extent of their separate property.

• All the partners shall be liable pro-rata with all their property only after the partnership assets have been exhausted

• The personal liability of the partners is merely joint and not solidary

• After exhaustion of the partnership assets, M. J and G shall be liable 50%, 30%, and 20%, respectively, of the unpaid claim.

Answer explanation

ARTICLE 1816. All partners, including industrial ones, shall be liable pro rata with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership.

The following are limitations of a limited partner, except:

• He can contribute cash or property, but not services

• He cannot be a general partner at the same time

• His surname shall not appear in the partnership name

• He cannot participate in the management of the business.

Answer explanation

ARTICLE 1853

A person may be a general partner and a limited partner in the same partnership at the same time, provided that this fact shall be stated in the certificate provided for in article 1844.

In a partnership, the liability of partners shall be joint and solidary

I. Obligations in favor of partnership suppliers by virtue of sales contract

II. Obligations in favor of a partnership client for return of deposits misappropriated by one of the partners

Ill. Obligations in favor of a pedestrian hit by the delivery van driven by one of the partners in the course of partnership business

• I and II

• Il and III

• I and Il

• I, II and III

Answer explanation

ARTICLE 1824. All partners are liable solidarily with the partnership for everything chargeable to the partnership under articles 1822 and 1823.

ARTICLE 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of his co-partners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act.

ARTICLE 1823. The partnership is bound to make good the loss: (1) Where one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it;

A. B, and C are partners in ABC Company. D represented himself as a partner in the partnership to E who, on the belief of such representation, extended credit of P50,000 to the partnership. Assuming only B and C consented to such representation, who shall be liable to E?

• All of A, B, C, and D are liable because of partnership liability for the credit extended to the partnership E.

• B, C, and D are partners by estoppel and thus, are liable to E pro rata.

• Partners A, B, and C are liable to E for the benefit extended to them.

• Only D who made the representation is liable to

Answer explanation

ARTICLE 1825

When a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to anyone, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such persons to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made:

When a partnership exists
• Partnership liability result- if all partners rely to representation
• Partnership liability does not result- if not all partners consent, only those who consented along with partner by estoppel will be liable pro-rata