Professional Documents
Culture Documents
(Caveat: Don’t take at face value. Do your own review.)
I. What are the formalities required by law for the constitution of the
partnership?
General Partnership
• Greater than PHP3000 capital contribution: Public instrument + SEC
registration
• If immovable are contributed: Public instrument + SEC registration +
inventory of properties contributed
Limited Partnership:
• Sign and swear to a certificate (Articles)
• File with SEC
• Substantial compliance in good faith with the prior requirements
Partnership by Estoppel: No need for formal requirements;; formed as a matter
of equity
II. Do the formalities in the preceding question affect the creation of the
juridical entity that is a partnership? Explain.
General partnership: GR: No;; Exception: Immovable – affects validity;;
therefore, affects the formation of a juridical person
Limited Partnership: Yes;; Exception: Will be considered as a general
partnership
Partnership by Estoppel: No;; formed as a matter of equity;; ergo, no need for
formal requirements.
III. What is the doctrine of marshalling of the assets?
Partnership assets are given to partnership creditors;; individual assets to
individual creditors.
However, under Art. 1816, in case partnership assets have been exhausted,
and the individual partners have entered into contracts for the partnership
name, they shall personally be liable pro rata with all their property, as partners
are jointly and subsidiarily liable with the partnership.
IV. Given the doctrine in the preceding question, how may a creditor of a
partner in a partnership satisfy his unsatisified credit?
Charging Order – Art. 1814 – is an order by the court upon application of a
judgment creditor of a partner, which charges the interest of a debtor-partner
with payment of the unsatisfied amount of a judgment debt. Instead of the
partner’s interest in the partnership being paid to the partner, it will be paid to
the partner’s creditor.
Art. 1814. Without prejudice to the preferred rights of partnership creditors
under Article 1827, on due application to a competent court by any judgment
creditor of a partner, the court which entered the judgment, or any other court,
may charge the interest of the debtor partner with payment of the unsatisfied
amount of such judgment debt with interest thereon;; and may then or later
appoint a receiver of his share of the profits, and of any other money due or to
fall due to him in respect of the partnership, and make all other orders,
directions, accounts and inquiries which the debtor partner might have made,
or which the circumstances of the case may require.
V. What are the causes for dissolution of a partnership?
Four general causes: Dissolution without violation of the partnership
agreement;; dissolution with violation of the partnership agreement;; dissolution
by operation of law;; dissolution upon court order
(Plus points if you cite the article verbatim, but he said he’s just looking for
those four general classes)
VI. A, B, C formed a general partnership with the following contributions to
the common fund: A, P2,000.00;; B, P4,000.00;; C, P6,000.00. There was no
agreement as to division of profits or apportionment of losses. After
some years of business operations, the assets of the partnership
dwindled to P3,000.00, so the partners agreed to stop their business. The
partnership is indebted to X for a loan of P12,000. Under the
circumstances, from whom can X demand satisfaction of his credit, and
to what extent?
(1) The partnership’s liability is for 12,000
(2) Due to the doctrine of marshalling of assets, partnership assets should first
be liable. PhP 12,000 – 3,000 = 9,000
(3) Due to the joint and subsidiary nature of liability of the partners, and without
stipulation as to profits, the liability is pro rata:
a. Add A, B, and C’s liabilities: total: 12,000
b. A’s ratio: 2,000/12,000 = 1/6. 1/6 of 9,000 = 1,500.
c. B’s ratio: 4,000/12,000 = 1/3. 1/3 of 9,000 = 3,000.
d. C’s ratio: 6,000/12,000 = ½. ½ of 9,000 = 4,500.
X can demand 3,000 from the partnership, 1,500 from A, 3,000 from B, and
4,500 from C.
VII. A, B, and C formed a partnership under the following terms and conditions:
a. Participation: A-40%;; B-40%;; C-20%
b. A and B would supply the entire capital. C would contribute his management
expertise and be manager for the first five years without compensation.
c. C shall not be liable for losses.
The partnership became bankrupt.
VII.1. Could A alone, opposed by B and C, have C removed as manager?
Explain.
No. When a partner has been designated as a managing partner in the articles
of partnership (upon its creation), then such partner can only be removed: (1)
upon just or lawful cause;; and (2) with the vote of partners representing the
controlling interest. There is no just or lawful cause for C to be removed as a
managing partner. Assuming arguendo that he does, then A does not hold the
controlling interest of the partnership. (Art. 1800)
VII.2. Could C be personally held liable for debts of the partnership not
satisfied with the assets of the partnership? Expound.
No. Losses are not the same as liabilities. Although an industrial partner may
be exempted from losses incurred by the partnership, an industrial partner shall
still be liable to liabilities of the partnership as to third persons.
VIII. Discuss what interest is conveyed in the following scenarios:
a. Title in the partnership name;; conveyance in partnership name
b. Title in partnership name;; conveyance in the partner’s name
c. Title in the name of one or more partners;; conveyance in name of the
partner or partners in whose name title stands
d. Title in the name of one or more or all partners or a third person in
trust for the partnership;; conveyance executed in partnership name or
in the name of a partner
e. Title in the name of all partners;; conveyance in the name of all partners
Title to Property Who conveys title Conveyance is executed What is conveyed
In the partnership name Any partner In the partnership name Title to the Partnership
Property
May be recovered by
partnership;; exceptions:
+Binds the partnership (Art.
1818)
+To an IPV who has no
knowledge that partner has
exceeded his authority
In the name of one of the Any partner In the name of the partner Equitable interest of the
partners partner
In the name of one or more Partners in whose In the name of the partners Title to the partnership
but not all partners + record name the title stands property
does not disclose the right
of the partnership May be recovered by
partnership
Exception: IPV without
knowledge
In the name of one or more A partner In the partnership name OR in Equitable interest of the
or all of the partners or one his own name partner in the partnership
person in trust for the
partnership
In the name of all the All the partners In the name of all the partners All the rights in such property
partners
BONUS – TRUE OR FALSE
1. In a limited partnership, the word “limited” must appear on the partnership name.
TRUE.
2. An express trust on an immovable or interest therein may not be proved by parol
evidence. TRUE.
3. An implied trust concerning an immovable may be proved by parol evidence.
TRUE.
4. Is No. 2 saying that for there to be an express trust (validity), there must be a trust
instrument, meaning that the trust must be in writing? FALSE. That the trust must
be in writing is only evidentiary matter, and is not a requirement for the validity of
a trust.
5. An express trust is imprescriptible until repudiated and the beneficiary is made
known thereof. TRUE
6. A trust is an excellent estate-planning device. TRUE
7. A constructive trust prescribes in 10 years. TRUE
8. In No. 7, if fraud attended the wrongful holding, the prescriptive period may run
from the time of constructive notice, e.g. registration of title in trustee’s name.
FALSE – Notice of actual fraud
9. The partnership is bound by the acts of partners even though not authorized,
provided the acts are done in the usual way of the business. TRUE.
10. Constructive notice of dissolution suffices to absolve the partnership from liability
to a creditor who is a prior dealer and who extended credit after dissolution. FALSE
– must not be a prior dealer;; a prior dealer requires personal notice of dissolution.