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  • A. Rules On Division of Profit & Loss

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    Vanessa May Ga
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    The document discusses rules on the division of profit and loss between partners. It states that profits and losses will be distributed according to the partnership agreement. If there is no agreement on profit sharing, profits will be distributed in proportion to capital contributions, but industrial partners must first receive a just and equitable share. Losses will also be shared according to capital contributions, but industrial partners are not liable for losses. It also discusses rules for how a managing partner should apply payments received from debtors who owe both the partnership and the partner individually. Payments must be applied proportionally to the amounts owed unless otherwise specified.

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    The document discusses rules on the division of profit and loss between partners. It states that profits and losses will be distributed according to the partnership agreement. If there is no agreement on profit sharing, profits will be distributed in proportion to capital contributions, but industrial partners must first receive a just and equitable share. Losses will also be shared according to capital contributions, but industrial partners are not liable for losses. It also discusses rules for how a managing partner should apply payments received from debtors who owe both the partnership and the partner individually. Payments must be applied proportionally to the amounts owed unless otherwise specified.

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    © All Rights Reserved
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    394 views2 pages

    A. Rules On Division of Profit & Loss

    Uploaded by

    Vanessa May Ga
    The document discusses rules on the division of profit and loss between partners. It states that profits and losses will be distributed according to the partnership agreement. If there is no agreement on profit sharing, profits will be distributed in proportion to capital contributions, but industrial partners must first receive a just and equitable share. Losses will also be shared according to capital contributions, but industrial partners are not liable for losses. It also discusses rules for how a managing partner should apply payments received from debtors who owe both the partnership and the partner individually. Payments must be applied proportionally to the amounts owed unless otherwise specified.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 2

    A.

    Rules on Division of Profit & Loss

    Art. 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.

    I. DISTRIBUTION OF PROFITS

    GENERAL RULE: Distributed according to their agreement

    EXCEPTION: In the absence of agreement;

    A. The share of each capitalist partner shall be in proportion to his capital contribution.
    B. The share of industrial partner must be satisfied first before the capitalist partners divide
    the profits. Amount will be based on what is just and equitable under the circumstances.
    The share of an industrial partner in the profits is not fixed.

    II. DISTRIBUTION OF LOSSES

    GENERAL RULE: Distributed according to their agreement.

    IN THE ABSENCE OF AGREEMENT but the share of distribution is agreed upon, the share of the losses
    shall be according to the profit-sharing ratio.

    IN THE ABSENCE OF AN AGREEMENT, division of losses is in accordance with capital contributions.

    However, Industrial Partners shall not be liable for losses.


    E. APPLICATION OF PAYMENT OF SEPARATE DEMANDABLE DEBTS OWED TO PARTNERSHIP AND TO
    PERSON AUTHORIZED TO RECEIVE IT

    Art. 1792. If a partner authorized to manage collects a demandable sum which was owed to him in his
    own name, from a person who owed the partnership another sum also demandable, the sum thus
    collected shall be applied to the two credits in proportion to their amounts, even though he may have
    given a receipt for his own credit only; but should he have given it for the account of the partnership
    credit, the amount shall be fully applied to the latter.

    The provisions of this article are understood to be without prejudice to the right granted to the
    other debtor by Article 1252, but only if the personal credit of the partner should be more onerous to
    him.

    OBLIGATION OF MANAGING PARTNER WHO COLLECTS DEBT

    GR: Any sum received by the managing partner shall be applied to the two (2) credits in
    proportion to their amounts.

    XPN: Where the managing partner received the sum for the account of the partnership, the
    whole sum shall be applied to the partnership credit only.

    BUT, under the second paragraph, the debtor is given the right to prefer payment of the credit
    of the partner if it should be more onerous to him in accordance with his right.

    Requisites for application of rule:

    1. There exists at least two debts, one where the collecting partner is creditor, and the other,
    where the partnership is the creditor;
    2. Both debts are demandable; and
    3. The partner who collects is authorized to manage and actually manages the partnership.

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