PARTNERSHIP BAR EXAM

Partnership the partners are not agents subject to the

(2009 Bar Question) control of the Board of Directors. But a
TRUE or FALSE. An oral partnership is valid. corporation may enter into a Joint venture
with another corporation as long as the
SUGGESTED ANSWER: nature of the venture is in line with the
TRUE. Partnership is a consensual contract, hence, it is business authorized by its charter. (Thdson
valid even though not in writing. & Co., Inc. v. Bolano, 95 Phil. 106).

ANOTHER SUGGESTED ANSWER: b. As a general rule a corporation may not

TRUE. An oral contract of partnership is valid even form a general partnership with another
though not in writing. However, if it involves corporation or an Individual because a
contribution of an immovable property or a real right, corporation may not be bound by persons
an oral contract of partnership is void. In such a case, who are neither directors nor officers of the
the contract of partnership to be valid, must be in a corporation.
public instrument (Art. 1771, NCC), and the inventory of
said property signed by the parties must be attached to However, a corporation may form a general
said public instrument (Art. 1773, NCC.). partnership with another corporation or an
individual provided the following conditions
ANOTHER SUGGESTED ANSWER: are met:
TRUE. Partnership is a consensual contract, hence, it is 1) The Articles of Incorporation of the
valid even though not in writing. The oral contract of corporation expressly allows the
partnership is also valid even if an immovable property corporation to enter into partnerships;
or real right is contributed thereto. While the law in 2) The Articles of Partnership must provide
such a case, requires the partnership to be in a public that all partners will manage the
document, the law does not expressly declare the partnership, and they shall be jointly and
contract void if not executed in the required form severally liable; and
(Article 1409[7], NCC). And there being nothing in the 3) In case of a foreign corporation, it must
law from which it can be inferred that the said be licensed to do business in the
requirement is prohibitory or mandatory (Article 5, Philippines.
NCC), the said oral contract of partnership must also be
valid. The interested party may simply require the c. No. A corporation may not be a general
contract to be made into a public document in order to partner because the principle of mutual
comply with the required form (Article 1357, NCC). The agency in general partnership allowing the
purpose of the law in requiring a public document is other general partner to bind the
simply to notify the public about the contribution. corporation will violate the corporation law
principle that only the board of directors
(1994 Bar Question) may bind the corporation.
1. Can two corporations organize a general
partnership under the Civil Code of the 2. No, for the same reasons given in the Answer to
Philippines? Number 2 above.
2. Can a corporation and an individual form a
general partnership? (1988 Bar Question)
Distinguish co-ownership from partnership.
SUGGESTED ANSWER:
1. SUGGESTED ANSWER:
a. No. A corporation is managed by its board Co-ownership is distinguished from an ordinary
of directors. If the corporation were to partnership in the following ways:
become a partner, co-partners would have
the power to make the corporation party to (1) As to creation: Whereas co-ownership may be
transactions in an irregular manner since created by law, contract, succession, fortuitous
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 PARTNERSHIP BAR EXAM
event, or occupancy, partnership is always however, he may ask for the return of his contributions
created by contract. as provided in Art 1856 and 1857, Civil Code.
(2) As to purpose: Whereas the purpose of co-
ownership is the common enjoyment of the (2010 Bar Question)
thing or right owned in common, the purpose of A, B, and C entered into a partnership to operate a
a partnership is to obtain profits. restaurant business. When the restaurant had gone
(3) As to personality: Whereas a co-ownership has past break-even stage and started to gamer
no juridical personality which is separate and considerable profits, C died. A and B continued the
distinct from that of the owners, a partnership business without dissolving the partnership. They in fact
has. opened a branch of the restaurant, incurring obligations
(4) As to duration: Whereas an agreement not to in the process. Creditors started demanding for the
divide the community property for more than payment of their obligations.
ten years is not allowed by law such an
agreement would be perfectly valid in the case Who are liable for the settlement of the partnership’s
of partnerships. This is so, because under the obligations? Explain?
law, there is no limitation upon the duration of
partnerships. SUGGESTED ANSWER:
(5) As to power of members: Whereas a co-owner The two remaining partners, A and B, are liable. When
has no power to represent the co-ownership any partner dies and the business is continued without
unless there is an agreement to that effect, a any settlement of accounts as between him or his
partner has the power to represent the estate, the surviving partners are held liable for
partnership, unless there is a stipulation to the continuing the business despite the death of C (Articles
contrary. 1841, 1785, par. 2, and 1833 of the New Civil Code).
(6) As to effect of disposition of shares: If a co-
owner transfers his share to a third person, the (2001 Bar Question)
latter becomes automatically a co-owner, but if Joe and Rudy formed a partnership to operate a car
a partner transfers his share to a third person, repair shop in Quezon City. Joe provided the capital
the latter does not become a partner, unless while Rudy contributed his labor and industry. On one
agreed upon by all of the partners. side of their shop, Joe opened and operated a coffee
(7) As to division of profits: Whereas in co- shop, while on the other side, Rudy put up a car
ownership the division of the benefits and accessories store. May they engage in such separate
charges is fixed by law, in a partnership the businesses? Why?
division of profits arid losses may be subject to
the agreement of the partners. SUGGESTED ANSWER:
(8) As to effect of death: Whereas the death of a Joe, the capitalist partner, may engage in the restaurant
co-owner has no effect upon the existence of business because it is not the same kind of business the
the co-ownership, the death of a partner shall partnership is engaged in. On the other hand, Rudy may
result in. the dissolution of the partnership. not engage in any other business unless their
partnership expressly permits him to do so because as
Rights and Obligations of Partners Among Themselves an industrial partner he has to devote his full time to
(2012 Bar Question)) the business of the partnership (Art. 1789, CC).
A partner cannot demand the return of his share
(contribution) during the existence of a partnership. Do (1998 Bar Question)
you agree? Explain your answer. Dielle, Karlo and Una are general partners in a
merchandising firm. Having contributed equal amounts
SUGGESTED ANSWER: to the capital, they also agree on equal distribution of
Yes, he is not entitled to the return of his contribution whatever net profit is realized per fiscal period. After
to the capital of the partnership, but only to the net two years of operation, however, Una conveys her
profits from the partnership business during the life of whole interest in the partnership to Justine, without the
the partnership period. If he is a limited partner, knowledge and consent of Dielle and Kaflo.
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 PARTNERSHIP BAR EXAM
(1989 Bar Question)
1. Is the partnership dissolved? “X” used his savings from his salaries amounting to a
2. What are the rights of Justine, if any, should she little more than P2,000 as capital in establishing a
desire to participate in the management of the restaurant. “Y” gave the amount of P4,000 to “X” as
partnership and in the distribution of a net profit of “financial assistance” with the understanding that “Y”
P360.000.00 which was realized after her purchase of would be entitled to 22% of the annual profits derived
Una’s interest? from the operation of the restaurant. After the lapse of
22 years, “Y” filed a case demanding his share in the
SUGGESTED ANSWER: said profits. “X” denied that there was a partnership
1. No, a conveyance by a partner of his whole interest in and raised the issue of prescription as “Y” did not assert
a partnership does not of itself dissolve the partnership his rights anytime within ten (10) years from the start of
in the absence of an agreement. (Art. 1813, Civil Code) the operation of the restaurant. Is “Y” a partner of “X”
2. Justine cannot interfere or participate in the in the business? Why? What is the nature of the right to
management or administration of the partnership demand one’s share in the profits of a partnership?
business or affairs. She may, however, receive the net Does this right prescribe?
profits to which Una would have otherwise been
entitled. In this case, P120,000 (Art. 1813, Civil Code) SUGGESTED ANSWER:
Yes, because there is an agreement to contribute to a
(1992 Bar Question) common fund and an intent to divide profits. It is
W, X, Y and Z organized a general partnership with W founded upon an express trust. It is imprescriptible
and X as industrial partners and Y and Z as capitalist unless repudiated.
partners. Y contributed P50.000.00 and Z contributed
P20.000.00 to the common fund. By a unanimous vote ALTERNATIVE ANSWER:
of the partners, W and X were appointed managing No, “Y” is not a partner because the amount is extended
partners, without any specification of their respective in the form of a financial assistance arid therefore it is a
powers and duties. loan, and the mere sharing of profits does not establish
a partnership. The right is founded upon a contract of
A applied for the position of Secretary and B applied for loan whereby the borrower is bound to pay principal
the position of Accountant of the partnership. and interest like all ordinary obligations. Yes, his right
The hiring of A was decided upon by W and X, but was prescribes in six or ten years depending upon whether
opposed by Y and Z. the contract is oral or written.

The hiring of B was decided upon by W and Z, but was Obligations of Partnership/Partners to Third Persons
opposed by X and Y. (2010 Bar Question)
A, B, and C entered into a partnership to operate a
Who of the applicants should be hired by the restaurant business. When the restaurant had gone
partnership? Explain and give your reasons. past break-even stage and started to gamer
considerable profits, C died. A and B continued the
SUGGESTED ANSWER: business without dissolving the partnership. They in fact
A should be hired as Secretary. The decision for the opened a branch of the restaurant, incurring obligations
hiring of A prevails because it is an act of administration in the process. Creditors started demanding for the
which can be performed by the duly appointed payment of their obligations.
managing partners, W and X.
What are the creditors’ recourse/s? Explain.
B cannot be hired, because in case of a tie in the
decision of the managing partner, the deadlock must be SUGGESTED ANSWER:
decided by the partners owning the controlling interest. Creditors can file the appropriate actions, for instance,
In this case, the opposition of X and Y prevails because Y an action for the collection of sum of money against the
owns the controlling interest (Art. 1801, Civil Code). “partnership at will” and if there are no sufficient funds,
the creditors may go after the private properties of
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 PARTNERSHIP BAR EXAM
Aand B (Article 1816,New Civil Code). Creditors may also SUGGESTED ANSWER:
sue the estate of C. The estate is not excused from the A. The two remaining partners, A and B, are liable.
liabilities of the partnership even if C is dead already but When any partner dies and the business is continued
only up to the time that he remained a partner (Article without any settlement of accounts as between him or
1829, 1835, par. 2; NCC, Testate Estate of Mota v. his estate, the surviving partners are held liable for
Serra, 47 Phil. 464 [1925]). However, the liability of C’s continuing the business despite the death of C (Articles
individual property shall be subject first to the payment 1841, 1785, par. 2, and 1833 of the New Civil Code).
of his separate debts (Article 1835,New Civil Code).
B. Creditors can file the appropriate actions, for
(1993 Bar Question) instance, an action for the collection of sum of money
A, B and C formed a partnership for the purpose of against the “partnership at will” and if there are no
contracting with the Government in the construction of sufficient funds, the creditors may go after the private
one of its bridges. On June 30, 1992, after completion of properties of A and B (Article 1816, New Civil Code).
the project, the bridge was turned over by the partners Creditors may also sue the estate of C. The estate is not
to the Government. On August 30, 1992, D. a supplier of excused from the liabilities of the partnership even if C
materials used in the project sued A for collection of the is dead already but only up to the time that he
indebtedness to him. A moved to dismiss the complaint remained a partner (Article 1829, 1835, par. 2; NCC,
against him on the ground that it was the ABC Testate Estate of Mota v. Serra, 47 Phil. 464 [1925]).
partnership that is liable for the debt. D replied that However, the liability of C’s individual property shall be
ABC partnership was dissolved upon completion of the subject first to the payment of his separate debts
project for which purpose the partnership was formed. (Article 1835, New Civil Code).
Will you dismiss the complaint against B if you were the
judge? (1997 Bar Question)
Stating briefly the thesis to support your answer to each
SUGGESTED ANSWER: of the following cases, will the death – of a partner
As Judge. I would not dismiss the complaint against A terminate the partnership?
because A is still liable as a general partner for his pro
rata share of 1/3 (Art. 1816, C. C.). Dissolution of a SUGGESTED ANSWER:
partnership caused by the termination of the particular Yes. The death of a partner will terminate the
undertaking specified in the agreement does not partnership, by express provision of par. 5, Art. 1830 of
extinguish obligations, which must be liquidated during the Civil Code.
the “winding up" of the partnership affairs (Articles
1829 and 1830, par. 1-a, Civil Code).
(1995 Bar Question)
Dissolution Pauline, Patricia and Priscilla formed a business
(2010 Bar Question) partnership for the purpose of engaging in neon
A, B, and C entered into a partnership to operate a advertising for a term of five (5) years. Pauline
restaurant business. When the restaurant had gone subsequently assigned to Philip her interest in the
past break-even stage and started to gamer partnership. When Patricia and Priscilla learned of the
considerable profits, C died. A and B continued the assignment, they decided to dissolve the partnership
business without dissolving the partnership. They in fact before the expiration of its term as they had an
opened a branch of the restaurant, incurring obligations unproductive business relationship with Philip in the
in the process. Creditors started demanding for the past. On the other hand, unaware of the move of
payment of their obligations. Patricia and Priscilla but sensing their negative reaction
to his acquisition of Pauline’s interest, Philip
simultaneously petitioned for the dissolution of the
A. Who are liable for the settlement of the partnership’s partnership.
obligations? Explain?
B. What are the creditors’ recourse/s? Explain. 1. Is the dissolution done by Patricia and Priscilla
without the consent of Pauline or Philip valid? Explain.
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 PARTNERSHIP BAR EXAM
2. Does Philip have any right to petition for the
dissolution of the partnership before the expiration of (1987 Bar Question)
its specified term? Explain. Tomas, Rene and Jose entered into a partnership under
the firm name “Manila Lumber.” Subsequently, upon
SUGGESTED ANSWER: mutual agreement, Tomas withdrew from the
1. Under Art. 1830 (1) (c) of the NCC, the dissolution by partnership and the partnership was dissolved.
Patricia and Priscilla is valid and did not violate the However, the remaining partners, Rene and Jose, did
contract of partnership even though Pauline and Philip not terminate the business of “Manila Lumber.” Instead
did not consent thereto. The consent of Pauline is not of winding up the business of the partnership and
necessary because she had already assigned her liquidating its assets, Rene and Jose continued the
interest to Philip, The consent of Philip is not also business in the name of “Manila Lumber” apparently
necessary because the assignment to him of Pauline’s without objection from Tomas. The withdrawal of
interest did not make him a partner, under Art. 1813 of Tomas from the partnership was not published in the
the NCC. newspapers.

ALTERNATIVE ANSWER: Could Tomas be held liable for any obligation or

Interpreting Art. 1830 (1) (c) to mean that if one of the indebtedness Rene and Jose might incur while doing
partners had assigned his interest on the partnership to business in the name of “Manila Lumber” after his
another the remaining partners may not dissolve the withdrawal from the partnership? Explain.
partnership, the dissolution by Patricia and Priscilla
without the consent of Pauline or Philip is not valid. SUGGESTED ANSWER:
Yes. Tomas can be held liable under the doctrine of
2. No, Philip has no right to petition for dissolution estoppel. But as regards the parties among themselves,
because he does not have the standing of a partner only Rene and Jose are liable. Tomas cannot be held
(Art. 1813 NCC). liable since there was no proper notification or
publication.
(1993 Bar Question)
A, B and C formed a partnership for the purpose of In the event that Tomas is made to pay the liability to
contracting with the Government in the construction of third person, he has the right to seek reimbursement
one of its bridges. On June 30, 1992, after completion of from Rene and Jose (Articles 1837 to 1840; Goquiolay
the project, the bridge was turned over by the partners vs. Sycip, 9 SCRA 663).
to the Government. On August 30, 1992, D. a supplier of
materials used in the project sued A for collection of the Limited Partnership
indebtedness to him. A moved to dismiss the complaint (1994 Bar Question)
against him on the ground that it was the ABC Can a husband and wife form a limited partnership to
partnership that is liable for the debt. D replied that engage in real estate business, with the wife being a
ABC partnership was dissolved upon completion of the limited partner?
project for which purpose the partnership was formed.
Will you dismiss the complaint against B if you were the SUGGESTED ANSWER:
judge?
a) Yes. The Civil Code prohibits a husband and wife from
SUGGESTED ANSWER: constituting a universal partnership. Since a limited
As Judge. I would not dismiss the complaint against A partnership is not a universal partnership, a husband
because A is still liable as a general partner for his pro and wife may validly form one.
rata share of 1/3 (Art. 1816, C. C.). Dissolution of a
partnership caused by the termination of the particular b) Yes. While spouses cannot enter into a universal
undertaking specified in the agreement does not partnership, they can enter into a limited partnership or
extinguish obligations, which must be liquidated during be members thereof (CIR v. Suter, et al., 27 SCRA 152).
the “winding up" of the partnership affairs (Articles
1829 and 1830, par. 1-a, Civil Code).
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 PARTNERSHIP BAR EXAM
2011-2014 Bar Questions in 2007, the partnership incurred a net loss of P500,000.
2014 Bar Question In 2008,the partners dissolved the partnership. The
Timothy executed a Memorandum of Agreement (MOA) proceeds of the sale of partnership assets were
with Kristopher setting up a business venture covering insufficient to settle its obligation. After liquidation, the
three (3) fastfood stores known as "Hungry Toppings" partnership had an unpaid liability ofP300,000.
that will be established at Mall Uno, Mall Dos, and Mall
Tres. (l) Assuming that the just and equitable share of the
The pertinent provisions of the MOA provides: industrial partner, P, in the profit in 2006 amounted to
1. Timothy shall be considered a partner with P1 00,000, how much is the share of 0, a limited
thirty percent (30%) share in all of the stores to partner, in the P800,000 net profit?
be set up by Kristopher; (A) P160,000.
2. The proceeds of the business, after deducting (B) P175,000.
expenses, shall be used to pay the principal (C) P280,000.
amount of P500,000.00 and the interest therein (D) P200,000.
which is to be computed based on the bank (E) None of the above.
rate, representing the bank loan secured by
Timothy; SUGGESTED ANSWER:
3. The net profits, if any, after deducting the (C) P280,000. First, deduct the share of P from the
expenses and payments of the principal and profits. P800,000 less P100,000 is P700,000. Next, get
interest shall be divided as follows: seventy the share of O by following the proportion that the
percent (70%) for Kristopher and thirty percent shares of L, M, N, O is 1:1:1:2, respectively.
(30%) for Timothy;
4. Kristopher shall have a free hand in running (II) In 2007, how much is the share of 0, a limited
the business without any interference from partner, in the net loss of P500,000?
Timothy, his agents, representatives, or (A) P 0.
assigns , and should such interference happen, (B) P1 00,000.
Kristopher has the right to buy back the share of (C) P125,000.
Timothy less the amounts already paid on the (D) P200,000.
principal and to dissolve the MOA; and (E) None of the above.
5. Kristopher shall submit his monthly sales
report in connection with the business to SUGGESTED ANSWER:
Timothy. (D) P200,000 A limited partner shall not become liable a
What is the contractual relationship between Timothy s a general partner unless, in addition to the exercise of
and Kristopher? his rights and powers as a limited partner, he takes part
in the control of the business (Art 1948, Civil Code). In
the absence of stipulation as to profits and losses, the
(2013 Bar Questions) share of each partner in the losses shall be
In 2005, L, M, N, 0 and P formed a partnership. L, M and proportionate to what he may have contributed (Art
N were capitalist partners who contributed P500,000 1797).
each, while 0, a limited partner, contributed P1 ,
000,000. P joined as an industrial partner, contributing (III) Can the partnership creditors hold L, 0 and Pliable
only his services. The Articles of Partnership, registered after all the assets of the partnership are exhausted?
with the Securities and Exchange Commission,
designated L and 0 as managing partners; L was liable (A) Yes. The stipulation exempting P from losses is valid
only to the extent of his capital contribution; and P was only among the partners. L is liable because the
not liable for losses. agreement limiting his liability to his capital
contribution is not valid insofar as the creditors are
In 2006, the partnership earned a net profit of concerned. Having taken part in the management of the
P800,000. In the same year, P engaged in a different partnership, 0 is liable as capitalist partner.
business with the consent of all the partners. However,
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 PARTNERSHIP BAR EXAM
(B) No. P is not liable because there is a valid stipulation
exempting him from losses. Since the other partners
allowed him to engage in an outside business activity,
the stipulation absolving P from liability is valid. For 0, it
is basic that a limited partner is liable only up to the
extent of his capital contribution.
(C) Yes. The stipulations exempting P and L from losses
are not binding upon the creditors. 0 is likewise liable
because the partnership was not formed in accordance
with the requirements of a limited partnership.
(D) No. The Civil Code allows the partners to stipulate
that a partner shall not be liable for losses. The
registration of the Articles of Partnership embodying
such stipulations serves as constructive notice to the
partnership creditors.
(E) None of the above is completely accurate.

SUGGESTED ANSWER:
(E) None of the above is completely accurate.

2011 Bar Questions

The liability of the partners, including industrial partners
for partnership contracts entered into in its name and
for its account, when all partnership assets have been
exhausted is
(A) Pro-rata.
(B) Joint.
(C) Solidary.
(D) Voluntary.

Janice and Jennifer are sisters. Janice sued Jennifer and

Laura, Jennifer’s business partner for recovery of
property with damages. The complaint did not allege
that Janice exerted earnest efforts to come to a
compromise with the defendants and that such efforts
failed. The judge dismissed the complaint outright for
failure to comply with a condition precedent. Is the
dismissal in order?
(A) No, since Laura is a stranger to the sisters, Janice has
no moral obligation to settle with her.
(B) Yes, since court should promote amicable
settlement among relatives.
(C) Yes, since members of the same family, as parties to
the suit, are required to exert earnest efforts to settle
their disputes before coming to court.
(D) No, the family council, which would ordinarily
mediate the dispute, has been eliminated under the
Family Code.

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