1.

A is a member of ABC partnership as an industrial partner which was created to

operate a car wash. To open the car wash, ABC partnership entered into loan
agreements to get capital to different entities. When the car wash went bankrupt,
the creditors started asking the partnership for its payment of its obligations. The
creditors also went to A, an industrial partner, A said he is not liable to third
parties because he is an industrial partner. Is the contention of A correct?
-not correct, an industrial partner is not liable for the losses but liable to third parties.

2. Aa capitalist partner is a member of ABC partnership engaged in the business of

a carwash. A wanted to open up another business in the laundry business, B and
C contested and said that A needs their consent to open the laundry business
before A can open it, otherwise they will file for damages against A. A then
approached you and asked your legal opinion, the question is does A need the
consent of B and C to open up a new business?
-the law only prohibits a capitalist partner to engage in other business if it is within the same
line.

3. Is there a difference between the liabilities of an industrial partner to a capital

partner?
-Yes. In industrial partner, the creditor can only go after to what the partner’s contribution while
a capitalist partner is liable up to the extent of his personal property

4. A a member of ABC partnership entered into an agreement with the partners

that he will not be liable to third parties in case the partnership went bankrupt. Is
the contention of A correct?
-No. even if he is an industrial partner, according to article 1817, any stipulation against liability
to the third party is void except as among to partners.

5. Does a partnership have a juridical identity? if yes why? If no why not? What is
the meaning of juridical entity? Give an example
-Yes. It is according to article 1768, Juridical identity means that the partnership has its own
personality distinct and separate from the partners.

Example: if A and B form a partnership, if A bought a car in the name of the partnership the
ownership of the car belongs to the partnership not with A.

6. What are the causes for the dissolution of a partnership?

-voluntary - civil interdiction and death
-involuntary - insolvency, unlawfulness, decree of the court

7. What is the difference between a universal and particular partnership?

-universal partnership has a purpose of gaining profits, it refers to property or to all profits while
particular partnership has its object of exercise the profession
8. . What happens when a capital partner refuses to add capital to the partnership to
save the partnership? debtor also owes money to the partner in an individual capacity.
-According to article 1791, if the capital partner refuses to contribute additional share to the
capital to save the business in case of imminent loss, shall be obliged to sell his interest to other
partners.

9. How are the losses to be divided if there is no agreement to the contrary?

-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.

10. Can members of the partnership exclude other members or partners from the division of
profits?
-According to article 1799, A stipulation which excludes one or more partners from any share in
the profits or losses is void.

11. What is a contract of partnership and what are the requisites?

-According to article 1767, by the contract of partnership, 2 or more person contributes money,
property or industry into a common fund with a purpose of gaining profit and dividing it among
themselves.
a. The requisites of the contract of partnership are:
i. Consent
ii. Object
iii. Cause
iv. Gaining profit and dividing it among themselves.

12. What are the different kinds of partnership? Define each of them.
-Kinds of partnership (article 1776) a. Universal partnership i. primary purpose is gaining profit
and dividing it among themselves.
b. Particular partnership i. Primary purpose is to practice profession.
c. General partnership i. All partners are general partners.
d. Limited partnership i. Is a partnership consisting of a general partner, who manages the
business and has unlimited liability for the debts and obligations of limited partnership and a
limited partner has limited liability but cannot participate in management.
e. Partnership at will i. A partnership that can be dissolved every time.
f. Partnership with a fixed term i. A partnership that may only dissolved upon the end of its term
unless continued by the partners.
g. De jure – a partnership complied with all requirements.
h. Da facto – a partnership failed to comply with all requirements.
i. Secret partnership – some partners are not known to public.
j. Open partnership – all partners are known to public.
k. Commercial partnership – business transactions.
l. Professional partnership – exercise of professions.

13. What is meant by a corporation by estoppel? How bout a partnership by estoppel?

-a. Corporation by estoppel – all persons assume to act as a corporation knowing to be without
authority to do shall be liable as general partners for all debts, liabilities, and damages incurred.
(section 21, corporation code)
-b. Partnership by estoppel - Partner by estoppel or one who is not really a partner, not being a
party to a partnership agreement, but is liable as a partner for the protection of innocent third
persons. (see Art. 1825.)

14. What is the difference between a corporation and a partnership in terms of

transferring of interest rights?
-In partnership, a partner cannot transfer his interest in the partnership so as to make the
transferee a partner without the consent of all the existing partners because the partnership is
based on the principle of delectus personarum, while in a stock corporation, a stock holder has
the right to transfer his shares without the prior consent of the other stock holders because the
corporation is not based on this principle

15. What are the requirements for a corporation to have legal identity?
- natural persons
-capacity to contract
-residents of the philippines
-citizens of the philippines
-owners of or subscribers to at least one share

16. Can one put up a partnership for the purpose of charity?

-no, only the corporation can put up for the purpose of charity

17. Is it a general rule that a corporation can only be put up for the purpose of
earning profits?
-YES

18. when does a corporation need the participation of the stock holders to participate
in decision making?
● -

19. What is the difference between an incorporator and a director?

-incorporators or those corporators mentioned in the articles of incorporation as originally
forming and composing the corporation
-The Board of Directors is the governing body in a stock corporation while the Board of Trustees
is the governing body in a non-stock corporation.

20. What is an authorized capital stock?

-capital stock divided into shares
-is synonymous with capital stock where the shares of the corporation have par value
21. What is the difference between a close corporation and an ordinary corporation?
-close corporation or one which is limited to selected persons or members of a family
-open corporation or one which is open to any person who may wish to become a stockholder or
member thereto.

22. give at least 10 corporations that are well known in the Philippines, and give at
least 5 partnership that is well known in the Philippines.
● • 10 CORPORATIONS;
○ Metropolitan bank & trust – metrobank – 37.5 billion USD
○ BPI
○ Nestle philippines
○ San Miguel corporation
○ Ayala corporation
○ Sm investments
○ PLDT
○ JG SUMMIT HOLDINGS
○ Coca cola FEMSA Ph.
○ SMART
● 5 PARTNERSHIPS
○ Johnson & Johnson ltd.
○ SGV & Co.
○ Manabat Delgado Amper & Co.
○ Isla Lipana & Co.
○ BDO Alba Romeo & Co.

23. How would you know the difference between a general partnership and a limited
partnership?
-general partnership is liable of to his personal asset, while limited is only liable up his
contribution.

24. If I were a layman and have no idea with the law and I approach you and ask
how does one put
-STUDY THE LAW DUDE. Joke lang :P

25. An individual asks your opinion and ask what the most ideal thing to put up is, is
it a sole proprietor, partnership or a corporation. Please give your professional
opinion.
-OWN

26. What is a corporation?

- is an artificial being created by operation of law, having the right of succession and the powers,
attributes and properties expressly authorised by law or incident to its existence
27. What do you mean when you say a corporation has separate juridical
personality? give me two examples of this.
-a corporation is a legal or juridical person with a personality separate and apart from its
stockholders or individual members.
-same with partnership that has juridical entity

EXAMPLES
-Alec bought a car in the name of the corporation. The car belongs to the corporation not with
Alec.

28. What is a difference between a corporation and a partnership?

- partnership consists of two or more persons who bind themselves to contribute money or
industry to a common fund, with the intention of dividing the profits among themselves.
-A corporation is a juridical entity established under the Corporation Code and registered with
the SEC

29. What is the difference between an incorporator and a stockholder?

-stockholder or the owners of shares of stock in a stock corporation ; also called shareholders
-incorporators or those corporators mentioned in the articles of incorporation as originally
forming and composing the corporation

30. What is a share of stock?

-commonly used in distributive sense to refer to the stock in the hands of the stockholders
-merely represents a distinct undivided share or interest in the common property of the
corporation

31. What is the process of starting up a corporation? Please provide the step by step
procedure.
-promotion -a promoter who acts alone that takes initiative in founding and organizing the
business.
-incorporation -filling with the SEC of the articles of incorporation
-formal organization and commencement of business operations-adoption of by-laws and
election of board of directors/trustees and officer

32. What is the investment needed to put up a corporation?

--The articles of incorporation must be authorised by the securities and exchange commission
-the articles of incorporation states, among other things, the entity’s authorized capital stock,
which is the maximum number of shares that the entity can issue
-to amend the articles of incorporation, a majority vote of the board plus a vote by shareholders
representing at least two thirds
-at lease 25% of the entity’s authorized capitalization should be subscribed and at least 25% of
thetotal subscription must be paid. the paid up capital be less than 5000
33. What is the difference between a defacto and a de jure corporation?
-De jure corporation is existing in a fact or law
-de facto corporation is existing in a fact but not in law

34. What happens if the corporation is not used or not active for the next 8 years?
-dissolve 2 yrs and more not active will be dissolve

35. Who runs the operation of the corporation?

-board of directors

36. What is a partnership?

-- ARTICLE 1767. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of dividing the
profits among themselves.

37. Is partnership a contract? if yes why? if no why not?

--Yes. Partnership contract is also called partnership, it is a document that establishes the terms
of the partnership and the agreements between partners.

38. Give me 3 examples of a partnership.

-A and B form a partnership for business operation. A contributes a land and B contributes
money.
-A, B and C are partners. A contributes money for equiments, B contributes a piece of land and
C contributes dogs for their kennel business.
-A and B put up their money together and bought a house and lot for their renting business

39. What is a contract?

--written/verbal agreement of 2 or more people.

40. Give me 5 legal grounds when you can hold a contract void.
--Unemancipated minors (under 18 ; under parental authority)
-Insane or demented (unable to think/act clearly)persons
-Deaf-mutes who do not know how to write
-Persons who are suffering from civil interdiction
-Incompetents who are in guardianship.

41. What are the four elements of a partnership? Explain each.

-Consensual-it is perfected by mere consent, that is upon the express or implied agreement of
two or more persons.
-Nominate – it has a special name or designation in our law
-Bilateral – it is entered into by two or more persons and the rights and obligations arising
therefor are reciprocal
-Onerous – each of the parties aspires to procure for himself a benefit through the giving of
something
-Commutative – undertaking of each of the partner is considered as the equivalent of that of the
others
-Principal – it does not depend for its existence or validity upon some other contract
-Preparatory – it is entered into as a means to an end

42. What are the essential requisites of a partnership?

--There must be a valid contract
-The parties must have legal capacity to enter into the contract
-there must be a mutual contribution of money, property, or industry to a common fund
-The object must be lawful
-The purpose or primary purpose must be to obtain profits and to divide the same among the
parties.

43. What is legal capacity?

-rights/capability of a person before entering into a partnership

44. Are all persons allowed to enter into a contract of partnership?

-yes except no emancipated minors, insane or demented persons, deaf mutes who do not know
how to write, persons who are suffering from civil interdiction, incompetents under guardianship

45. What is civil interdiction?

-having a criminal law

46. What is co ownership?

--refers to the combined property rights in one asset generally in real property with two or more
owners.
Ex. A and B inherited the land from their parents which is leased to C.

47. Is co-ownership the same a partnership? if yes why? if no why not?

--No, persons may become co-owners without a contract and it is created by law for example by
Inheritance, but they cannot be partners without a contract.

48. What is an unlawful partnership?

-unlawful partnership is when your purpose of creating a partnership is unlawful or illegal.

49. Can I sell a thing which is not yet existing?

-yes but cannot donate

50. What is the difference of obligations and contracts to the contract of sales and
how is the contract of sales different from a partnership contract?
-
51. Can the courts change the price in a contract of sale? if yes why? if no why not?
-
52. Give me 5 examples of an absolute contract of sale.
-
53. Give me 5 examples of a conditional contract of sale.
-
54. Give me 10 examples of a contract of sale that you were a part of for the last 10
Months.
-
55. What is the difference between a loan and a sale?
-
56. What is the importance of studying the law on sales?
-
57. How do you think this subject can help you in the future
-
58. What are the causes for the dissolution of a partnership?
-involuntary and voluntary

59. What is the difference between a universal and particular partnership?

--universal partnership has a purpose of gaining profits, it refers to property or to all profits while
particular partnership has its object of exercise the profession

60. What happens when a capital partner refuses to add capital to the partnership to
save the partnership?
-According to article 1791, if the capital partner refuses to contribute additional share to the
capital to save the business in case of imminent loss, shall be obliged to sell his interest to other
partners.

61. What is the rule when a partner collects a sum of money from a partnership
debtor when the debtor also owes money to the partner in an individual capacity?
-According to article 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.

62. What is the rule on loss of the items given by the partner to the partnership, how
about the rules on loss of things that are lent to the partnership for use only
● According to article 1795, The risk of specific and determinate things, which are not
fungible, contributed to the partnership so that only their use and fruits may be for the
common benefit, shall be borne by the partner who owns them.
If the things contribute are fungible, or cannot be kept without deteriorating, or if they were
contributed to be sold, the risk shall be borne by the partnership. In the absence of stipulation,
the risk of the things brought and appraised in the inventory, shall also be borne by the
partnership, and in such case the claim shall be limited to the value at which they were
appraised.

63. How are the losses to be divided if there is no agreement to the contrary?
-Same proportion as to profits

64. Can members of the partnership exclude other members or partners from the
division of profits?
-According to article 1799, A stipulation which excludes one or more partners from any share in
the profits or losses is void.

65. What is a contract of partnership and what are the requisites?

--There must be a valid contract
-The parties must have legal capacity to enter into the contract
-there must be a mutual contribution of money, property, or industry to a common fund
-The object must be lawful
-The purpose or primary purpose must be to obtain profits and to divide the same among the
parties.

66. What are the tests or indicia to determine the existence of a partnership?
● ARTICLE 1769. In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by article 1825, persons who are not partners as to each other are not
partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a partnership, whether such-co-
owners or co-possessors do or do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership, whether or not the
persons sharing them have a joint or common right or interest in any property from which the
returns are derived;
(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he
is a partner in the business, but no such inference shall be drawn if such profits were received in
payment:
(a) As a debt by installments or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment varies with the profits of the business;
(e) As the consideration for the sale of a goodwill of a business or other property by installments
or otherwise.

67. Assuming that there is a mutual contribution of money property and industry to a
common fund is the receipt by a person of a share of the profits of business
conclusive evidence that he is a partner of the business?
-Yes, based on article 1769 paragraph 4, the receipt by a person of a share of the profits of a
business is a prima facie evidence that he is a partner in the business.
68. What are the different kinds of partnership? Define each of them.
--Kinds of partnership (article 1776) a. Universal partnership i. primary purpose is gaining profit
and dividing it among themselves.
b. Particular partnership i. Primary purpose is to practice profession.
c. General partnership i. All partners are general partners.
d. Limited partnership i. Is a partnership consisting of a general partner, who manages the
business and has unlimited liability for the debts and obligations of limited partnership and a
limited partner has limited liability but cannot participate in management.
e. Partnership at will i. A partnership that can be dissolved every time.
f. Partnership with a fixed term i. A partnership that may only dissolved upon the end of its term
unless continued by the partners.
g. De jure – a partnership complied with all requirements.
h. Da facto – a partnership failed to comply with all requirements.
i. Secret partnership – some partners are not known to public.
j. Open partnership – all partners are known to public.
k. Commercial partnership – business transactions.
l. Professional partnership – exercise of professions.

69. Who manages the partnership?

-A managing partner is one who manages the affairs or business of the partnership?

70. What are the property rights of the partner? Are these rights assignable?
● The property rights of a partner are:
○ His rights in specific partnership property.
○ His interest in the partnership. <- This is not the assignable
○ His right to participate in the management (art 1810)

71. What is meant by a corporation by estoppel? How bout a partnership by estoppel?

--a. Corporation by estoppel – all persons assume to act as a corporation knowing to be without
authority to do shall be liable as general partners for all debts, liabilities, and damages incurred.
(section 21, corporation code)
-b. Partnership by estoppel - Partner by estoppel or one who is not really a partner, not being a
party to a partnership agreement, but is liable as a partner for the protection of innocent third
persons. (see Art. 1825.)

72. Distinguish the difference between a limited partnership and a general

partnership?
--general partnership is liable of to his personal asset, while limited is only liable up his
contribution.

73. What is the difference between a contract of partnership and a co-ownership?

Please cite the difference and give an example of each.
-persons may become co-owners without a contract and it is created by law for example by
inheritance while contract of partnership has a purpose attached to it which is to obtain profit.
74. What are the essential features of partnership?
--There must be a valid contract
-The parties must have legal capacity to enter into the contract
-there must be a mutual contribution of money, property, or industry to a common fund
-The object must be lawful
-The purpose or primary purpose must be to obtain profits and to divide the same among the
parties.

75. If and when there is no agreement on the sharing in the contract of partnership,
what then is the sharing in the contract of partnership?
-The sharing of profit within the partners shall be proportion to what they have contributed.

76. What is the difference between a nominate contract and innominate contract?
-Nominate – designated in law or civil code
-innominate – not specifically designated in the civil code

77. What is the principle of a partnership having its own juridical identity?
-partnership has its own juridical personality separate and distinct from the partners

78. How do you determine in a contract if there is a contract of partnership?

-there is a purpose of gaining profit

79. How do you put up a partnership? Does it always have to be registered?

-Based on article 1772 a capital of 3000 or more shall appear in a public instrument and must
be recorded in SEC

80. Can you have any purpose in establishing a partnership?

-yes. Legality of the object and interest of the parties

81. Can a partnership acquire a property in its name? If yes why? If no why not?
--Yes. Based on article 1774 any immovable property or an interest therein may be acquired in
the partnership name. Title so acquired can be conveyed only in the partnership name.
Being a juridical entity, the partnership can acquire a property and subsequently
becomes its owner.

82. What is the difference between a universal partnership from a particular

partnership?
-universal partnership may refer to all present property or to all the profits while particular
partnership has for its determinate things, or a specific undertaking or the exercise of a
profession or vocation.

83. Can we enforce the provision on the law of partnership if and when it is not
agreed upon? If yes why? If no why not?
-

84. If A and B partnership contributed fungible items to the contract of partnership,

and it deteriorates, who bears the loss? What if the items increase in value? Who
benefits from the loss or increase in value?
-Based on article 1795 paragraph 2 the risk of things bought and appraised in the inventory
shall also be borne by the partnership, and in such case the claim shall be limited to the value at
which they are appraised.

85. What is the sharing in profit if and when there is no agreement in the contract of
Partnership?
-- The sharing of profit within the partners shall be proportion to what they have contributed.

86. Can other partners challenge or disown the decisions made by other partners?
How about managers of the partnership? Please explain and elaborate your
Answer.
-

87. Who manages the partnership? What is the legal basis of your answer?
-Managing partner or one who manages the affairs or business of the partnership; he may be
appointed either in the articles of partnership or after the constitution of the partnership. (see
Art. 1800.) He is also known as general or real partner;
ARTICLE 1803. When the manner of management has not been agreed upon, the
following rules shall be observed:
○ (1) All the partners shall be considered agents and whatever any one of them
may do alone shall bind the partnership, without prejudice to the provisions of
article 1801.
○ (2) None of the partners may, without the consent of the others, make any
important alteration in the immovable property of the partnership, even if it may
be useful to the partnership. But if the refusal of consent by the other partners is
manifestly prejudicial to the interest of the partnership, the court's intervention
may be sought. (1695a)

88. In a contract of partnership? Do you need the concurrence of all the partners
before a decision can be made?
-Yes.

89. When the manner of management in the partnership is not agreed upon, what
are the rules to be observed? Please give an example of each.
-when management is not agreed upon, every partner is an agent of the partnership while in a
corporation, the power to do business and manage its affairs is vested in the board of director
and trustees

90. Can a partner open up another business; say for example a single proprietorship
that is the same line of business as the partnership? How about a business that
is not in conflict with the partnership?
--No. A partner can only open up another business that is dissimilar to the from partnership
based on article 1808

91. What is a corporation?

- is an artificial being created by operation of law, having the right of succession and the powers,
attributes and properties expressly authorised by law or incident to its existence

92? what are the different kinds of stocks of a corporation?

● Common Shares
○ A basic class of stock ordinarily and usually issued without extraordinary rights or
privileges and entitles the shareholder to a pro rata division of profits.
● Founders Shares
○ Given rights and privileges not enjoyed by owners of other stocks; exclusive right
to vote/be voted in the election of directors shall not exceed 5 years (note: within
this period, common shares are deprived of their voting rights)
● Preferred Shares
○ Issued only with par value; given preference in distribution of assets in liquidation
and in payment of dividends and other preferences stated in the articles of
incorporation; may be deprived of voting rights.
● Redeemable Shares
○ Expressly provided in articles; have to be purchased/taken up upon expiration of
period of said shares purchased whether or not there is unrestricted retained
earnings; may be deprived of voting rights.
● Treasury Stocks
○ stocks previously issued and fully paid for and reacquired by the corporation
through lawful means (purchase, donation, etc.); not entitled to vote and no
dividends could be declared thereon as corporations cannot declare dividends to
itself.
○ treasury share; stock previously issued and fully paid and reacquare for the
corporation
93. What is the difference between a stock and a non stock corporation?
1 stock corporation - the ordinary business corporation created and opreated for the purpose of
making a profit which may be distributed in the form of dividends to stockholders in the basis of
invested capital
2 non stock corporations do not issues stock and are created not for the profit but for the public
good and welfare. of this character are most religious, social, literary, scientiifc, civic and
political organizations and societies. Non stock have no capital stock which can be subscribed
by their members. Their capital is sourced from contributions and donations.

94. What is the difference between a member and a stock holder?

Stock holder - owners of shares of stock in a stock corporation. They are the owners of the
corporation. They are also called shareholders.
Member - corporators of a corporation which has no capital stock. Under the old rule, they
include corporators of a stock corporation who do not own capital stock. In other words, a stock
corporation may be composed of stock holders and members, the latter referring to
incorporators who do not own shares of stock

95. What is a ultra vires act?

-Any act that lies beyond the authority of a corporation to perform. Ultra Vires acts fall outside
the powers that are specifically listed in a corporate charter or state law. They can also be any
action that is specifically prohibited by the corporate charter

96. Are the officers and directors liable for the act of the corporation? if yes why if no why not?
-No they are not personally liable but the corporation they represent.

97. Who is the executive committee.

-Group of directors appointed to act on behalf of, and within the powers granted to them by, the
board of directors. Typically it consists of a chairperson, vice-chairperson, secretary, and
treasurer.

98. What is a derivative suit?

-Derivative suits are actions filed in court by a stockholder or group of stockholders irrespective
of number of shares held in cases where “directors are guilty of breach of trust, not of mere
error of judgment or abuse of discretion and intra-corporate remedy is futile or useless, done for
the benefit of the corporation, to bring about redress of the wrong inflicted directly upon the
corporation and indirectly upon the stockholders

99. What is a corporation by estoppel?

-Corporation by estoppel – all persons assume to act as a corporation knowing to be without
authority to do shall be liable as general partners for all debts, liabilities, and damages incurred.
(section 21, corporation code)

100. What is a delinquency sale?

-the board of directors may, by resolution, order the sale of delinquent stock and shall
specifically state the amount due on each subscription plus all accrued interest, and the date,
time and place of the sale which shall not be less than 30 days nor more than 60 days from the
date the stocks became delinquent.