Bar Q and A #32

1.) Dielle, Karlo and Una are general partners in a merchandising firm. Having contributed equal amounts to the capital, they also agree on equal distribution of whatever net profit is realized per fiscal period. After two years of operation, however, Una conveys her whole interest in the partnership to Justine, without the knowledge and consent of Dielle and Karlo. 1. Is the partnership dissolved? 2. What are the rights of Justine, if any, should she desire to participate in the management of the partnership and in the distribution of a net profit of P360,000.00 which was realized after her purchase of Una’s interest?

No, a conveyance by a partner of his whole interest in a partnership does not of itself dissolve the partnership in the absence of an (Art.1813)
Justine cannot interfere or participate in the management or administration of the partnership business or She may, however, receive the net profits to which Una would have otherwise been entitled. In this case, P120, 000. (Art. 1813)

2.) A, B and C formed a partnership for the purpose of contracting with the Government in the construction of one of its bridges. On June 30, 1992, after completion of the project, the bridge was turned over by the partners to the Government. On August 30, 1992, D, a supplier of materials used in the project sued A for collection of the indebtedness to him. A moved to dismiss the complaint against him on the ground that it was the ABC partnership that is liable for the debt. D replied that ABC partnership was dissolved upon completion of the project for which purpose the partnership was formed. Will you dismiss the complaint against A If you were the Judge?

No, as Judge, I would not dismiss the complaint against A because A is still liable as a general partner for his pro-rata share of 1/3 (Art. 1816). Dissolution of a partnership caused by the termination of the particular undertaking specified in the agreement does not extinguish obligations, which must be liquidated during the "winding up" of the partnership affairs. (Arts. 1829 and 1830, par.1[a])

3.) Can two corporations organize a general partnership under the Civil Code of the Philippines?

No. A corporation is managed by its board of directors. If the corporation were to become a partner, co-partners would have the power to make the corporation party to transactions in an irregular manner since the partners are not agents subject to the control of the Board of Directors. But a corporation may enter into a joint venture with another corporation as long as the nature of the venture is in line with the business authorized by its charter. (Tuason & Co., Inc. v. Bolano, 95 Phil. 106)

4.) Can a corporation and an individual form a general partnership?

No. A corporation may not be a general partner because the principle of mutual agency in general partnership allowing the other general partner to bind the corporation will violate the corporation law principle that only the board of directors may bind the corporation.

5.) Will death of a partner terminate the partnership?

Yes. Death of a partner will terminate the partnership, by express provision of par. 5, Art. 1830 of the CivilCode.

6.) A foreign manufacturer of computers and a Philippine distributor entered into a contract whereby the distributor agreed to order 1,000 units of the manufacturer’s computers every month and to resell them in the Philippines at the manufacturer’s suggested prices plus 10%. All unsold units at the end of the year shall be bought back by the manufacturer at the same price they were ordered. The manufacturer shall hold the distributor free and harmless from any claim for defects in the units. Is the agreement one for sale or agency?

The contract is one of agency not sale. The notion of sale is negated by the following indicia: (1) the price is fixed by the manufacturer with the 10% mark up constituting the commission; (2)the manufacturer reacquires the unsold units at exactly the same price; and (3) warranty for the units was borne by the The foregoing indicia negate sale because they indicate that ownership over the units was never intended to transfer to the distributor.

7.) Jo-Ann asked her close friend, Aissa, to buy some groceries for her in the supermarket. Was there a nominate contract entered into between Jo-Ann and Aissa? In the affirmative, what was it? Explain.

Yes, there was a nominate contract. On the assumption that Aissa accepted the request of her close friend Jo-Ann to buy some groceries for her in the supermarket, what they entered into was the nominate contract of Agency. Art. 1898 of the New Civil Code provides that by the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.

8.) A as principal appointed B as his agent granting him general and unlimited management over A's properties, stating that A withholds no power from B and that the agent may execute such acts as he may consider appropriate. Accordingly, B leased A's parcel of land in Manila to C for four (4) years at P60,000.00 per year, payable annually in advance. B leased another parcel of land of A in Caloocan City to D without a fixed term at P3,000.00 per month payable monthly. B sold to E a third parcel of land belonging to A located in Quezon City for three (3) times the price that was listed in the inventory by A to B. All those contracts were executed by B while A was confined due to illness in the Makati Medical Center. Rule on the validity and binding effect of each of the above contracts upon A the principal. Explain your answers.

The agency couched in general terms comprised only acts of administration (Art. 1877). The lease contract on the Manila parcel is not valid, not enforceable and not binding upon A. For B to lease the property to C, for more than one (1) year, A must provide B with a special power of attorney (Art. 1878). The lease of the Caloocan City property to D is valid and binding upon A. Since the lease is without a fixed term, it is understood to be from month to month, since the rental is payable monthly (Art. 1687). The sale of the Quezon City parcel to E is not valid and not binding upon A. B needed a special power of attorney to validly sell the land (Arts. 1877 and 1878). The sale of the land at a very good price does not cure the defect of the contract arising from lack of authority.

9.) CX executed a special power of attorney authorizing DY to secure a loan from any bank and to mortgage his property covered by theowner’scertificateof title.In securing a loan from MBank, DY did not specify that he was acting for CX in the transaction with said bank. Is CX liable for the bank loan? Why or why not? Justify your answer.

CX is liable for the bank loan because he authorized the mortgage on his property to secure the loan contracted by DY. If DY later defaults and fails to pay the loan, CX is liable to pay. However, his liability is limited to the extent of the value of the said property.

10.) Joaquin Reyes bought from Julio Cruz a residential lot of 300 square meters in Quezon City for which Joaquin paid Julio the amount of P300,000.00. When the deed was about to be prepared Joaquin told Julio that it be drawn in the name of Joaquina Roxas, his acknowledged natural child. Thus, the deed was so prepared and executed by Julio. Joaquina then built a house on the lot where she, her husband and children resided. Upon Joaquin’s death, his legitimate children sought to recover possession and ownership of the lot, claiming that Joaquina Roxas was but a trustee of their father. Will the action against Joaquina Roxas prosper?

Yes, because there is a presumed donation in favor of Joaquina under Art. 1448 of the Civil Code. (De Los Santos v. Reyes, 27 January 1992, 206 SCRA 437) However, the donation should be collated to the hereditary estate and the legitime of the other heirs should be preserved.