Essay: Read each question carefully.

Answer each numbered

question and always support your answers with the pertinent
laws, rules, and/or jurisprudence. A mere "YES" OR "NO"
answer WITHOUT ANY CORRESPONDING EXPLANATION
OR DISCUSSION may not be given full credit.

WALAC, JUNGIE
BSAC-3
Bus Law
1. X and Y are partners with X as the managing partner. Z is a
debtor of the partnership. He is also indebted to the
manager X in his personal capacity. X collected the amount
of P 10,000.00 from Z. State the rules on how the amount
shall be applied to the two obligation.
 When a partner is named manager in the partnership’s
articles of incorporation. Unless committed in bad
faith, all activities of administration, even when his
partners object, the appointment of a managing
partner has been revoked. In addition, in the payment
of the liabilities of the partnership and those of the
private debts of a partner, partnership creditors shall
be paid first out of partnership assets, thereafter, a
partner’s separate creditor shall be out of the share
owing him if there is an excess. If the share of the
debtor partner in the remaining assets is not enough to
settle his private debts, his private creditor can go after
the partner’s separate assets over which he has
preference.

2. Jane and Rain formed a partnership to operate a wagwagan

shop in Baguio City. Jane provided the capital while Rain
contributed his labour and industry. On one side of their
shop, Jane opened and operated a coffee shop, while on the
 other side, Rain put up a grocery store. May they engage in
such separate businesses? Why?
 No because Rain, as an industrial partner, is prohibited
from engaging in any other business without the
written permission of the other partners. If he
continues to insist on doing his own business, Jane may
either dismiss him from the partnership or allow him
to benefit from the benefits that the industrial partner
may have acquired from other firms, with a claim to
damages in either scenario.

3. Ana and Bing were partners in the operation of a car rental

business. One car was mortgaged to C who foreclosed the
mortgaged debt. Ana, in her own behalf, redeemed the
property with her own private funds. Subsequently, Ana
transferred the ownership of the car under her name. Did
Ana become the absolute owner of the property? Explain.
 No because it is still under their partnership.

 No, the law says that he will only hold the property as
the trustee and will be entitled to reimbursement plus
interest from the time he redeemed the property.
 Article 1808
 The capitalist partners cannot engage for their own
account in any operation which is of the kind of
business in any operation which is of the kind of
business in which the partnership is engaged, unless
there is a stipulation to the contrary.
 Any capitalist partner violating this prohibition shall
bring to the common fund any profits accruing to him
from his transaction, and shall personally bear all the
losses. (n)
4. Dina and Fina are partners engaged in the real estate
business. Dina learned that Fina was interested in buying a
certain parcel of land owned by the partnership, even for a
high price. Without informing Fina, Dina was able to make
 Fina sell his share in the partnership. Then, Dina sold the
land at a big profit. Is Fina entitled to the profits as to the
proceeds of the sale of the land even that Fina sell his share?
Explain.
 The Partnership Act states that partners must provide
honest accounts and other essential information about
the firm and their connection with one another. To
share any profit or benefit gained in connection with
the partnership or from carrying on a rival business
without the approval of the partners. As a result, Dina
is accountable to Fina for the profit made by the latter.

5. Explain the rule with regard to the obligation of a partner

as to damages suffered by the partnership through his fault?

 According to the law, each partner is liable to the

partnership for losses caused by his negligence, and he
cannot compensate them with revenues and benefits
obtained for the partnership through his industry.
However, the courts may reasonably diminish such
duty if unusual profits were realized as a result of the
partner’s extraordinary efforts in other partnership
activities.