PARTNERSHIP EXERCISES I.

FORMATION, ORGANIZATION AND MANAGEMENT Organize a commercial partnership registered with SEC for the purpose of marketing and distribution of coconut oil, supplied by Southern Oil Mills Inc. (SIOM) in Nabilid, Roxas, Zamboanga del Norte. Data: 1. Five (5) persons to contribute Php100,000.00 each. 2. Main Office: A building and lot of X, Y and Z at Bonifacio St., to be rented in such amount to be agreed upon in a contract of lease. 3. Contributors agreed to select their managing partners only after their articles of partnership are registered with SEC. 4. Supply other facts/data that you need to state in the articles of partnership. II. OPERATION 1. Prepare for the partnership a contract with SIOM for the latter to supply the coconut oil in the market and distribution for the fixed period of five (5) years within Zamboanga Peninsula. III. ANALYSIS 1. State the general features of a commercial partnership. 2. What is a partnership at will? 3. What is a partnership by estoppels? IV. LIABILITY OF PARTNERS 1. Under Article 1816 of the New Civil Code. State the liability of the partners or contractual obligations incurred by the partnership. 2. Under 1822, 1823 and 1824 of the New Civil Code. What is the liability of the partnership for any wrongful act or omission of any partner in the ordinary course of business. 3. Under 1822, 1823 and 1824 of the New Civil Code. What is the liability of the partnership for any wrongful act or omission of any partner not in the ordinary course of business? But the partner used the vehicle of the partnership assigned to him, run over a pedestrian who was seriously injured that required medical and hospital services for recovery in the total sum of Php50,000.00 as reimbursement. V. SUNGA-CHAN CASE REVISITED In the Sunga-Chan vs. Chua Case. Supposed after the death of Jacinto Sunga (father), Lilibeth Sunga-Chan asked Lamberto Chua that she succeeds the share of her father. Was Lamberto Chua entitled to an inventory and accounting of the assets, property and other incremental benefits that accrued to the Shellite from the time Jacinto Sunga died up to the time Lamberto Chua agreed that Lilibeth succeeds the share of her father?

VI. Based on general empirical evidence and observations. Are partnership now commonly organized by businessmen in the Philippines? In general, state the disadvantages of partnership as against private corporations. Where five (5) people asked you to recommend whether to organize a partnership or private corporation. What will you suggest?

I. FORMATION, ORGANIZATION AND MANAGEMENT

PARTNERSHIP AGREEMENT KNOW TO ALL MEN BY THESE PRESENTS: This contract of partnership is entered into by and between: A. B. C. D. E. A, Filipino, of legal age, single, and a resident of Roxas, Zamboanga del Norte; B, Filipino, of legal age, single, and a resident of Miputak, Dipolog City; C, Filipino, of legal age, single, and a resident of Olingan, Dipolog City; D, Filipino, of legal age, single, and a resident of Sicayab, Dipolog City; E, Filipino, of legal age, single, and a resident of Turno, Dipolog City.

In consideration of the mutual covenants herein contained, the abovementioned parties agree to form, and hereby do form, this partnership pursuant to title IX, articles 1767-1867 of the new Civil Code of the Philippines governing the laws of partnernership, on terms and conditions subsequently set forth. WITNESSETH: I. NAME BAD-EC distributors II. PURPOSE Marketing and distribution of coconut oil. III. PLACE OF BUSINESS The Main Office shall be a building and lot owned by X, Y, and Z, located at Bonifacio Street, to be rented in such amount to be agreed upon in a contract of lease. IV. CAPITAL CONTRIBUTIONS Each partner shall have a contribution of Php 100,000.00 as an initial capital V. DURATION

The partnership shall commence upon the signing of this contract and full payment of the initial capital contribution, and shall continue to exist until dissolved pursuant to the provisions on Dissolution and Winding Up of articles 1828-1824 of the new Civil Code. VI. MANAGEMENT The terms regarding management shall be agreed only after the registration of the articles of partnership covenanted in this document to the Securities and Exchange Commission. VII. PROFIT The net profit shall be accounted on a monthly basis, and shall accrue equally to all of the parties of this contract VIII. LOSS AND EXPENSES Loss and expenses arising from the operation of the partnership shall be born equally by the parties.

IN WITNESS WHEREOF, we have hereunder affix our signatures this ___ day of ________, 2013, at Barra, Dipolog City

II. OPERATION

DISTRIBUTOR CONTRACT
KNOW TO ALL MEN BY THESE PRESENTS: This distributor contract is entered into by and between Southern Island Oil Mill (SIOM),a corporation engaged in coco-oil manufacturing, based atRoxas, Zamboanga del Norte, hereinafter referred to as the supplier/manufacturer, and BAD-CE distributors, a partnership based on Bonifacio Street, Dipolog City, duly registered with the Securities and Exchange Comission (SEC), hereinafter referred to as the distributor, on February 25, 2013, at Dipolog City NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto, willfully agrees to the articles of distributorship subsequently set forth below. WITNESSETH ARTICLE I APPOINTMENT OF DISTRIBUTORSHIP Subject to the terms and conditions set forth in this agreement and the payment of a non-refundable distributors fee of TWO HUNDRED THOUSAND PESOS [Php 200,000.00], Sothern Island Oil Mills (SIOM) hereby appoints and grants BAD-CE distributors, the exclusive and non-assignable right to sell the coconut oil products and merchandise purchased by the latter from former. The distributor right shall be limited to customers who have places of business in the Zamboanga Peninsula. The distributor shall not be an agent of SIOM and shall not at any

time represent itself as such, nor shall the distributor incur, assume or create any debt, obligation, contract or lease of any kind in the name of or on behalf of SIOM. ARTICLE II TERMS AND TERMINATION The initial term of this agreement shall commence on the date set forth below, and shall continue for a period of five [5] years. Upon the expiration of the initial term, this agreement shall continue on a yearly basis with th a subscription fee of one fourth 1/4 of the initial distributors fee herein abovementioned. Either party may terminate this agreement at any time, and for any justifiable reason, upon thirty [30] days written notice to the other party. SIOM reserves the right to terminate this Agreement at any time: (i) upon three (3) days advance written notice in the event that any payment owing to SIOM for merchandise or services supplied to Distributor is not received within fifteen [15]days after the date on which such payment is due; and (ii) immediately upon written notice of termination by Company in the event that Distributor is in breach of any provision hereof and fails to cure such breach following written notice of breach by Company and a reasonable period to cure such breach, which shall not exceed for thirty [30] days from the date of notice. ARTICLE II ORDERS AND PRICES All orders for merchandise requested by the distributor shall be subject to acceptance or non-acceptance by SIOM at its corporate headquarters, now located in Roxas, Zamboangadel Norte. SIOM shall cause all items ordered by the distributor to be delivered to distributor's main office at Bonifacio Street, Dipolog City. Title to all such merchandise and supplies and risk of loss beborn by the distributor at the time of delivery to such main office. The distributor shall shoulder all costs and charges related to the delivery of merchandise and supplies to their main office. ARTICLE III PAYMENT The distributor agrees to pay all amounts shown as currently due on SIOMS's billing statements for purchases of merchandise with such promptness as shall enable SIOM to receive payment no later than the 5th day following the date of the statement. All prices shall be exclusive of tariffs, customs duties, sales and goods and services taxes, insurance, and freight charges, all of which shall be the shouldered by the distributor. All amounts becoming payable by the distributor pursuant to Company's billing statements shall be stated and payable in Philippine currency.

ARTICLE IV MINIMUM PURCHASE REQUIREMENT The minimum volume of merchandise to be purchased by the distributor shall be ONE HUNDRED THOUSAND PESOS [Php 100,000.00] ARTICLE V WARRANTIES AND LIMITATIONS OF LIABILITY SIOM warrants the good and marketable title to the merchandise sold to BAD-CE distributors.BAD-CE distributors agrees not to return any merchandise to SIOM, except in compliance with SIOMs standard return policy for defective merchandise.

ARTICLE VI FORCE MAJEURE Except with respect to the distributor's payment obligations hereunder, delays or failure of either party in the performance of its obligations hereunder shall be excused if and to the extent caused by circumstances beyond the reasonable control of the party affected. ARTICLE VII COMPLIANCE WITH LAWS AND INDEMNIFICATION The distributor agrees to comply with any and all laws, regulations and governmental orders which may be applicable to the sale and distribution of the merchandise purchased SIOM. SIOM agrees to indemnify the distributor and hold it harmless from and against any and all claims, suits, proceedings, judgments, orders, fines or penalties arising in connection with the sale or distribution of SIOMSs products, except for such claims arising out of the distributors sole negligent or intentional wrongful acts or omissions. ARTICLE VIII MODIFICATIONS AND AMENDMENTS Except as set forth above, this Agreement may not be modified or amended, nor may any obligations hereunder be waived, except by written instrument signed by both parties. ARTICLE IX NON-WAIVER The failure of either party to enforce its rights under any provision hereof shall not be deemed a waiver of such rights for purposes of future enforcement. ARTICLE X REPEALING CLAUSE Any provision hereof which is contrary to applicable law shall, to the extent of such contravention, be severed from this agreement and shall not impair the validity of any other term, condition or provision hereof. IN WITNESS WHEREOF, we have hereunder affix our signatures this ___ day of ________, 2013, at Barra, Dipolog City

Southern Island Oil Mills (SIOM) Supplier/ Manufacturer Company

BAD-CE distributors Distributor

ACKNOLEDGEMENT

III. ANALYSIS

1. General Features of a Commercial Partnership 1. There must be a valid contract 2. The parties must have legal capacity to enter into the contract 3. There must be a mutual contribution of money, property, or industry to a common fund 4. The object must be lawful 5. The primary purpose must be to obtain profits and to divide the same among parties 6. The articles of partnership must not be kept secret among the members 2. Partnership at will- One in which time is specified and is not formed for a particular undertaking or venture and which may be terminated at any time by mutual agreement of the partners, or by the will of any one of the partner alone; or one for a fixed term or particular undertaking which is continued after the end of the term or undertaking without express agreement 3. Partnership by estoppel- One who is not really a partner but is liable as a partner for the protection of innocent rd 3 persons. He is one represented as being IV. LIABILITY OF PARTNERS 1. Under Article 1816 of the New Civil Code. State the liability of the partners or contractual obligations incurred by the partnership. Art. 1816. All partners, including industrial ones, shall be liable pro rata with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership. However, any partner may enter into a separate obligation to perform a partnership contract. (n) 2. Under 1822, 1823 and 1824 of the New Civil Code. What is the liability of the partnership for any wrongful act or omission of any partner in the ordinary course of business. Art. 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of co-partners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act. (n) Art. 1823. The partnership is bound to make good the loss: (1) Where one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it; and (2) Where the partnership in the course of its business receives money or property of a third person and the money or property so received is misapplied by any partner while it is in the custody of the partnership. (n) Art. 1824. All partners are liable solidarily with the partnership for everything chargeable to the partnership under Articles 1822 and 1823.

3. Under 1822, 1823 and 1824 of the New Civil Code. What is the liability of the partnership for any wrongful act or omission of any partner not in the ordinary course of business? But the partner used the vehicle of the partnership assigned to him, run over a pedestrian who was seriously injured that required medical and hospital services for recovery in the total sum of Php50,000.00 as reimbursement.

Under 1822, 1823 and 1824 of the New Civil Code, the liability of a wrongful partner not in the ordinary course of business is direct and primary. He alone is solely responsible for his own private/personal act or omission and not the partnership. In case a wrongful partner would use the vehicle of the partnership, but not in the ordinary course of business and has cause damage or injury to a third person, the general rule is that the name to whom the vehicle was registered would be liable directly and solidary. In this case, if the registration of the vehicle is with the partnership, the partnership would be liable as a consequence of imputed or vicarious liable. However, as a defense, the partnership can invoke that it exercised due diligence of a good father of a family in the selection and supervision, and if proved to be so, the erring partner would be solely liable to pay the Php 50,000.00 amount to the injured party. The burden however belongs to the partnership that it exercised due diligence.

V. SUNGA-CHAN CASE REVISITED In the Sunga-Chan vs. Chua Case. Supposed after the death of Jacinto Sunga (father), Lilibeth Sunga-Chan asked Lamberto Chua that she succeeds the share of her father. Was Lamberto Chua entitled to an inventory and accounting of the assets, property and other incremental benefits that accrued to the Shellite from the time Jacinto Sunga died up to the time Lamberto Chua agreed that Lilibeth succeeds the share of her father? -Answer soon to come VI. Based on general empirical evidence and observations. Are partnership now commonly organized by businessmen in the Philippines? In general, state the disadvantages of partnership as against private corporations. Where five (5) people asked you to recommend whether to organize a partnership or private corporation. What will you suggest?
-Answer soon to come