Practice question
After dissolution, a general partnership has PHP900,000 cash. It owes PHP300,000 to outside creditors, PHP200,000 on a documented partner loan distinct from capital, PHP300,000 for capital, and PHP100,000 for profits. No security, competing priority or contrary agreement applies. Which order governs settlement between partners under Article1839?
- Outside creditors, partner loan, capital, profits
- Profits, capital, partner loan, outside creditors
- Capital, profits, outside creditors, partner loan
- Partner loan, profits, capital, outside creditors
- All categories must share equally regardless of rank
Legal references
- Civil Code RA386: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html Articles1830(4),1831 and1839.
Answer this question in flashcards to review your response and continue practicing.