Partnership

Question 1

1. Contract of __________ is a contract of two or more persons who bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. It may also be formed by two or more persons for the exercise of a profession.

Cases that do not establish a (answer sa blank):
1) Persons who are not partners to each other.
2) Co-ownership or co-possession, whether such co-owners or co- possessors do or do not share any profits made by the use of the property.
3) Sharing of gross returns, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived.
Generally, receipt by a person of share of the profits of a business is a prima facie evidence that he is a partner. However, these are exceptional instances when the receipt by a person of a share of the profits of a business shall not be considered a prima facie evidence that he is a partner in a business:
. a. As a debt by installment or otherwise
. b. As wages of an employee
. c. As rent to a landlord.
. d. As an annuity to a widow or representative of a deceased partner.
. e. As interest on a loan, though the amounts of payment vary with the profits of the business.
. f. As the consideration for the sale of a goodwill of a business or other property by installment or otherwise.

Answer 1

1. Partnership

Question 2

Characteristics of a contract of partnership
1) __________ – It is entered into by two or more persons whose rights and obligations are reciprocal.
2) __________– It is generally perfected by mere consent.
3) __________ – It has a special name given to it by law.
4) __________ – The partners contribute money, property, or industry to a common fund for the purpose of receiving profits.
5) __________ – It does not depend upon any other contract for its validity or existence.
6) __________ – It is a means by which other contracts will be entered into as the partnership pursues its business.

Answer 2

1. Bilateral or Multilateral
2. Consensual
3. Nominate
4. Onerous
5. Principal
6. Preparatory

Question 3

Essential requisites of partnership
1) There must be a __________ partnership contract.
2) The parties must have __________ capacity to enter into contract.
3) There must be a __________ of money, property, or industry to a common fund.
4) It must have a __________ object or purpose.
5) The partnership must be established for the common benefit or interest of the partners which is to obtain __________ and to divide the profits among the partners.

Answer 3

1. valid
2. legal
3. mutual contribution
4. lawful
5. profits

Question 4

Form of contract of partnership
1) As a rule, it may be in any form because it is perfected by mere consent.
2) If the contributed capital is __________, the contract of partnership must be notarized and registered for SEC to prejudice and affect third persons but not for validity of the contract. Noncompliance with this formality will not affect the liability of the partners to third persons.
3) If ____________ property is contributed, the contract of partnership must be notarized and inventory of the said real property must be attached to the contract of partnership for the contract to be valid. It must also be registered to SEC to affect and bind third persons.

Answer 4

2. at least P3,000
3. immovable or real

Question 5

1. Universal partnership of ____________ is a partnership whereby the common fund comprises all that the partners may acquire by their work or industry during the existence of the partnership.
2. Universal partnership of ____________ is a partnership wherein all the partners contribute all the property which belonged to them to the common fund, with the intention of dividing the same among themselves, as well as the profits which they acquire therewith.
3. In case Universal Partnership is entered into without specification of the type of Universal Partnership, it shall be presumed to be a Universal Partnership of ____________.
4. ____________ is a partnership which has for its object determinate things, their use or fruits, or a specified undertaking, or the exercise of a profession. Example is General Professional Partnership.

Persons who cannot enter a universal partnership but can enter a particular partnership:
1) Husband and wife
2) Persons who were guilty of adultery or concubinage at the time of formation
3) Persons who were guilty of the same criminal offense
4) Public officer or his wife, descendants or ascendants and another person by reason of the public officer’s position

Answer 5

1. profits
2. all present property
3. Profits
4. Particular Partnership

Persons who are prohibited from giving each other any donation or advantage cannot enter into a universal partnership.” — This principle ensures that the law protects vulnerable parties and maintains fairness in contractual relationships

Question 6

Kinds of partnership
1) ____________ is a partnership where all the partners are liable to the extent of their separate property after the partnership assets have been exhausted.
2) ____________ is a partnership where there is at least one general partner and at least one limited partner who is liable to the extent of his investment in the partnership.
3) ____________ is a partnership which is not partnership but is considered as one with respect to those who, by reason of their conduct or admission, are precluded from denying its existence.
4) ____________ is a partnership which is established by the lapsing of time.
5) ____________ is a partnership that exists both in fact and in law.

Answer 6

1. General partnership
2. Limited partnership
3. Partnership by estoppel or nominal partnership
4. Partnership by prescription
   🕰️ Example Scenario: Long-Term Informal Business
   Scenario: Lito and Marissa have been running a car repair shop together for over 15 years. They:
   - Share profits and losses
   - Make joint decisions about operations
   - Represent themselves publicly as co-owners
   - Split expenses and reinvest earnings
   However, they never signed a formal partnership agreement.

Eventually, a legal dispute arises—say, over ownership of a newly acquired property. One party denies the existence of a partnership. But because they’ve acted like partners continuously and publicly, the court may recognize a Partnership by Prescription, especially if third parties relied on their apparent partnership.

5. De jure partnership

Question 7

Kinds of partnership
6) ____________ is a partnership that exists in fact but not in law.
7) ____________ is one for which a period for its duration is fixed by the partners.
8) ____________ is one which is organized for a certain undertaking which, when attained, will cause the termination of the partnership.
9) ____________ is one where no period is fixed by the parties for its duration.

Answer 7

6. De facto partnership
7. Partnership with a fixed term
8. Partnership for a particular undertaking
9. Partnership at will

Question 8

Obligations of the Partners
1. Commencement of Juridical Personality of a Partnership
a. From the date stipulated or agreed by the partners
b. From the moment of the execution of the contract of partnership

2. Rules on Division of partnership profits
   a. It should be divided based on profit agreement.
   b. In the absence of profit agreement:
   — The industrial partner shall first receive a just and equitable share in the profits before distribution to capitalist partners.
   — The remaining profits after distribution to industrial partners of his just and reasonable share in profits shall be distributed to the capitalist partners based on the following by order of priority: 1) ____________ 2) ____________.
   — In case of capitalist-industrial partner, he shall receive a just and equitable share in the profit for being an industrial partner and then he shall also share in the remaining profits as a capitalist partner based on ____________.
3. Rules on Division of partnership losses
   a. It should be divided based on loss agreement.
   b. In the absence of loss agreement:
   — The industrial partner shall be exempted from sharing in losses.
   —The losses shall be distributed to the capitalist partners based on the following by order of priority: 1) ____________ 2) ____________ 3) ____________.
   —In case of capitalist-industrial partner, for being an industrial partner, he shall not share in losses. But for being capitalist partner, he shall share in the losses based on profit ratio.

Answer 8

2.b
1) Capital contribution ratio
2) Equally
capital contribution ratio

3.b
1) Profit agreement of capitalist partners
2) Capital contribution ratio
3) Equally

Question 9

Designation of profits or losses by a third person as agreed by the partners
a. If entrusted by the partners to a third person, it is binding upon the partners and may be impugned only when it is ____________.
b. If the designation by a third person is manifestly inequitable, it can no longer be impugned by a partner who has begun to ____________.
c. If the designation by a third person is manifestly inequitable, it can no longer be impugned by any partner if ____________ had already lapsed from the time he obtained knowledge thereof.

Answer 9

a. manifestly inequitable
b. execute it
c. three months

Question 10

RULES ON MANAGEMENT
Partnership management when a partner has been appointed manager in the articles of partnership.

– The managing partner may execute all acts of administration despite the opposition of his partners unless he acts in bad faith.
– With just or lawful cause, the revocation of the power of the managing partner can be made by the vote of the partners representing the controlling interest.
– Without just or lawful cause, the revocation of the power of the managing partner can be made only with the consent of all the partners including the managing partner.

Question 11

RULES ON MANAGEMENT
Partnership management when a partner has been appointed manager after the partnership has been constituted or has been appointed in a separate document other than articles of partnership.

– The managing partner may execute all acts of administration.
– In case of opposition to the decision of the managing partner on acts of administration, the partners representing the controlling interest may resort to voting for his removal as manager.
– He may be removed with or without just cause by the vote of the partners representing the controlling interest.

Question 12

RULES ON MANAGEMENT
Two or more partners have been appointed as managers.

– When there is a specification of their respective duties, each managing partner shall perform only the duties specified in his appointment.
– When there is no specification of their respective duties and there is no stipulation that one shall not act without the consent of the others, each one may separately execute all acts of administration.
– When there is no specification of their respective duties and there is no stipulation that one shall not act without the consent of the others, the decision of the majority of the managing partners shall prevail in case of opposition.
– When there is no specification of their respective duties and there is no stipulation that one shall not act without the consent of the others, the decision of partner owning the controlling interest shall prevail in case of tie in voting.
– When there is a stipulation that none of the managing partners shall act without the consent of the others, the unanimous vote of all managing partners shall be necessary for the validity of the acts. However, if there is imminent danger to the partnership involving an act of administration, the absence of any of the managing partners may be alleged by the present partners to justify the approval of act of administration despite the absence of one of the managing partners.

Question 13

RULES ON MANAGEMENT
Manner of management has not been agreed upon.

– All the partners shall be considered agents of the partnership or all of them are managers.
– Whatever any of the partners may do alone shall bind the partnership.
– In case of opposition of the other partners, the decision of the majority shall prevail and the decision of the partners owning the controlling interest shall prevail in case of tie.

Question 14

Acts that are not considered for apparently carrying on in the usual way of business of the partnership and may not be performed by a partner unless he is authorized by all the other partners or these are acts which require unanimous vote of the partners because they are considered ACT OF STRICT OWNERSHIP OR DOMINION

a. ____________ of partnership property in trust for creditors or on the assignee’s promise to pay the debts of the partnership.
b. Disposition of the ____________ of the business.
c. Acts which would make it ____________ to carry on the ordinary business of the partnership.
d. ____________ of judgment.
e. Entering into a ____________ concerning a partnership’s claim or liability.
f. Submission of a partnership claim or liability to ____________.
g. ____________ of a claim of the partnership.

Answer 14

a. Assignment
b. goodwill
c. impossible
d. Confession
e. compromise
f. arbitration
g. Renunciation

Question 15

1. An ____________ partner cannot engage in any business for himself unless the partnership expressly permits him to do so.

Alternative remedies of the capitalist partner if the (answer sa 1) partner engages in business for himself without the express permission of the partnership.
a.
b.

Answer 15

1. industrial

a. Exclude the industrial partner from the partnership with a right to damages; or
b. Avail themselves of the benefits obtained from the business he engaged in with a right to damages.

Question 16

1. The ____________ partner can engage in a business of different kind even without stipulation allowing him to do so and in a business of the same kind if there is a stipulation allowing him to do so.

Remedies available to injured partners when a (answer sa 1) partner engages in the same kind of business without stipulation allowing him to engage in that business.
a.
b.

Answer 16

1. capitalist

a. To ask the guilty capitalist partner to bring to the common fund any profits accruing to him from the said transaction; and
b. To ask the guilty capitalist partner to bear all the losses from the said transaction.

Question 17

1. A general partner, whether capitalist or industrial, for the partnership debts, shall be liable ____________ with all their separate property and after all the partnership assets have been exhausted.
2. Liability of newly admitted partner sa obligations before his admission
3. Liability of newly admitted partner sa obligations after his admission

Answer 17

1. pro rata and subsidiarily
   📊 Pro-rata
   Meaning: Each partner is liable in proportion to their share in the partnership.
   Think of it as:
   “You pay your fair slice of the pie.”
   Example Scenario: If a partnership owes ₱100,000 and Partner A owns 60% while Partner B owns 40%, their pro-rata liability would be:
   Partner A: ₱60,000
   Partner B: ₱40,000

🧍‍♂️ Subsidiarily
Meaning: Partners are liable only after the partnership assets are exhausted.
Think of it as:
“The partnership pays first. If it can’t, then the partners step in.”

2. He is liable for all the obligations of the partnership arising before his admission as though he had been a partner when such obligations were incurred, except that this liability shall be satisfied only out of partnership property, unless there is a stipulation to the contrary.
   In short, limited partner sya.
3. He is liable pro-rata and subsidiarily for all obligations incurred after his admission as a partner.
   In short, general partner sya.

Before admission = limited liability (unless stipulated)
After admission = general liability (pro-rata and subsidiary)

Question 18

Cases wherein the partnership shall be solidarily liable with all the partners and wherein all partners are liable solidarily with the partnership for everything chargeable to the partnership

a. For loss or injury caused to a third person or any penalty is incurred by reason of the wrongful act or omission of any partner acting in the ordinary course of business of the partnership or with the authority of his co-partners.
b. Where one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it.
c. Where the partnership in the course of business receives money or property of a third person and such money or property is misapplied by any partner while it is in custody of the partnership.

Answer 18

Familiarize, heh

🧾 Plain English Version:
There are certain situations where both the partnership and all its partners are equally and fully responsible for any debts or obligations. In these cases, a creditor can go after the partnership’s assets or any partner’s personal assets—no matter who caused the problem—to get paid.

🔍 Breakdown:
“Solidarily liable” means:
“Everything chargeable to the partnership” means:

📚 CPALE Tip:
This usually applies in cases like:
- Wrongdoing or negligence by a partner
- Illegal acts committed in the name of the partnership
- Torts (e.g., someone gets injured due to the partnership’s actions)
So if Partner A messes up, Partner B and the partnership itself can still be held fully liable—even if they had nothing to do with it.

Question 19

Assignment or conveyance of partner’s interest to third person

1. The associate or assignee ____________ a partner of the partnership without the consent of the other partners.
2. The partnership is ____________ by the assignment of the said interest.
3. The associate or assignee is entitled only to the share of the assigning partner in the ____________ and net assets at the date of liquidation.

Answer 19

1. does not become
2. not dissolved
3. partnership profits

Question 20

Distinctions between partner’s right to specific partnership property and partner’s interest in the partnership.

1. What is assignable and what is not.
2. What can Be Attached by Personal Creditors and cannot be attached.

Answer 20

1. A partner cannot assign a partner’s right to specific partnership property, but he can assign his partner’s interest in the partnership.
2. A partner’s personal creditor cannot attach a partner’s right to specific partnership property, but such creditor can attach the partner’s interest in the partnership.

The partner’s interest in the partnership refers to their economic interest—specifically, their share in the profits and losses, and their right to receive distributions.

Question 21

Rules for application of payment when a person owes separate demandable debts to the partnership and to the partner authorized to receive also known as managing partner.

1. If the partner authorized to receive issues the receipt for the partnership, payment shall be applied to the ____________-.
2. If the partner authorized to receive issues his own receipt, payment shall be applied to the ____________.
3. If the debt to the partnership is not yet due, the payment shall be applied to the ____________.
4. If the debt owed to the partner is more onerous, the selection by the debtor of the more onerous debt as to the application of payment shall be followed.

Answer 21

1. partnership credit in its entirety
2. partnership credit and partner’s credit proportionately
3. partner’s credit in its entirety

Question 22

Preference of credits of partnership creditors and partner’s creditors

a. The partner’s personal creditors have preference over the ____________.
b. The partnership’s creditors have preference over the ____________.
c. Partner’s separate creditor shall be paid out of the share of the partner owing him if there is an excess in the partnership’s assets over partnership’s liabilities.
d. Partnership creditors shall be out first using partnership’s separate assets.

Answer 22

a. partner’s personal assets
b. partnership’s assets

Question 23

1. Partnership ____________ refers to the point when all the business or affairs of the partnership are completely wound up.
2. Partnership ____________ is the process of settling the disputes or affairs of the partnership after dissolution or winding up of the partnership business.
3. Partnership ____________ is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business.

Answer 23

1. Termination
2. Liquidation
3. Dissolution

Question 24

Causes of dissolution of a partnership without violation of the agreement of the parties: (automatic causes)
Extrajudicial Causes of Dissolution (W/o court intervention)

1) By the termination of the definite term or particular undertaking specified in the agreement.
2) By the express will of all the partners who have not assigned their interests or suffered them to be charged for their separate debts, either before or after the termination of any specified term or undertaking.
3) By the expulsion of any partner bona fide or in good faith from the business in accordance with such power conferred by the agreement of the parties.

Answer 24

familiarize

✌️ 2) By the express will of all the partners
Who have not assigned their interests or had them charged for personal debts, either before or after the term or undertaking ends.
🔍 What It Means:
If all partners (who still have full rights) agree to dissolve the partnership, it can end—even if the term hasn’t expired or the project isn’t finished.
Partners who assigned their interest or had it attached by creditors are excluded from this decision.

🧪 Sample Scenario:
“EcoBuild Ventures” is a partnership formed to run for 10 years. After 6 years, all partners—Liam, Bea, and Carlo—decide to dissolve the partnership early. ✅ They can do so automatically, as long as:
None of them assigned their partnership interest to outsiders.
None had their interest seized by personal creditors.
This respects the principle of mutual consent among active partners.

☑️ 3) By the expulsion of any partner in good faith
In accordance with a power granted by the partnership agreement.
🔍 What It Means:
If the partnership agreement allows for expulsion, and it’s done in good faith, the partnership dissolves.
This reflects the principle of delectus personae—partners must trust each other.
🧪 Sample Scenario:
“BrightLens Studios” is a creative partnership. The agreement states that any partner who commits plagiarism may be expelled. Partner Dino is caught copying copyrighted work. The other partners expel him in good faith, following the agreement.
✅ This leads to automatic dissolution, unless the remaining partners agree to continue with a restructured partnership.

Question 25

identify if it's a(n) a. Non- automatic cause of dissolution (Grounds for court-ordered dissolution of partnership/Judicial cause); OR b. Automatic cause of dissolution (By operation of law) 1) In contravention of the agreement between the partners, by the express will of any partner at any time such as withdrawing from the partnership. 2) A partner becomes in any way incapable of performing his part in the partnership contract. 3) A partner has been guilty of such conduct as tend to affect prejudicially the carrying on of the business. 4) Loss before/after delivery of property where the partner contributed only its use or enjoyment or in case of universal partnership of profits. 5) The business of the partnership can be carried only at a loss.

Answer 25

1. b 2. a 3. a 4. b 5. a

Question 26

identify if it's a(n) a. Non- automatic cause of dissolution (Grounds for court-ordered dissolution of partnership/Judicial cause); OR b. Automatic cause of dissolution (By operation of law) 1) A partner has been declared insane in any judicial proceeding or is shown to be of unsound mind. 2) By the death of any partner. 3) By the insolvency of any partner. 4) By the insolvency of the partnership. 5) By the civil interdiction of any partner.

Answer 26

1. a 2. b 3. b 4. b 5. b

Question 27

identify if it's a(n) a. Non- automatic cause of dissolution (Grounds for court-ordered dissolution of partnership/Judicial cause); OR b. Automatic cause of dissolution (By operation of law) 1) When any event makes it unlawful for the business of the partnership to be carried on or for the members to carry it on in partnership. 2) Loss before delivery of specific thing, which a partner has promised to contribute to the partnership or in case of universal partnership of all present property. 3) A partner willfully or persistently commits a breach of the partnership contracts. 4) Other circumstances that render dissolution equitable.

Answer 27

1. b 2. b 3. a 4. a

Question 28

Limited Partnership 1. Formality of Limited Partnership - A certificate of ____________ must be signed under oath by the partners and must be recorded with the SEC for it to be considered a limited partnership. 2. Effect if there is no substantial compliance with the registration of certificate of limited partnership with the SEC. The partnership will be considered a ____________ as to third persons. 3. Contribution allowed to a pure limited partner a. b. c. 4. Instances when a limited partner is liable pro-rata and subsidiarily like a general partner to the partnership creditors: a. b. Fact: Limited partner's interest is assignable.

Answer 28

1. limited co-partnership 2. general partnership 3. a. Cash b. Personal property c. Real property 4. a. If he allows his name to be included in the partnership name contrary to allowed instances of law. b. If he takes part in the control or management of the business.

Question 29

1. Generally, a contract of partnership is: A. A preparatory and a consensual contract B. An aleatory and a consensual contract C. A preparatory and a formal contract D. An aleatory and a formal contract 2. A, B, and C formed ABC Partnership. They are also the major stockholders of ABC Corporation. Which of the following statements is true. A. ABC Partnership is a person separate and distinct from A, B, and C. This is not true with ABC Corporation. B. ABC Corporation is a person separate and distinct from A, B, and C. This is not trie with ABC Partnership. C. ABC Corporation and ABC Partnership are considered as a person separate and distinct from A, B, and C, but the law treats ABC Corporation and ABC Partnership as one entity D. ABC Corporation and ABC Partnership are considered as a person separate and distinct from A, B, and C. Further, the law treats ABC Corporation and ABC Partnership as separate from each other. 3. As distinguished from a partnership, a joint venture: A. Generally relates to a continuing business B.. Is usually limited to a single transaction C. Does not allow corporations to become venturers D. Operates with legal personality 4. As distinguished from a corporation, a partnership: A. Is created by agreement of the parties and not by operation of law B. Is created by operation of law and not agreement of the parties C. Distributed its profit to those who contributed capital to the business D. Does not distribute its profits to those who contributed capital to the business 5. As distinguished from stockholders of a corporation, the partners of a partnership: A. Have limited liability B. Have unlimited liability C. Cannot generally exercise management of the partnership unless appointed as managing partners D. May transfer his interest without consent of the partners

Answer 29

1. A 2. D 3. B 4. A. 5. B

Question 29

6. Statement 1: The partnership can exist even before the existence of a common fund. Statement 2: In order to constitute a partnership, there must be an actual profit to be divided. A. Only statement 1 is true. B. Only statement 2 is true. C. Both statements are true. D. Both statements are not true. 7. What is the primary purpose of establishing a partnership? A. To contribute money, property, or industry B. To establish a common fund C. To obtain profits and divide the same among the parties D. To conduct a business and practice a profession 8. Henry and Ian are the heirs of Gary. Gary passed onto both Henry and Ian an undivided parcel of land measuring 500 square meters. Pending the settlement of the estate, the parcel of land earned income amounting to P2,000,000 which Henry and Ian split in half amongst themselves. Is there a partnership between Henry and Ian? A. Yes. Co-ownership is a form of partnership B. No. Co-ownership does not of itself establish a partnership. C. Yes. The fact that there is sharing of profits is the hallmark of a partnership. D. No. Such is not registered with the Securities and Exchange Commission. 9. In which of the following cases is receipt by a person of a share in the profits a prima facie evidence that he is a partner? A. Receipt as payment of debt by installment B. Receipt as one of the managing professionals of professional firm C. Receipt by way of rent to a landlord D. Receipt of wages of an employee 10. In a universal partnership of all profits, which of the following is contributed? I. Ownership of all the property II. All that may be acquired by the partners by their industry or work III. Usufruct over the property of the partners A. I and III only. B. II only. C. I and II only. D. II and III only.

Answer 29

6. A 7. C 8. B 9. B 10. D

Question 29

11. Bobby and Teddy entered into a universal partnership of all present property. After the constitution of the partnership, Bobby inherited from her grandmother a parcel of land amounting to P20,000,000. Subsequently, the parcel of land earned P2,500,000 after being inherited by Bobby. Which of the following is true? A. Bobby and Teddy may stipulate that the parcel of land and the income from such property be included in the composition of the universal partnership. B. Bobby and Teddy may stipulate that the parcel of land be included in the composition of the universal partnership, but not the income from such C. Bobby and Teddy may stipulate that the income from the parcel of land be included in the composition of the universal partnership, but not the parcel of land itself. D. Bobby and Teddy cannot stipulate that the parcel of land and the income from such property be included in the composition of the universal partnership. 12. Jane, Karen, and Lucy formed a partnership for a fixed term of two (2) years. After two years, Jane, Karen, and Lucy continued the partnership without any express agreement. Which of the following statements is true? A. Any contract that the partners may enter into after the two year period is unenforceable for being entered into with lack of authority. B. Any contract that the partners may enter into after the two year period is voidable because of the defect in the consent of the partnership. C. Any contract that the partners may enter into after the two year period is void since there is no more partnership to speak of. D. Any contract that the partners may enter into after the two-year period is valid since the continuation after the expiration of the term constitutes renewal. 13. Which of the following partnership has complied with all the requisites for its lawful establishment? A. Partnership de facto B. Partnership de jure C. Open partnership D. Universal partnership 14. It is a partner who does not take active part in the business of the partnership, but may be known to be a partner by third persons A. Secret partner B. Silent partner C. Dormant partner D. Ostensible partner 15. When immovable property or real rights are contributed, the partnership contract: A. May be entered into orally B. Must be in writing C. Must appear in a public instrument D. Must appear in a public instrument with an affidavit of good faith

Answer 29

11. C 12. D 13. B 14. B 15. C.

Question 30

21. Paul, Peter, John, and Lucas formed a partnership. Paul owns 10% owns 15%. Paul and Peter were delegated as managing partners without a stipulation as to their specific duties. Paul seeks to bind the partnership by entering into a contract of sale of merchandise. Peter opposed. For the sale to be allowed, A. Peter must vote in favor of the contract. B. Paul, John and Lucas must vote in favor of the contract. C. All of the partners must vote in favor of the contract. D. No vote required. Paul is authorized to bind the partnership 22. In case there is a stipulation that none of the managing partners shall act without the consent of others: A. The concurrence of all is necessary for the validity of the acts. B. The concurrence of majority of the number of partners is necessary for the validity of the acts C. The concurrence of the controlling interest in the partnership is necessary for the validity of the acts. D. The stipulation is void. 23. When the manner of management is not agreed upon: A. The party who has the controlling interest will be considered as the agent of the partnership. B. All capitalist partners will be considered as agents of the partnership C. All industrial partners will be considered as agents of the partnership D. All partners will be considered as agents of the partnership 24. Felix George, and Heidi are partners of FGH Partnership. FGH Partnership, through Felix, entered into a service contract with JKL Accounting Firm whereby JKL Accounting Firm will provide payroll services to the partnership. The service contract provides a stipulation that no party shall terminate the contract without a 30-day prior notice. Subsequently, a letter from JKL Accounting Firm was received by Heidi, stating that the service contract is being terminated 30 days after date of receipt of the letter. Thirty days have passed and JKL Accounting Firm Shocked, Felix questioned the cessation of the required work as it is effectively stopped rendering accounting services to FGH Partnership. Partnership. Felix sued JKL Accounting Firm for damages for failure to seriously hampering the giving out of salaries of the employees of FGH comply with the 30-day notice rule. Is JKL Accounting Firm liable? A. Yes. The notice should have been sent to all the partners. B. Yes. The notice should have been sent to Felix, the person who has contracted with JKL Accounting Firm. C. No. Notice to Heidi is notice to the entire partnership. D. No. Even without a 30-day prior notice, rescission is a remedy in contracts of sale of services. 25. Which of the following should first be considered in determining how profits and losses shall be distributed? A. Agreement B. Whether the partners are capitalist or industrial C. Amount of capital contribution D. Amount of interest in the partnership

Answer 30

21. B 22. A 23. D 24. C 25. A

Question 31

16. The partnership contract must appear in a public instrument where the capital is: A. At least P3,000 B. More than P3,000 C. At least P5,000 D. More than P5,000 17. Generally, a contract of partnership: A. Can be entered into in any form B. Is required to be in writing C. Is required to be in a public instrument D. Requires delivery of the money and property to be contributed for its perfection 18. Failure to comply with the requirement for a partnership contract to appear in a public instrument where the amount of capital is at least P3,000: A. Will result to the invalidation of the contract of partnership B. Will not affect the liability of the partnership and the the partners with third persons C. Will not be able to produce any legal effect with respect to the contracts of the partnership with third persons D. Will make the managing partner liable for damages to the partners in good faith 19. The managing partners may be appointed: A. Only in the articles of partnership B. Only after constitution of the partnership C. Either in the articles of partnership or after constitution of the partnership D. In the articles of partnership and after constitution of the partnership 20. Severus, Albus, and Harry entered into a contract of partnership for the establishment of a wizardry shop. The articles of partnership did not specify who the managing partners are. Subsequent to the constitution of the partnership, Severus was appointed by the partners as the managing partner. Subsequently, Harry wanted to take over the management of the business. Albus agrees. Harry and Albus holds the controlling interest in the partnership. Can Harry and Albus remove Severus as the managing partner? A. No. The facts do not show in any just or lawful cause B. Yes. The partners may do so at any time and for any cause . C. No. Severus has a vested right over the management of the partnership D. Yes. The removal is subject to approval by the Securities and Exchange Commission

Answer 31

16. A 17. A 18. B 19. C 20. B

Question 32

26. When an unlawful partnership is dissolved by a judicial decree, the profits: a. Shall be confiscated in favor of the State b. Shall be given to the partner who did not know of the illegality c. Shall be distributed to each of the partners less payment of penalties d. Shall be distributed to each of the partners 27. Who among the following is not liable for losses? a. Capitalist partner b. Industrial partner c. General partner d. Limited partner 28. Statement 1: A stipulation excluding one or more partners from any share in the profits or losses is void. Statement 2: If only the share in the losses has been stipulated, the share in the profits shall be in the same proportion. a. Only Statement 1 is true. b. Only Statement 2 is true. c. Both statements are true. d. Both statements are not true. 29. Upon exhaustion of the partnership assets in a partnership with all general partners: a. All partners are liable pro rata and subsidiarily with their personal property b. All partners are liable pro rata and primarily with their personal property c. All partners, except industrial partners, are liable pro rata and primarily with their personal property d. All partners, except industrial partners, are liable pro rata and subsidiarily with their personal property 30. Ned, Ophelia and Patrick are partners in NOP Partnership. Subsequently, Quincy was admitted to the partnership. At the time of her admission, NOP Partnership already had a debt of P200,000 to Randy. Subsequently, the partnership was dissolved and liquidated, and the partnership's debt to Randy ballooned to P500,000. After the partnership's assets were exhausted, the remaining amount due to Randy was P350,000. Can Randy collect from the personal assets of Quincy? a. Yes, but only to satisfy the P150,000 debt incurred after Quincy's admission. b. Yes, to satisfy the P350,000 debt to Randy c. No, since there is no stipulation allowing Randy to collect from Quincy d. No, Quincy's capital contribution and her personal assets shall not be used to satisfy the debt to Randy

Answer 32

26. A 27. B 28. A 29. A 30. A

Question 33

31. Statement 1: Any stipulation against individual liability of the partners is valid against third persons. Statement2: Any stipulation against individual liability of the partners is void among partners. a. Only Statement 1 is true b. Only Statement 2 is true. c. Both statements are true d. Both statements are not true 32. Mario, Luigi and Peach are partners in MLP Partnership. The partnership was established for the purpose of carrying a furniture business. The managing partner designated is Mario. Luigi, representing himself as a partner in MLP Partnership, contacted Xavier, who is an operator of a dormitory. He was able to convince Xavier to purchase 1,000 pieces of furniture at a discounted price. Mario, noting that the contract Luigi entered is prejudicial to the partnership, seeks to not bind the partnership on the contract. Is MLP Partnership bound by the contract entered into by Luigi? a. Yes, considering that what Luigi did is merely an act of dominion which is covered by his authority as a partner b. Yes, considering that his is a apparently for the carrying on of the usual business of the partnership c. No, considering that Luigi is not a managing partner d. No, considering that Luigi exceeded his authority by entering into a contract prejudicial to the interest of the partnership and the partners. 33. Statement 1: Partners representing the controlling interest are authorized to enter into a compromise concerning a partnership claim of liability. Statement 2: Partners representing the controlling interest are authorized to dispose of the goodwill of the business. a. Only Statement 1 is true b. Only Statement 2 is true. c. Both statements are true d. Both statements are not true 34. The partnership can recover real property conveyed by any partner in the name of partnership when: a. The grantee does not have knowledge that the partner exceed his authority and the grantee is a holder for value b. The partner has authority to carry out the usual business of the partnership c. The real property has been conveyed by the grantee to a holder for value d. The person claiming the right under the grantee does not know that the partner has exceeded his authority. 35. Melissa, Hero and Sandara are partners of MHS Partnership. MHS Partnership has a long-time supplier named Direk. Direk made his payment for the merchandise he brought to Sandara for P300,000, considering that for years, it was Sandara who had collected the amounts with no problems. However, Sandara used the funds for her European tour. Can the partnership recover from Direk? a. No. The partnership is liable for loss because Sandara was acting within the scope of her apparent authority. b. Yes. Direk is liable for loss because Sandara was acting within the scope of her apparent authority. c. No. The partnership is liable for loss because there was no showing that Sandara was not authorized to collect from Direk. d. Yes. Direk is liable for loss because Derek should have known that Sandara was not authorized to collect from DIrek.

Answer 33

31. D 32. B 33. D 34. A 35. A

Question 34

36. For wrongful acts of a partner in the ordinary course of the business of the partnership which causes loss or injury to any person a. Only the erring partner is liable b. Only the partnership is liable c. Both the erring partner and the partnership is liable, jointly d. Both the erring partner and the partnership is liable, solidarily 37. Brienne, Charlie and Dina are friends. Brienne and Charlie are known to Dina as coming from wealthy families, so Dina, misrepresenting herself to be partners of Brienne and Charlie, approached Elise and told Elise that they are engaged in the buying and selling of ivory statues. Elise call Charlie, and Charlie confirmed that he, together with Brienne and Dina, is indeed engaged in such business. Elise, interested in interior decorations, gave P320,000 to Dina for the latter to purchase ivory statues. Subsequently, Dina failed to deliver. From the facts, who is liable for the contract with Elise? a. No one b. Dina only c. Charlie and Dina only d. Brienne, Charlie and Dina 38. Statement 1: Partnership creditors are preferred on partnership property. Statement 2: Partner's individual creditors are preferred on partners' individual property. a. Only Statement 1 is true. b. Only Statement 2 is true. c. Both statements are true. d. Both statements are not true. 39. It is the change in the relation of the partners caused by any partners ceasing to be associated in the carrying on of the business. a. Winding up b. Liquidation c. Termination d. Dissolution 40. Which of the following loss would dissolve a partnership by operation of law? a. Loss of a generic thing which a partner had promised to contribute before delivery b. Loss of a specific thing which a partner had promised to contribute before delivery c. Loss of a generic thing which a partner had promised to contribute after delivery d. Loss of a specific thing which a partner had promised to contribute after delivery

Answer 34

36. D 37. C 38. C 39. D 40. B.

Question 35

41. Which of the following does not dissolve a partnership by operation of law? a. Death of any partner b. Insolvency of a partner c. Civil interdiction of a partner d. Absence of a partner 42. Statement 1: The courts can declare a partnership dissolved. Statement 2: A partner acting in good faith may unilaterally cause the dissolution of a partnership a. Only Statement 1 is true. b. Only Statement 2 is true. c. Both statements are true. d. Both statements are not true. 43. Andres, Jose, and Marcelo are partners of AJM Partnership. One of their long-time suppliers is Emilio. On October 30, 2020, the partners decided to discontinue the partnership. Days after the dissolution, Jose entered into a contract with Emilio for the purchase of supplies. Emilio did not have personal notice of the dissolution of the partnership, but two days before, Andres had caused the dissolution to be advertised in a newspaper of general circulation. Does the contract with Emilio bind the partnership? a. Yes, because Emilio did not have personal notice of the dissolution. b. Yes, because the law requires that the dissolution be advertised in a newspaper of general circulation thrice. c. No, because the dissolution was already advertised in a newspaper of general circulation d. No, because even without the publication, the partnership has no longer juridical and legal existence. 44. Aside from the partner designated in the agreement or those who have not wrongfully dissolved the partnership, who else can wind up the partnership affairs? a. The partner owning controlling interest b. The legal representative of the last surviving solvent partner c. The spouse of the partner who has not wrongfully dissolved the Partnership d. The industrial partners who must also be managing partner 45. The limited partners: A. Shall not be bound by the obligation of the partnership. Their capital contribution shall not be used to satisfy partnership debts. However, their personal assets may be used to satisfy partnership debts. B. Shall not be bound by the obligations of the partnership. Their personal assets shall not be used to satisfy partnership debts. However, Their capital contribution may be used to satisfy partnership debts. C. Shall not be bound by the obligations of the partnership. Their capital contribution shall not be used to satisfy partnership debts. However, Their personal assets may be used to satisfy partnership debts. D. Shall be bound by the obligations of the partnership.

Answer 35

41. D. 42. C 43. C 44. B 45. B

Question 36

46. A limited partnership: A. shall have no general partners. B. shall have two or more limited partners C. shall have one or more limited partners D. shall have equal number of general and limited partners. 47. Statement 1: A limited partner has no right to participate in the management of the partnership. Statement 2: A limited partner cannot become an industrial partner. A. Only statement 1 is true B. Only Statement 2 is true. C. Both statements are true. D. Both statements are not true. 48. Failure to file the certificate required for a limited partnership with the Securities and Exchange Commission: A. The partnership becomes a general partnership. B. The partnership becomes a general partnership, but only with respect to the third persons. C. The partnership becomes a general partnership, but only with the respect to the partner themselves D. The partnership does not obtain legal existence. 49. Which of the following acts may not be done by a limited partner? A. Loan money to the partnership B. Inspect and copy the partnership books at a reasonable time C. Assign a substituted limited partner D. Receive or hold as collateral security any partnership property 50. In the settlement of accounts of a limited partnership upon dissolution, which of the following is the correct order of payment after satisfaction of creditors' claims? I. Those to general partners, in respect to their share of the profits II. Those to general partners, in respect to their capital contribution III. Those to limited partners, in respect to their share of the profits IV. Those to limited partners, in respect to their capital contribution A. III, I, IV, II B. III, IV, I , II C. I, II, III, IV D. I, III, II, IV

Answer 36

46. C 47. C 48. B 49. D 50. A

Question 36

1. Partnership as distinguished from corporation a. Acquires juridical personality upon approval by the SEC and issuance of certificate b. Has limited liability c. Created by operation of law d. No power of succession 2. Essential elements or feature of a partnership, except a. Must have a lawful object or purpose b. There must be a contribution of money, property or industry to a common fund c. With intention to divide and contribute whatever profits they make to other people d. Must be established for the common benefit or interest of the partners 3. One of the following is not a characteristic of contract of partnership a. Real, in that the partners must deliver their contributions in order for the partnership contract to be perfected b. Principal, because it can stand by itself c. Preparatory, because it is a means by which other contracts will be entered into d. Onerous, because the parties contribute money, property or industry to the common fund 4. One of the following is not a requisite of a contract of partnership. Which is it? a. There must be a valid contract b. There must be a mutual contribution of money, property or industry to a common fund c. It is established for the common benefit of the partners which is to obtain profits and divide the same among themselves d. The articles are kept secret among the members 5. The minimum capital in money or property except when immovable property or real rights thereto are contributed, that will require the contract of partnership to be in a public instrument and be registered with SEC a. P5,000 b. P10,000 c. P3,000 d. P30,000

Answer 36

1 D 2 C 3 A 4 D 5 C

Question 37

6. A and B put up a partnership to engage in distribution of books and school supplies. A contributed P1M while B his services. A wants to put up a restaurant on the opposite side of the street. On the other hand, B wants to have a bakery beside A’s restaurant. Which of the following is correct? a. A may put up his restaurant without need of securing B’s consent b. B may put up his bakery without need of securing A’s consent c. Both A and B can put up their restaurant and bakery businesses without the need of securing each other’s consent d. Neither A nor B can put up another business. 7. A and B entered into a universal partnership of all present property. At the time of their agreement, A had a four-door apartment which he inherited from his father 3 years earlier. B, on the other hand, had a fishpond which he acquired by dacion en pago from C. During the first year of the partnership, rentals collected on the four-door apartment amounted to P480,000; while fish harvested from the fishpond were sold for P300,000. During the same period, B received by way of donation a vacant lot from an uncle. The partners had a stipulation that future property shall belong to the partnership. Which of the following does not belong to the common fund of the partnership? a. Fishpond b. Rental of P480,000 c. Apartment d.Vacant land 8. A and B entered into a universal partnership of profits. At the time of execution of the articles of partnership, A had a two-door apartment which he inherited from his father 3 years earlier. B on the other hand, had a fleet of taxis which he purchased two years before. In the first year of the partnership, A earned P500,000 as a radio talent while B won P1,000,000 in the lotto. During the same period, rentals of P120,000 were collected from the apartment, while fare revenues of P200,000 were realized from the operation of the fleet of taxis. Which of the following belongs to the partnership? a. Two-door apartment b. Lotto winnings of P1,000,000 c. Salary of P500,000 d. Fleet of taxis 9. A partnership formed for the exercise of a profession which is duly registered is an example of a. Universal partnership of profits b. Universal partnership of all present property c. Particular partnership d. Partnership by estoppel 10. A, B and C are partners in CAB Enterprises. Not having established yet their credit standing, the three partners requested D, a well known businessman, to help them negotiate a loan from E, a money lender. With the consent of A, B and C, D represented himself as a partner of CAB Enterprises. Thereafter, E granted a loan of P150,000 to CAB Enterprises. What kind of partner is D? a. Managing partner b. Liquidating partner c. Ostensible partner d. Partner by estoppel

Answer 37

6 A 7 D 8 C 9 C 10 D

Question 38

11. Using the preceding number, assuming that CAB Enterprises was unable to pay the loan on due date at which time the assets of the partnership amounted only to P120,000. From whom may E collect the payment? a. D only for the whole amount of P120,000 b. A, B and C who are liable jointly for P50,000 each c. CAB Enterprises for its assets of P120,000; thereafter, A, B and C from their separate property at P10,000 each d. CAB Enterprises for its assets of P120,000 thereafter, A, B, C and D from their separate assets at P7,500 each 12. A partner can engage in business for himself without the consent of his co-partners if he is a. A capitalist partner whether or not the business he will engage in is of the same kind as or different from the partnership business b. An industrial partner whether or not the business he will engage in is of the same kind as or different from the partnership business c. A capitalist partner and the business he will engage in is of a kind different from the partnership business d. An industrial partner and the business he will engage in is of a kind different from the partnership business 13. The partnership will bear the risk of loss of three of the following things, except a. Things contributed to be sold b. Fungible things or those that cannot be kept without deteriorating c. Non-fungible things contributed so that only their use and fruits will be for the common benefit d. Things brought and appraised in the inventory 14. A partner’s interest in the partnership is his share of the profits and surplus which he may assign to a third person. Which of the following statements concerning such right is correct? a. The conveyance of a partner’s interest will cause the dissolution of the partnership b. The assignee becomes a partner c. The assignee has a right to interfere in the management of the partnership business d. The assignee has the right to receive the profits which the assigning partner would otherwise be entitled thereto 15. A partnership which comprises all the profits that the partners may acquire by their work or industry during the existence of the partnership is called: a. Universal partnership of all present property b. Universal partnership of profits c. Particular partnership d. Partnership at will

Answer 38

11 D 12 C 13 C 14 D 15 B

Question 39

16. A partnership whereby the partners contribute to a common fund all the property actually belonging to them at the time of the constitution of the partnership, with the intention of dividing the same among themselves, as well as the profits which they may acquire therewith is: a. Universal partnership of all present property b. Universal partnership of profits c. Particular partnership d. Partnership at will 17. A partnership without a definite period of existence and which can be dissolved at any time by any of the partners is called: a. Universal partnership of all present property b. Universal partnership of profits c. Particular partnership d. Partnership at will 18. A, B and C, capitalist partners, each contributed P10,000 and D, the industrial partner contributed his services. Suppose X, is the creditor of the firm amounting to P90,000. After getting the P30,000 capital assets of the partnership, which is correct? a. X can recover P20,000 each from A, B and C only b. X can recover P60,000 from either A or B or C c. X can recover P15,000 each from A, B, C and D d. X can recover P15,000 each from A, B and C but D is exempt because he is an industrial partner. 19. A, B and C are partners. D is admitted as a new partner. Will D be liable for partnership obligations contracted prior to his admission to the partnership? a. No, only for those contracted after his admission b. Yes, and his liability would extend to his own individual property c. Yes, but his liability will extend only to his share in the partnership property and not to his own individual property d. Yes, as if he had been an original partner 20. A partner who has all the rights, powers and subject to all the restrictions of a general partner but whose liability is, among themselves, limited to his capital contribution is: a. General partner c. General-limited partner b. Limited partner d. Dormant partner

Answer 39

16 A 17 D 18 C 19 C 20 C

Question 40

21. Bears the risk of things contributed to the partnership: a. General partner b. Limited partner c. Partner contributing usufructuary rights over fungible things d. Partner contributing usufructuary rights over non-fungible things 22. A, B and C, are capitalist partners, each contributed P10,000. After exhausting the assets of the firm, the firm’s indebtedness amounts to P90,000. It was stipulated that A would be exempted from liability. Which is correct? a. A may recover his original capital of P10,000 b. The creditors may collect P30,000 each from A, B, and C c. A can recover P20,000 each from B and C should he be required to pay the creditors d. The creditors can recover P45,000 each from B and C. 23. Instances when a partnership is unlawful, except a. A partnership formed to furnish apartment houses which would be used for prostitution b. A partnership formed for the purpose of acquiring parcels of land c. A partnership formed for gambling purposes d. A partnership formed to create illegal monopolies or combinations in restraint of trade 24. A and B orally agreed to form a partnership two years from today, each one to contribute P1,000. If at the arrival of the period, one refuses to go ahead with the agreement, can the other enforce the agreement? a. Yes, because the partnership contract is not governed by the Statute of Frauds b. Yes, because the prior agreement was voluntarily made c. No, because the agreement was merely oral and executory d. No, since the agreement is to be enforced after one year from the making thereof, the same should be in a public instrument to be enforceable 25. Where at least one partner is a general partner and the rest are limited partners a. General partnership c. Partnership de facto b. Partnership by estoppel d. Limited partnership

Answer 40

21 D 22 B 23 B 24 C 25 D

Question 40

41. Partner who is not really a partner but who may become liable as such insofar as third persons are concerned a. Nominal b. Ostensible c. Silent d. Secret 42. Which of the following losses will not cause the dissolution of a partnership? a. Loss before delivery of a specific thing which a partner had promised to contribute to the partnership b. Loss of a specific thing after its delivery to and acquisition of its ownership by the partnership from the partner who contributed the same c. Loss after delivery of a specific thing where the partner contributed only its use and enjoyment, where such partner reserved the ownership thereof d. Loss before delivery of a specific thing where the partner promised to contribute only its use and enjoyment, reserving the ownership thereof 43. A newly admitted general partner is liable to creditors existing at the time of his admission and his liability is a. Up to his capital contribution only if there is stipulation. b. Up to his separate property even if there is no stipulation. c. Up to his capital contribution even if there is stipulation. d. Up to his separate property only if there is stipulation. 44. Using the preceding number, but the obligations were contracted after his admission, which of the following is correct? a. He is liable to the creditors before and after his admission up to his separate property b. He is liable to the creditors before and after his admission only up his capital contribution c. He is liable to the creditors before his admission up to his capital contribution and to the creditors after his admission up to his separate property. d. He is not liable to creditors existing before his admission 45. A and B are partners engaged in the real estate business. A learned that C was interested in buying a certain parcel of land owned by the partnership, even for a higher price. Without informing B of C’s offer A was able to convince B to sell to him (A) his (B’s) share in the partnership. Then A sold the land at a big profit. Which of the following is correct? a. A is liable to B for the latter’s share in the profit b. C is liable to B for the latter’s share in the profit c. A new partnership is formed between A and C d. The sale of the land to C is void since it was without the knowledge of B.

Answer 40

41 A 42 B 43 D 44 C 45 A

Question 41

26. Where all the partners are general partners a. Partnership by estoppel b. Limited partnership c. Partnership de facto d. General partnership 27. A, B, and C are partners each contributing P10,000. The firm’s indebtedness amounts to P90,000. It was stipulated that A would be exempted from liability. Assuming that the capital of P30,000 is still in the firm, which of the following is not correct? a. The creditors may get the P30,000 and still collect each 20,000 from A, B and C. b. A can recover P10,000 each from B and C should he (A) be required to pay the creditors. c. A cannot recover his original capital of P10,000. d. The creditors can recover P45,000 each from B and C. 28. May be required to make additional contribution in case of imminent loss: a. Capitalist partner b. Limited partner c. Industrial partner d. a, b, and c 29. May contribute money, property or industry to the common fund: a. Limited partner c. Both limited and general partners b. General partner d. Dormant partner 30. Partner who contributes money and / or property, except a. General b. Capitalist c. Industrial d. Managing

Answer 41

26 D 27 D 28 A 29 B 30 C

Question 41

31. Partner who contributes industry or labor a. General b. Capitalist c. Industrial d. Managing 32. Partner who contributes both capital and industry a. General b. Limited c. Managing d.Capitalist-industrial 33. Partner who is liable beyond the extent of his contribution a. General b. Limited c. Industrial d. Silent 34. Partner who is liable only to the extent of his contribution a. Limited b. General c. Industrial d. Managing 35. Partner who manages actively the firm’s affairs a. Silent b. Liquidating c. Managing d. Dormant

Answer 41

31 C 32 D 33 A 34 A 35 C

Question 42

36. Partner who does not participate in the management though he shares in the profits or losses a. Liquidating b. Nominal c. Ostensible d. Silent 37. Partner who winds up the affairs of the firm after it has been dissolved a. Liquidating b. Managing c. Industrial d. Capitalist 38. Partner whose connection with the firm is known to the public a. Ostensible b. Secret c. Silent d. Nominal 39. Partner whose connection with the firm is concealed or kept a secret a. Ostensible b. Secret c. Silent d. Nominal 40. Partner who is both a secret and silent partner a. Nominal b. Ostensible c. Limited d. Dormant

Answer 42

36 D 37 A 38 A 39 B 40 D

Question 43

46. A and B are partners in a real estate business. A and B were approached by X who offered to buy a parcel of land owned by the partnership. Thereafter B sold to A, B’s share in the partnership. Then A sold the land to X at a big profit. Which is correct? a. The sale of the land to X is void b. A is liable to B for B’s share in the profits c. B may rescind the contract between A and X d. A is not liable to B for any share in the profits 47. The following persons are disqualified to form a universal partnership, except a. Husband and Wife b. Brother and sister c. Those guilty of adultery and concubinage d. Those guilty of the same criminal offense, if the partnership is entered into in consideration of the same. 48. A, B and C are capitalist partners while D is an industrial partner. A, the managing partner engaged personally in a business that is the same as the business of the partnership without the consent of the other partners. As a result, a. If there are losses, the partnership will bear the losses b. If there are profits, the profits will be shared by A and the partnership c. If there are profits, A will give the profits to the partnership d. A will be excluded from the partnership and will pay damages 49. A, a managing partner is B’s creditor to the amount of P1,000 already demandable. B also owes the partnership P1,000, also demandable. A collects P1,000 from B. One is not correct. a. If A gives a receipt for the partnership it is the partnership’s credit that has been collected b. If A gives a receipt for his own credit, it is A’s credit that has been collected c. If A gives a receipt for his own credit, P500 will be given to him, P500 to the partnership d. B may decide that he is paying only A’s credit if the personal credit of A is more onerous to B. 50. The remedy of capitalist partners against an industrial partner who engaged in a business for himself without the expressed permission from the partnership is: a. To compel him to sell his interest to the said capitalist partners. b. To exclude him from sharing in the profits of the partnership. c. To remove him as manager if he is appointed as manager of the partnership. d. To expel him from the partnership and claim for damages.

Answer 43

46 D 47 B 48 C 49 B 50 D

Question 43

51. A and B are equal partners in AB Partnership by contributing P50,000 each on June 1, 2010. On July 1, 2010, the partnership contracted an obligation to pay Z the amount of P180,000 on August 31, 2010. On August 10, 2010, C was admitted as a new partner. C contributed P50,000. How will the obligation be paid? a. A P60,000; B P60,000; C P60,000 b. A P90,000; B P90,000; C None c. A P180,000 or B P180,000 and C P50,000 d. A P65,000; B P65,000; C P50,000 52. A, B, and C are equal partners in ABC Partnership. On April 29, 2011, C died. Not knowing that C is dead, on May 2, 2011, A contracted a liability to D who also did not know about the death of C. The liability is P90,000. After D exhausted the net assets of the partnership in the amount of P60,000, he can collect. a. P30,000 from A or P30,000 from B. b. P15,000 from A and P15,000 from B. c. P10,000 from the estate of C, P10,000 from A and P10,000 from B. d. P30,000 from the estate of C or P30,000 from B or P30,000 from C. 53. A, B and C are partners. Their contributions are as follows: A, P60,000; B, P40,000 and C, services. The partners agreed to divide profits and losses in the following proportions: A, 35%; B, 25% and C 40%. If there is a loss of P10,000, how should the said loss be shared by the partners? a. A, P6,000; B, P4,000; C, nothing b. A, P3,000; B, P2,000; C , P5,000 c. A, P3,500; B, P3,500; C, P3,000 d. A, P3,500; B, P2,500; C, 4,000 54. Using the preceding no., but the partners did not agree on how to divide profits and losses. If there is a loss of P10,000, how should the said loss be shared by the partners? a. A, P6,000; B, P4,000; C, nothing b. A, P3,000; B, P2,000; C, P5,000 c. A, P3,500; B, P3,500; C, P3,000 d. A, P3,500, B, P2,500; C, P4,000 55. When the manner of management has not been agreed upon, who shall manage the affairs of the partnership? a. Capitalist partners b. Industrial partners c. Capitalist-industrialist partners d. All of the partners

Answer 43

51 D 52 C 53 D 54 A 55 D

Question 44

61. Using the preceding no. but A issued to D a receipt in the name of the partnership. How should the payment of P3,000 be applied? a. The P3,000 should be applied to the indebtedness of D to A. b. The P3,000 should be applied to the indebtedness of D to the partnership. c. P2,000 should be applied to the indebtedness of D to the partnership and P1,000 to the indebtedness of D to A. d. P1,000 should be applied to the indebtedness of D to the partnership and P2,000 to the indebtedness of D to A 62. A, B, C and D are partners. Their contributions are as follows: A, P50,000; B, P30,000; C, P20,000; D, services. The partnership incurred obligations to third persons which the firm was unable to pay. After exhausting the assets of the partnership, there still is unpaid balance of P10,000 to E. Who are liable to E for the payment of the unpaid balance of P10,000 and how much should each pay to E? a. A, P5,000; B, P3,000; C, P2,000; D, nothing b. A, P2,500; B, P2,500; C, P2,500; D, P2,500 c. A, P4,000; B, 3,000; C, P2,000; D, P1,000 d. A, P4,000; B, P4,000; C, P2,000; D, nothing 63. One or more but less than all the partners have no authority to perform the following acts, except: a. Do any act which would make it impossible to carry on the ordinary business of the partnership. b. Submit a partnership claim or liability to arbitration. c. Renounce a claim of the partnership. d. Convey partnership property in the ordinary course of partnership business. 64. A, B, and C are equal partners in ABC Partnership. The partnership is indebted to D for P150,000. Partner A is indebted to E for P20,000. D attached and took all the assets of the partnership amounting to P90,000. B and C are solvent while A is insolvent and all that he owns is a land valued at P15,000. Which is correct? a. E has priority to the land of A as a separate `creditor b. D has priority to the land of A to cover A’s share of the P60,000 remaining liability of the partnership. c. B and C have priority to the land of A if they paid D the P60,000 remaining liability of the partnership. d. D and E shall both have priority to the land of A in proportion to their claims of P60,000 and P20,000, respectively. 65. A, B and C are partners. A is an industrial partner. During the first year of operation, the firm realized a profit of P60,000. During the second year, the firm sustained a loss of P30,000. So, the net profit for the two years of operation was only P30,000. In the Articles of Partnership, it was agreed that A, the industrial partner would get 1/3 of the profit but would not share in the losses. How much will A, the industrial partner get? a. A will get only P20,000 which is 1/3 of the profit of the 1st year of operation. b. A will get only P10,000 which is 1/3 of the net profit. c. A will get only P20,000 in the first year and none in the second year. d. A will share in the loss in the second year.

Answer 44

61 B 62 B 63 D 64 A 65 B

Question 44

56. A, B, and C are partners in a partnership business. A contributed P10,000, B contributed P5,000 and C his services only. After payment of partnership debts, what remains of the partnership assets is P6,000 only. In the absence of stipulation to the contrary, the share of C will be equal to: a. That of A b. P2,000 c. That of B d. Nothing 57. A, B and C are partners in ABC Co. D owes the partnership P4,500. A, a partner, received from D a share of P1,500 ahead of partners B and C, giving D a receipt for his share only. When B and C were collecting from D, the latter was already insolvent. Which of the following is correct? a. Partner A can be required to share the P1,500 with B and C. b. A cannot be required to share the P1,500 with B and C c. B and C should automatically exhaust first all remedies to collect from D. d. B and C can automatically deduct from the capital contribution of A in the partnership, their respective share in the P1,500. 58. A partnership suffered losses in the first year of its operation. A, a capitalist partner, cannot contribute an additional share to the capital because of insolvency. Can A be obliged to sell his interest to the other partners on the ground of such refusal? a. Yes, A’s refusal to contribute additional share reflects his lack of interest in the continuance of the partnership. b. No, because there is actually no imminent loss of the business. c. Yes, provided that A is paid the value of his interest. d. No, because his refusal is justifiable. 59. Which of the following is considered prima facie evidence of the existence of a partnership? a. Where payment of interest on a loan depends on the profit of the business. b. The receipt by a person of a share in the profits. c. The sharing of gross returns of a business. d. Where the parties are established as co-owners of a property. 60. A and B are partners, with A as the managing partner. D is indebted to A in the amount of P10,000 and to the partnership in the amount of P5,000. Both debts are due and demandable. D paid A P3,000. A issued to D a receipt in his own name. How should the amount of P3,000 be applied? a. The P3,000 should be applied to the indebtedness of D to A. b. The P3,000 should be applied to the indebtedness of D to the partnership. c. P2,000 should be applied to the indebtedness of D to the partnership and P1,000 to the indebtedness of D to A. d. P1,000 should be applied to the indebtedness of D to the partnership and P2,000 to the indebtedness

Answer 44

56 D 57 A 58 D 59 B 60 D

Question 45

66. Three (3) of the following are rights of a partner. Which one (1) is not? a. Right to associate another person to his share. b. Right to admit another partner c. Right to inspect and copy partnership books d. Right to ask dissolution of the firm at the proper time For nos. 67 – 70, write: a. both statements are true b. both statements are false c. only the first is true d. only the second is true 67. A. Partnership with a capital of three thousand pesos or more, in money or property, shall appear in a public instrument, and recorded at SEC. Failure shall not affect the liability of the partnership and members thereof to third person. B. Whenever immovable property is contributed, an inventory of said property is needed, signed by the parties and attached to the public instrument, otherwise the contract of partnership is void 68. A. Co-ownership or co-possession does not in itself establish a partnership, except when such co- owners or co-possessors share in the profits made by the use of the property. B. The sharing of gross returns does not of itself establish a partnership, except when the persons sharing them have a joint or common right or interest in any property from which the returns are derived. 69. A. The receipt by a person of a share of the profits of a business is conclusive evidence that he is a partner in the business. B. A partnership of all present property is where the partners contribute all property which actually belong to them to a common fund, with the intention of dividing the same among themselves, as well as all the profits which they may acquire therewith. 70. A. In a universal partnership of all present property, the property which belong to each of the partners at the time of constitution of the partnership becomes a common fund of all partners and all profits which they may acquire therewith. A stipulation for the common enjoyment of any profits may also be made. But properties which they may acquire through inheritance, legacy, or donation cannot be included in such stipulation, except the fruits thereof. B. The universal partnership of profits comprises all that the partners may acquire by industry or work during the existence of the partnership. Movable or immovable property which each may possess at the time of the celebration of the contract shall continue to pertain exclusively to each, only the usufruct passing to the partnership.

Answer 45

66 B 67 A 68 B 69 D 70 A

Question 46

a. both statements are true b. both statements are false c. only the first is true d. only the second is true 71. A. A partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners. B. When an unlawful partnership is dissolved by a judicial decree, the profits and partners’ contributions shall be confiscated in favor of the State. 72. A. A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which case a written instrument shall be necessary. C. Every contract of partnership having a capital of three thousand pesos or more in money or property shall appear in, a public instrument which must be recorded in the office of the SEC., otherwise the partnership is void. 73. A. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property is not made, signed by the parties and attached to the public instrument. B. A universal partnership of profits is that in which the partners contribute all the property which actually belongs to them to a common fund with the intention of dividing the same among themselves, as well as the profits which they may acquired therewith. 74. A. In a universal partnership of profits, the property which belong to each of the partners at the time of the constitution of the partnership becomes the common property of all the partners, as well as all the profits which they may acquire therewith. B. A universal partnership of all present property comprises only all that the partners may acquire by their industry or work during the existence of the partnership. 75. A. A universal partnership of profits comprises all movable or immovable property which each of the partners may possess at the time of the celebration of the contract and all that the partners may acquire by their industry or work during the existence of the partnership. B. Future property by inheritance, legacy or donation, including the fruits thereof cannot be included in the stipulation regarding the universal partnership of all present property.

Answer 46

71 C 72 B 73 C 74 B 75 B

Question 47

a. both statements are true b. both statements are false c. only the first is true d. only the second is true 76. A. A and B are partners in a universal partnership of profits. Subsequently, A won first prize in the sweepstakes. The prize money will belong to the partnership. B. A and B are partners in a universal partnership of profits. Later A purchased a parcel of land. The fruits of said land belong to the partnership. 77. A. Persons who are prohibited from giving each other any donation or advantage cannot enter into universal or particular partnership. B. A partnership begins from the moment of the execution of the contract, unless it is otherwise stipulated. 78. A. If property has been promised by a partner as contribution to the partnership, the fruits arising from the time the property should have been delivered should also be given provided prior demand was made. B. A partner who has undertaken to contribute a sum of money and fails to do so becomes a debtor for the interest and damages from the time he should have complied with his obligation, without the need of any demand. 79. A. The partners shall contribute equal shares to the capital of the partnership. B. If there is no agreement to the contrary, in case of an imminent loss of the business of the partnership, any partner who refuses to contribute an additional share to the capital, to save the venture, shall be obliged to sell his interest to the other partners. 80. A. If a partner 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. B. The risk of specific and determinate things 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.

Answer 47

76 B if ang acquire og future property, dapat through industry or labor. 77 D 78 D 79 B 80 B magiging true if ang partner na yan is managing partner

Question 48

a. both statements are true b. both statements are false c. only the first is true d. only the second is true 81. A. In the absence of stipulation, the share of each partner in the profits and losses shall be equal to each other. B. A stipulation which excludes one or more partners from any share in the profits or losses is void, as a general rule. 82. A. The partner who has been appointed manager may execute all acts of administration despite the opposition of his partners, unless he should act in bad faith and his power is irrevocable without just or lawful cause. B. When the manner of management has not been agreed upon, none of the partners may, without the consent of the others, make any important alterations in the property of the partnership, even if it may be useful to the partnership. 83. A. Every partner may associate another person with him in his share, provided it is with the consent of all the other partners. B. The capitalist partners cannot engage for their own account in any operation which is of the kind of business in which the partnership is engaged, unless there is stipulation to the contrary. 84. A. Every partnership shall operate under a firm name, which shall include the name of one or more of the partners. B. All partners, excluding 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 of and for the account of the partnership, under its signature, and by a person authorized to act for the partnership.

Answer 48

81 D 82 B if ang appointment naas articles of partnership 83 D 84 B

Question 49

a. both statements are true b. both statements are false c. only the first is true d. only the second is true 85. A. Persons who are not partners as to each other are not partners as to third persons, except in cases of estoppel. B. An admission or representation made by any partner concerning partnership affairs is evidence against the partnership. 86. A. A person admitted as a partner into an existing partnership is liable for all the obligations of the partnership arising before his admission as though he had been a partner when incurred and that such liability will extend to his own individual property. B. B has worked for M and Co., as procurer of contracts for fertilizers to be manufactured by the firm, and as supervisor of the mixing of the fertilizers. However, he had no voice in the management of the business except in his task of supervising the mixing of said fertilizers. For his service, he is entitled to 35% of the profits in the fertilizer business. He is a partner in M and Co. 87. A. F was a bookkeeper in a partnership named “GH”, with a yearly salary amounting to 5% of the net profits for each year. F, however had no vote at all in the management of the business. He is a partner in GH. B. Unless there is a stipulation to the contrary, the partners shall contribute equal shares to the capital of the partnership. 88. A. Every partner may associate another person with him in his share, but the associate shall not be admitted in the partnership without the consent of all the other partners, even if the partner having an associate should be a manager. B. Articles of universal partnership, entered into without specification of its nature, only constitute universal partnership of profits.

Answer 49

85 C 86 B 87 D 88 A