: GPA REVIEW SCHOOL OF THE PHILIPPINES REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS | COVERAGE: Contract of Partnership | Direction: Read and select the best answer for the following questions. T. Itis a contract of two or more persons who bind tiemseives 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 common profession a. Contract of Agency b. Contract of Partnership ©. Contract of Co-ownership 4. Contract of Sale 2. Which partnership is a taxable corporation for purposes of income taxation under NIRC? a. General Professional Partnership b. Commercial or Business Partnership ©. Both A and B 4. Neither A nor B 3. The following are the characteristics of a contract of partnership, except a, Consensual — It is perfected mere consent except in case real property is contributed that requires certain ; formality for validity, b. Principal - It does not depend upon any other contract for its validity or existence. i ©. Bilateral or Multilateral It is entered into by two or more persons whose rights and obligations are { reciprocal. 4. Nominate — It has a special name given to it by law. ©. Preparatory ~ It is a means by which other contracts will be entered into as the partnership pursues its business. £ Onerous ~ The partners contribute money, property or industry to a common fund with the intention of dividing profits among themselves except in case of universal partnership which is a gratuitous contract. Accessory — Its existence is dependent upon a principal contract. \ 4. The following are the essential requisites of parmership, except a. There must be a valid partnership contract. b. There must be a mutual contribution of money, property or industry to a common fund. c. Itmust have a lawful object or purpose. 4. The partnership must be established for the common benefit or interest of the partners which is to obtain | profits and to divide the profits among the partners, e. The partnership must be registered in the SEC. 5. When an unlawful partnership is dissolved by a judicial decree, to whom shall the partnership profits go? ‘a, To the innocent partner. b. To the guilty partner. c. Toall the partners pro-rata. 4. Tothe stele. 6. Which of the following statements concerning associations and societies, whose articles are kept secret among the members, and wherein any one of the members may contract in his own name with third persons is correct? a. They shall have separate juridical person: b, They shall be treated as a corporation, c. They shall be treated as a partnership. d. They shall be governed by the rules on co-ownership. 7. The following statements concerning partnership are correct, except ‘a. Partnership is a juridical entity which has a personality separate and distinct from that of each of the partners. b. There must be intent to form a partnership. c. There is fiduciary relation among partners, , 4. All partnership contracts are consensual 8. It isa principle which means that a partner has a right to choose those whom he wants to be associated with the partnership. a. Delectus personse b. Deletus militus ©. Dilitus trusius d. Deletos fructus Seen Try a CRAR.— Regulatory Framework for Business Transactions (RFBT 8708) Page 1 of 249. The following statements pertaining to the forms of contract of partnership are correct, except ‘a. Asa general rule, a partnership contract may be constituted in any form, whether written or oral, to be valid because itis perfected by mere consent, b. Where immovable property or real rights are contributed to the partnership, regardless of the amount thereof, the partnership contract must be in a public instrument and an inventory of the said real property or real rights must be made, signed by the partners and attached to the public instrument, in order for it to be valid. It must also be registered to SEC for regulatory purposes. c. Where the capital of the partnership is P3,000 or more, in money or property, the partnership contract must be in a public instrument and registered with the SEC, in order for it to be valid. 4. Ifthe partnership is a limited partnership, a certificate of limited co-partnership must be signed under oath by the partmers and must be registered with SEC, otherwise the partnership will be considered as a general partnership as to third persons but continue to be limited partnership among the partners. 10. What is the effect if'a contract of partnership with a capital of at least P3,000 in money and/or personal property is not in a notarized document and not registered with SEC? a. The contract of partnership is null and void. b. The partnership shall be classified as @ corporation. c. The partnership shall be classified as a sole proprietorship. d. The liability of the partnership and the partners thereof to third persons will not be affected. 11. A and B orally entered into a contract of partnership whereby A contributed building while B contributed land. The partnership business is being operated by the partners for almost 10 years already. A and B divided equally the profits for 10 years. What is the status of the contract of partnership after 10 years of operation? 1. Itis void both as to the contracting parties and to third persons because the contract of partnership is not in a public instrument and an inventory of the immovable property is not signed and attached to the public instrument. b. It may be considered valid as to the contracting parties on the basis of doctrine of estoppel but it may be considered void as to third persons for failure to comply with the formality required by law. Only third persons directly affected by this void contract may ask for declaration of nullity of the contract of partnership but not the partners because they are guilty of estoppel. c. Its rescissible both as to the contracting parties and to third person because it is intended to defraud third person. 4. It is unenforceable both as to the contracting parties and to third person because it violates status of fraud. 12. A and B orally agreed to form a partnership business. A will contribute P1M cash while B will contribute a car. They will deliver the agreed contribution to the partnership three years from the date of oral agreement. What is the status of the agreement to form a partnership business? Voidable b, Unenforceable c. Void d. Rescissible 13, An insane and a capacitated person orally entered into a contract of partnership. The insane contributed a car ‘while the capacitated person contributed P1M cash. What is the status of contract of partnership? Voidable on the part ofthe insane partner Unenforeceable Void Rescissible pe se 14. An insane and a demented person orally entered into a contract of | partnership. The insane contributed a car while the demented person contributed PIM cash. What is the status of contract of partnership? a. Voidable b. Unenforeceable ©. Void d. Resci le 15. Which of the following is not allowed to enter into a contract of partnership? . Any natural person who is capacitated b. Another partnership ©. Acorporation 4. None of the above —_—— ee CRAR_— Regulatory Framework for Business Transactions (RFBT 8708) Page 2 of 2416. The following cases on their own do not necessarily establish a partnership, except ‘a. Persons who are not partners to each other. b. Co-ownership whether such co-owners do or do not share any profits made by the use of the co-owned property. Co-possession, whether such co-possessors do or do not share any profits made by the use of the co- possessed property. 4. Sharing of gross retums, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived, ce. Receipt by a person of a share of the profits of a business. e 17, Which of the following is « prima facie evidence that a person is a partner in a partnership business? 1. Receipt by such person of a share of the profits of a partnership business 'b. Being co-owner in a co-owned property ¢. Sharing of gross returns in a co-owned property 4. Being a co-possessor of a co-possessed property 18, As a general rule, the receipt by a person of a share of the profits of a partnership business is a prima facie evidence that he is a partner in said partnership business. However, the following are the exceptional cases wherein 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 such business, except As a debt by installment or otherwise. ‘As wages of an employee. As rent to a landlord. {As an annuity to a widow or representative of a deceased partner. As interest on a loan, though the amounts of payment vary with the profits of the business. {As the consideration for the sale of a goodwill of a business or other property by installment or otherwise, As a return of the contribution or a return of investment in the business. we mpaoge 19. This is a type of partnership in which the partners contribute all the property which actually belonged to them at the time of perfection to the common fund, with the intention of dividing the same among themselves, as well as the profits which they may acquire therewith. ‘a. Universal partnership of all present property. b. Universal partnership of profits. ¢. Particular partnership d. General professional partnership 20. The following properties shall belong to the common fund in a universal partnership of all present property, except 2. Property belonging to the partners at the time of the constitution of the partnership. Profits that may be acquired from the present property. Property acquired by each partner after the formation of the partnership if stipulated. | Profits and fruits from property acquired by each partner, even those from property acquired by inheritance, legacy or donation after the formation of the partnership if stipulated. Property acquired by inheritance, legacy or donation after the formation by the partnership if stipulated. b. c. 4. 21. This is a type partnership whereby the common fund comprises only all that the partners may acquire by their work or industry during the existence of the partnership. .. Universal partnership of all present property. Universal partnership of profits. Particular partnership General professional partnership aoge 22, The following properties shall belong to the common fund in a universal partnership of profits, except ‘a, Profits obtained by the partners by their work or industry during the existence of the partnership. b. The usufruct or use of the property belonging to each partner at the time of the constitution of the partnership. ©, The profits and fruits from the properties mentioned in letter a and b. 4, The profits and fruits, f stipulated, of the property acquired by each partner after the constitution of the partnership ©. Profits acquired by the partners without the exertion of physical or intellectual efforts, such as those acquired by chance or lucrative ttle if stipulated, 23. The articles of universal partnership is entered into without specification as to its nature. What shall be its construction or interpretation? It is a particular partnership. universal partnership of all present property, ‘ universal partnership of profits, general professional partnershi CPAR— Regulatory Framework for Business Transactions (RFBT 8708) Page 3 of 24 424. The following persons cannot enter into a universal partnership but can enter into a particular partnership, except ‘a. Husband and wife bb. Persons who were guilty of adultery or concubinage at the time of formation c. 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 ition Sisters and Brothers 25. It is a type partnership which has for its object determinate things, their use or fruits, or a specified undertaking, or the exercise of a profession such as General Professional Partnership. a. Universal partnership of all present property b. Universal partnership of profits. ©. Particular partnership 4, Ordinary partnership 26. Which of the following statements pertains to partnership by estoppel? a, It is a partnership where all the partners are liable to the extent of their separate property after the partnership assets have been exhausted. b. tis a partnership where there is at least one general partner who is liable up to the extent of his separate assets and at least one limited partner who is liable up to the extent of his investment in the partership. ¢. Iisa partnership which actually exists among the partners as well as to third persons. 4. Itis a partnership which in reality 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. 27. Which of the following statements pertains to general professional partnership? a. It isa partnership which is established by the lapsing of time. b. Its a partnership that exists both in fact and in law. ¢. Itis a partnership that exists in fact but not in law. 4. It is a partnership that is taxable like a corporation in so far as income tax is concer. It is a partnership ‘organized for the operation of a business or commercial enterprise. ¢. It is a partnership that is exempted from income tax. It is a partnership organized for the practice of ‘common profession. 28. Which of the following statements pertains to partnership at will? a. It is one for which a period for its duration is fixed by the partners. b. It is one which is organized for a certain undertaking which, when attained, will cause the termination of the partnership. . Itis one where no period is fixed by the parties for its duration. 29, Which of the following statements pertains to a general-timited partner? ‘a. He is one who is liable for partnership debts to the extent of his separate property after all the assets of the partnership have been exhausted. He is a partner present in every type of partnership. b. He his one who is liable for partnership debts to the extent of his capital contribution only. He is only allowed to contribute money and/or property but neither industry nor service. c. He is one who has all the rights and powers and is subject to all the restrictions of a general partner, except that, in respect to his contribution, he shall have the rights against the other members which he ‘would have had if he were not also a general partner. 30, Which of the following statements pertains to a capitalist-industrial partner? 1. He is one who contributes money or property to the common fund. b. He is one who contributes his services or industry to the partnership. He is classified as a general partner, ¢. He is one who contributes not only money or property but also his services to the partnership. 31. Which of the following statements pertains to an ostensible partner? He manages the business or affair of the partnership. He takes charge of the winding up of the affairs of the partnership after itis dissolved. He is not actually a partner but who may become liable as such to third persons. He is one who is active in management of partnership business and known to the public as a partner, such as by allowing his name to be included in the firm name. poor 32. Which of the following statements pertains to dormant partner? ‘8, He is one whose connection with the partnership is kept from the public. b. He is one who has no voice in the management of the business, ¢. He is who does not participate in the management of the business and not known to the public as partner. 4. He is one who is no longer a partner of business but has left his capital in the business as loan. He receives interest on such as long as the loan is not paid off. he osereeae ane pS RRRERDEr-p-enpenrimene>>eneneeseseney 1-7-2777 SEER ROTC CRAR ~ Regulatory Framework for Business Transactions (RFBT 8708) Page 4 of 2433. Which of the following statements pertains to substituted limited partner? ‘a. He is one who decided to leave the partnership after reaching the age of retirement. b. He is a partner who is admitted to an existing partnership and who is liable as a limited partner to existing liabilities of partnership before his admission and who is liable as & general partner to new liabilities of the partnership after his admission. ¢, He is a person admitted to all the rights of a limited partner who has died or has assigned his interest in a partnership, 34, How shall the profits and losses of the partnership be distributed among the partners? a. It should be divided equally. . It should be divided according to their profits and losses sharing agreement. ¢. It should be divided proportionately in accordance to the capital contribution. 35. In the absence of agreement as to the sharing of profits, how shall industrial partner share with it? ‘8, The industrial partner shall share on the basis of loss agreement ratio. b. The industrial partner shall receive an equal share in profit. c. The industrial partner shall receive the lowest share received by a capitalist partner. 4. The industrial partner shall first receive a just and equitable share in the profits before distribution to capitalist partners. 36. In the absence of agreement as to the sharing of profits, how shall the remaining profits after distribution to industrial partners of his just and reasonable share in profits be distributed to the capitalist partners? a. Itshould be divided equally. .Itshould be divided according to loss sharing agreement. €. Itshould be divided proportionately in accordance to the capital contribution ratio. 37. In the absence of agreement as to the sharing of profits, how shall a capitalist-industrial partner share in partnership profits? a, He shall share on the basis of loss agreement ratio He shall receive an equal share in profit. He shall receive the lowest share received by a capitalist 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 on the basis of capital contribution ratio. b c. a 38. In the absence of agreement as to the sharing of losses, how shall industrial partner share with it? a. The industrial partner shal! not share in the losses. 'b. The losses shall share on the basis of profit agreement ratio. ¢. The industrial partner shall receive the lowest share received by a capitalist partner. 4. The industrial partner shall first receive a just and equitable share in the losses. 39. In the absence of agreement as to the sharing of losses, how shall the losses be distributed to capitalist partners? a. Itshould be divided equally. b. It should be divided in accordance with the profit agreement, c. Itshould be divided proportionately in accordance to the capital contribution ratio. 40. In the absence of agreement as to the sharing of profits and losses, how shall the losses be distributed to capitalist partners? a. It should be divided equally. b. It should be divided in accordance with time spent in working for the partnership. ¢. Itshould be divided proportionately in accordance to the capital contribution ratio. 41. In the absence of agreement as to the sharing of losses, how shall a capitalist-industrial partner share in partnership losses? He shall share on the basis of profit agreement ratio. He shall receive an equal share in losses. He shall receive the lowest share received by a capitalist partner. For being an industrial partner, he shall not share in losses but for being capitalist partner he shall share in the losses on the basis of profit ratio, peor 42. Which of the following stipulations in the sharing of profit or losses is valid? a. A stipulation excluding a capitalist partner in the share of profits b. Astipulation excluding a capitalist partner in the share of losses. ©. Astipulation excluding an industrial partner in the share of profits. 4. A stipulation excluding an industriel partner in the share of losses. ———— CRAR— Regulatory Framework for Business Transactions (RFBT 8708) Page 5 of 2443, C and I entered into a contract of partnership for a fixed term of two years. C, a capitalist partner and I, an industrial partner agreed with the following profit or loss sharing terms. I will share equally in the profit and there is no agreement as to losses. On 2010, the partnership had P10,000 net loss. On 2011, the partnership had P20,000 net income. Upon examination of the contract, it was determined that the word profit is really intended by the partners as cumulative profit. How much shall be received by I as his share for the two years of partnership operation? ‘a, P10,000 because industrial partner do not share in the losses. b. P5,000 because the year-2010 P10,000 net loss shall be netted from year-2011 P20,000 net income before distribution. . zero because industrial partner has no investment. 4. 20,000 because he is an industrial partner. 44, The following statements concerning the designation of share in the profits and losses by a third person or by @ partner are correct, except a. If entrusted by the partners to a third person, it is binding upon the partners and may be impugned only when it is manifestly inequitable. b. If the designation by a third person is manifestly inequitable, it can no longer be impugned by a partner who has begun to execute it. ©. Ifthe designation by a third person is manifestly inequitable, it can no longer be impugned by any partner if three months had already lapsed from the time he obtained knowledge thereof. 4. If entrusted to one of the partners, the designation is valid 45, What is the prescriptive period for a partner to file an action to impugn or question the manifestly inequitable sharing of partnership profits or losses designated by a third person? a. Within 3 months from the knowledge of such designation but it must be before the said partner executes b. Within 2 months from the knowledge of such designation but it must be before the said partner executes it. ©. Within | month from the knowledge of such designation but it must be before the said partner executes it. 4. Within 6 months from the knowledge of such designation but it must be before the said partner executes it 46, When a partner has been appointed manager in the articles of co-partnership, the following are the rules of partnership management to be observed, except a. The managing partner may execute all acts of administration despite the opposition of his partners unless hhe acts in bad faith. b. With just or lawful cause or if the managing partner acts in bad faith, 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 or if the managing partner acts in good faith, the revocation of the power of the managing partner can be made only with the consent of all the partners including the managing partner. 4. The managing partner's decision on acts of administration may be reversed by the vote of majority of the partners. 47. When a partner has been appointed manager aRer the partnership has been constituted or has been appointed in a separate document other than articles of co-partnership, the following are the rules of partnership ‘management to be observed, except a. The managing partner may execute all acts of administration. b. 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. c. He may be removed with just cause by the vote of the partners representing the controlling interest. 4. He can only be removed without just cause by the vote of all partners including the managing partner. 48. The following are the rules of partnership management when two or more partners have been appointed as managers, except ‘a. When there is a specification of their respective duties, each managing partner shall perform only the duties specified in his appointment. b. 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. 4. 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 vote of the majority of managing partners shall be sufficient for the validity of the acts. —— CRAR- Regulatory Framework for Business Transactions (RFBT 870B) Page 6 of 24I | 49. Incase it should have been stipulated that none of the managing partners shall administratively act without the consent of the others, the concurrence of all managing partners shall be necessary for the validity of the administrative act. When may the present managing partners administratively act validly by alleging the absence ‘or disability of the other managing partners? a, When the present partners represent the majority of the partnership. j b. When the present partners represent the controlling interest in the partnership. | ©. When there is imminent danger of grave or irreparable injury to the partnership. 50. When the manner of management has not been agreed upon, the following are the rules of partnership management to be observed, except a. Alll the partners shall be considered agents of the partnership or all of them are managers. j b. 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. 4. Any of the partners may make any important alteration in the immovable property of the partnership without the consent of the others if it may be useful to the partnership. | 51. Which of the following partners is not allowed to participate in the management of a partnership? a. Capitalist partner Industrial partner Nominal partner Managing partner Any act of a partner for the purpose of the partnership business. Any act of a partner including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member. ©. Any act of @ partner which is not apparently for the carrying on of business of the partnership in the usual way but authorized by the other partners, 4, Any act of a partner who has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority. | | 52. The following acts of a partner binds the partnership, except a b. 53. Inwhich of the following instances shall the partnership be bound by the acts of the partners? 1. If the partner is authorized to act for the partnership whether or not the act is for apparently carrying on in the usual way the business of the partnership. IL. If the partner is not authorized to act for the partnership but the act is for apparently carrying on in the usual i way the business of the partnership and the third person has no knowledge of the partner's lack of authority. IIL When although the act is for the apparently carrying on in the usual way the business of the partnership, the | partner is not authorized to act for the partnership and the third person has knowledge of the partner’s lack of authority. | IV. When the partner is not authorized to act for the partnership and the act is not for apparently carrying on in the i | usual way the business of the partnership whether or not the third person has knowledge of the partner’s lack of authority, V. Any act in contravention of a restriction on authority of a pariner to persons having knowledge of the restriction, a. andi | b, MandIV | cc. Land OT 4. Wand IV 54, The following acts are not considered administrative acts or acts for apparently carrying on in the usual way of business of the partnership and may not be performed by a single partner without authorization from all the other partners or these are acts which require unanimous vote of the partners because they are considered acts of strict ‘ownership or acts of strict dominion, except a. Assignment of partnership property in trust for creditors or on the assignee’s promise to pay the debts of the partnership. Disposition of the goodwill of the business. ‘Acts which would make it impossible to carry on the ordinary business of the partnership. Confession of judgment. * Entering into a compromise concerning a partnership's claim or liability. Submission of a partnership claim or liability to arbitration, Renunciation of a claim of the partnership, Payment of the salary of partnership's employees. peosaos en SE CRAR.— Regulatory Framework for Business Transactions (RFBT 8708) Page 7 of 24