REVIEW NOTES
Partnership
 A contract whereby two or more
persons bind themselves to contribute
money, property or industry to a common
fund, with the intention of dividing the
profits among themselves.
 Two or more persons may also
form a partnership for the exercise of a
profession.
Characteristics of a contract of partnership
1. Consensual
2. Principal
3. Bilateral or multilateral
4. Nominate
5. Preparatory
6. Onerous
7. Commutative
Essential requisite of partnership
1. There must be a valid contract
2. Parties must have legal capacity to
contract. (Take note of the provision
of obligations and contracts as to
who are those incapable of giving
consent)
In determining whether a partnership exists,
these rules shall apply:
1. Persons who are not partners as to each 3.
other are not partners as to third persons,
except in case of estoppel.
2. Co-ownership or co-possession does not of
itself establish a partnership, whether such-
co-owners or co-possessors do or do not
3. There must be a mutual contribution
of money, property or industry to a
common fund
4. It must have a lawful object
5. The primary purpose must be to
obtain profits and divide the same
among themselves
Partnership has a juridical personality
separate and distinct from that of each of the
partners.
 In case of failure to comply with the
requirements of art 1772, with reference
to the execution of a public instrument
and registration with the SEC, when the
partnership capital in money or personal
property, exceeds 3,000. such partnership
acquires juridical personality.
 in case of failure to comply with art
1773, partnership shall be void, whenever
immovable property is contributed
thereto, if an inventory of said property is
not made signed and attached to the
instrument
 in case of associations and
societies whose articles are kept secret
among the members and any members
may contract in his own name, no juridical
personality.
share any profits made by the use of the
property.
The sharing of gross returns does not of
itself establish a partnership, whether or not
the persons sharing them have a joint or
common right or interest in any property
from which the returns are derived.
 BUL.M-14FC.Business Law Final Coaching
4. The receipt by a person of a share of the Effect if the above requirements are not
profits of a business is prima facie evidence complied with
that he is a partner in the business. EXCEPT a. The partnership contract is still
in the following instances as there is no such valid. Accordingly, the partnership
inference shall be drawn if such profits were still acquires juridical personality.
received in payment: b. The liability if the partnership and
the members thereof to third
a. As a debt by installments or otherwise. persons are not affected.
b. As wages of an employee or rent to a
landlord.
c. As an annuity to a widow or Who may become partners
representative of a deceased partner.
d. As interest on a loan, though the amount 1. Any natural persons who is capacitated may
of payment vary with the profits of the become a partner
business. 2. A partnership may enter into another
e. As the consideration for the sale of a partnership with individuals or other
goodwill of a business or other property partnership as there is no prohibition
by installments or otherwise. thereto.

Form of a partnership contract  What are the obligations of the partners

A partnership contract may be constituted in any
form except as follows:
1. Where the immovable property or real rights
are contributed to the partnership
a. The partnership contract must be in a
public instrument; and
b. An inventory of the said property must
be made, signed by the parties and
attached to the public instrument.
Effect if above requirements are not
complied with
a. The partnership contract is void.
b. The partnership will not have any
juridical personality.
2. Where the capital of the partnership is P3,
000.00 or more, in money or property.
a. The partnership contract must be in a Kinds of partnership
public instrument, and
b. Registered with the Securities and
Exchange Commission
among themselves and to the
partnership with respect to contribution
of money or property?
(1) To contribute at the beginning of the
partnership or at the stipulated time
the money or property which he
promised to contribute;
(2) To answer for eviction
(3) To answer to the partnership for the
fruits of the property the
contribution of which he delayed
(4) To preserve the said property
(5) To indemnify the partnership for any
damage caused to it by the retention
of the same or by the delay in its
contribution.
1. As to object
a. Universal partnership –either be a
universal partnership of all present

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 property or a universal partnership of e. Secret partner – takes active part but
profits. not known
1) Universal partnership of all present f. Silent partner – no active part although
property he may known
2) Universal partnership of profits- g. Dormant partner –no active part not
presumption in favour of universal known
partnership of profits. h. Real partner
b. Particular partnership - has for its object i. Subpartner
determinate things, their use or fruits,
or a specific undertaking, or the exercise Persons who are prohibited from giving each
of a profession. other any donation or advantage cannot enter
2. As to liability into universal partnerships.
a. General Partnership  Donation except moderate gifts
b. Limited partnership a. Husband and wife
3. As to duration b. Common law
a. Partnership for a fixed term c. Between persons guilty of adultery or
b. Partnership for a particular undertaking concubinage
c. Partnership at will d. Between persons who found guilty of
4. As to representation to others adultery or concubinage
a. Ordinary partnership e. Those made to public officers or his wife,
b. Partnership by estoppel ascendants or descendants by reason of
5. As to legality of its existence: office.
a. De jure partnership
b. De facto partnership  Partnership begins from the moment of the
6. As to publicity execution of the contract, unless it is
a. Secret partnership otherwise stipulated. (ex: future partnership)
b. Open or notorious –
Obligations of partners
1) contribution of capital
Kinds of partners 2) contribution of property.
1. As to liability 3) contribution of money.
a. General partner 4) Answer for eviction in case the partnership is
b. Limited partner deprived therein
2. As to contribution 5) To answer to the partnership for the fruits of
a. Capitalist partner the property when delivery is delayed
b. Industrial partner 6) To preserve the property with diligence of
3. Other Classifications good father of a family pending delivery
a. Managing partner 7) Indemnify partnership for damage caused to
b. Liquidating partner it by the retention or delay in its
c. Nominal partner - contribution.
d. Ostensible partner- takes active part and
known at partner with or without actual Effect of failure to contribute – partner
interest. If he is not actually a partner, becomes a debtor
subject to liability of estoppel. Appraisal of goods contributed – 1.
Stipulation
 BUL.M-14FC.Business Law Final Coaching
2. no
stipulation, experts chosen
8) reimburse amount appropriated
 Conversion for its own use
 Pay legal interest
 Damages in case of delay of
reimbursement
9) contribute additional capital (capitalist
partner) – in case of imminent loss, if
refused, obliged to sell his interest to other
partners
10) obligation of managing partner who collects
debt
 both debts are due and demandable –
i. payment made to managing partner
who issues a receipt in the name of
the partnership, the debt will be
applied to the partnership’s debt
ii. payment made to managing partner
who issues a receipt in his own
name, proportionate.
11) obligation of a partner who has received
his share of the partnership credit.
Requisites:
i. a partner has received, in
whole or in part, his share of
the partnership credit
ii. the other partners have not
collected their share
iii. the partnership debtor has
become insolvent
12) obligation to pay damages to the
partnership. (when guilty of negligence
or fault)
 G.R. – damages not generally subject
of set-off by the profits earned
 Except: if unusual
profits are realized through the
extraordinary efforts of the partner
at fault, the courts are authorized by
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the law to equitably mitigate or
lessen his liability for damages
13) obligation to bear risk for property
contributed
Rules:
a. Specific and determinate things
which are not fungible where
only the use is contributed – risk
of loss remains with the owner
partner.
b. Specific and determinate things
the ownership of which is
transferred to the partnership –
partnership has the risk of loss
being the owner.
c. Fungible things even if only the
use is contributed – risk of loss ir
borne by the partnership.
d. Things to be contributed to be
sold- partnership bears the loss.
e. Things brought and appraised at
the inventory – partnership
bears the loss. There is an
implied sale to the partnership.
14) Obligations of the partnership to the
partners
a. To pay to the partner any amounts
he may have disbursed for the
partnership with interest from the
time the expenses were made.
b. To pay for the obligations which a
partner may have contracted in
good faith in the interest of the
partnership business.
c. To answer for risks in consequence
of its management.
15) Obligation to render information
16) obligation to account
17) Liability of a newly-admitted partner for
obligations of the partnership
 limited to his share in partnership
property for existing obligation
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  subsequent obligation, extends to
his personal property
What are the obligations of an industrial Rules on division of profit and loss
partner?
 Not to engage in any other business for
himself unless the partnership expressly
permits him to do so; otherwise
(1) The capitalist partners may exclude him
from the firm; or
(2) They may avail themselves of the benefits
which the industrial partner may have
obtained from other businesses, with a
right to damages in either case.
May a capitalist partner engage in business for
himself?
 As a rule, he cannot engage, for his own
account, in any operation which is of the same
kind of business in which the partnership is
engaged; otherwise:
(a) He shall be liable to the partnership
for any profits he obtained from his
transactions; and
(b) He shall personally bear all his
losses.
Rights of partners
a. To associate another person with him in
his share of the profits. (subpartner)
b. To have access to and inspect and copy
the partnership books at reasonable
hours.
c. To have a formal account of partnership
affairs. (wrongfully excluded, right exists,
accountable as fiduciary, when just and
reasonable)
d. Property rights of a partner (specific
part. Property, interest (profit and Designation in the share in the profits and losses
surplus), participate in management, by a third person or by a partner.
right to reimbursement for amounts 1. If entrusted by the partners to a third person
advances, access and inspection of
books, true and full information)
1. If all are capitalist partner
a. agreement.
b. If only the sharing of the partners in the
profits has been agreed upon, the share
of each partner is the losses shall be in
the same proportion as the share of
each in the profits.
c. In the absence of both, in proportion to
his capital contribution.
2. If aside from the capitalist partners, there is
also an industrial partner (or there are
industrial partners)
a. Profits
1) agreement.
2) In the absence of any agreement
thereon, the industrial partner shall
first receive a just and equitable
share of the profits and thereafter,
each capitalist partner shall share in
the profits in proportion to his
capital contribution.
b. Losses
1) The industrial partner shall not
share in the losses.
2) The capitalist partners shall share in
the losses as follows.
a) agreement.
b) In the absence of any
agreement thereon, each
capitalist partner shall share in
the losses in the same
proportion as the share of each
in the profits.
c) In the absence of both, capital
contribution.
 BUL.M-14FC.Business Law Final Coaching
 The same shall be binding upon the
partners
2. If entrusted to one of the partners
 The designation is void
3. Stipulation excluding partner from any share
in profit or losses – void as to third person
but valid as to the partners.
Rules on management
1. When a partner has been appointed
manager in the articles of partnership. All
acts of administration even with the
opposition of his partners unless acted in
bad faith.
 Revocation of appointment of managing
partner
1) With just or lawful causes – his
appointment can be revoked by the
vote of the partners owning the
controlling interest.
2) Without just cause of lawful cause –
his appointment can be revoked
only with the consent of all the
partners including the managing
partner
2. When a partner has been appointed 4. When the manner of management has not
manager after the partnership has been
constituted.
 Revocation of his appointment as
managing partner
He may be removed with or
without just or lawful cause by the
vote of the partners owning the
controlling interest.
3. When two or more partners have been
appointed as managers
a. When there is a specification of their
respective duties
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 Each managing partner shall
perform only the duties specified in
his appointment.
b. When there is no specification of their
respective duties or there is no
stipulation that one shall not act without
the consent of the others.
 Each one may separately execute all
acts of administration.
 Rule in the case of opposition of the
other managers
a) The decision of the majority of
the managing partners shall
prevail.
b) In case of tie, the decision of the
managing partners owning the
controlling interest shall prevail.
c. When there is a stipulation that none of
the managing partners shall act without
the consent of the others.
 The concurrence of all of them shall be
necessary for the validity of the acts. Unless
there is imminent danger of grave or
irreparable injury to the partnership.
been agreed upon
 All the partners shall be considered
managers .
Rule in case of opposition of the other
partners.
1) The decision of the majority
shall prevail.
2) In case of a tie, the decision
of the partners owning the
controlling interest shall
prevail.
 Unanimous consent
required for any
important alteration
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 in immovable
property of
partnership.
Requirement to operate under a firm name
 A partnership shall operate
under a firm name, which may or
may not include the name of one
or more of the partners.
What are the property rights of every partner?
1. His rights in specific partnership property.
2. His interest in the partnership
 A partner’s interest in the partnership
is his share of the profits and surplus.
3. His right to participate in management.
Liability of partnership to third persons for acts
 State the rules in case a managing of partners
partner collects a demandable debt
from a person who also owes the
partnership a demandable debt.
(1) The sum collected shall be
applied to the two credits in
proportion to their
amounts;
(2) It shall be fully applied to
the partnership credit, if the
receipt given in for the
account of the same; and
(3) The debtor, however, has
the right to have the
payment applied to his debt
to the partner if it should be
more onerous to him.
Obligations of partnership for wrongful act of
partner/s
 The partnership shall be solidarily liable
with all the partners in the following
cases:
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 the 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 the business receives money or
property of a third person and such
money or property is misapplied by
any partner while it is in the custody
of the partnership.
1. When the partnership is bound
1. If the partner is authorized to
act for the partnership, the
partnership is bound whether
or not the act is for apparently
carrying on in the usual way
the business of the
partnership.
2. If the partnership is not
authorized to act for the
partnership the partnership is
bound if:
i. The act is apparently
carrying on in the usual
way of business of the
partnership; and
ii. The third person has no
knowledge of the
partner’s lack of authority.
2. When the partnership is not bound
1) When although the act is for
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
 BUL.M-14FC.Business Law Final Coaching
person has knowledge of the
partner’s lack of authority.
2) When the partner is not
authorized to act for the
partnership and the act is not
for apparently carrying on in
the usual way the business of
the partnership.
- All the partners shall be liable pro rata to
third persons, any agreement to the
contrary shall be void, but valid among
themselves.
Effect of conveyance of real property of
partnership
1. Title in partnership name, conveyance in
partnership name
2. Title in partnership name, conveyance in
partners name
3. Title in name of one or more of partners,
conveyance in name of partner or
partners in whose name title stands
4. Title in name of one or more or all
partners or a third person in trust for
partnership, conveyance executed in
partnership name or in name of partner
5. Title in name of all partners, conveyance
in name of all partners
 Solidary liability arising from partner’s
wrongful act or breach of trust
Partner by estoppel, partnership by estoppel
1. When person a partner by estoppel?
2. When partnership liability results?
3. When liability pro-rata – no partnership,
those parties are liable proprata. Or with
partnership but not all consented
4. Estoppel does not create partnership
Preference of partnership creditors in
partnership assets over private creditor or a
partner
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In the payment of the liabilities of the
partnership and those of the private
debts of a partner, preference shall be as
follows:
1) Partnership creditors shall be
paid first out of partnership
assets.
2) Thereafter, a partner’s separate
creditor shall be paid out of the
share owing him if there is an
excess
3) If the share of the debtor
partner in the remaining assets
is not enough to settle his
private debts, his private
creditor can go after the
partner’s separate assets over
which he has preference.
DISSOLUTION AND WINDING UP
 Dissolution is the change in the relation
or the partners caused by any partner
ceasing to be associated in the carrying
on of the business.
 Winding up is the process of settling the
business or affairs of the partnership after
dissolution.
 Termination refers to the point when all
the business or affairs of the partnership
are completely wound up.
CAUSES OF DISSOLUTION
1. Without violation of the agreement of
the partners.
a. termination of the definite term or
particular undertaking
b. By the express will:
i. Of any partner who must act in
good faith, when no definite
term or particular undertaking
is specified.
ii. Of all the partners who have
not assigned their interests or
suffered them to be charged
for their separate debts, either
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 before or after the termination
of any specified term or
undertaking.
c. By the expulsion of any partner
from the business bona fide in
accordance with such a power
conferred by the agreement
between the partners.
2. In contravention of the agreement
between the partners
3. 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.
4. In the following cases of loss:
a. Loss before or after delivery of
property where the partner
contributed only its use or
enjoyment, he having reserved the
ownership thereof.
b. Loss before delivery of specific
thing, which a partner had
promised to contribute to the
partnership.
5. By the death of any partner.
6. By the insolvency of any partner or of
the partnership.
7. By the civil interdiction of any partner.
8. By decree of court in the following
cases:
1) On the application by or for a
partner to dissolve the partnership
whenever:
a. A partner has been declared
insane in any judicial
proceeding or is shown to be When the act of a partner after dissolution binds
of unsound mind.
b. A partner becomes in any way
incapable of performing his
part of the partnership
contract.
c. A partner has been guilty of
such conduct as tends to affect
prejudicially the carrying on of
the business.
d. A partner wilfully or
persistently commits a breach
of the partnership agreement
e. The business of the
partnership can only be carried
on at a loss.
f. Other circumstances render a
dissolution equitable.
2) On the application of the purchaser
of a partner’s interest.
a. After the termination of the
specific term or particular
undertaking.
b. At any time when the
partnership was a partnership
at will when the interest was
assigned or the charging order
was issued.
What is the effect of dissolution on the
authority of partners to act for the
partnership?
(1) General rule - Dissolution
terminates all authority of any
partner to act for the partnership.
(2) Exceptions:
(a) When necessary to wind up
partnership affairs; and
(b) When necessary to complete
transactions begun but not
then finished
the partnership
1. When the act is necessary for winding
up of partnership affairs.
2. When the act is necessary to complete
transactions begun before dissolution.
3. In the case of a new transaction or
business in the following cases:
 BUL.M-14FC.Business Law Final Coaching
a. If the other party to the transaction Under the direction and control of the
had extended credit to the court
partnership before dissolution and
he had no knowledge or notice of Rescission of partnership contract
the dissolution.
b. If the other party to the transaction  Grounds for rescission
had not so extended credit but had 1. Fraud; or
nevertheless known of the 2. Misrepresentation to enter into the
partnership before dissolution, and partnership contract.
the fact of dissolution had not been
advertised in a newspaper of Liquidation of dissolved partnership
general circulation in the place at a. Liquidation or winding up
which the business is regularly This involves the sale of the assets of the
carried on. partnership, the payment of its liabilities, and
the distribution of the remaining cash or
Rules on existing liability of a partner upon other property to the partners.
dissolution
1. The dissolution does not itself discharge b. Order of payment of partnership liabilities.
the partner’s liability a. Those owing to the creditors other than
2. A partner is discharged from any existing partners.
liability upon dissolution by the b. Those owing to partners other than
agreement of the following: capital and profits.
a. The partner himself; c. Those owing to partners in respect to
b. The partnership creditor; and capital.
c. The person continuing the business d. Those owing to partners in respect to
3. The individual property of a deceased profits.
partner shall be liable for obligations of
the partnership while he was a partner, Right to accounting
but subject to the prior payment of his Any partner or the legal representative of a
separate debts. deceased partner has a right to an accounting of
his interest against the following:
Who may wind up partnership affairs 1. Winding up partners
2. The surviving partners
1. Extra-Judicially 3. The person or partnership continuing
a. By the partner or partners the business
designated by the agreement.
b. If none was designated:
1. By the partner or partners who LIMITED PARTNERSHIP
have not wrongfully dissolved
the partnership. A partnership which has one or more general
2. If all the partners are dead, the partners and one or more limited partners.
legal representative of the last
surviving partner who was not Requirements for formation
insolvent.
2. Judicially
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 Two or more persons desiring to form a
limited partnership must comply with the
following requirements:
1. They must subscribe and swear to a
certificate, which shall state:
a. The name of the partnership,
adding thereto the word “limited”.
b. The character of the business.
c. The location of the principal place
of business.
d. The name and place of residence of
each member, general and limited
partners being respectively
designated.
e. The term for which the partnership
is to exist.
f. The amount of cash and a
description of and the agreed value
of the other property contributed
by each limited partner.
g. Additional contributions, if any to
be made by each limited partner
and the times at which or events on
the happenings of which they shall
be made.
h. The time agreed upon, when the
contributions of each limited
partner is to be returned.
i. The share of the profits or the
compensation by way of income
which each limited partner shall
receive by reason of his
contribution.
j. The right, if given, of a limited
partner to substitute an assignee or
contributor to his place and the
terms and conditions of the
substitution.
k. The right, if given, of the partners to
admit additional limited partner.
l. The right, if given, of one or more of
the limited partners to priority over
the other limited partners, as to
contributions or as to
compensation by way of income
and the nature of such priority.
m. The right, if given, of the remaining
general partner or partners to
continue the business on the death,
retirement, civil interdiction,
insanity or insolvency of a general
partner.
n. The right, if given, of a limited
partner to demand and receive
property other than cash in return
for his contribution.
2. They must file for record the certificate
with the Securities and Exchange
Commission
3. The contributions of a limited partner
may be cash or other property, but not
service
Obligations of a limited partner
1. Not to allow the inclusion of his
surname in the partnership.
Exceptions:
a. It is also the surname of a general
partner.
b. The business had been carried on
under a name in which his surname
appeared prior to his admission as a
limited partner.
2. To be liable as a general partner if he
takes part in the control of the business.
3. To be liable to the partnership for the
following:
a. For the difference between his
actual contribution and that stated
in the certificate.
b. For any unpaid contribution which
he agreed in the certificate to make
in the future at the time and on the
conditions stated in the certificate.
4. To hold as trustee for the partnership in
the following:
 BUL.M-14FC.Business Law Final Coaching
a. Specific property stated in the
certificate as contributed by him,
but which was not contributed.
b. Specific property which has been
wrongfully returned to him.
c. Money or property wrongfully paid
or conveyed to him on account of
his contribution.
5. To be liable to the partnership after he
has rightfully received the return of his
capital contribution, for any sum not in
excess of such return with interest,
which is necessary to discharge its
liabilities to all creditors who extended
credit or whose claims arose before such
return.
6. Not to receive or hold as collateral any
partnership property on account of his
claims for loan granted to or other
business transaction with the
partnership.
7. Not to receive from a general partner or
the partnership on account of such
claims any payment, conveyance or
release from liability. If at the time the
assets of the partnership are not
sufficient to discharge partnership
liabilities to persons not claiming as
general or limited partners.
Right of a general partner- all acts of
administration but not acts of strict dominion.
Rights of a limited partner (the same right as
general partner)
a. To have the partnership books kept at the
principal place of business of the
partnership.
b. To inspect and copy the partnership books or
any of them at a reasonable hour.
c. To have on demand true and full information
of all things affecting the partnership.
d. To have on demand a formal account of
partnership affairs whenever circumstances
render it just and equitable.
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e. To have dissolution and winding up by decree
of court.
f. To receive a share in the profits or other
compensation by way of income stipulated in
the certificates.
g. To receive the return of his contribution
provided partnership assets exceed the
liabilities.
h. To loan money to the partnership.
i. To transact business with the partnership.
j. To receive, unless he is also a general partner,
on account of resulting claims against the
partnership, with general creditors, a pro rata
share of the asset.
k. To agree with other limited partners that one
or more of them shall have priority over
other limited partners as to:
a. Return of their contribution
b. Compensation by way of income
c. Any other matter
Assignment of limited partner’s interest
I. Rule: A limited partner’s interest is
assignable.
II. Effect of assignment
a. The assignee does not become a
substituted limited partner
1. The assignee is only entitled to receive
the following to which the assignor
partner would otherwise be entitled:
a. Share of the profits
b. Other compensation by way of
income
c. Return of the contribution
2. He has no right to:
1) Require the information or
account of partnership
transactions.
2) Inspect partnership books
•Substituted limited partner
is a person admitted to all the rights of a
limited partner who has died or has
assigned his interest in the partnership.
uc cpa review
 •Requisites in order that assignee may
become a substituted limited partner
a) All the members of the
partnership must consent to
the assignee becoming a
substituted limited partner,
unless the assignor is
empowered by the certificate
to give the assignee such right.
b) The certificate must be
amended to reflect the
substitution.
c) The certificate must be
registered with the SEC.
•Rights and liabilities of the substituted
limited partner
He has all the rights and powers,
and is subject to all restrictions and
liabilities of the assignor, except
those liabilities of which he is
ignorant at the time he became a
limited partner and which could not
be ascertained from the certificate.
•Liabilities of the assignor
The substitution of the
assignee as a limited partner
does not release the assignor
from the following liability:
1) To persons who rely on a false
statement in the certificate
2) To creditors who extended
credit or whose claims arose
before the assignment.
Retirement, death, civil interdiction, insanity, or
insolvency of a partner
a) Effect
a) Partner is a general partner –
partnership is dissolved.
b) Partner is a limited partner –
partnership is not dissolved
except if there is no more
limited partner because in such
a case, the requirement that
there must be at least one
limited partner in a limited
partnership is no longer
complied with.
b) Continuation of business
 The business may be
continued by the remaining
general partners if:
1. The right to do so is stated
in the certificate; or
2. All members consent.
Order of payment of liabilities
the liabilities of the partnership shall be entitled
to payment in the following order:
1. Those to creditors, including limited
partners, in the order of priority as
provided by law
2. Those to limited partners by way of their
share of the profits and other
compensation by way of income on their
contributions.
3. Those to limited partners in respect to
the capital of their contributions.
4. Those to general partners other than for
capital and profits.
5. Those to general partners in respect to
profits.
6. Those to general partners in respect to
capital.
State the requirements for the amendment
or cancellation of a certificate.
(a) The amendment or
cancellation must be in writing;
(b) It must be signed and sworn to
by all the members, including
the new members, and the
assigning limited partner in
case of substitution or addition
of a limited or general partner;
and
(c) The certificate, as amended,
must be filed for record in the
 BUL.M-14FC.Business Law Final Coaching
Securities and Exchange
Commission.

2
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 BL.O.1405.Law on Partnerships.MCQ

MULTIPLE CHOICE QUESTIONS

1. Partner who contributes both capital and 6. Partner who winds up the affairs of the firm
industry after it has been dissolved
A. General A. Liquidating
B. Limited B. Managing
C. Managing C. Industrial
D. Capitalist-industrial D. Capitalist

7. Partner whose connection with the firm is

2. Partner who is liable beyond the extent of his known to the public
contribution A. Ostensible
A. General B. Secret
B. Capitalist C. Silent
C. Industrial D. Nominal
D. Silent

8. Partner whose connection with the firm is

3. Partner who is liable only to the extent of his concealed or kept a secret
contribution A. Ostensible
A. Limited B. Secret
B. General C. Silent
C. Industrial D. Nominal
D. Managing

9. Partner who is both a secret and silent

4. Partner who manage actively the firm’s partner
affairs A. Nominal
A. Silent B. Ostensible
B. Liquidating C. Limited
C. Managing D. Dormant
D. Dormant

10. Partner who is not really a partner but who

5. Partner who does not participate in the may become liable as such insofar as third
management though he shares in the profits persons are concerned
or losses A. Nominal
A. Liquidating B. Ostensible
B. Nominal C. Silent
C. Ostensible D. Secret
D. Silent

11. May contributed money, property or industry

to the common fund
BL.O.1405.Law on Partnerships.MCQ
A. Limited partner
B. General partner
C. Both limited and general partner
D. Dormant partner
12. May be required to make additional
contribution in case of imminent loss:
A. Capitalist partner
B. Limited partner
C. Industrial partner
D. Dormant partner
13. 1st Statement - F was a bookkeeper in a
partnership named “GH”, with a yearly salary
amounting to 5% of the net profits for the
year. F, however had no vote at all in the
management of the business. He is a partner
in GH.
2nd Statement - Unless there is a stipulation
to the contrary, the partners shall contribute
equal shares to the capital of the
partnership.
A. both statement are true
B. both statement are false
C. only the first is true
D. only the second is true
14. 1st Statement - Co-ownership or co-
possession does not in itself establish a
partnership, except when such co-owners or
co-possession share in the profits made by
the use of the property.
2nd Statement - The sharing gross returns
does not of itself established 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.
A. both statement are true
B. both statement are false
C. only the first is true
D. only the second is true
15. 1st Statement - 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
2nd Statement - A partnership of all present
property is where the partner contribute all
the 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.
A. both statement are true
B. both statement are false
C. only the first is true
D. only the second is true
16. 1st Statement - 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 acquired therewith. A
stipulation for the common enjoyment of any
profits may also be made. But properties
which they may acquired through
inheritance, legacy, or donation cannot be
included in such stipulation, except the fruits
thereof.
2nd Statement -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.
A. both statement are true
B. both statement are false
C. only the first is true
D. only the second is true
17. 1st Statement - Every partner may associate
another person with him in his share, but the

associated 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.
2nd Statement -Articles of universal
partnership, entered into without
specification of its nature, only constitute
universal partnership of profits.
A. both statement are true
B. both statement are false
C. only the first is true
D. only the second is true
18. Which of the following is not correct?
A. A- cash (Ltd.); B – cash (Gen.);
C – service (Gen)
B. A- property (Ltd.); B – cash (Gen.);
C – service (Gen)
C. A- service (Ltd.); B – cash (Gen.);
C – service (Gen)
D. A- cash (Ltd.); B – property (Gen.);
C – service (Gen)
19. A and B orally agreed to form a partnership
two years from today, each one to contribute
P10, 000.00. At the arrival of the said date, if
one refuses to go ahead with the agreement,
can the other enforce the agreement?
A. Yes, since the agreement is to be
enforced after one year from the making
thereof, the same should be in writing to
be enforceable.
B. Yes, because the prior agreement was
voluntarily made.
C. Yes, because the contract of partnership 23. X, Y and Z are partners in Ace & Co. W
is not governed by the Statute of Frauds.
D. No, because the agreement was merely
oral.
BL.O.1405.Law on Partnerships.MCQ
20. If a partner is insolvent, the first in the order
of preference in the distribution of his assets
is:
A. Partnership creditors
B. Partner’s contribution to the partnership
C. Separate creditors of the debtor
D. Pro-rata between the separate creditors
and the partnership creditors.
21. The following except one, are common
characteristics of partnership and
corporation. Which is the exception?
A. The individuals composing both
organizations have little voice in the
conduct of the business.
B. Both can only act through agents.
C. Both are business organizations
composed of a number of individuals.
D. Both have juridical personalities
separate and distinct from that of the
members composing it.
22. Which of the following is not a requisite
prescribed by law in order that the
partnership may be held liable to a third
party for the acts of one of the partners.
A. The partners bind the partnership by
acquiescence for obligations he may
have contracted in good faith.
B. The partner must have the authority to
bind the partnership.
C. The contract must be in the name of the
partnership or for its own account.
D. The partner must act on behalf of the
partnership.
represented himself as a partner in the said
partnership to A, who on the faith of such
representation, granted P1M loan to the
BL.O.1405.Law on Partnerships.MCQ
partnership. Assuming only X and Y
consented to such representation, who shall
be liable to A?
A. Since the partnership benefited from the
credit extended by A, all partners X, Y
and Z are liable.
B. Only X, Y and W are partners by
estoppel and are liable pro rata.
C. Since the loan was extended to the
partnership, all the partners and W are 26. Still based on the same facts:
liable.
D. Only W who made the representation
shall be liable.
24. A, B, and C are general partners in the
merchandising firm. Having contributed
equal amounts to the capital, they also
agreed on equal distribution of whatever
profit is realized per fiscal period. After two
years of operation however, C conveys her
whole interest in the partnership to D,
without knowledge and consent of A and B.
Is the partnership dissolved?
A. The partnership is not dissolved because
the conveyance of a partner’s interest in
the partnership does not of itself
dissolve the partnership.
B. The partnership is not dissolved because
the assignment made by C of his whole
interest was without the knowledge and
consent of A and B.
C. The partnership was dissolved because
the assignee, D automatically becomes a
new partner and strictly speaking, there
is a new entity.
D. It is dissolved because C has ceased to
be a partner because of the assignment
of his whole interest to D.
25. Based on the preceding facts:
A. D can participate in the management of
the partnership.
B. D cannot inspect the books nor copy
them for any information on the
partnership affairs as a partner can.
C. C has ceased to have the rights to use
the partnership property.
D. C cannot take part in the control of the
business anymore.
A. If A and B want to dissolve the
partnership, C as a partner need not
consent thereto because he had
assigned his interest to D.
B. D may ask the court for its dissolution
being the assignee of C’s interest in the
partnership.
C. A, B and D may dissolve the partnership
even without the consent of C.
D. A, B and C cannot dissolve the
partnership without the consent of D.
27. Spouses A and B formed a limited
partnership to engage in real estate business
and A contributed P1M only. Is the
partnership between the spouses valid?
A. The partnership is not valid because the
spouses cannot enter into a limited
partnership.
B. The partnership is valid because spouses
can enter into a partnership, limited or
general, universal or particular.
C. The partnership is not valid because
spouses cannot enter into any kind of
partnership for business except conjugal
partnership.
D. The partnership is valid because spouses
are prohibited to enter into a universal
partnership only.

28. 1st Statement -A corporation cannot enter
into a partnership contract with natural
person but with a juridical person it can.
2nd Statement -A general partner is always
the capitalist in a limited partnership.
A. Both statements are false
B. First is true, second is false
C. Both are true
D. First is false, second is true
29. W, X, Y and Z organized a general partnership
with W and X as industrial partners and Y and
Z as capitalist partners. Y contributed P.5 M
and Z contributed P.2 M to the common
fund. By a vote of the partners, W and X
were appointed managing partners, without
specification of their duties and powers. A
applied as secretary and B applied as
accountant of the partnership. The hiring of
A was decided upon by W and X but was
opposed by Y and Z. Whose decision shall
prevail?
A. The decision of W and X shall prevail
because the hiring is an act of
management and as managers they can
do so.
B. That of Y and Z shall prevail because
they are the capitalist partners.
C. The decision of Y and Z because they
have the controlling interest.
D. The decision of W and X because it is an 33. X, Y and Z are partners who contributed
act of ownership.
30. In the same problem as aforementioned,
suppose the hiring of B was decided upon by
W and Z, but was opposed by X and Y, whose
decision shall prevail?
A. The decision of W and Z because W is
the managing partner and the hiring is
an act of administration.
B. The decision of X and Y because in case
of tie in the decision of managing
BL.O.1405.Law on Partnerships.MCQ
partners, that of the controlling interest
shall prevail.
C. That of W and Z because Z is also a
capitalist partner.
D. None of the decision because of the
statement of equal rights.
31. If a partner is insolvent, the first in the order
of preference is:
A. Partnership creditors
B. Partner’s contribution to the
partnership.
C. Separate creditors of the partner.
D. Pro rata between the separate creditors
and the partnership creditors.
32. A, B and C are partners in partnership “DA
KING RAYMOND” to engage in buy and sell of
carabao milk. A and B contributed P10,
000.00 each while C contributed his service.
After payment of the partnership liabilities to
creditors, only P6, 000.00 remains. In the
absence of stipulation to the contrary the
share of C shall be:
A. Equal to the share of A
B. Equal to the share of B
C. P2, 000.00
D. Nothing
equally to the capital of the partnership. A
owes the partnership P9, 000.00. Z collected
from A P3, 000.00 before X and Y could
receive anything from A, who later became
insolvent and therefore, they could not
collect their shares.
A. Partner Z shall share the P3, 000.00 with
his co-partners X and Y.
B. Z cannot be required to share what he
already received from A.
C. X and Y should first exhaust all remedies
to collect from A.
BL.O.1405.Law on Partnerships.MCQ
D. X and Y can automatically deduct from
the capital contribution of Z in the 36. May contribute money, property or industry
partnership their respective shares in
the p3, 000.00.
34. A and B are partners in a real estate business.
The partnership owns a parcel of land which
C desires to buy. C contacted A and informed
him of his intention to buy the said land. A
did not tell B such intention of C. A bought B
out of the partnership and afterwards sold
the land to C at a profit.
A. The partnership was dissolved when A
became the sole owner.
B. The sale is void because it was without
the knowledge of B.
C. A is not liable to B for his share of the
profits.
D. A is liable to B for his share in the
profits.
35. A, B and C are partners in “RAY MOON”
Company to engage in the sale of beer under
the full moon on summer days even in cases
of conflagration and very very hot coffee on
rainy days even in case of inundation. D
represented himself as a partner in the
partnership to E who, on the belief of such
representation, extended credit of P50,
000.00 to the partnership. Assuming only B
and C consented to such representation, who
shall be liable to E?
A. All of A, B, C, and D are liable because of
partnership liability for the credit
extended to the partnership by E.
B. B, C and D are partners by estoppels and
thus, are liable to E.
C. Partners A, B and C are liable to E for the
benefit extended to them.
D. Only D who made the representation is
liable to E.
to a common fund.
A. Limited partner
B. General partner
C. Both limited and general partner
D. Both limited and industrial partner
37. One of the following incidents as a cause for
involuntary dissolution of the partnership,
A. Termination of the definite term of
partnership.
B. Insolvency of a partner.
C. Express will of a partner in a partnership
at will.
D. Expulsion of a partner for cause as
stated in the Articles of part.
38. The following are disqualified to form a
universal partnership, except one:
A. Brother and sister
B. Husband and wife
C. Those guilty of adultery or concubinage
D. Those guilty of the same offense, if the
partnership is entered into consideration
of the same
39. A is a capitalist partner and B the industrial
one. A engaged personally in the same kind
of business as that of the partnership:
A. If there are losses, the partnership will
bear the losses.
B. If there are profits, they will be shared
by A and the partnership.
C. If there are profits, A shall give them to
the partnership.
D. A may be excluded from the partnership
with liability for damages.

40. Suppose in the same facts as
aforementioned, B engages in business on his 43. A, B and C are partners in a partnership
own account but different from that of the
partnership.
A. If there are profits, B and the
partnership shall share equally.
B. If there are losses, B and the partnership
shall equally share.
C. B may be excluded from the partnership
but without damages.
D. B may be excluded from the partnership
with damages.
41. A and B are capitalist partners while C is an
industrial partner. Both A and B equally
contributed P15, 000.00 to each to the
capital. A contractual liability in favor of X
was incurred in the amount of P40, 000.00.
After the exhausting partnership assets there
is a balance recoverable from:
A. A and B only
B. A, B and C
C. A, B and C and C can get reimbursement
from A and B.
D. A, b and C without reimbursement from
A and B in C’s favour.
42. In the aforementioned facts, suppose A, B
and C agreed that one of them shall not be
liable to the creditors, is the agreement
valid?
A. The stipulation that one of them shall
not be liable to the creditors is voidable
at the instance of the creditors.
B. It shall be void agreement even among
the partners because partnership is for
common benefit and interest.
C. It shall be void insofar as the creditors
are concerned.
D. It shall be voidable among the partners
themselves.
BL.O.1405.Law on Partnerships.MCQ
engaged in retail with each contributing P20,
000.00 each. D is admitted as a new partner
with a contribution of P8, 000.00. At the time
of his admission, the partnership has a pre-
existing obligation to E in the amount of P80,
000.00.
A. D is not liable to E for this obligation
incurred when he was not yet a partner.
B. D is liable to E up to his personal assets
which were not contributed.
C. D is liable up to his capital contribution.
D. D is liable up to his capital contribution
in favor of creditors but with right of
reimbursement from A, B and C.
44. 1st Statement -The partners are liable to third
persons jointly or equally for torts or quasi-
delict committed by any partner in the
conduct of the business or with authority of
the partners.
2nd Statement - For contractual liability, their
liability shall be solidary and all partners are
liable.
A. Both are false statements
B. Both are true
C. First is false, second is true
D. First is true, second is false
45. 1st Statement -The partnership shall be
bound in the contract entered into by the
partner who has no authority provided the
third person is in good faith although the act
of the partner is not in usual way of business.
2nd Statement - The partner’s acts although
not in the usual way of conducting the
business shall bind the partnership provided
he was authorized by his co-partners.
A. Both statements are true
B. Both are false
C. First is true, second is false
BL.O.1405.Law on Partnerships.MCQ
D. First is false, second is true
46. A and B are partners with A as the managing 49. C and P are capitalist partners while I is
partner. C owes A P10, 000.00 and the
partnership P30, 000.00 which are now both
due. A issued a receipt for the payment of C
in the amount of P10, 000.00 in his own
name. The payment shall be applied to:
A. This partnership credit totally.
B. The credit of A only since the receipt is
in his name.
C. The payment shall be applied equally in
both credits.
D. The payments shall be applied
proportionately to both credits.
47. A, B and C are partners who contributed
equally to the capital. D without the
knowledge of the death of C contracted with
A who also was unaware of the death of C.
The liability of A is P90,000.00. How much
can D collect after exhausting partnership
assets in the amount of P60,000.00.
A. P30, 000.00 from any one of A, B and C.
B. P15, 000.00 each from A and B.
C. P10, 000.00 from each of A and B and
P10, 000.00 from C’s estate.
D. The partners are not liable beyond their
capital contribution because the
partnership was already dissolved at the 51. Suppose instead of profit, the partnership
time of liability.
48. This is the order of priority in general
partnership liabilities:
A. Outside creditors, creditor partner,
partner’s capital, partner’s profit.
B. Outside creditors, creditor partner,
partner’s profit, partner’s capital.
C. Creditor partner, Outside creditor,
partner’s profit, partner’s capital.
D. Creditor partner, Outside creditor,
partner’s capital, partner’s profit.
industrial partner, who in addition to his
services also contributed capital to the
partnership. There is no agreement as to the
profits and losses. The partnership realized
profit in the amount of P21, 000.00. The
share of I in the profits shall be:
A. C and P will determine I’s share in the
profits.
B. I’s share shall be P7, 000.00.
C. Pro rata to his contributed capital.
D. Just and equitable under the
circumstances.
50. In the preceding number, suppose I is only an
industrial partner, his share in the profits
shall be:
A. Just and equitable under the
circumstances.
B. In proportion to the capital contribution
of his co-partners.
C. Equal to the least share in the profit of a
capitalist partner.
D. The average share of all the capitalist
partners.
suffered loss in the same amount of P21,
000.00 the share of the capitalist partners in
the loss shall be:
A. In accordance to their profit sharing
agreement.
B. In accordance with their loss sharing
agreement.
C. In proportion to their capital
contribution.
D. Equally among them.

52. With still the same facts, as industrial
partner, the share of I in the loss shall be:
A. Just and equitable under the
circumstances.
B. As agreed upon by the partners before 56. 1 Statement -A universal partnership
the loss was realized.
C. None, he being an industrial partner.
D. In proportion to his capital contribution.
53. 1st Statement -After dissolution, the partners
can still enter into new business transactions
in the name of the dissolved partnership
although not for the purpose of winding up
partnership affairs.
2nd Statement - Insanity of either general or
limited partner in a limited partnership shall
dissolve the partnership.
A. Both statements are false
B. Both are true
C. First is false, second is true
D. First is true, second is false
54. A and B orally entered into a partnership
with each of them contributing P3, 000.00
each and some personal properties in the
amount of P1, 000.00 each. The partnership
contract is:
A. Unenforceable because the amount
involved exceeds P500.00.
B. Void because it is not in public
instrument.
C. Valid
D. Void, because it is not registered with
the SEC.
55. A partnership which must be in public
instrument to be valid is:
A. Contribution immovables or real rights
therein regardless of the value thereof.
B. Contribution is P3, 000.00 or more or
personal property.
BL.O.1405.Law on Partnerships.MCQ
C. General partnership
D. Particular partnership
st
entered into without designation is
considered one of profits.
2nd Statement -A limited partner’s surname
cannot appear in the partnership name if it is
also the surname of a general partner to
prevent misrepresentation to third persons.
A. Both statements are false
B. First is true, second is false
C. Both are true
D. First is false, second is true
57. Which of the following statements is not
correct?
A. A partnership contract is not covered by
the Statute of Frauds
B. A limited partner shall not be bound by
the obligations of the partnership.
C. A limited partner who takes part in the
control of the business shall be liable as
a general partner.
D. A stipulation which excludes a partner
from sharing in the profits or loss is void.
58. Which of the following is incorrect?
A. An industrial partner who engages in
business for himself may be excluded
from the firm.
B. An industrial partner may not engage in
business for himself unless there is a
contrary stipulation.
C. A capitalist partner may engage in the
same line of business as that of the
partnership.
D. An offending capitalist partner may not
be excluded from the firm.
BL.O.1405.Law on Partnerships.MCQ
59. 1st Statement -A partner’s interest in the
partnership is not assignable unless the other
partners consent.
2nd Statement - An act of strict dominion may
be performed by a partner without the
consent of his co-partners if it is
advantageous to the partnership.
A. Both statements are false
B. Both are true
C. First is true, second is false
D. First is false, second is true
60. 1st Statement -The death, insanity,
retirement, insolvency or civil interdiction of
a limited partner does not dissolve the
partnership.
2nd Statement -In a general partnership, the
fact that the business can only be carried on
at a loss does not result in the dissolution of
the partnership.
A. First statement is false, second is true
B. First is true, second is false
C. Both are true
D. Both are false
61. 1st Statement -A partnership contract begins
from the moment of the execution of the
contract unless it is otherwise stipulated
2nd Statement -Even if a third person is in
good faith, the partnership is not bound in
the contract entered into by a partner after
the dissolution of the partnership if the
business of the partnership has become 65. 1st Statement -If a person shares in the gross
unlawful.
A. First statement is false, second is true
B. First is true, second is false
C. Both are false
D. Both are true
62. 1st Statement -A universal partnership of
present property shall include the profits
which the partners may acquire therewith
such as properties to be acquired through
legacy, donation or inheritance.
2nd Statement -After dissolution, the partners
may still enter into contracts in the name of
the dissolved partnership if it is for the
purposes of winding up.
A. First statement is false, second is true
B. First is true, second is false
C. Both statements are false
D. Both are true
63. Three of the following are property rights of
a partner. Which is not?
A. Right to specific partnership property.
B. Right to participate in the management.
C. Right to demand formal accounting of
partnership affairs.
D. Interest of the partner in the partnership
64. 1st Statement -If a person receives a share in
the profits of a business, he is a prima facie
presumed to be a partner in business.
2nd Statement -In partnership there is agency,
co-ownership and co-possession of
partnership property.
A. Both statements are true
B. Both are false
C. First is false, second is true
D. First is true, second is false
returns by the use of a property he is
deemed to be a partner.
2nd Statement -If co-owners shared in the
profits derived from the use of the property
owned in common, there is partnership.
A. Both are true
B. First is false, second is true
C. First is true, second is false
D. Both are false

66. 1st Statement -A person who represents
himself as a partner, when in fact he is not,
shall be liable as a partner by estoppel even
if third person has knowledge that he is not.
2nd Statement -A partnership is always
created by agreement of the parties
A. Both statements are false
B. Both are true
C. Firs is true, second is false
D. First is false, second is true
67. 1st Statement -A general partnership is
dissolved by the insanity of a partner.
2nd Statement -A limited partnership is 71. In the same facts in the preceding number,
dissolved by the insanity of a limited partner suppose it is a profit of P10, 000.00, how
A. Both statements are false
B. Both are true
C. First is false, second is true
D. First is true, second is false
68. A limited partner shall be liable as general
partner unless:
A. He takes part in the control of the
business.
B. His surname appears in the partnership
name.
C. His contribution is service.
D. He renounces his share in the profits
after knowledge of the error that he was
made a general partner.
69. A partnership is dissolved, except:
A. Death of a partner
B. Insolvency of a partner or of the
partnership
C. Partnership business can only be carried
on at a loss.
D. Partnership business has become
unlawful. 73.
BL.O.1405.Law on Partnerships.MCQ
70. A, B and C are partners contributed the
following: A - P6, 000.00; B – P4, 000.00; and
C – service. They agreed that the profits and
losses shall be distributed as follows to wit: A
– 35%; B- 25% and C – 40%. How shall the
loss of P10, 000.00 be distributed?
A. A – P6, 000.00; B – P4, 000.00; C – none
B. A – P3, 333.33; B – P3, 333.33; C – P3,
333.33
C. A – P3, 500.00; B – P2, 500.00; C – P4,
000.00
D. A – P5, 000.00; B – P2, 500.00; C – none
shall it be distributed?
A. A – P5, 000.00; B – P5, 000.00;
C – none
B. A – P3, 333.33; B – P3, 333.33;
C – P3, 333.33
C. A – P6, 000.00; B – P4, 000.00;
C – none
D. A – P3, 500.00; B – P2, 500.00;
C – P4, 000.00
72. Still with the same facts except that there is
no agreement as to the sharing of profits and
losses, how shall the profits of P10, 000.00
be distributed?
A. A – P3, 500.00; B – P2, 500.00;
C – P4, 000.00
B. A – P6, 000.00; B – P4, 0000.00;
C – just
C. A – P5, 000.00; B – P5, 000.00;
C – none
D. A – P3, 333.33; B – P3, 333.33;
C – 3, 333.33
With the same facts in the immediately
preceding number, if it was a loss of P10,
000.00, how shall it be distributed?
BL.O.1405.Law on Partnerships.MCQ

A. A – P3, 500.00; B – P2, 500.00; promising new partner whose promises were
C – P4, 000.00 made to be broken leaving an obligation
B. A – P6, 000.00; B – P4, 000.00; totalling to P140, 000 and the partnership
C – none assets amounting to P30, 000. The creditors
C. A – P3, 333.33; B – P3, 333.33; are going after the separate properties of the
C – P3, 333.33 partners to satisfy their remaining claims.
D. A – P5, 000.00; B – P5, 000.00; How are the creditors’ claims satisfied?
C – none Answer 1 – M and N can go after the
separate properties of A and B but
Raymond’s separate properties are not
74. Partnership assets and liabilities are as answerable to their claims.
follows: Answer 2 – O and P can go after the separate
12/31/2014 12/31/2013 properties of A, B and Raymond.
Assets P 200, 000 P 50,000 A. Both answers are wrong.
Liabilities 100, 000 200, 000 B. Both answers are correct.
Capital C. Answer 1 is wrong but answer 2 is
A – P50, 000; correct.
B – P50, 000 100, 000 150, 000 D. Answer 1 is correct but answer 2 is
wrong.
A and B, general partners, have fully paid
their capital contributions. What is the 76. A is the managing partner of A and B
remedy of creditor C? company. X is indebted to A for P20, 000 and
A. Collect partnership liability from the the partnership for P60, 000. When both
partnership. debts mature, X pays A P20, 000 and the
B. Collect partnership liability from B only latter issues a receipt for his personal credit.
C. Collect partnership liability from A only The payment for P20, 000 shall be applied:
D. Collect partnership liability from A and A. To the whole debt owing to A.
B capital contributions (including B. ¼ in favor of A and ¾ in favor of
personal assets) partnership.
C. Debt owing to the partnership.
75. A and B are partners engaging in the humble D. ½ in favour of A and ½ in favour of the
business of merchandising. On January 15, partnership.
2010 when the total obligation of the
partnership totals P80, 000, Raymond was 77. XYZ partnership composed of three (3)
admitted as new smiling face partner with or capitalist partners and one industrial partner
without reason who secretly promised to suffered business losses. Its remaining assets
himself that the partnership will maximize amounting to P100, 000. The partnership is
profit up to nine digits. At the time of C’s indebted to its supplier C in the amount of
admission, the partnership creditors were M P160, 000. How can C recover the 160, 000?
for P50, 0000 and N for P30, 000. After A. C can recover from the partnership
January 15, 2010, the partnership borrowed P100, 000 and the balance of P60, 000
from O, P20, 000 and P40, 000 from P. On from the other capitalist partners.
June 15, 2010, the partnership becomes
terribly insolvent despite the presence of the

B. C can recover from the partnership
P100, 000 and the balance of P60, 000
from any of the partners solidarily.
C. C can recover from the partnership
P100, 000 and the balance of P60, 000
from the four (4) partners jointly
including the industrial partner.
D. C can recover from the partnership
P100, 000 only and suffer as his list in
the balance of P60,000.
78. A, B and C formed the partnership with A as
general partner, B as limited partner and C as
industrial partner. A and B contributed P50,
000 each. The partnership failed and after
disposing all its assets to pay partnership
debts there still remains a note payable in
the sum of P 30, 000.00
A. A legal representative of a limited
partner.
B. A and B are liable to pay P15, 000.
C. Only A is liable to pay P30, 000
indebtedness.
D. C is liable to pay P15, 000.
79. Which of the following persons are not
disqualified to form a universal partnership?
A. Those guilty of adultery and
concubinage
B. Husband and wife
C. Brother and sister
D. Those guilty of the same criminal
offense, if the partnership is entered
into in consideration of the same.
80. A limited partnership formed in 2004 by
Raymondo as general partner and Zeus and
Sharryl as limited partners. In 2005,
Raymondo and Sharryl got married. Did the
marriage dissolve or change the form of the
partnership?
1st answer – yes, partnership is dissolved by
the marriage because there is a change in
equity and status among the partners.
BL.O.1405.Law on Partnerships.MCQ
2nd answer – no, because spouses can enter
into a universal partnership.
A. Both answers are correct.
B. 1st answer is wrong, 2nd answer is correct
C. Both answers are wrong
D. 1st answer is correct, 2nd answer is wrong
81. Which of the following incidents may be a
cause for involuntary dissolution of a
partnership?
A. Expulsion of any partner
B. Insolvency of any partner
C. Express will of any partner
D. Termination of term of the partnership
82. Which of the following liabilities of the
partnership shall rank 1st in the order of
payment?
A. Those owing to creditors other than
partners.
B. Those owing to partners in respect to
profits.
C. Those owing to partners in respect to
capital.
D. Those owing to partners other than for
capital or profit.
83. A, B and C are partners in a joint venture
engaged in real estate and land
development. A without the knowledge of B
and C offered to sell to D all the remaining
unsold lots at a price very much higher than
the prevailing market prices. Later, A bought
out B and C from the partnership and
thereafter finally sold the lots at a very high
profit.
1st conclusion – When A bought out B and C
from the partnership, the partnership was
dissolved so B and C have no more share in
the profit of the sale.
2nd conclusion – The sale of the lots between
A and D is void because it was without the
knowledge and consent of B and C.
A. Both conclusions are correct
BL.O.1405.Law on Partnerships.MCQ

B. Both conclusions are wrong partnership indebtedness, only P20, 000

C. 1st conclusion is correct, 2nd conclusion is worth of assets remained. How much is the
wrong share of Z?
D. 1st conclusion is wrong, 2nd conclusion is A. Zero
correct B. Equal to the share of X
C. Equal to the share of Y
84. A and B are capitalist partners with C as
D. P6, 000
industrial partner. A and B contributed P20,
87. The following are instances, except one,
000 each to the capital of the partnership. A
when a partnership is unlawful. Which is the
contractual liability of P50, 000 was incurred
exception?
by the partnership in favour of REX. The
A. A partnership formed to furnish
assets of the partnership has been exhausted
apartment houses to be used as venue
still leaving an unpaid liability of P12, 000.
for illegal gambling.
What are the rights and obligation of the
B. A partnership formed to create cartel of
partner if any?
monopolies.
A. A and B only
C. A partnership formed for smuggling of
B. C only
contrabands.
C. A, B and C are liable to REX and C after
D. A partnership formed for the purpose of
giving his share may ask reimbursement
buying lands.
from A and B, unless otherwise
stipulated.
D. C has no right for reimbursement from A
88. A partner in a partnership who is not really a
and B unless stipulated
partner not being a party to the partnership
85. The common property of a universal
agreement but is made liable as a partner for
partnership shall be
the protection of innocent third persons is
A. All the properties that shall belong to
known as:
each of the partners after the
A. Dormant partner
constitution of the partnership.
B. Secret partner
B. All the properties which belongs to each
C. Partnership by estoppels
of the partners at the time of the
D. Partner by estoppel
constitution of the partnership as well as
the profits which they may accrue.
89. A, B and C are partners engaged in retail
C. All the properties which belong to each
business. Their contribution is P20, 000 each.
of the partners at the time of the
D is admitted as new partner with a
constitution of the partnership.
contribution of P8, 000. At the time of his
D. All the properties which belong to each
admission, the partnership has an
of the partners at the time of the
outstanding obligation to E in the amount of
constitution of the partnership as well as
P80, 000. In this case:
properties which may acquire therewith
A. D is liable to E for this obligation so that
.
after the assets of the partnership
86. X, Y and Z are partners and contributed to
amounting to P68, 000 will be exhausted
the partnership P40, 000. P30, 000and
leaving a balance of P12, 000, only A, B
services, respectively. The partnership was
and C shall be liable jointly or pro rata,
later liquidated and after payment of the
out of their separate property.

B. D is not liable to E for this obligation.
C. D is liable to E for this obligation so that
the assets of the partnership will be
exhausted, leaving a balance of P12,
000, all the partners shall be liable
jointly or pro rata, out of their separate
property.
D. Answer not given.
90. A, B and Raymundu are equal partners in X
partnership. On April 29, 2010, After
incurring unexpected heavy losses like
several mountains that fall on the little and
tiny partnership, partner Raymundu died
after walking and crying not only a river but
an ocean on the lonely road of broken 93. This is the order of preference in the
dreams. Not knowing that Raymundu died,
on May 1, 2010 A feeling alone contracted a
liability to D who also does not know of the
death of Raymundu, the liability is P90, 000.
After D exhausted the net assets of X
partnership in the amount of P60, 000, he
can collect:
A. P10, 000 from estate of Raymundu; P10,
000 from A; P10, 000 from B
B. P15, 000 from A and P15, 000 from B
C. P20, 000 from A and P10, 0000 from B
D. P30, 000 from A
91. A and B are partners of X partnership. A is
the managing partner. E owes A P10, 000 and
X partnership P30, 000. The obligations of E
are both due. A collected from E the debt of
E to A in the amount of P10, 000 and issued a
receipt in the name of A.
A. The whole of the P10, 000 will be
applied to debt of E to A.
B. P10, 000 will be applied to debt of E to
the partnership,
C. P2, 500 to debt of E to A and P7, 500 to
debt of E to the partnership.
D. P 50, 000 each to debt of E to A and to 95. B and Y orally agreed to form a partnership.
the partnership.
BL.O.1405.Law on Partnerships.MCQ
92. A, B and C are general partners in ABC
partnership. G is debtor to the partnership in
the amount of P15, 000. A received from the
debtor G the sum of P5, 000 and issued a
receipt identifying the amount collected as
P5, 000.
A. A can be compelled to share B and C
their P5, 000.
B. B and C should automatically sue G to
collect the P10, 000.
C. B and C can charge the capital of A with
their share of the p5, 000.
D. A cannot be compelled to share the P5,
000 with B and C.
liquidation of a general partnership.
A. Outside creditors; partner’s creditors;
partner’s capital; partner’s profit
B. Outside creditors; partner’s creditors;
partner’s profits; partner’s capital
C. Partner’s creditors; outside creditors;
partner’s capital; partner’s profits
D. Partner’s capital; outside creditors;
partner’s creditors; partner’s profits
94. F, G, H and I are partners. They contributed
capital as follows: F – P5, 000; G – P30, 000;
H – P20,000; and I as the industrial partner,
his services. The partnership obligation to
outsiders exceeds the total net assets by P18,
000.Who and by how much will the partners
be liable for the payment of the P18,000?
A. F – P9, 000; G – P 5,4 00; H – P3, 600; I –
nothing
B. F – P6, 000; G – P 6, 000; H – P6, 000; I –
nothing
C. F – P4, 500; G – P 2, 700; H – P1, 800 I –
nothing
D. F – P4,500; G – P 4,500; H – P4, 500; I
P4, 500
Each contributed cash and properties worth
P10, 000 to common fund. But they did not
BL.O.1405.Law on Partnerships.MCQ
register the partnership with the Securities
and Exchange Commission.
A. The partnership is void
B. The partnership is voidable
C. The partnership is still valid
D. The partnership is unenforceable
96. A partnership which comprises all that the
partners may acquire by their work or
industry during the existence of the
partnership is:
A. Particular partnership
B. General partnership
C. Universal partnership of all present
property
D. Universal partnership of profits
BL.O.1405.Law on Partnerships.MCQ
BL.O.1405.Law on Partnerships.MCQ
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