LAW REVIEWER

• The liability of the partners, including industrial partners for partnership contracts
entered into in its name and for its account, when all partnership assets have been
exhausted is a. Pro-rata
• X Co., a partnership is compose of A (capitalist partner), B (capitalist partner) and C
(industrial partner). If you were partner A, who between B and C would you have an
insurable interest en, such that you may then insure him? b. Both B and C, as they are
his partner A limited partnership has A, as general partner, B as limited partner, and C,
as industrial partner contributing
• P100,000, P50,000 and services, respectively. The partnership falled and after disposing
all its assets to pay partnership debts, there still remains a note payable in the sum of
P30,000. Against whom can the creditor demand payment? CAP15,000 B P7.500 C
P7,500. b. A-P15,000 B-POC P15,000
• X, Y and Z form Y Partnership to engage to import-export business. The partners agreed
that the profit will be divided on the following ratio: X-20%, Y-30%, Z-50%, but not
agreement as to losses. After one year of operations, there was a loss of P10,000 How
will you apportion this loss if the capital contributions are as follows: XP20,000
YP15.000. Z-P5,000. c. X-P2,000; Y-P3,000, Z-P5,000
• M. T and E decided to form a universal partnership of all present property. The contract
of partnership was executed on October 10,2010 but they commenced business on
October 18.2011. One of the following is not correct? d. In the absence of any
partnership agreement specifically covering the division of losses among the partners.
They will be deemed to share the losses in accordance with their capital contributions.
• Partners A, B and C met a tragic accident. A and B instantly died on the spot, while C was
brought to the hospital but died a few hours later. Who may wind-up partnership
affairs? c. Legal representative of C
• A, B and C agreed to form Y partnership. It was orally agreed that A would contribute
P20,000, B-P15,000 P5,000. It was orally agreed that in the event the ventures proved to
be a financial loss, all losses above the amounts And C of capital contributed would be
assumed by A. There were no other express agreements. Under these circumstances,
which of the following is correct? d. Partnership is valid notwithstanding failure to put
the agreement in public Instrument.
• In the preceding question if after exhausting the partnership capital of P40,000, there is
still liability to X in the amount of P40,000, the liability of the partners to X will be: d. All
of them will be liable to X
• Which of the following is true with respect to a limited partner? d. Should not
contribute industry
• A, B, and C formed a Universal Partnership of profits. The partners contributed the
following A-20 sewing machines B-14 Furnitures and Fixtures C-4-storey building The
 parties agreed that only the use and fruits of the objects contributed shall pertain to the
partnership. Which of the following statements is true? d. During the term of the
partnership, the loss of the objects contributed shall be borne by the partner
concerned.
• If a partner assigns his interest in the partnership to his personal creditor or to a third
person for value, the assignee acquires the right to c. Receive the partner-assignor’s
share of the profits
• Which of the following is a characteristic of partnership as a contract? a. Preparatory
• S and G established a partnership contributing P200,000 each. F, a classmate allowed his
name to be included in the firm name of the partnership. The partnership was insolvent
and after exhausting all the remaining assets, there romains a liability to third persons
amounting to P30,000. The creditors can compel d. S. G and F to pay P10,000 each
• Using the preceding number, if the partnership is solvent and there is a profit of
P30,000, without any stipulation as regards to profit sharing, the participation of the
partners on the profit will be remainder, equally between S and G. c. Equally P15,000
each between S and G
• Limitedly partner who takes active participation in the management of the partnership
shall become c. Liable as a general partner
• The following are the rights of a partner, except b. Admit another partner
• A partnership which comprises all that the partners may acquire by their or industry
during existence of the partnership b. Universal partnership of profits
• The following are the effects of unlawful partnership, except c. The contribution of the
partners shall be confiscated in favor of the govemment
• Absent any contrary provisions in the agreement, under which of the following
circumstance will limited partnership be dissolved? c. A general partner retires and all
the remaining general partners do not consent to continue.
• A, B and C are partners contributing services, P20,000 and P40,000 respectively. The
distribution of P80,000 profit Shall be: a. A P20,000 B-P20,000 C P40,000
• Using the preceding number if the P80,000 represents net assets, the distribution shall
be b. A-P5,000 B-P25,000 C-P50,000
• A, B and C are partners contributing services, P40,000 and P80,000, respectively. The
distribution of P60,000 loss shall be c. A-POB-P20.000 C-P40.000
• A limited partnership has A, as general partner, B as limited partner, and C as capitalist-
industrial partner contributing P50,000; P50,000 and P50,000 and services respectively.
The partnership failed and after disposing all its assets to pay partnership debts only
P30,000 remains. The distribution shall be a. A-P10,000 B-P10.000 C-P10,000
• A and B are co-owners of a parcel of land from which they derive profits in equal sharing
being co-heirs in inheritance. Is there a partnership? B. There is no partnership because
co-ownership by itself does not establish a partnership despite the sharing of profits.
• A and B are partners in Ace partnership. While A was performing his duties as a partner
in the conduct of the business, he negligently caused damage to X, a third person. Who
shall be liable to X and in what capacity? d. A, B and the Partnership are all liable
solidarily to X.
• Which of the following is not a prohibition on a limited partner? d. Limited partner may
not constitute his assignee as substituted limited partner
• A, B and C as partners in a partnership stipulated and mutually agreed that A shall not
share in the profits and losses. Is the agreement valid as among the partners only and
not against third persons? C. Not valid stipulation exempting a partner from sharing
profit and losses
I. A newly admitted partner shall be liable for the pre-existing obligations of the
partnership at the time of his admission in favor of partnership creditors up to the
extent of his capital contribution. II. An industrial partner shall not share in the
losses and his share in the profits shall be just and equitable under the
circumstances... b. True, True
• Three of the following dissolves a partnership, except d. Partnership business can only
be carried at a loss
I. A partner who is liable to the partnership for damages due to his fault may claim
compensation it through his extraordinary efforts in other activities of the
partnership unusual profits have been realized. II. A partner shall become debtor of
the partnership if he falls to deliver his promised contribution and shall be in delay
from the time of a demand from the partnership. a. False, False
• A contributed P1M, B contributed PIM, and C contributed services. They agreed to
divide the profits and losses equally. In case of loss of P.3M, for how much, if any, is C
liable? d. P1M
• Supposed in the preceding case, there was not agreement as to profit-loss sharing, what
will be the share D P1M of C in the profit? b. Just and equitable under the
circumstances
• Based on the preceding number, what shall be his share in the loss? d. None
• The receipt by a person of share of the profits of a business is prima facie evidence that
he is a partner in the business and it is given: d. As his interest in the partnership
• There is partnership except d. There is no fiduciary relationship
• If a partner is insolvent, the first order of preference in the distribution of his assets is c.
Separate creditors of the debtor
• A partnership which must be in public instrument to be valid is a. Contribution of
immovables or real rights therein regardless of the value thereof
• Three of the following are property rights of a partner, except c. Right to demand
formal accounting of partnership affairs
• One of the following is a cause for involuntary dissolution of the partnership? b.
Insolvency of a partner
• The following are disqualified to form a universal partnership, except a. Brother and
sister
• What best describes the nature of partnership contract? a. Consensual contract
• A partnership that has for its object determinate thing, their use or fruits or specific
undertaking, or the exercise a profession or vocation. A. Particular
• This partner shall have all the rights partnership without limited partners a. General
• The contributions of a limited partner may be d. Both A and B
• This partner cannot engage in business for himself, unless the partnership expressly
permits him to do so. A. Industrial
• When the manner of partnership management has not been agreed upon, all the
partners shall be considered b. Agents
• The nature of the partner’s liability with the partnership for everything chargeable to
the partnership due to quasidelict or delict. c. Solidary
• It is the change in the relation of the partners caused by a partner ceasing to be
associated with the carrying on of business. c. Dissolution.
• Every contract of partnership having a capital of P3,000 or more, in money or property,
shall appear in a public instrument, which must be recorded in the b. Securities and
Exchange Commission
• Three lawyers formed a law partnership. The senior and well known partner died. Can
they still continue using the name of such deceased partner? b. Yes as long as they will
punt some mark in that name indicating that such partner is already deceased
• Three of the following are rights of a partner, except b. Right to admit another partner
• One or more but less than all the partners have no authority to perform the following
acts, except d. Convey partnership property in the ordinary course of partnership
business
• The remedy of capitalist partners against an industrial partner who engaged in a
business for himself without the expressed permission from the partnership is d. To
expel him from the partnership and claim for damages
• The following are the instances when a partnership is unlawful, except b. A partnership
formed for the purpose of acquiring parcels of land
• A, B and C are partners in CAB enterprises. Not having established yet their credit rating,
the three partners requested D, a well known business man, to help them negotiate the
loan, from E. A money lender. With the consent of A, B and C D represented himself as a
partner of CAB Enterprises. Thereafter. E granted a loan of P150,000 to CAB enterprises.
What kind of partner is D? d. Partner by estoppel
• Which of the following statements is/are correct?
I. In a Limited Partnership, the partnership debt are paid out of the common fund and
the individual properties of general partners.
 II. Limited partner/s contribute to the capital through money, and/or industry and/or
property, and share in the profits. But do not participate in the management of the
business.
The contributions of a limited partner may be cash or other property, but not services limited
partners can only contribute cash or other property, not services because if he does so, then
he shall become a GENERAL INDUSTRIAL PARTNER, in which case, he shall not be Exempted
from personal liability. 1845

• Listed below are the characteristics of limited partnership, except d. The retirement,
death, insanity or insolvency of a limited partner dissolves the partnership
• A.Cruz, 8. Fuentes, and C. Cruz have formed a limited partnership. All requirements
were all done. A. Cruz and B. Fuentes contributed money and property to the business,
while C. Cruz contributes his industry. B. Fuentes manages the business. The Cruz and
Fuentes’ surname appear in the limited partnership name. Which of them is the limited
partner? a. A. Cruz
A limited partner can only contribute money and/or property. The surname of the limited
partner shall not appear in the partnership name, unless it is also the surname of a limited
partner. In this case, there are two partners with the same name. Considering that C. Cruz
contributed industry, and has his surname in the partnership name, he is not the limited
partner. B. Fuentes, on the other hand, also has his surname on the partnership name as
mentioned, and is managing the business. Hence he’s also not the one.

• Which of the following statements is/are correct?

I. Limited partnership is created by mere consent
II. Limited partnership is formed if there has been substantial compliance in good faith
with the requirements set forth in Article 1844); otherwise, the partnership is non-
existent.
c. Both are incorrect

• Listed are the essential requirements for the formation of limited partnership, except: c.
Oral constitution of contract.
• In a limited partnership composed of X, Y, Z, the contributions are as follows: X-industry,
Y cash and industry, and Z- property Who among the partners are sure to be the general
partner? a. X
• Art 1845.-A limited partner or special partner is not allowed to contribute services. He
can contribute only money or property, otherwise, he shall be considered an industrial
and general partner, in which case, he shall not be exempted from personal liability.
• In a limited partnership composed of X, Y, Z, the contributions are as follows: X Industry,
Y cash and industry, and Z- property. Is it possible that Y is both a limited partner and
general partner in the same partnership? C. Yes. A partner may be a general partner
 and a limited partner in the same partnership at the same time, provided that this fact
shall be stated in the certificate provided.
• A limited partner whose surname appears in a partnership is liable as a general partner
to partnership creditors who extend credit to the partnership without actual knowledge
that he is not a general partner. C. None of the above
• A, a limited partner, appeared as a general partner in the certificate. In case the general
partners are insolvent. B, an innocent 3 person suffered loss due to reliance of false
statement transacting with the business. A knows at the time he sign the certificate that
the statement was false, and had enough time to cancel or amend the certificate. Is A
personally liable to 8 for the loss. d. Yes, because all the requisites to make him liable
are present.
• Which of the following statement is/are correct?
I. A limited partner will be made liable as a general partner if in addition to the
exercise of his rights and powers as a limited partner, he takes part in the settlement
of affairs after dissolution of business.
II. A limited partner who was granted apparent grant of control makes him liable as a
general partner.
c. None of the above
The bare grant of apparent control to a limited partner is not sufficient to make him liable as
a general partner where he has not actually participated in the control of the partnership. A
limited partner is not subject to general liability for taking part in the management of the
firm. For settling affairs after dissolution.

• Without the written consent or ratification of specific act of the limited partnership, the
general partners in a limited partnership have no authority to, except: c. Manage the
business.
The general partner not need have a written consent or ratification of specific act from the
limited partner to manage the business. As a general rule, the ones who can manage the
business are the general partners only.
I. All limited partners are capitalist partners, but not all capitalist partners are limited
partners.
II. All industrial partners are general partners, but not all general partners are industrial
partners. C. True, true.
• The name of a limited partnership should include “limited” or “Itd”, otherwise it will be
considered as a general partnership a. True
• Which of the following statement is/are incorrect?
I. Where there are several limited partners, the members may agree that one or more
of the Limited partners shall have a priority over other limited partners as to the
 return of their contributions, as to their compensation by way of income, or as to
any other matter without it being stated in the certificate.
II. In the absence of statement that one or more of the limited partners shall have a
priority over other limited partners as to the return of their contributions, as to their
compensation by way of income, or as to any other matter, all the limited partners
shall stand upon equal footing
A. I
• A limited partner is considered as trustee for the partnership for, except: d. Unpaid
contribution he agreed to make in the future time
• D, a limited partner lawfully received the return of his contribution on the date specified
in the certificate. Subsequently, the partnership became liable to E. If in case the asset
of the partnership becomes insufficient, to whom shall the claim of E be directed to?
A.The general partners
• D, a limited partner lawfully received the return of his contribution of 200,000 on the
date specified in the certificate. Subsequently, the partnership became liable to E
amounting to 300,000. How much will D be liable to the partnership to pay E? D. 0
If given the choice, which will you choose to be a capitalist partner or an industrial partner?
Why?

• I choose to be capitalist partner, because an industrial partner may not engage in

business for himself unless the partnership allows him to, and if he does, the capitalist
partners may either exclude him from the firm or reap the benefits that he may have
obtained in violation of this provision, with a right to damages in either case.
Limited partnership

• Are only liable up to the amount of their investment.

• Limited rights and no collateral security
• The contributions of a limited partner may be cash or other property, but not services
limited partners can only contribute cash or other property, not services because if he
does so, then he shall become a GENERAL INDUSTRIAL PARTNER, in which case, he shall
not be Exempted from personal liability.

General partnership

• Over all rights

• Who share its profit and must pat its debts if it goes bankrupt.
• Must be created by agreement, proof of existence and estoppel.
General Creditors

• Person or organization that lends money but does not hhave an agreement that
allowwd to take property or assets.
Industrial partnership

• Contributed purely his service is not liable for the losses.

• To company as an investment to an enterprise instead of money.
• PROFIT. – receive such share as may be just and equitable under the circumstances. But,
if besides his services he has contributed capital, he shall also receive a share in the
profits in proportion to his capital.
Universal Partnership

• To all the present property or to all profits.

• PROFIT – comprises all that the partners may acquire by their industry or work during
the existence of the partnership.
Dissolution

• Expiration of contract
• Is the process during which the affairs of the partnership are wound up (where the
ongoing nature of the partnership relation terminates).
Winding up

• Is a procedure that distributes, or liquidates, any remaining property of the partnership

and any assets that remain after the dissolution of the partnership business. Only those
partners that remain with the partnership have the right to partnership assets in the
wind up process.
Termination

• If no part of its business, financial operations, or activities continues. In any case, the
partnership agreement dictates what happens when the partnership is terminated.
Without an agreement, the termination terms are left up to the courts in your state.