No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

Law on Partnership for Discussion Part One

1) It is a contract of two or more persons who bind themselves to contribute money, property, or
industry to a common fund, with the intention of dividing the profits among themselves. It may
also be formed by two or more persons for the exercise of a common profession.
a. Partnership
b. Sole Proprietorship
c. Cooperative
d. Corporation

2) Which of the following is not allowed to become a partner in a commercial or business

partnership?
a. Natural person
b. Partnership
c. Corporation
d. None of the above

3) Which of the following is allowed to become a partner in a General Professional Partnership?

a. Cooperative
b. Corporation
c. Both a and b
d. Neither a nor b

4) Who among the following is allowed to become partners in General Professional Partnership?
a. CPAs and Lawyers
b. Doctors and Engineers
c. Architects and Dentists
d. CPAs and CPA-Lawyers

5) Which of the following is not a general characteristic of a contract of partnership?

a. Preparatory
b. Gratuitous
c. Principal
d. Consensual

6) Which of the following is not an essential requisite of partnership as a form of business

organization?
a. It must have a valid partnership contract.
b. It must have a lawful object or purpose.
c. It must be registered with the Securities and Exchange Commission (SEC).
d. It must have a mutual contribution of money, property or industry to a common fund.
e. It must be established for the common benefit or interest of the partners which is to
obtain profits and then to divide the profits among the partners.

7) This legal principle means that a partner has a right to choose those whom he wants to be
associated with the partnership because it is based on trust and confidence.
a. Res perit domino
b. Genum nun quam peruit
c. Caveat emptor
d. Delectus personae

8) As a general rule, how is a contract of partnership perfected?

a. By mere consent
b. By delivery of capital contribution to the common fund
c. By operation of law
d. By execution of notarized articles of co-partnership

1|P a g e RLACO/DSALES/NVALDERRAM A
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

9) M, a minor and I, an insane, entered into an oral contract of partnership with capital contribution
of P1,500 each during the lucid interval of the latter. What is the status of contract of
partnership?
a. Rescissible
b. Voidable
c. Unenforceable
d. Void

10) On January 1, 2021, A and B orally agreed to organize a contract of partnership to be set-up on
February 1, 2022 with capital contribution of P10,000 each. The cash contribution will be made
on February 1, 2022. What is the status of contract of partnership?
a. Rescissible
b. Voidable
c. Unenforceable
d. Void

11) A, B and C organized a partnership business engaged in sale of medical marijuana. On its first
year of operation, the partnership earned profit of P100,000. Who shall be entitled to such profit?
a. A
b. B
c. C
d. State

12) If immovable or real property is contributed to the partnership, what is the formality or solemnity
required by law?
a. The articles of co-partnership must be registered with the Securities and Exchange
Commission.
b. The contract of partnership must be in writing, whether private instrument or public
instrument.
c. The articles of co-partnership must be in public instrument and an inventory of said real
property is made and signed by the partners, and attached to the public instrument.
d. The contract of partnership and inventory of real property must be registered in the
Registry of Deeds.

13) What is the status of contract of partnership if the formality required by the preceding number is
not complied with?
a. Rescissible
b. Voidable
c. Unenforceable
d. Void

14) What is the minimum capital contribution in money or personal property in order for the
registration with Securities and Exchange Commission of the partnership to apply?
a. At least P1,000
b. At least P3,000
c. At least P5,000
d. At least P10,000

15) If the registration provided in the preceding number is not complied with, what is the effect of
noncompliance with such formality?
a. The contract of partnership is void ab initio.
b. The contract of partnership is unenforceable.
c. The relationship of the parties will be governed by the rules on co-ownership.
d. The liability of the partners to third persons for the obligations of the partnership will not
be affected.

16) What shall govern the associations and societies, whose articles are kept secret among the
members, and wherein any one of the members may contract in his own name with third
persons?
a. They shall be governed by the provisions on Law on Partnership.
b. They shall be governed by the provisions relating to co-ownership.
c. They shall have juridical personality of a corporation.
d. They shall be ruled by the provisions on Cooperative Code.

2|P a g e RLACO/DSALES/NVALDERRAM A
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

17) Which of the following instances, on their own, establishes a partnership?

a. Co-ownership when such co-owners share to any profits made by the use of the co-
owned property.
b. Co-possession when such co-possessors share to any profits made by the use of the co-
possessed property.
c. Joint or common right or interest in any property when they share gross returns from the
jointly controlled or owned property
d. None of the above

18) Which of the following is a prima facie evidence that a person is a partner in a partnership
business?
a. Receipt of a person of share of the profits of a business
b. Receipt of a person of interest from a loan
c. Receipt of a person of Christmas bonus
d. Receipt of a person of contingent rent

19) Which of the following receipt of share of the profits of a business is a prima facie evidence that
person is a partner in a partnership business?
a. As wages of an employee
b. As return on investment
c. As rent to a landlord
d. As interest on a loan
e. An annuity to a widow of deceased partner

20) It is a type of universal partnership wherein all the partners contribute all the property which
actually belonged to them to the common fund, with the intention of dividing the same among
themselves, as well as the profits which they acquire therewith.
a. Universal partnership of all present property
b. Universal partnership of profits
c. Particular partnership
d. Partnership by prescription

21) Which of the following properties shall not form part of common fund of universal partnership of
all present property?
a. Property belonging to the partners at the time of the constitution or perfection of the
partnership.
b. Profits that may be acquired from the present property.
c. Property acquired by each partner after the formation of the partnership if stipulated.
d. Property acquired by each partner by inheritance, legacy or donation after the formation
of the partnership if stipulated.

22) It is a type of universal partnership whereby the common fund comprises all that the partners
may acquire by their work or industry during the existence of the partnership.
a. Universal partnership of all present property
b. Universal partnership of profits
c. Particular partnership
d. Partnership by prescription

23) Which of the following properties shall not belong to the common fund in a universal partnership
of profits?
a. Profits obtained by the partners by their work or industry during the existence of the
partnership.
b. The usufruct or use of the property belonging to each partner at the time of the
constitution of the partnership.
c. The profits and fruits, if stipulated, of the property acquired by each partner after the
constitution of the partnership.
d. The profits and fruits acquired by chance or lucrative title if stipulated.

3|P a g e RLACO/DSALES/NVALDERRAM A
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

24) It is a partnership which has for its object determinate things, their use or fruits, or a specified
undertaking, or the exercise of a profession.
a. Universal partnership of all present property
b. Universal partnership of profits
c. Particular partnership
d. Partnership by prescription

25) It is a partnership where all the partners are liable up to the extent of their separate property
after the partnership assets have been exhausted.
a. General Partnership
b. Limited Partnership
c. Nominal Partnership
d. Partnership by prescription

26) What is the minimum composition of a limited partnership?

a. At least one capitalist partner and at least one industrial partner
b. At least one ostensible partner and at least one nominal partner
c. At least one general partner and at least one limited partner
d. At least one managing partner and at least one nonmanaging partner

27) It is a partnership which in reality is not partnership but is considered as one with respect to
those who, by reason of their conduct or admission, are precluded from denying its existence.
a. Partnership by prescription
b. Nominal partnership
c. De jure partnership
d. De facto partnership

28) It is one which is organized for a certain purpose which, when attained, will cause the
termination of the partnership.
a. Partnership with a fixed term
b. Partnership for a particular undertaking
c. Partnership at will
d. Partnership by prescription

29) Which partnership is subject to corporate income tax?

a. Commercial or business partnership
b. General Professional Partnership
c. Both a and b
d. Neither a nor b

30) This partner is liable for partnership debts up to the extent of his capital contribution or
investment to the partnership.
a. General partner
b. Limited partner
c. Industrial partner
d. Nominal partner

31) He must be present in every type of partnership.

a. Industrial partner
b. Capitalist industrial partner
c. General partner
d. Limited partner

32) He refers to a partner contributes not only money or property but also his services to the
partnership.
a. Capitalist partner
b. Industrial partner
c. Capitalist-industrial partner
d. Nominal partner

4|P a g e RLACO/DSALES/NVALDERRAM A
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

33) What is the proper classification of an industrial partner?

a. General partner
b. Limited partner
c. Managing partner
d. Nominal partner

34) Who among the following may participate in the management of the business of the partnership?
a. Nominal partner
b. Quasi-partner
c. Both a and b
d. Neither a nor b

35) He is one who is active in management of partnership business and known to the public as a
partner, such as by allowing his name to be included in the firm name.
a. Ostensible partner
b. Secret partner
c. Silent partner
d. Dormant partner

36) He is a person admitted to all the rights of a limited partner who has died or has assigned his
interest in a partnership.
a. Retiring partner
b. Withdrawing partner
c. Newly admitted partner
d. Substituted limited partner

37) He takes charge of the winding up of the affairs of the partnership after it is dissolved.
a. Managing partner
b. Liquidating partner
c. Nominal partner
d. Silent partner

38) In the absence of agreement among the partners, when does the juridical personality of the
partnership begin?
a. From the moment of submission of articles of co-partnership to SEC.
b. From the moment of issuance by SEC of Certificate of Registration.
c. From the moment of execution of articles of co-partnership by the partners.
d. From the moment of registration to BIR of the Partnership.

39) How shall the profit of the partnership be divided?

a. It shall be divided based on a valid loss agreement.
b. It shall be divided equally among the partners.
c. It shall be divided based on a valid profit agreement.
d. It shall be divided based on capital contribution ratio.

40) In the absence of a valid profit agreement, what is the share of industrial partner in the
partnership profit?
a. Equal to the share of least capitalist partner
b. Equally with all capitalist partners
c. Based on valid loss agreement ratio
d. Just and equitable share

41) In the absence of a valid profit agreement, how shall the remaining profits be distributed to the
capitalist partners after the distribution to the industrial partner of his just and equitable share?
a. Equally with all capitalist partners
b. Based on valid loss agreement ratio of capitalist partners
c. Based on capital contribution ratio
d. Based on the effort exerted ratio

42) How shall the loss of the partnership be divided?

a. It shall be divided based on a valid loss agreement.
b. It shall be divided equally among the partners.
c. It shall be divided based on a valid profit agreement.
d. It shall be divided based on capital contribution ratio.

5|P a g e RLACO/DSALES/NVALDERRAM A
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

43) In the absence of a valid loss agreement, what is the share of industrial partner in the
partnership loss?
a. Equal to the share of least capitalist partner
b. Equally with all capitalist partners
c. None
d. Just and equitable share

44) In the absence of a valid loss agreement, how shall the loss be divided to the capitalist partners?
a. Equally with all capitalist partners
b. Based on valid profit agreement ratio of capitalist partners
c. Based on capital contribution ratio
d. Based on the effort exerted ratio

45) In the absence of valid agreement, who among the following is exempted from sharing in
partnership loss?
a. Capitalist partner
b. Industrial partner
c. Capitalist-industrial partner
d. Limited partner

46) Which agreement among the partners is valid as to the distribution of profit or loss?
a. Stipulation excluding a capitalist partner from share in partnership profit
b. Stipulation excluding an industrial partner from share in partnership profit
c. Stipulation excluding a capitalist partner from share in partnership loss
d. Stipulation excluding an industrial partner from share in partnership loss

47) Which designation of partnership profit or loss is void?

a. Unilateral designation of profits or losses by a single partner without the consent or
approval by all the partners
b. Mutual agreement of the partners as to unequal distribution of partnership profits and
losses
c. Profit or Loss ratio designated by third person mutually selected by the partners
d. None of the above

48) What is the prescriptive period to file an action to impugn or question the manifestly inequitable
sharing of partnership profits or losses designated by a third person chosen by the partners?
a. Within 3 months from the knowledge of such designation but before its execution by the
complaining partner
b. Within 6 months from the knowledge of such designation but before its execution by the
complaining partner
c. Within 12 months from the knowledge of such designation but before its execution by
the complaining partner
d. Within 1 month from the knowledge of such designation but before its execution by the
complaining partner

49) Which managing partner may not be validly removed by the controlling partner without valid or
justifiable cause?
a. Managing partner appointed in the articles of co-partnership
b. Managing partner appointed after the execution of articles of co-partnership
c. Managing partner appointed in a document separate from the articles of co-partnership
d. Managing partner appointed by the controlling partner

50) When may the controlling partner validly remove a managing partner appointed in a document
separate from the articles of co-partnership?
a. When such managing partner acted in good faith
b. When such managing partner acted in bad faith
c. Either a or b
d. Neither a nor b

6|P a g e RLACO/DSALES/NVALDERRAM A
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

51) When there are two or more managing partners appointed without designation as to their
respective duties, who shall prevail in case there is opposition on acts of administration?
a. Decision of majority of managing partners
b. Decision of the controlling managing partner
c. Decision of majority of the partners
d. Decision of the controlling partner

52) When there is a stipulation in the rules of management that none of the managing partners shall
act without the consent of the others, what is the vote necessary for validity of acts of
administration?
a. Majority of the managing partners
b. Majority of the partners
c. Unanimous vote of all managing partners
d. Decision of controlling partner

53) When there is a stipulation in the rules of management that none of the managing partners shall
act without the consent of the others, when may the absence of any of the managing partners be
alleged by the present partners to justify the approval of act of administration?
a. If the act is that of strict dominion
b. If the act is that of administration
c. If there is imminent danger to the partnership involving an act of administration
d. If there is imminent danger to the partnership involving an act of strict dominion

54) When the rules of management were not agreed upon, who shall be considered the managers of
the partnership?
a. The controlling partner
b. All partners
c. Industrial partner
d. Capitalist partner

55) A, B, C and D formed a partnership with A and B contributing P10,000 cash and P20,000 cash,
respectively, while C and D contributing services. C and D are appointed as managing partners. C
and D hired E as chief accountant who was opposed by A and B. A and C hired F as internal
auditor who was opposed by B and D. Who between E and F is/are validly hired in the ABCD
Partnership?
a. E
b. F
c. Both E and F
d. Neither E nor B

56) A, B, C, D and E formed a partnership with capital contribution of 1:2:3:4:5. No one is appointed
as managing partner. A, B and C preferred BDO as its depositary bank while D and E preferred
BPI. Which is the proper depositary bank of ABCDE Partnership?
a. BDO
b. BPI
c. Both BDO and BPI
d. Neither BDO nor BPI

57) ABC Partnership is engaged in the buy and sell of fruits and vegetables with A appointed as
managing partner. Which of the following acts by a partner is not binding against ABC
Partnership?
a. Sale by Partner B of fruits at a minimal gross profit to a customer who does not have
knowledge of B’s lack of authority.
b. Sale by Partner A of vegetables at break-even to a customer who acted in good faith.
c. Acquisition by Partner C of a brand new delivery truck at a huge historical cost which is
unanimously approved by all the partners.
d. Acquisition by Partner B of an old delivery truck below its book value without the
knowledge and consent by the other partners.

7|P a g e RLACO/DSALES/NVALDERRAM A
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

58) Which of the following acts may be validly done by the managing partner alone?
a. Disposition of the goodwill of the business
b. Confession of judgment
c. Obtaining a regular loan from an accredited lender
d. Submission of a partnership claim or liability to arbitration
e. Entering into a compromise concerning a partnership’s claim or liability

59) Which of the following acts requires unanimous consent by all the partners?
a. Renunciation of a claim of the partnership
b. Availing of volume discount and purchase discount from a major supplier
c. Payment and release of salaries of employees
d. Issuance of check for payment of utilities payable of the business

60) Which of the following statements about the right of industrial partner to engage in a business
other than the partnership business is correct?
a. An industrial partner can engage in any business for himself unless expressly prohibited
by the partnership.
b. An industrial partner can engage in a business of different kind even without stipulation
allowing him to do so and in a business of the same kind of the partnership if there is a
stipulation allowing him to do so.
c. The industrial partner cannot only engage in a business of the same kind with the
partnership but he is allowed to engage in a business of different kind of that of the
partnership.
d. An industrial partner cannot engage in any business for himself, unless the partnership
expressly permits him to do so.

61) What is/are the remedies available to injured partners if the industrial partner engages in any
business for himself without the express permission of the partnership?
a. Exclude the industrial partner from the partnership with a right to damages
b. Avail themselves of the benefits obtained from the business the industrial engaged in
with a right to damages
c. Either a or b
d. Both a and b

62) Which of the following statements about the right of capitalist partner to engage in a business
other than the partnership business is correct?
a. A capitalist partner can engage in any business for himself unless expressly prohibited by
the partnership.
b. A capitalist partner can engage in a business of different kind even without stipulation
allowing him to do so and in a business of the same kind of the partnership if there is a
stipulation allowing him to do so.
c. A capitalist partner cannot only engage in a business of different kind with the
partnership but he is allowed to engage in a business of the same kind of that of the
partnership.
d. A capitalist partner cannot engage in any business for himself unless the partnership
expressly permits him to do so.

63) What is/are the remedies available to injured partners if the capitalist partner engages in a
business of the same kind of the partnership without the express permission of the partnership?
a. To ask the guilty capitalist partner to bring to the common fund any profits accruing to
him from the said transaction
b. To ask the guilty capitalist partner to bear all the losses from the said transaction.
c. Both a and b
d. Neither a nor b

For the Glory of God

8|P a g e RLACO/DSALES/NVALDERRAM A

Copy protected with Online-PDF-No-Copy.com