Law on Partnership

1. Common property in a universal partnership

a. All present property and all property that they may acquire thereof
b. All present property and all property that they may acquired therewith
c. All future property
d. All present property

2. A, B and C are partners of A and Company. They agreed that in case of loss, the share of A is 50%, B
30% and C 20%. After three years total assets of A and Company is P100, 000 as against total liability
of P112, 000. If D is the only creditor, D can collect from A.
a. P 6,000
b. P 12,000
c. P 4,000
d. P 8,000

3. One or more but less than all the partners have no authority to perform the following acts, except:
a. Do any act which would make it impossible to carry on the ordinary business of the partner.
b. Submit a partnership claim or liability to arbitration.
c. Renounce a claim of the partnership.
d. Convey partnership property in the ordinary course of partnership business.
e. None of the above

4. The following are advantages of a partnership as a form of organization. Which is not?

a. It is easy and inexpensive to organize as it is formed by a simple contract between two or
more persons;
b. The unlimited liability of the partners makes it reliable from the point of view of the
creditor;
c. There is constant likelihood of dissension and disagreement when each of the partners has
the same authority in the management concern;
d. The combined personal credit of the partners offers better opportunity for obtaining
additional capital.

5. A and B are partners in AB Partnership. A is the managing partner. A third person, C is indebted by
P10,000 to B and P20,000 to the partnership. When both debts are due, C paid B P10,000 and non
to the partnership.
a. The payment should be applied to the partnership debt.
b. The amount paid will be applied in proportion to both credits.
c. The payment shall be divided equally between B and the partnership.
d. The payment shall be applied to the credit to B.

6. X, Y and Z are general partners in a merchandising firm. Having contributed equal amounts to the
capital, they also agreed on equal distribution of whatever net profit is realized per fiscal period.
After two years of operation, however, Z conveys her whole interest in the partnership to J, without
the knowledge and consent of X and Y.
 What are the rights of J if any should she desire to participate in the management of the partnership
and in the distribution of a net profit of P360,000.00 which was realized after her purchase if Z’s
interest?
a. J can participate in the management of the partnership and she is entitled to P120,000 of
the net profit.
b. J can participate in the administration of the partnership and she is entitled to P120,000 of
the net profit.
c. J cannot participate in the administration of the partnership and she is entitled to P120,000
of the net profit.
d. J cannot participate in the administration of the partnership and she is not entitled to
P120,000 of the of the net profit

7. Case 1: A, B, and C were partners. A informed B that the former was resigning from the
partnership. The partnership was dissolved by the act of A. C had no knowledge of the dissolution.
Case 2: A, B, and C were partners. A informed B that the former was resigning from the
partnership. The partnership was dissolved by the act of A.

Comment to Case 1: If partnership liability is incurred by a contract entered into by C, A and B are
bound to contribute their share of the liability as if the partnership had not been dissolved.
Comment to Case 2: If the contract was entered into by B despite his knowledge of the dissolution,
A and C can recover from B.
a. Both comments are correct.
b. Both comments are wrong.
c. Only comment 1 is correct.
d. Only comment 2 is correct.

8. Three (3) of the following contracts are void. Which is not?

a. Contract in writing contemplating and asking for an impossible service.
b. Oral authority given to an agent in a sale of land.
c. Oral partnership agreement where immovable property is contributed.
d. Oral partnership agreement when capital is more than P3,000.

9. Alterra and Bavadia agreed on May 30, 2013 that they will contribute P20,000 each to form a
partnership for the purpose of engaging in the business of buying and selling palay for a period of
three (3) years. They agreed to organize it on July 1, 2013 and start with the operation on July 15,
2013. They registered it with the SEC and the certificate of registration was issued July 30, 2013.
When is the partnership formed?
a. May 30, 2013
b. July 1, 2013
c. July 15, 2013
d. July 30, 2013
10. A, B and C are partners in ABC Company. D introduced himself as a partner in ABC Company to X,
who in the belief of such introduction, extended a P60,000 credit to ABC Company. These facts are
known by A who did not oppose. Who shall be held liable to X.
a. Since X extended the credit to ABC Company, a partnership liability exists, thus, partner A, B
and C and D are liable.
b. Only A, who knows the transaction and D are partners by estoppel are liable pro-rata to X.
c. D who represented himself as partner in ABC Company is liable.
d. A, and C who benefited in the P60,000 credit shall be liable to X.

11. Which of the following contracts of partnership may not appear in a public instrument?
a. Limited partnership
b. Partnership where immovables are contributed
c. Partnership having a capital of P3,000 or more
d. None of the above

12. A, B and C are partners. Their contributions are as follows: A, P60,000; B P40,000 and C, services.
The partners agreed to divide profits and losses in the following proportions: A, 35%; B, 25% and C,
40%. If there is a loss of P10,000, how should the said loss of P10,000 be shared by the partners?
a. A, P6,000; B, P4,000; C, nothing
b. A, P3,000; B, P2,000; C, P5,000
c. A, P3,500; B, P3,500; C, P3,000
d. A, P3,500; B, P2,500; C, P4,000

13. K is an industrial partner. Besides his services, he also contributed capital to the partnership. There
is no agreement or stipulation as to the profits or losses. The share of K in the profit is
a. the remaining partners will determine his share in profits
b. combination of C and D below
c. such share as may be just and equitable under circumstances.
d. Pro-rata to his contributions.

14. A, B and C formed partnership engaged in appliance business. A and B were general partners while C
was a limited partner. Later, B and C got married, and afterwards A sold his interest to B. Based on
the facts presented, is the partnership dissolved?
a. No, the marriage of B and C will not dissolved the partnership unless there is judicial
approval.
b. The selling of A’s interest to B will not dissolved the partnership because the spouses can
enter into a particular partnership.
c. No, the marriage of B and C and the selling of A’s interest to B converts the partnership into
a universal partnership
d. Yes, when B acquired the interest of A it became a sole proprietorship therefore the
partnership is dissolved.

15. The following persons are disqualified to form a universal partnership. Who are the exceptions?
a. Brother and Sister
 b. Husband and Wife
c. Those guilty of adultery and concubinage
d. Those guilty of the same criminal offense, if the partnership is entered into in consideration
of the same.

16. X, Y and Z were partners. X is an industrial partner. During the first year of operation, the firm
realized a profit of P60,000. During the second year, the firm sustained a loss of P30,000. So, the net
profit for the two years of operation was only P30,000. In the Article of Partnership, it was agreed
that X, the industrial partner would get 1/3 of the profit but would not share in the losses. How
much will X, the industrial partner get?
a. X will get only P20,000 which is 1/3 of the profit of the 1st year of operation.
b. X will get only P10,000 which is 1/3 of the net profit
c. X will get only P20,000 in the first year and none in the second year.
d. X will share in the loss in the second year.

17. May be required additional contribution in case of imminent loss:

a. Capitalist partner c. Industrial partner
b. Limited partner d. None of the above

18. A, B and C formed a limited partnership, with A as a general partner, while B and C as limited
partners, with the following contributions;
 A contribute a specific parcel of land
 B to contribute P10,000, the first P5,000 upon formation, and the last P5,000, 10 days after
formation.
 C contributed a specific car as was stated in the article of partnership, when in fact it was not
contributed.
If the partnership was dispossessed of the land contributed by A after delivery to the partnership by
the real owner, the effect will be;
a. A is considered a debtor of the partnership
b. A is considered a trustee of the land for and in behalf of the partnership
c. The partnership will dissolved
d. A is to answer for warranty against eviction.

19. In the preceding number, if B partner did not deliver the last P5,000 to the partnership, the effect
will be:
a. B hold a trustee for in behalf of the partnership the P5,000.
b. B is considered a debtor of the partnership of P5,000 plus interest without the need of
demand.
c. B may be expelled from the firm plus the damages incurred.
d. B is considered a debtor of the firm for P5,000 plus interest after demand is made.

20. A, B and C are partners where C as a capitalist partner is engaged in the same business in which the
partnership is engaged in. In this situation,
 a. the partnership may oust C from the partnership and at the same time avail of C’s profit in
her separate business.
b. the partnership may oust C from the partnership
c. the partnership may avail of C’s profits in her separate business.
d. the partnership has nothing to do with C since it is her right to engage in any business.

21. A, B and C form a partnership stipulating that the capital will be P15,000 without stating the
contributions of each partner, how much will each contribute?
a. Each partner may contribute any amount as long as the total is equal to P15,000.
b. A shall contribute P7,000, B shall contribute P3,000, and C shall contribute P3,000, base on
their capacity.
c. Each partner shall contribute P5,000.
d. A shall contribute P6,000, B and C shall contribute P4,500 each base on their ages; A being
the eldest, B and C are of the same age.

22. A and B formed a general partnership and contributed P500,000 each. C, a brother-in-law of A,
allowed his name to be included in the partnership firm name. The partnership became insolvent
and there remains unpaid partnership obligation to X to the tune of P60,000. X can compel:
a. Either A or B to pay the P60,000 liability
b. Any of A, B and C to pay the P60,000 liability
c. A and B to pay P30,000 each
d. A, B and C to pay P20,000 each

23. The duty to deliver the fruits of the promised contribution of things or money to the partnership
common fund:
a. Arises from the perfection of the contract of partnership without need of demand;
b. Arises when the duty to deliver the promised contribution arises upon demand;
c. Arises from the perfection of the contract of partnership upon demand
d. Arise when the duty to deliver the promised contribution without the need of a demand;

24. As regards a limited partner, which statement is correct?

a. He cannot be allowed to transact business directly with the partnership of which he is
member as this would result into conflict of interest;
b. He is automatically the agent of the partnership with general authority to bind the
partnership to contracts with third persons;
c. He can only contribute money and property but not services;
d. He has no liability to partnership creditors even if he takes part in the management of the
partnership.

25. A partnership which comprises all profits that the partners may acquire by their work or industry
during the existence of the partnership;
a. Universal partnership of profits
b. Particular partnership
c. Universal partnership of all present property
 d. Partnership at will

26. Antonio is an industrial partner. Besides his services, he also contributed capital in the partnership.
There is no agreement or stipulation regarding profit or losses. His share in the partnership profit is;
a. Depends upon the agreement of the others partners
b. Pro-rata in his interest
c. Such share that is just and equitable
d. Combination of B and C

27. Unless otherwise provided in a general partnership agreement, which of the following statements is
correct when a partner dies?
The deceased partner’s The deceased partner’s The partnership would
executor would estate would be free from be dissolve automatically
automatically become any partnership liabilities
a partner
a. Yes Yes Yes
b. Yes No No
c. No Yes No
d. No No Yes

28. A, B and C wish to go into the business together to bottle mineral water. Each contributed P50,000,
but C wanted to limit his liability to the extent of his contribution, and his name to appear in the
partnership name. Which form of partnership as business organization should they choose?
a. General partnership c. No partnership organization is available
b. Limited partnership d. Limited

29. A, B and C, capitalist partners, each contributed P30,000, P20,000 and P10,000 respectively; and D,
the industrial partner contributed his services. Suppose X, a customer, is the creditor of the firm to
the amount of P180,000. How can X recover the P180,000.
a. X must sue the firm and get P60,000 from all the partners including D, the industrial partner.
X can still recover the balance of P120,000 from the four partners jointly.
b. X can recover from the firm P60,000. X can still recover the balance of P120,000 from the
capitalist partners only.
c. X can recover from the firm P60,000. X can still recover the balance of P120,000 from any of
the partners solidary.
d. X can recover from the firm P60,000 and consider the balance of P120,000 as a loss.

30. Which of the following provision in Partnership Law are considered directory and not mandatory.
a. If the capital is P3,000 or more it must appear in a public instrument.
b. The partnership contract must be recorded with the SEC.
c. If immovable properties is contributed it must appear in a public instrument .
d. B and C
e. A and B
31. A partner whose liability for partnership debts is limited to his capital contribution is called:
a. General partner d. Secret partner
b. Limited partner e. None of the above
c. General-limited partner

32. When the manner of management has not been agreed upon, who shall manage the affairs of the
partnership?
a. Capitalist partners d. All of the partners
b. Industrial partners e. None of the above
c. Capitalist-industrialist partners

33. As a general rule, a partner cannot ask for a formal accounting of the affairs of the partnership
during its existence and before it is dissolved, except;
a. When he is wrongfully excluded from the partnership business.
b. When the right exists under the terms of any agreement.
c. As provided by Article 1807
d. Whenever other circumstances render it just and reasonable.
e. All of the above

34. Sometimes termed dormant partner:

a. Limited partner c. Secret partner
b. Capitalist d. None of the above

35. 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 Securities and Exchange Commission. Failure
to comply with said requirements.
a. will not affect the liability of a partnership and the members thereof to third persons.
b. will render the partnership void.
c. will not give the partnership a legal personality.
d. will give the partnership a de facto existence.

36. A, B and C capitalist partners, contributed P10,000 and D, the industrial partner contributed his
services. Suppose X, is the creditor of the firm the amount of P90,000, after getting the P30,000
assets of the partnership.
a. X can recover P20,000 each from A, B and C only
b. X can recover P60,000 from either A, B or C
c. X can recover P15,000 each from A, B, C and D
d. X can recover P15,000 each from A, B and C but D is exempt because he is an industrial

37. Statement No.1: A person may be a general partner and a limited partner in the same partnership at
the same time.
Statement No.2: All partners, excluding industrial ones, shall be liable pro-rata with all their property
and after all the partnership assets have been exhausted, for the contracts which may be entered
 into in the name of and for the account of the partnership, under its signature, and by authorized to
act for the partnership.
a. Both are true c. No. 1 is true, No.2 is false
b. Both are false d. No. 1 is false; No. 2 is true

38. Statement No.1: A person admitted as a partner into a existing partnership is liable for all the
obligations of the partnership before his admission as though he had been a partner when incurred
and that such liability will extend to his own individual property.
Statement No.2: In the absence of stipulation, the share of each partner in the profits and losses
shall be equal to each other.
a. Both are true c. No.1 is true, No.2 is false
b. Both are false d. No.1 is false, No.2 is true

39. 1st Statement: For failure to register the Certificate of Limited Partnership with the Securities and
Exchange Commission (SEC), any and all contracts entered into by such partnership with third
persons shall be considered void. There was, absolutely, no partnership at all to speak of.
2nd Statement: When an unlawful partnership is dissolved by a judicial decree, all the
contribution as well as the profits shall be confiscated by the State.
a. Both statement are true
b. Both statement are false
c. 1st statement is true, while 2nd statement is false
d. 1st statement is false, while 2nd statement is true

40. A partner in a limited partnership cannot contribute

a. cash d. partly cash and partly property
b. property e. none of the above
c. services

41. A and B are partners, with A as the managing partner. D is indebted to A in the amount P10,000 and
to the partnership in the amount of P5,000. Both debts are due and demandable. D paid A P3,000. A
issued to D a receipt in his own name. How should the amount of P3,000 be applied?
a. The P3,000 should be applied to the indebtedness of D to A.
b. The P3,000 should be applied to the indebtedness of D to the partnership.
c. P2,000 should be applied to the indebtedness of D to the partnership and P1,000 to the
indebtedness of D to A.
d. P1,000 should be applied to the indebtedness of D to the partnership and P2,000 to the
indebtedness of D to A.
e. None of the above

42. Statement No.1: Every partner is responsible to the partnership for damages suffered by it through
his fault, and he may compensate them with the profits and benefits which he may have earned for
the partnership by his industry of work.
Statement No.2: When an unlawful partnership is dissolved by a judicial decree, the profits, but not
partners’ contributions, shall be confiscated in favor of the State.
 a. Both are true c. No.1 is true, No.2 is false
b. Both are false d. No.1 is false, No.2 is true

43. Statement No.1: If property has been promised by a partner as contribution to the partnership, the
fruit arising from the time the property should have been delivered should also be given without the
need of a demand.
Statement No.2: The partner who has been appointed manager in the Article of Partnership
may execute all acts of administration despite the opposition of his partners, unless he should act
in bad faith and his power is irrevocable without just or lawful cause.
a. Both are true c. No.1 is true, No.2 is false
b. Both are false d. No.1 is false, No.2 is true

44. A, B and C formed a general partnership with a gross capital of P90,000. They agree that the profit
and loss sharing is: A-50%; B-25%; C-25%. Upon dissolution and after exhausting the partnership
capital, X has still a collectible amount of P30,000 from the firm. How much can A collect from C
alone.
a. P7,500 c. P30,000
b. P15,000 d. P10,000

45. In the preceding question, supposing there is no profit and loss sharing and A contributed P24,000;
B-P21,000; C-P15,000. How much is the obligation of C to X?
a. P30,000 c. P7,500
b. P15,000 d. P10,000

46. C, a partner in “C” partnership, assigns his interest in “Y” partnership to X, who is not made a
partner. After assignment, X asserts the right to
1. Participate in the management of “Y” partnership
2. C’s share in the surplus profit
3. May compel the other partners that he (x) becomes a partner.
X is correct as to which of these rights?
a. 1 and 3 c. 2 only
b. 3 only d. 2 and 3

47. A, B and C formed a limited 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 P30,000. Against
whom can the creditor demand payment of the note of P30,000?
a. Only A is liable to pay the P30,000 indebtedness
b. A and C are liable to pay P15,000 each
c. A and B are liable to pay P15,000 each
d. A, B and C are liable to pay P10,000 each

48. Which of the following statements is (are) usually correct regarding general partner’s liability?
I. All general partners are jointly and severally liable for partnership torts.
 II. All general partners are liable only for those partnership obligations they actually
authorized.
a. I only c. Both I and II
b. II only d. Neither I nor II

49. A capitalist partner engaged for his own account in an operation which is of the kind of business in
which the partnership is engaged. Said partner can be
a. compelled to sell his interest in the partnership to the other capitalist partners.
b. compelled to dissolve or discontinue the operation of his business
c. compelled to bring to the common funds of the partnership any profits accruing to him from
his transactions.
d. Denied his share in the profits of the partnership

50. A partner who does not participate in the management of the affairs of the partnership and whose
connection with it is not made known to the public is called:
a. Ostensible partner d. Dormant partner
b. Secret partner e. None of the above
c. Silent partner

51. A and B are partner engaged in the real estate business. A learned that C was interested in buying a
certain parcel of land owned by the partnership, even for a higher price. Without informing B, A was
able to make B sell to him (A) his (B’s) share in the partnership. Then A sold the land at a big profit.
a. A is liable to b for the latter’s share in the profit
b. C is liable to B for the latter’s share in the profit
c. The partnership is dissolved when A became the sole owner.
d. The sale of the land to C is void since it was without the knowledge of B.

52. The remedy of capitalist partners against an industrial partner who engaged in a business for himself
without the expressed permission from the partnership is:
a. To compel the industrial partner to sell his interest to the said capitalist partners.
b. To exclude him from sharing in the profits of the partnership
c. To remove him as manager if he is appointed as manager of the partnership
d. To expel him from the partnership and claim for damages.

53. Management of a partnership is usually conferred upon the:

a. Manager c. Partners
b. President d. None of the above

54. Which of the following is not an element of partnership?

a. There must be a valid contract
b. There must be a mutual contribution of money, property or industry to a common fund.
c. There must be intent to engage in lawful business, trade or profession.
d. None of the above
55. Statement No.1: The general partners may continue the business of the limited partnership with
partnership property on the death, retirement, civil interdiction or insolvency of another general
partner.
Statement No.2: Any stipulation exempting a general partner, whether capitalist or industrial,
form his pro rate obligation to third persons shall be void, except as among the partners.
a. Both are true c. No.1 is true, No.2 is false
b. Both are false d. No.1 is false, No.2 is true

56. A substituted limited partner is:

a. a person admitted as a partner by the other partners.
b. a buyer of right of the deceased partner
c. An assignee admitted to all the rights of a limited partner.
d. All of the above