ALDERSGATE COLLEGE

Solano, Nueva Vizcaya

SCHOOL OF BUSINESS AND ACCOUNTANCY

LAW ON BUSINESS ORGANIZATION

PARTNERSHIP
Prepared by: ATTY. KRIZZA FE P. ALCANTARA-BAGNI, CPA

TEST I - MULTIPLE CHOICE. Select the best answer by writing the letter of your choice.

1. A Contract where 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.
a. Voluntary association
b. Corporation
c. Partnership
d. Sole proprietorship

2. One of the following is not a characteristic of contract of partnership.

a. Real, in that the partners must deliver their contributions in order for the partnership contract to be perfected.
b. Principal, because it can stand by itself.
c. Preparatory, because it is a means by which other contracts will be entered into.
d. Onerous, because the parties contribute money, property or industry to the common fund.

3. One of the following is not a requisite of a contract of partnership. Which is it?

a. There must be a valid contract.
b. There must be a mutual contribution of money,
c. property or industry to a common fund.
d. It is established for the common benefit of the partners which is to obtain profits and divide the same among themselves.
e. The articles are kept secret among the members.

4. The minimum capital in money or property except when immovable property or real rights thereto are contributed, that will require
the contract of partnership to be in a public instrument and be registered with the Securities and Exchange Commission (SEC).
a. P5,000.00.
b. P10,000.00.
c. P3,000.00.
d. P3Q,000.00

5. If the partnership has the minimum capital mentioned in No. 4, but the contract is not in a public instrument or the same is not
recorded with the SEC, the partnership;
a. is void.
b. is voidable.
c. does not acquire juridical personality.
d. still acquires juridical personality.

6. Joseph and Edward entered into a universal partnership of all present property. At the time of their agreement, Joseph had a four-
door apartment which he inherited from his father 3 years earlier. Edward, on the other hand, had a fishpond which he acquired by
dacion en papo from Robert. During the first year of the partnership, rentals collected on the four-door apartment amounted to
P480,000.00; while fish harvested; from the fishpond were sold for P300,000.00. During the same period, Edward received by way
of donation a vacant lot from an uncle. The partners had a stipulation that future property shall belong to the partnership. Which of
the following does not belong to the common fund of the partnership?
a. Fishpond.
b. Rental of P480,000.00
c. Apartment.
d. Vacant land.

7. Vincent and James entered into a universal partnership of profits. At the time of the execution of the articles of partnership, Vincent
had a two-door apartment which he inherited from his father 3 years earlier. James, on the other hand, had a fleet of taxis which he
purchased 2 years before. In the first year of the partnership, Vincent earned P500,000.00 as a radio talent, while James won
PI,000,000.00 in the lotto. During the same period, rentals of PI20,000.00 were collected from the apartment, while fare revenues of
P200,000.00 were realized from the operation of the fleet of taxis. Which oi the following belongs to the partnership?
a. Two-door apartment.
b. Lotto winnings of PI ,000,000.00.
c. Salary of P500,000.00.
d. Fleet of taxis.

8. A partnership formed for the exercise of a profession which is duly registered is an example of:
a. Universal partnership of profits.
b. Universal partnership of all present property.
c. Particular partnership.
d. Partnership by-estoppel.

9. Three of the following partnership contracts are void. Which one is not?
a. A universal partnership of all present property between husband and wife.
b. A universal partnership of profits between a man and a woman living together as husband and wife without the benefit of
marriage.
c. A particular partnership between husband and wife.
d. A universal partnership of profits between a private individual and a public officer.

10. John, Albert and Wilfred are partners in JAW Enterprises. Not having established yet their credit standing, the three partners
requested Simon, a well-known businessman, to help them negotiate a loan from Carlos, a money lender. With the consent of John,
Albert and Wilfred, Simon represented himself as a partner of JAW Enterprises. Thereafter, Carlos granted a loan of P150,000.00 to
JAW Enterprises. What kind of partner is Simon?

1|Page
 a. Managing partner.
b. Liquidating partner.
c. Ostensible partner. '
d. Partner by estoppel.

11. Refer to No. 10. Assuming that JAW Enterprises unable to pay the loan on due date at which time the assets of the partnership
amounted only to PI20.000.00. From whom may Carlos collect the payment?
a. Simon only for the whole amount of P120,000.00.
b. John, Albert and Wilfred who are liable jointly for P50,000.00 each.
c. JAW Enterprises for its assets of PI20,000.00; thereafter John, Albert and Wilfred from their separate property at PI0,000.00
each.
d. JAW Enterprises for its assets of P120,000.00, thereafter, John, Albert, Wilfred and Simon from their separate assets at
P7,500.00 each.

12. Teresa, Olga, Pamela and Sonia, partners in TOPS Company Limited, a trading company, have contributions of P50,000.00 each.
Teresa and Olga are general partners, Pamela, a limited partner; and Sonia, a general-limited partner. TOPS Company limited
purchased merchandise on credit from Moret Sales Co. amounting to P180,000.00 On due date, however, TOPS Company Limited
was unable to pay. Accordingly, Moret Sales Co. filed a case of collection against the partnership which by then had assets amounting
to PI50,000.00. From whom may Moret Sales Co. collect the sum of PI80.000.00?
a. The partnership for its assets of PI50,000.00; thereafter, from Teresa and Olga at P15,000.00 each from their separate assets.
b. Teresa and Olga only at P90,000.00 each from their separate assets.
c. The partnership for its assets of PI50,000.00; thereafter, from Teresa, Olga, and Sonia at P10,000.00- each from their separate
property. However, Sonia can recover P5,000.00 each from Teresa and Olga.
d. Teresa, Olga and Sonia at P60,000.00 each. Thereafter, Sonia can recover from Teresa and Olga P30,000.00 each.

13. Which of the following losses will not cause, the dissolution of a partnership?
a. Loss before delivery of a specific thing which a partner has promised to contribute to the partnership.
b. Loss of a specific thing after its delivery to and acquisition of its ownership by the partnership from the partner who contributed
the same.
c. Loss after delivery of a specific thing where the partner contributed only its use and enjoyment, he having reserved the ownership
thereof.
d. Loss before delivery, of a specific thing where the partner promised to contribute only its use and enjoyment, reserving the
ownership thereof.

14. Gregory, Edmond and Mark are partners in GEM Company with contributions of PI0,000.00, P40,000.00 and P50,000.00,
respectively. Their agreement shows that they will share in the profits in the ratio of 2:3:4. During the year, the partnership sustained
a loss of P9,000.00. How shall this loss be divided among the partners?
a. Equally at P3.000.00 each.
b. Gregory, P900.00; Edmond, P3.600.00; and Mark, P4,500.00.
c. Gregory, P2.000.00; Edmond, P3,000.00; and Mark, P4,000.00.
d. The partners must establish first a loss sharing agreement before the loss may be divided because they failed to have an
agreement on the division of loss.

15. Which of the following stipulations is valid?

a. A stipulation excluding a capitalist partner from profits.
b. A stipulation exempting a capitalist partner from losses.
c. A stipulation exempting an industrial partner from losses.
d. A stipulation excluding an industrial partner from profits.

16. A partner can engage in business for himself without the consent of his co-partners if he is:
a. a capitalist partner whether or not the business he will engage in is of the same kind as or different from the partnership business.
b. an industrial partner whether or not the business he~ will engage in is of the same kind as or different from the partnership
business.
c. a capitalist partner and the business he will engage in is of a kind different -from the partnership business*.
d. an industrial partner and the business he will engage, in is of a kind different from the partnership business.

17. Which of the following statements is false when no one among the partners Was appointed as manager?
a. Each partner will be considered as agent of the partnership.
b. Any one may make an important alteration in the immovable property of the partnership without the consent of the others
provided it is useful to the partnership.
c. In case the act of one partner is opposed by another, the decision of the majority of the partners will prevail.
d. In case of a tie in the voting, the tie shall be resolved by the vote of the partner owning the controlling interest.

18. The following statements pertain either to a partner appointed as manager in the articles of partnership or through a document after
the formation of the partnership.
I. He may be removed as manager only for a just or lawful Cause by the vote of the partners owning the controlling interest.
II. He may be removed as manager with or without just or lawful cause by the vote of the partner owing the controlling interest.
III. He may perform all acts of administrator despite the opposition of his partners provided he is ir. good faith.
IV. He may perform all acts of administration in good faith but opposing partners may resort to his removal if he persists.

Based on the foregoing:

a. I and III pertain to a partner appointed as manager in the articles of partnership.
b. I and III pertain to a partner appointed as manager through a document after the formation of the partnership
c. II and III pertain to a partner appointed through a document after the formation of the partnership.
d. I and IV pertain to a partner appointed as manager in the articles of partnership

19. Campos, Urbano, Tamesis and Encanto are partners in CUTE Company each one contributing P300.Q00.00 except for Encanto
who is an industrial partner. The partners agreed that Campos shall be exempted from liability to third persons. Three years of
continued losses after the formation of the partnership resulted in unpaid partnership liabilities to third persons amounting to
P500,000.00. Partnership assets have also been reduced to P200.000.00. From whom may third persons collect the partnership
debts?
a. From the partnership assets of P200.000.00; thereafter, from the partners for their separate assets at PI00,000.00 each except
Campos who was exempted from liability to third persons by agreement.

2|Page
 b. From the partnership assets of P200.000.00; thereafter, from the partners for their' separate assets at P
100,000.00 each except for Encanto since an industrial partner does not share in the losses.
c. From the partnership assets of P200.000.00; thereafter, from all the partners for their separate assets at
P75.000.00 each including Campos and Encanto.
d. From the partnership assets of P200,000.00; thereafter, from Urbano and Tamesis only for their separate
assets at PI50,000.00 since Campos was exempted from liability by agreement, while Encanto, being an industrial partner is not
liable for losses.

20. The partnership will bear the risk of the loss of three of the following things. Which is the exception?
a. Things contributed to be sold.
b. Fungible things or those that cannot be kept without deteriorating.
c. Things contributed so that only their use and fruits will be for the common benefit.
d. Things brought and appraised in the inventory.

21. A partner’s interest in the partnership is his share of the profits and surplus which he may assign to a third person. Which of the
following statements concerning such right is correct?
a. The conveyance of a partner’s interest will cause the dissolution of the partnership.
b. The assignee becomes a partner.
c. The assignee has a right to interfere in the management of the partnership business.
d. The assignee has the right to receive the profits which the assigning partner would otherwise be entitled to.

22. Torres is indebted for P5,000.00 to MACE Trading Company, a partnership managed by Mendoza to whom Torres also owes
P10,000.00. The two debts which are both demandable are unsecured. Torres remits P4,5Q0.00 to Mendoza in payment of his debt
to him. Accordingly, Mendoza issues a receipt for his own credit. To which credit should the payment be applied?
a. To Mendoza’s credit because the payment made by Torres is intended for his debt to Mendoza who issues his own receipt.
b. To both the partnership credit and Mendoza’s credit proportionately at PI,500.00 and P3,000.00, respectively.
c. To Mendoza’s credit because its amount is greater than that of the partnership credit.
d. To the partnership credit because the managing partner should not prefer his own interest to that of the partnership

23. In three of the following wrongful acts of partners, the partnership is solidarily liable with all the partners to third persons. Which one
is the exception?
a. For loss or injury caused to a third person by reason of the wrongful act or omission of a partner acting in the ordinary course of
business.
b. Where a partner acting within the scope of his apparent authority receives money or property of a third person and misapplies
it.
c. Where the partnership receives money or property of a third person in the ordinary course of business and such money or
property is misapplied by a partner while it is in the custody of the partnership.
d. For loss or injury caused to a third person by reason of the use of partnership property by a partner for personal purpose.

24. Benito, Ignacio, Gregorio, Artemio and Servando are partners in BIGAS Company which is engaged in the buying and selling of rice.
Benito is the manager. Ignacio was also given a special power of attorney by the partnership to buy a van for the company. No other
power was given to all the partners. In which of the following acts or contracts is the partnership not bound by the act of the partner?
a. Ignacio buying rice for the partnership from Teodoro who has no knowledge of Ignacio’s lack of authority.
b. Ignacio buying a van for the partnership from Teresa.
c. Gregorio buying a van for the partnership from Thelma who has no knowledge of Gregorio’s lack of authority.
d. Benito selling rice for the partnership.

25. Assuming that no fraud is committed by or consented to by the partner concerned, which of the following statements is false?
a. Notice to any partner relating to partnership affairs while already a partner is notice to the partnership.
b. Knowledge of a partner acting on the particular matter acquired by him while already a partner is knowledge of the partnership.
c. Knowledge of a partner acting on the particular matter obtained by him before he became a partner is knowledge of the
partnership provided he still remembers the same.
d. Knowledge of partner not acting on the particular matter obtained by him before he became a partner is knowledge of the
partnership.

26. Which of the following statements is incorrect?

a. Partnership creditors are preferred as to partnership assets.
b. Partnership creditors are preferred as to each partner’s separate assets.
c. A partner’s separate creditors are preferred as to the partner’s separate assets.
d. A partner’s separate creditors may attach a partner’s share in the partnership assets.

27. The change in the relation of the partners caused by any ceasing to be associated in the carrying on the business is
known as:
a. termination of the partnership.
b. winding up of partnership affairs.
c. liquidation of the partnership business.
d. dissolution of the partnership.

28. A decree by the court is necessary to dissolve a general partnership based on three of the following grounds. Which one will not
require such decree but will cause the automatic dissolution of the partnership?
a. The business of the partnership can only be earned on at a loss.
b. A partner is shown to be of unsound mind.
c. A partner has been guilty of such conduct as tends to affect prejudicially the carrying pn of the business.
d. A partner is civilly interdicted.

29. Three of the following will cause the automatic dissolution of a general partnership. Which one will not?
a. 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.
b. Expulsion of any partner from the business bona fide in accordance with such a power conferred by the agreement between the
partners.
c. A partner becomes in any way incapable of performing his part of the partnership contract.
d. The insolvency of a partner or of the partnership.

3|Page
30. When is the partnership not bound by the act/s of a partner after dissolution in the following cases?
a. Acts necessary to wind up partnership affairs.
b. Acts to complete transactions begun before dissolution.
c. New transactions where the third person is a previous creditor and there was a publication of the dissolution in a newspaper of
general circulation in the place or places where the business had been carried on but such third person has not read it.
d. New transactions where the third person is a new creditor and there was publication of the dissolution in a newspaper of general
circulation in the place or places where the business had been carried on but such creditor has not read it.

31. The partnership is not bound in three of the following acts of a partner after dissolution. However, it is bound in one. Which is it?
a. Where the partner acting is insolvent.
b. When it is unlawful to carry on the business.
c. When the partner has no authority to wind up partnership affairs and the third person is a previous creditor who had no knowledge
of the partner’s lack of authority.
d. When a partner has no authority to wind up partnership affairs and the third person is a new creditor who has not read the
publication of the lack of authority of the partner in a newspaper of general circulation in the place or places where the partnership
business is carried on.

32. What is the order of payment of liabilities of a dissolved general partnership using the code number representing each liability?
I. Those owing to partners other than for capital or foi profits.
II. Those owing to creditors other than partners.
III. Those owing to partners in respect of profits.
IV. Those owing to partners in respect of capital.
a. I, II, III, IV.
b. II, I, IV, III.
c. II, I, III, IV.
d. I, II, IV, III.

33. In a limited partnership where there are 4 partners:

a. All the partners must be limited partners.
b. The number of limited partners must be equal tr the number of general partner, that is, 2:2.
c. The number of limited partners must be greater than the number of general partners, that is, 3:1
d. It is enough that there is one limited partner. rest may all be general partners.

34. A limited partner may contribute:

a. Money and/or property.
b. Money and/or services.
c. Properly and/or services.
d. Services only.

35. A limited partner shall be liable as general partner in three of the following cases. Which one is the exception?
a. When he is a general-limited partner as stated in the certificate.
b. When he takes part in the control of the business.
c. When he participates in the management of the business.
d. When his surname which appears in the partnership name is also the surname of a general partner

36. Which of the following omissions will make a partnership formed as a limited partnership liable as a general partnership?
I. The certificate is not signed and sworn to by all the partners.
II. The certificate is not registered with the Securities and Exchange Commission.
III. The partnership name does not include the word “Limited” or “Ltd.”, its abbreviation, in the certificate.
a. I and II.
b. II and III.
c. I and III.
d. I, II and III.

37. A person admitted to all the rights of a limited partner who has died or has assigned his interest in the partnership is known as:
a. An ostensible partner.
b. A liquidating partner.
c. A substituted limited partner.
d. A general-limited partner.

38. If the assignee does not become the partner referred to in the preceding number, his rights do not include:
a. The receipt of the assignor’s share of the profits.
b. The receipt of the assignor’s other compensation by way of income.
c. The return of the assignor’s contribution.
d. The inspection of partnership books or account of partnership transactions.

39. What is the order of payment of liabilities of a dissolved limited partnership using the code number representing each liability?
I. Those owing to general partners other than for capital or for profits.
II. Those owing to creditors including limited partners, except those to limited partners on account of their contributions and general
partners.
III. Those owing to limited partners by way of their share in the profits and other compensation by way of income.
IV. Those owing to limited partners in respect to the capital of their contiibutions.
V. Those owing to general * partners in respect of capital.
VI. Those owing to general partners in respect of profits.
a. II, III, IV, V, VI.
b. I, III, IV, V, VI.
c. II, I, III, IV, VI, V.
d. II, III, IV, I, VI, V.

40. Which of the following will not cause the automatic dissolution of a limited partnership?
a. Death of a general partner.
b. Death of a limited partner.
c. Insolvency of a general partner.

4|Page
 d. Insanity of a general partner.

41. One of the distinctions between a partnership and a corporation is that a partnership:
a. May be formed by one person:
b. Is created by operation of law.
c. Acts through a board of directors.
d. May exist for an indefinite period.

42. Belinda, Ara, Rica and Klaudia are partners in BARK Enterprises, a pet shop, with Belinda contributing P50,000.00; Ara, P20,000.00;
and Rica, P30,000.00 Klaudia is an industrial partner and manages the partnership. Based on the foregoing information, which of
the following statements is false?
a. Belinda may engage in the buying and selling of rice without the consent of the other partners.
b. Klaudia may engage in the buying and selling of rice without the consent of the other partners.
c. Klaudia is not liable for the losses of the partnership.
d. Klaudia may be held liable by third persons for partnership debts with her separate property.

43. Josephine, Ellen, Wilma, Edith and Lydia are partners in JEWEL Company, Ltd. Josephine, Ellen and Wilma are general partners,
Edith is a general-limited partner, while Lydia is a limited partner. Based on the foregoing information, which of the following
statements is false?
a. Josephine, Ellen and Wilma may be held liable with their separate property after the exhaustion of partnership assets.
b. Edith may participate in the management of the partnership.
c. Edith may not be held liable with her separate property for partnership debts after the exhaustion of partnership assets.
d. Lydia may not be held liable with her separate property for partnership debts after the exhaustion of partnership assets.

44. Which of the following will not cause the automatic dissolution of a general partnership?
a. Death of a partner.
b. Insolvency of a partner.
c. When the partnership business becomes unlawful.
d. Insanity of a partner.

45. Wilma, Olga and Wynona agreed to form a limited partnership with Wilma and Olga as general partners contributing P50,000.00
each, and Wynona as limited partner contributing P100,000.00. The partnership which is to engage in the trading of garments was
named “WOW Garments Co., Limited” as indicated in the certificate signed and sworn to by the partners before a notary public.
However, the certificate was not filed with the Securities and Exchange Commission. In the meantime, the partners already began
operating the business and transacting with third persons.
a. The partnership entered into by the Wilma, Olga and Wynona is void.
b. The partnership will be considered a general partnership. Accordingly, atll partners will be liable with their separate property
after the exhaustion of partnership assets.
c. The partnership will be considered a limited partnership as indicated in its name. Only Wilma and Olga will be liable with their
separate property after the exhaustion of partnership assets.
d. Wilma, Olga and Wynona will be considered separately as sole proprietors with each one having a capital equivalent to their
respective contributions.

46. Fernando, Filoteo, Fortunato and Fulgencio are partners in the firm F4 Enterprises which is engaged in the trading of fertilizers.
Fernando contributed P50,000.00; Filoteo, P36,000.00; and Fortunato, P20,000.00. Fulgencio is an industrial partner and manages
the partnership. Based on the foregoing facts, which of the following statements is incorrect?
a. Fernando may engage in the business of trading car spare parts without the consent of the other partners.
b. Filoteo may be validly exempted from losses incurred by the partnership by agreement of the partners.
c. Fulgencio may not engage in the car repair business without the consent of his co-partners.
d. Fulgencio is exempt from losses although there is no agreement among the partners.

47. Bettina, Erlinda, Amanda, Ursula, Teresa and Yolanda are partners in BEAUTY Enterprises, a dealer in cosmetics and other beauty
products, - with contributions of P60,000.00, P50,000.00, P40,000.00, P30,000.00, P20,000.00, and P10;000.00, respectively. No
one was appointed as manager in the articles of partnership.
a. Bettina is the manager because she made the biggest investment.
b. Every act in the ordinary course of the business will have to be decided by the majority determined on a per head basis.
c. Every act in the ordinary course of the business will have to be decided by the controlling interest (biggest investment) although
the partners owning them do not constitute the majority.
d. All the partners aro agents or-managers of the partnership and any one of them may perform acts of administration.

48. Which of the following will not cause the automatic dissolution of a general partnership?
a. Death of a capitalist partner.
b. Insolvency of a capitalist partner.
c. Insanity of an industrial partner.
d. Civil interdiction of an industrial partner.

49. PATOK Enterprises, a partnership engaged in the business of renting out video films, is owned by Patricia, Alice, Tina, Olga, and
Kaye, with Kaye as the manager. Diana owes PATOK Enterprises P6,000.00 and Olga, P4,000.00. Both debts are on secured and
are already due. Diana pays Olga P4,000.00 for which Olga issues her own receipt.
a. The payment should be applied to Olga’s credit only.
b. The payment should be applied to PATOK’s credit only.
c. The payment should be divided proportionately between PATOK and Olga, at P2,400.00 and PI,600.00, respectively.
d. The payment should be divided equally between PATOK and Olga at P2,000.00 each.

50. Federico, Alberto, Sofronio and Teodoro are partners in FAST Motorparts Company, a dealer of car spare parts. Federico, Alberto
and Sofronio invested P500,000.00, P200,000.00 and P300,000.00, respectively. Teodoro is an industrial partner who manages the
partnership. The partners have stipulated that Federico shall be exempt from liability to third persons. At the end of three years, the
assets of the partnership have dwindled to P220,000.00 while its liabilities to third persons have a balance of P340,000.00. How
much ultimately will be the share of each partner after payment to third persons and the settlement among the partners?
a. P30,000.00 for each partner.
b. Federico, P60,000.00; Alberto, P24,000.00: Sofronio, P36,000.00; and Teodoro, none.
c. Federico, none; Alberto, P48,000.00; Sofronio, P72,000.00; and Teodoro, none.
d. Federico, none; Alberto, Sofronio and Teodoro. P40,000.00 each.

5|Page
51. John Solanda and Sons is a partnership composed of three partners, namely: Robert Solanda, Simon Solanda. and Theodore
Solanda. The partners are the sons of John Solanda who has retired from business but who suggested that they include his name
in the firm to give them an advantage since he is well-known in the business community.
I. John Solanda shall have all the rights of a geners. partner.
II. John Solanda shall have all the liabilities of a general partner.

Based on the foregoing facts:

a. Both statements are true.
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.

52. The following partnership contracts were presented to you for evaluation:
I. A partnership engaged in the sale of office supplies with a capital of PI00,000.00 broken down into: cash, P30,000.00; office
supplies for sale P50,000.00; and office equipment, P20,000 The agreement is in a private instrument.
II. A partnership engaged in the lease of offices with a capital of P700,000.00 broken down into: land, P100,000.00; building,
P500,000.00; cash, P80,000.00; and office equipment, P20,000.00. The agreement is in a public instrument attached to which
is the inventory of the land and the building signed by the partners. The agreement is not recorded with the Securities and
Exchange Commission.
III. A partnership engaged in the trading of computers whose name is “Lamont Enterprises, Ltd.” It has a total capital of P500,000.00
broken down into P100,000.00 cash and computers worth P400,000.00, contributed by both general and limited partners. The
agreement was subscribed and sworn to by all the partners before a notary public but not recorded with the Securities and
Exchange Commission.

Based on the foregoing:

a. Each partnership has a separate juridical personality.
b. I and II have separate juridical personality.
c. II and III have separate juridical personality.
d. None of the partnerships has a separate juridical personality.

53. GREAT Company, a partnership engaged in the distribution of generators, is composed of George, Roland, Edmond, Albert and
Troy. George is the managing partner. During the month of April, the following transactions were entered into by the following partners
in behalf of the partnership without any authority:
I. The sale of a generator by Roland to Juan Tories who was not aware that Roland had no authority. Juan Torres has paid
for the generator which is due for delivery.
II. The purchase of a car by Edmond from Intrepid Motors whose owner was not aware of Edmond’s lack of authority. The car
and the price are due for delivery and payment, respectively.

Based on the foregoing, the partnership is bound by:

a. Transaction I only.
b. Transaction II only.
c. Both Transactions I and II.
d. Neither Transaction I nor II.

54. MARK Company, is a partnership engaged in the trading business, with Marquez, Alconcer, Ramos, and Kanapi as partners.
Marquez, Alconcer and Ramos are capitalist partners, contributing P 100,000.00, P60,000.00, and P40.000.00, respectively. Kanapi
is an industrial partner. The partners have a stipulation that Marquez shall not be liable for partnership liabilities. After three years of
continued losses, the partnership incurred liabilities of P200,000.00 at which time its assets had dwindled to P140.000.00. After
partnership assets have been, exhausted, partnership creditors may go after the separate assets of:
a. all the partners.
b. Marquez, Alconcer and Ramos, but not those of Kanapi.
c. Alconcer, Ramos and Kanapi, but not those of Marquez.
d. Alconcer and Ramos only.

55. Sibal, Untalan, Pareno, Eusebio, and Ranees are partners in SUPER Enterprises whose business is car painting and repairs. All
partners are capitalist partners with Sibal as manager. After five years of operations, Ranees resigned from the partnership. Although
Sibal was aware of the resignation of Ranees, he still bought 50 gallons of car paint from Masterpaint owned by Marcelo who had
been dealing with SUPER for the past 5 years, and car spare parts from Supremeparts, owned by Salviejo who was transacting for
the first time with SUPER. The dissolution of SUPER was published in the Manila Bulletin but neither Marcelo nor Salviejo read it.
Neither one knew at the time they transacted with Sibal that the partnership had been dissolved.
a. SUPER is liable to both Masterpaint and Supremeparts.
b. SUPER is liable to Masterpaint only.
c. SUPER is liable to Supremeparts only.
d. SUPER is not liable to both Masterpaint and Supremeparts.

56. TRIUMPH Company, a partnership engaged in the buying and selling of car spare parts, has for its partners and their respective
contributions the following: Tomas, P10,000.00; Ramon, P20,000.00; Ignacio; P30,000.00; Urbano; P40,000.00; Marcos,
PI00,000.00; Pablo, P200,000.00; and Hilario, P300,000.00. No one was appointed as manager of the partnership. In the course of
the operation of the partnership, Tomas proposed to buy car spare parts from Dominion Motors, but his proposal was opposed by
Ramon. A voting among the partners took place and Ignacio, Urbano and Marcos sided with Tomas, while Pablo and Hilario sided
with Ramon.
a. The group of Tomas, Ignacio, Urbano and Marcos will prevail because they constitute the majority.
b. The group of Ramon, Pablo and Hilario will prevail because they own the controlling interest.
c. None will prevail because no one was appointed as manager of the partnership,.
d. The partners will have to appoint a manager in order to resolve the conflict.

57. Refer to No. 56. Assuming that when the voting took place, Marcos abstained, Ignacio and Urbano sided with Tomas, while Pablo
and Hilario sided with Ramon.
a. None will prevail because the voting was equal.
b. The group of Ramon, Pablo and Hilario will prevail because they own the controlling interest.
c. None will prevail because no one was appointed as manager of the partnership.
d. The partners will have to appoint a manager in order to resolve the conflict.

6|Page
58. Refer to No. 56. Assume the same facts except that in the articles of partnership, Tomas,* Ramon, Ignacio, Urbano and Marcos were
appointed managers. In the course of the operation of the partnership, Tomas proposed to buy car spare parts from Dominion Motors,
but his proposal was opposed by Ramon. A voting among the managing partners took place and Ignacio and Urbano sided with
Tomas, while Marcos sided with sided with Ramon.
a. The group of Tomas, Ignacio and Urbano will prevail because they constitute the majority of the managing partners.
b. The group of Ramon and Marcos will prevail because they own the controlling interest among the managing partners.
c. The conflict will have to be referred to Pablo, and Hilario because they represent the controlling interest among all the partners.
d. The partners will have to agree that all of them must be managers in order to resolve the conflict.

59. Refer to No. 58. Supposing that when the voting among the managing partners took place, Ignacio sided with Tomas, Urbano
abstained, while Marcos sided with Ramon.
a. None will prevail because the voting was equal.
b. The group of Ramon and Marcos will prevail because they own the controlling interest among the managing partners.
c. The conflict will have to be referred to Pablo and Hilario because they represent the controlling interest among all the partners.
d. The conflict will have to be referred to an arbiter for its resolution.

60. Donna, Emma, Alma and Rona are partners in DEAR Company with Donna as manager. Tricia owes DEAR Company P5,500.00
and Donna, in Donna’s .personal capacity, P4,500.00. Tricia’s debt to Donna is secured by a pledge of her diamond ring. Both debts
are already due. Tricia pays P4,500.00 to Donna and tells her that the same is in payment of her debt to Donna. Donna, thus, issues
her personal receipt.
a. The payment of P4,500.00 will be applied proportionately to the two credits: to the partnership credit at P2,475.00; to Donna’s
credit at P2,025.00. This is so because Donna should not place her interest before that of DEAR Company.
b. The payment of P4,500.00 will be applied entirely to Donna’a credit.
c. The payment will be applied in partial payment of the partnership credit of P5,500.00; hence, there will be a balance of PI,000.00.
d. Tricia, Donna and DEAR Company will have to agree as to which credit the payment shall apply.

61. Which of the following statements concerning the name of a partnership is false?
a. The partnership name may include the name of only one of the partners.
b. The partnership name may include the names of two or more, but not all of the partners.
c. The partnership name may include the names of all the partners.
d. The partnership cannot adopt a name which does not include the name of at least one of the partners.

62. Omussa, the owner of a vacant lot, leased the same to Florida under an agreement that the rental shall be paid by Florida at the rate
of 10% of the annual net income of the flower business that she would put up on the lot. A private agreement was signed by the
parties. In the first year of operations, Omussa received from Florida the amount of P20,000.00 representing 10% of the net income
of the flower shop business.
a. Omussa is a partner of Florida by her mere receipt of the share of the net profits of the flower business of Florida.
b. The relationship of Omussa and Florida is only that of a lessor and lessee.
c. Omussa and Florida have a dual contract: partnership and lease.
d. Omussa and Florida are not partners; neither are they lessor and lessee because their agreement was not in a public instrument.

63. LIFE Company, a partnership engaged in the water distribution business, is composed of partners Larredo, Ingles, Filler and Encanto.
One day, Larredo was driving the firm’s delivery truck beyond the speed limit in order to serve its customers, when he rammed into
and caused extensive damage on the parked car of Tertullo.
a. Only Larredo can be held liable for damages by Tertullo.
b. LIFE Company and Larredo are solidarity liable for damages to Tertullo.
c. LIFE Company and the four partners are solidarity liable for damages to Tertullo.
d. LIFE Company and the four partners are jointly liable for damages to Tertullo.

64. A person admitted as a partner id to ah existing partnership shall be liable up to the extent of his separate assets for what obligations?
a. Obligations of the partnership existing at the time of his admission only if there was a stipulation.
b. Obligations of the partnership incurred after his admission only if there was a stipulation.
c. Obligations of the partnership incurred before and after his admission even if there was no stipulation.
d. Obligations of the partnership incurred before his admission if there was a stipulation, and those incurred after his admission
even if there was no stipulation.

65. PARAGON Enterprises, a partnership engaged in the garments manufacturing business, is composed of partners Pacis, Ramas and
Gonzales. During the year, PARAGON bought a computerized embroidering machine amounting to P300,000.00 from Tadena with
the following stipulation: down payment of P50,000.00; balance to be paid in amount equal to 20% of the monthly net profits of
PARAGON until the full amount is paid.
a. Tadena is an actual partner of Pacis, Ramas and Gonzales during the time that he receives a share of the profits of PARAGON
as payment of the purchase price of the machine.
b. Tadena is only a partner by estoppel of Pacis, Ramas and Gonzales during the time that he receives a share of the profits of
PARAGON as payment of the purchase price of the machine.
c. Tadena is not a partner of Pacis, Ramas and Gonzales whether before or alter he has received the full payment of the purchase
price of the machine from PARAGON.
d. Tadena is only a nominal partner of Pacis, Ramas and Gonzales during the time that he receives a share of the profits of
PARAGON as payment of the purchase price of the machine

66. MAGIC Company is a partnership composed of Martha, Agnes, Glenda, Irene and Candice, with Martha as manager who is
authorized to collect the credits of the partnership. Theresa owes Martha P4,000.00 which is due on December 10. She also owes
MAGIC Company P6,000.00 which is due on December 20. On December 15, Theresa tendered payment in the amount of P4.000.00
to Martha in payment of her debt to the latter. Martha issued her own receipt acknowledging the payment.
a. The payment will be applied proportionately to the credits of MAGIC and Martha in the amount of PI,600.00 and P2,400.00,
respectively.
b. The payment will be applied in its entirety to Martha’s credit.
c. The payment will pe applied in its entirety to MAGIC’s credit.
d. The payment will be applied equally to the two debts of Theresa.

67. Aseron, the managing partner of ACE Company, was driving the delivery truck of the firm when he rammed it into an electric post
resulting in damages to the vehicle amounting to P50.000.00. To make up for accident, Aseron worked long hours for the firm and
was able to increase its sales from P5,000,000.00 to P15,000,000.00.

7|Page
 a. Aseron will no longer be liable for damages to ACE because he was able to generate unusual revenues for the firm through his
extraordinary efforts.
b. Aseron will still be liable to the firm for damages but the amount will be equitably reduced since he was able to generate unusual
profits for the firm through his extraordinary efforts.
c. Aseron’s obligation to the firm for damages will be extinguished by compensation since ACE is also liable to him for the
extraordinary efforts he exerted to increase its sales.
d. Aseron and ACE will share equally in the damages of P50,000.00.

68. Trevor owes P3,000.00 to CHAMP Company, a partnership composed of Charles, Harry, Albert, Mark and Prince, with Mark as the
manager who is authorized to collect all credits of the firm. He also owes Charles the amount of P6,000.00. Both debts are already
due. Trevor gives P3,000.00 to Charles in payment of his debt to the latter. Charles thus issues his own receipt.
a. Payment will be applied proportionately to the two credits at PI,000.00 for Charles’ credit and PP2,000.00 for CHAMP’S credit.
b. Payment will be applied equally to the two credits.
c. Payment will be applied in its entirety to Charles’ credit.
d. Payment will be applied in its entirety to CHAMP’s credit.

69. Barranda wrote Salvador a letter wherein he placed an order for a laptop computer worth P80,000.00. In writing the letter, Barranda
used a stationery which had for its letterhead “Barranda and Bermudez, Real Estate Agents.” Bermudez is not really a partner of
Barranda but they agreed to use the said letterhead to give a semblance of bigness by making it appear that the two of them are
partners. Salvador delivered the laptop computer but Barranda defaulted in his payment of its price. Against whom may Salvador
proceed? *
a. Barranda only since Bermudez is not his partner.
b. Barranda only since the purchase of the laptop computer is his personal transaction
c. Barranda and Bermudez since they are partners in so far as Salvador is concerned.
d. “Barranda and Bermudez, Real Estate Brokers” only since an actual partnership was created between Barranda ana Bermudez
and it has a personality separate and distinct from the two.

70. Daoang and Depante have been partners for more than 5 years in the purified water business. At the start of the sixth year, Daoang
assigned his interest in the partnership to Trinidad, but Depante objected on the ground that he did not want Trinidad to be his
partner.
a. Trinidad automatically became a partner of Depante when Daoang conveyed his interest to him.
b. Daoang and Depante continue to be partners despite Daodng’s conveyance of his interest to Trinidad.
c. The partnership between Daoang and Depante was automatically dissolved when Daoang conveyed his interest to Trinidad.
d. The conveyance by Daoang of his interest in the partnership to Trinidad entitled the latter to inspect the books, and participate
in the management, of the partnership.

TEST II - MATCHING TYPE. Indicate your answers by writing the letter representing the statement or phrase that best describes,
defines or explains the numbered items.

Terms

1. Partnership 11. Universal partnership of

2. Particular partnership all present property
3. Partnership for a fixed 12. Limited partnership
term 13. Winding up
4. Partnership by estoppel 14. Partnership for a
5. Capitalist partner particular undertaking
6. Dissolution 15. Universal partnership of
7. Substituted limited profits
partner 16. Termination
8. Delectus personae 17. Partnership at will
9. General partnership 18. Limited partner
10. Subsidiary liability 19. Industrial partner
20. General partner

Statements

A. He contributes his services to the partnership.

B. All the partners are general partners.
C. A period is stipulated for the existence of the partnership.
D. Refers to the process of settling the business or affairs of the partnership after dissolution.
E. 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.
F. Property belonging to each partner at the time of the establishment of the partnership as well as the profits realized therefrom belongs
to the partnership.
G. The pro rata liability for partnership obligations of the partners, including industrial ones, to the extent of their separate property after
partnership assets have been exhausted!
H. The principle that a person is free to choose those whom he wants to be associated in partnership.
I. A partnership whose existence may be terminated at any time by the partners.
J. A partner who is liable only to the extent of his contribution to the partnership.
K. A partnership which comprises all that the partners may acquire by their work or industry during the existence of the partnership.
L. A partnership where there is at least one general partner and at least one limited partner.
M. The change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business.
N. It has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession.
O. A partner who is liable to the extent of his separate property when all the partnership assets have been exhausted.
P. He contributes money and/or property to the common fund of the partnership.
Q. A person admitted to all the rights of a limited partner who has died or who has assigned his interest in the partnership.
R. The point when all partnership affairs are wound up.
S. It is not in reality a partnership but is considered as one with respect to those who, by reason of their conduct or admission, are
precluded from denying its existence.
T. A partnership organized for a certain purpose which when attained will cause the dissolution of the partnership.
U. None of the foregoing.

8|Page
TEST III - TRUE OR FALSE. Write the word “TRUE” if the statement is true, and the word “FALSE” if the statement is false.

1. An artificial person like a corporation, may be a partner in a partnership.

2. A limited partner may contribute money and/or property to a partnership but not services.
3. A partnership has a personality separate and distinct from each of the partners.
4. A partnership begins from the moment of the execution of the contract, unless a different date is stipulated.
5. A partnership whose capital in money or property amounts to P3,000.00 or more does not acquire juridical personality if the contract is not recorded
with the Securities and Exchange Commission.
6. The sharing of gross returns does not of itself establish a partnership even if the persons sharing them have a joint or common interest in the
property from which the returns are derived.
7. In a universal partnership of all present property, the partners may stipulate that future property shall belong to the partnership but the stipulation
cannot include property acquired by inheritance, legacy or donation.
8. In a universal partnership of profits, property belonging to each partner at the time of the establishment of the partnership shall continue to pertain
to each partner with only the usufruct passing on to the partnership.
9. Articles of universal partnership entered into without specification of its nature, only constitute a universal partnership of all present property.
10. A man and a woman living together as husband and wife without the benefit of marriage may enter into a universal partnership.
11. A partnership for a fixed term or a particular undertaking which is continued after the expiration of the term or the attainment of the undertaking
becomes a partnership at will.
12. Spouses can validly enter into a particular partnership with each other.
13. The profits and losses of the partnership shall be divided equally among the partners if they have no profit and loss sharing agreement.
14. A stipulation exempting a capitalist partner from losses is valid.
15. When a partner has been appointed manager in the articles of partnership, he may be removed without just cause by the vote of the partner
owning the controlling interest.
16. An industrial partner can engage in business for himself if it is of a kind different from the partnership business even without the consent of the
other partners.
17. All partners including industrial ones shall be liable pro rata with all their separate property after the partnership assets have been exhausted.
18. The partnership shall bear the loss of things which are contributed to the partnership to be sold.
19. A newly-admitted partner is liable for partnership debts contracted before his admission to the extent of his contribution, unless there is a contrary
stipulation.
20. A partner may associate another person with him in his share but the associate shall not be admitted to the partnership without the consent of all
the partners.
21. The partnership shall be solidarity liable with all the- partners if one partner acting within the scope of his apparent authority receives money or
property of a third person and misapplies it.
22. When a partner is not authorized to act for the partnership and the act of the partner is not for apparently carrying on the business, the partnership
shall be bound by the act of such partner if the third person was not aware of the partner’s lack of authority.
23. Notice to any partner relating to partnership affairs is notice to the partnership.
24. The private creditor of a partner shall have preference over such partner’s separate property.
25. A general partnership is automatically dissolved by reason of the insanity of a partner.
26. After dissolution, a partnership is still bound by the act of a partner authorized to act for the partnership with respect to the completion of transactions
begun before dissolution.
27. A partnership intended to be formed as a limited partnership but without the word “Limited” or “Ltd.” appended to its name shall be considered as
a general partnership.
28. A partner may be a limited and general partner at the same time.
29. As a rule, a limited partner shall be liable as a general partner if he allows the use of his surname to be included in the partnership name.
30. A limited partner may assign his interest to another person.

9|Page