CPA Review School of the Philippines

Manila
BUSINESS LAW DO DELA CRUZ
LAW ON PARTNERSHIP
1. Partnership as distinguished from corporation
a. Acquires juridical personality upon approval by the SEC and issuance of certificate
b. Has limited liability
c. Created by operation of law
d. No power of succession

2. Essential elements or feature of a partnership, except

a. Must have a awful object or purpose
b. There must be a contribution of money, property or industry to a common fund
c. With intention to divide and contribute whatever profits they make to other people
d. Must be established for the common benefit or interest of the partners

3. 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

4. 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, property or industry to a common fund
c. It is established for the common benefit of the partners which is to obtain profits and divide the same
among themselves
d. The articles are kept secret among the members

5. 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
SEC
a. P5,000 b.P10,000 c. P3,000 d. P30,000

6. A and B put up a partnership to engage in distribution of books and school supplies. A contributed P1M
while B his services. A wants to put up a restaurant on the opposite side of the street. On the other hand, B
wants to have a bakery beside A’s restaurant. Which of the following is correct?
a. A may put up his restaurant without need of securing B’s consent
b. B may put up his bakery without need of securing A’s consent
c. Both A and B can put up their restaurant and bakery business without the need of securing each other’s
consent
d. Neither A nor B can put up another business.

7. A and B entered into a universal partnership of all present property. At the time of their agreement, A had a
four-door apartment which he inherited from his father 3 years earlier. B, on the other hand, had a fishpond
which he acquired by dacion en pago from C. During the first year of the partnership, rentals collected on
the four-door apartment amounted to P480,000; while fish harvested from the fishpond were sold for
P300,000. During the same period, B 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. Fish pond b. Rental of P480,000 c. Apartment d. Vacant land

8. A and B entered into a universal partnership of profits. At the time of execution of the articles of
partnership, A had a two-door apartment which he inherited from his father 3 years earlier. B on the other
hand, had a fleet of taxis which he purchased two years before. In the first year of the partnership, A earned
P500,000 as a radio talent while B won P1,000,000 in the lotto. During the same period, rentals of
P120,000 were collected from the apartment, while fare revenues of P200,000 were realized from the
operation of the fleet of taxis. Which of the following belongs to the apartment?
a. Two-door apartment b. Salary of P500,000
b. Lotto winnings of P1,000,000 d. Fleet of taxis
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9. 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

10. A, B and C are partners in CAB Enterprises. Not having established yet their credit standing, the three
partners requested D, a well known businessman, to help them negotiate a loan from E, a money lender.
With the consent of A, B, and C, D represented himself as a partner of CAB Enterprises. Thereafter, E
granted a loan of P150,000 to CAB Enterprises. What kind of partner is D?
a. Managing partner c. Ostensible partner
b. Liquidating partner d. Partner by estoppels

11. Using the preceding, assuming that CAB Enterprises was unable to pay the loan on due date at which time
the assets of the partnership amounted only to P120,000. From whom may E collect the payment?
a. D only for the whole amount of P120,000
b. A, B, and C who are liable jointly for P50,000 each
c. CAB Enterprises for its assets of P120,000; thereafter, A, B and C from their separate assets at P10,000
each
d. CAB Enterprises for its assets of P120,000 thereafter, A, B, C and D from their separate assets at
P7,500 each

12. 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 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

13. The partnership will bear the risk of loss of three of the following things, except
a. Things contributed to be sold
b. Fungible things or those that cannot be kept without deteriorating
c. Non-fungible things contributed so that only their use and fruits will be for the common benefit
d. Things brought and appraised in the inventory

14. A partner’s interest in the partnership is his share of the profits ad 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 assigning partner would otherwise be entitled
thereto

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

16. A partnership whereby the partners contribute to a common fund, all the property actually belonging to
them at the time of the constitution of the partnership, with the intention of dividing the same among
themselves, as well as the profits which they may acquire therewith is:
a. Universal partnership of all present property b. Particular partnership
b. Universal partnership of profits d. partnership at will

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17. A partnership without a definite period of existence and which can be dissolved at any time by any of the
partner is called:
a. Universal partnership of all present property c. Particular partnership
b. Universal partnership of profits d. partnership at will

18. A, B and C, capitalist partners, each contributed P10,000 and D, the industrial partner contributed his
services. Suppose X, is the creditor of the firm amounting to P90,000. After getting the P30,000 capital
assets of the partnership, which is correct?
a. X can recover P20,000 each from A, B and C only
b. X can recover P60,000 from either A or 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, C, but D is exempt because he is an industrial partner.

19. A, B and C are partners. D is admitted as a new partner. Will D be liable for partnership obligations
contracted prior to his admission to the partnership?
a. No, only for those contracted after his admission
b. Yes, and his liability would extend to his own individual property
c. Yes, but his liability will extend only to his share in the partnership property and not to his onw
individual property
d. Yes, as if he had been an original partner

20. Bears the risk of things contributed to the partnership

a. General partner
b. Limited partner
c. Partner contributing usufructuary rights over fungible things
d. Partner contributing usufructuary rights over non-fungible things

21. A, B, and C are capitalist partners, each contributed P10,000. After exhausting the assets of the firm, the
firm’s indebtedness amounts to P90,000. It was stipulated that A would be exempted from liability. Which
is correct?
a. A may recover his original capital of P10,000
b. The creditors may collect P30,000 each form A, B and C
c. A can recover P20,000 each form B and C should be required to pay the creditors
d. The creditors can recover P45,000 each from B and C

22. Instances when a partnership is unlawful, except

a. A partnership formed to furnish apartment houses which would be used for prostitution
b. A partnership formed for the purpose of acquiring parcels of land
c. A partnership formed for gambling purposes
d. A partnership formed to create illegal monopolies or combinations in restraint of trade

23. A and B orally agreed to form a partnership two years from today, each one to contribute P1,000. If at the
arrival of the period, one refuses to go ahead with the agreement, can the other enforce the agreement?
a. Yes, because the partnership contract is not governed by the Statute of Frauds
b. Yes, because the prior agreement was voluntarily made
c. No, because the agreement was merely oral and executor
d. No, since the agreement is to be enforced after one year from the making thereof, the same should be in
a public instrument to be enforceable

24. Where at least one partner is a general partner and the rest are limited partners
a. General partnership c. Partnership de facto
b. Partnership by estoppel d. Limited partnership

25. Where all the partners are general partners

a. Partnership by estoppel c. Partnership de facto
b. Limited partnership d. General partnership

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26. A, B and C are partners each contributing P10,000. The firm’s indebtedness amounts to P90,000. It was
stipulated that A would be exempted from liability. Assuming that the capital P30,000 is still in the firm.
Which of the following is not correct?
a. The creditors may get the P30,000 and still collect each 20,000 from A, B and C
b. A can recover P10,000 each from B and C should be (A) be required to pay the creditors
c. A cannot recover his original capital of P10,000
d. The creditor can recover P45,ooo each form B and C

27. May be required to make additional contribution in case of imminent loss

a. Capitalist partner b. limited partner c. industrial partner d. a, b and c

28. May contribute money, property or industry to the common fund

a. Limited partner c. both limited and general partners
b. General partner d. dormant partner

29. Partner who contributes money and/or property, except

a. General b. capitalist c. industrial partners d. managing

30. Partner who is contributes industry or labor

a. General b. capitalist c. industrial partners d. managing

31. Partner who contributes both capital and industry

a. General b. limited c. managing d. capitalist-industrial

32. Partner who is liable beyond the extent of his contribution

a. General b. limited c. industrial d. silent

33. Partner who is liable beyond the extent of his contribution

a. Limited b. General c. industrial d. managing

34. Partner who manages actively the firm’s affairs

a. Silent b. liquidating c. managing d. dormant

35. Partner who does not participate in the management though he shares in the profits or losses
a. Liquidating b. nominal c. Ostensible d. Silent

36. Partner who winds up the affairs of the firm after it has been dissolved
a. Liquidating b. managing c. industrial d. capitalist

37. Partner whose connection with the firm is known to the public
a. Ostensible b. Secret c. silent d. nominal

38. Partner whose connection with the firm is concealed or kept a secret
a. Ostensible b. secret c. silent d. nominal

39. Partner who is both a secret and silent partner

a. Nominal b. Ostensible c. limited d. dormant

40. Partner who is not really a partner but who may become liable as such insfar as third persons are concerned
a. Nominal b. ostensible c. silent d. secret

41. Which of the following losses will not cause the dissolution of a partnership?
a. Loss before delivery of a specific thing which a partner had 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 were the partner contributed only its use and enjoyment, where
such partner reserved the ownership thereof
d. Loss before delivery of a specific thing were the partner promised to contribute only its use and
enjoyment, reserving the ownership thereof

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42. A newly admitted general partner is liable to creditors existing at the time of his admission and his liability
is
a. Up to his capital contribution only if there is stipulation
b. Up to his separate property even if there is no stipulation
c. Up to his capital contribution even if there is stipulation
d. Up to his separate property only if there is stipulation

43. Using the preceding number, but the obligations were contracted after his admission, which of the
following is correct?
a. He is liable to the creditors before and after his admission up to his separate property
b. He is liable to the creditors before and after his admission only up his capital contribution
c. He is liable to the creditors before and after his admission up to his capital contribution and to the
creditors after his admission up to his separate property
d. He is not liable to creditors existing before his admission

44. A and B are partners 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 of C’s offer A was
able to convince B to sell to him (A) his (B’s) share in the partnership. Then A sold the land at a big profit.
Which of the following is correct?
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. A new partnership is formed between A and C
d. The sale of the land to C is void since it was without the knowledge of B

45. A and B are partners in a real estate business. A and B were approached by X who offered to buy a parcel
of land owned by the partnership. Thereafter B sold to A, B’s share in the partnership. Then A sold the land
to X at a big profit. Which is correct?
a. The sale of the land to X is void c. B may rescind the contract between A and X
b. A is liable to B for B’s share in the profits d. A is not liable to B for any share in the profits

46. The following persons are disqualified to form a universal partnership, except
a. Husband and Wife
b. Brother and Sister
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

47. A, B and C are capitalist partners while D is an industrial partner. A, the managing partner engaged
personally in a business that is the same as the business of the partnership without the consent of the other
partners. As a result,
a. If there are losses, the partnership will bear the losses
b. If there are profits, the profits will be shared by A and the partnership
c. If there are profits, A will give the profits to the ownership
d. A will be excluded from the partnership and will pay damages

48. A, a managing partner is B’s creditor to the amount of P1,000 already demandable. B also owes the
partnership P1,000, also demandable. A collects P1,000 from B. One is not correct.
a. If A gives a receipt for the partnership it is the partnership’s credit that has been collected
b. If A gives a receipt for his own credit, it is A’s credit that has been collected
c. If A gives a receipt for his own credit, P500 will be given to him, P500 to the partnership
d. B may decide that he is paying only A’s credit if the personal credit of A is more onerous to B

49. The remedy of capitalist partners against an industrial partner who engaged I a business for himself without
the expressed permission from the partnership is:
a. To compel him 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.

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50. A and B are equal partners in AB Partnership by contributing P50,000 each on June 1, 2012. On July 1,
2010, the partnership contracted an obligation to pay Z the amount of P180,000 on August 31, 2010. On
August 10, 2010, C was admitted as a new partner. C contributed P50,000. How will the obligation be
paid?
a. A P60,000; B P60,000; C P60,000 c. A P180,000; or B P180,000 and C P50,000
b. A P90,000; B P90,000; C None d. A P65,000; B P65,000; C P50,000

51. A, B and C equal partners in ABC Partnership. On April 29, 2011, C died. Not knowing that C is dead, on
May 2, 2011, A contracted a liability to D who also did not know about the death of C. the liability is
P90,000. After D exhausted the net assets of the partnership in the amount of P60,000, he can collect.
a. P30,000 from A or P30,000 from B.
b. P15,000 from A andP15,000 from B.
c. P10,000 from the estate of C, P10,000 from A and P10,000 from B.
d. P30,000 from the estate of C or P30,000 from B or P30,000 from C.

52. 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 be shared by the partners?
a. A, P6,000; B, P4,000; C, nothing c. A, P3,500; B, P3,500; C, P3,000
b. A, P3,000; B, P2,000; C, P5,000 d. A, P3,500; B, P2,500; C, P4,000

53. Using the preceding no., but the partners did not agree on how to divide profits and losses. If there is a loss
of P10,000, how should the said loss be shared by the partnership?
a. A, P6,000; B, P4,000; C, nothing c. A, P3,500; B, P3,500; C, P3,000
b. A, P3,000; B, P2,000; C, P5,000 d. A, P3,500; B, P2,500; C, P4,000

54. When the manner of management has not been agreed upon, who shall manage the affairs of the
partnership?
a. Capital partners c. Capitalist-industrial partners
b. Industrial partners d. All of the partners

55. A, B and C are partners in a partnership business. A contributed P10,000, B contributed P5,000 and C his
services only. After payment of partnership debts, what remains of the partnership assets is P6,000 only. In
the absence of stipulation to the contrary, the share of C will be equal to:
a. That of A b. P2,000 c. That of B d. Nothing

56. A, B and C are partners in ABC Co. D owes the partnership P4,500. A, a partner, received from D a share
of P1,500 ahead of partners B and C, giving D a receipt for his share only. When B and C were collecting
from D, the latter was already insolvent. Which of the following is correct?
a. Partner A can be required to share the P1,500 with B and C
b. A cannot be required to share the P1,500 with B and C
c. B and C should automatically exhaust first all remedies to collect from D
d. B and C can automatically deduct from the capital contribution of A in the partnership, their respective
share in the P1,500

57. A partnership suffered losses in the first year of its operation. A, a capitalist partner, cannot contribute an
additional share to the capital because of insolvency. Can A be obliged to sell his interest to the other
partners on the ground of such refusal?
a. Yes, A’s refusal to contribute additional share reflects his lack of interest in the continuance of the
partnership
b. No, because there is actually no imminent loss of the business
c. Yes, provided that A is paid the value of his interest
d. No, because his refusal is justifiable

58. Which of the following is considered prima facie evidence of the existence of a partnership?
a. Where payment of interest on a loan depends on the profit of the business
b. The receipt by a person of a share in the profits
c. The sharing of gross returns of a business
d. Where the parties are established as co-owners of a property

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59. A and E are partners, with A as the managing partner. D is indebted to A in the amount of 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

60. Using the preceding no., but A issued to D a receipt in the name of the partnership. How should the
payment 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

61. A, B, C and D are partners. Their contributions are as follows: A, P50,000; B, P30,000; C, P20,000; D,
services. The partnership incurred obligations to third persons which the firm was unable to pay. After
exhausting the assets of the partnership, there still in unpaid balance of P10,000 to E. Who are liable to E
for the payment of the unpaid balance of P10,000 and how should each pay to E?
a. A, P5,000; B, P3,000; C, P2,000; D, nothing c. A, P4,000; B, P3,000; C, P2,000; D, P1,000
b. A, P2,500; B, P2,500; C, P2,500; D, P2,500 d. A, P4,000; B, P4,000; C, P2,000; D, nothing

62. 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 partnership
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

63. A, B, and C are equal partners in ABC Partnership. The partnership is indebted to D for P150,000. Partner
A is indebted to E for P20,000. D attached and took all the assets of the partnership amounting to P90,000.
B and C are solvent while A is insolvent and all that he owns is a land valued at P15,000. Which is correct?
a. E has priority to the land of A as a separate creditor
b. D has priority to the land A to cover A’s share of the P60,000 remaining liability of the partnership
c. B and C have priority to the land of A if they paid D the P60,000 remaining liability of the partnership
d. D and E shall both have priority to the land of A in proportion to their claims of P60,000 and P20,000
respectively

64. A, B and C are partners. A 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 Articles of Partnership, it was agreed that A, the industrial
partner would get 1/3 of the profit but would not share in the losses. How much will A, the industrial
partner get?
a. A will get only P20,000 which is 1/3 of the profit of the 1st year of operation
b. A will get only P10,000 which is 1/3 of the net profit
c. A will get only P20,000 in the first year and none in the second year
d. A will share in the loss in the second year

65. Three (3) of the following are rights of a partner. Which one (1) is not?
a. Right to associate another person to his share
b. Right to admit another partner
c. Right to inspect and copy partnership books
d. Right to ask dissolution of the firm at the proper time

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 For nos. 67-88, write:

a. Both statement are true c. only the first is true

b. Both statement are false d. only the second is true

66. A. partnership with a capital of three thousand pesos or more, in money or property, shall appear in a
public instrument, and recorded at SEC. failure shall not affect the liability of the partnership and members
thereof to third person
B. whenever immovable property is contributed an inventory of said property is needed, signed by the
parties and attached to the public instrument, otherwise the contract of partnership is void

67. A. Co-ownership or co-possession does not in itself establish a partnership, except when such co-owners or
co-possessors share in the profits made by the use of the property.
B. the sharing of gross returns does not of itself establish a partnership, except when the persons sharing
them have a joint or common right or interest in any property from which the returns are derived.

68. A. The receipt by a person of a share of the profits of a business is conclusive evidence that he is a partner
in the business
B. A partnership of all present property is where the partners contribute all property which actually belong
to them to a common fund, with the intention of dividing the same among themselves, as well as all the
profits which they may acquire therewith

69. A. In a universal partnership of all present property, the property which belongs to each of the partners at
the time of constitution of the partnership becomes a common fund of all partners and all profits which
they may acquire there with. The stipulation for the common enjoyment of any profits may also be made.
But properties which they may acquire through inheritance, legacy, or donation cannot be included on such
stipulation, except the fruits thereof.
B. the universal partnership of profits comprises all that the partners may acquire by industry or work
during the existence of the partnership. Movable or immovable property which each may posses at the time
of the celebration of the contract shall continue to pertain exclusively to each, only the usufruct passing to
the partnership

70. A. partnership must have a lawful object or purpose, and must be established for the common benefit or
interest of the partners
B. When an unlawful partnership is dissolved by a judicial decree, the profits and partners’ contributions
shall be confiscated in favor of the state.

71. A. A partnership may be constituted in any form, except where immovable property or real rights are
contributed thereto, in which case a written instrument shall be necessary.
B. Every contract of partnership having a capital of three thousand pesos or more in money or property
shall appear in, a public instrument which must be recorded in the office of the SEC., otherwise the
partnership is void

72. A. A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory
of said property is not made, signed by the parties and attached to the public instrument.
B. A universal partnership of profits is that in which the partners contribute all the property which actually
belongs to them to a common fund with the intention of dividing the same among themselves, as well as
the profits which they may acquired therewith.

73. A. In a universal partnership of profits, the properties which belong to each of the partners at the time of
the constitution of the partnership becomes the common property of all the partners, as well as the profits
which they may acquire therewith.
B. A universal partnership of all present property comprises only all that the partners may acquire by their
industry or work during the existence of the partnership.