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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 three years earlier. James, on the other hand, had a fleet of taxis which he purchased 2 years before. I...

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1. 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 three 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 P1,000,000.00 in the lotto. During the same period, rental of P120,000.00 was collected from the apartment, while the fare revenues of P200,000.00 were realized from the operation of the fleet of taxis. Which of the following belongs to the partnership? a. Two-door apartment b. Lotto winnings of P1,000,000.00 c. Salary of P500,000.00 d. Fleet of taxis 2. Which of the following statements is/are correct? I. The dissolution of the partnership does not itself discharge the existing liability of any partner II. The individual property of a deceased partner shall be liable for all the obligations of the partnership incurred while he was a partner. a. Only the first is correct b. Only the second is correct c. The first and second are correct d. The first and second are wrong 3. Liz, Ulysses, Naomi and Avi are partners where Liz, Ulysses, and Naomi contributed Php 1,000,000 each and Avi her service. LUNA partnership is engaged in the manufacture and export of school supplies and stationaries. Due to a very strong typhoon, the entire roofing of the factory was blown by the strong winds and if not repaired immediately would aggravate the damage. Liz, Ulysses, Naomi and Avi agreed on an additional contribution of Php 200,000 each in order to save the business from imminent loss. Which of these is the correct statement? a. Avi is duty bound to contribute 20% more of her time to the business of the partnership. b. If Liz no longer has money, she can be complied to sell her interest in the partnership to the other partners. c. Ulysses can question the decision because she did not vote for the additional contribution. d. If Naomi still has money, but refuses to make the contribution, she can be compelled to sell her interest in the partnership to the other partners. Explanation: According to Article 1791 of the Civil Code, one of the obligations of a partner in the partnership is to contribute additional capital in case of an imminent loss of the business of the partnership except and industrial partner or if there is an agreement to the contrary. Any partner who refuses to contribute such additional share to the capital shall be obliged to sell his interest to the other partners. 4. 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 that he is in good faith. IV. He may perform all acts of administration in good faith but in opposing partners may resort to the removal if he persists. Based on the following 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. Explanation: There are different rules in terms of management among different types of managers. A partner that has been appointed as a manager in the Articles of Partnership may execute all acts of administration despite opposition unless he acts in bad faith. His appointment can only be revoked by the vote of the partners owning the controlling interest. On the other hand, a partner that has been appointed as manager after the formation of the partnership may also execute all acts of administration and appointment but may be revoked with or without lawful cause through the vote of partners owning the controlling interest. 5. Ned, Ophelia, and Patrick are partners in NOP Partnership. Subsequently, Quincy was admitted to the partnership. At the time of her admission, NOP Partnership already had a debt of P200,000 to Randy. Subsequently, the partnership was dissolved and liquidated, and the partnership’s debt to Randy ballooned to P500,000. After the partnership’s assets were exhausted, the remaining amount due to Randy was P350,000. Can Randy collect from the personal assets of Quincy? a. Yes, but only to satisfy the P150,000 debt incurred after Quincy’s admission. b. Yes, to ratify the P350,000 debt to Randy. c. No, since there is no stipulation allowing Randy to collect form Quincy. d. No, Quincy’s capital contribution and her personal assets shall not be used to satisfy the debt to Randy. Explanation: Article 1826 - Liability of New Partner: a. Debts incurred prior to admission: liable up to his contribution (except if there is stipulation) b. Debts incurred after admission: liable up to his personal assets. 6. D, E are capitalist partners while F is an industrial partner in their restaurant business. Later, F put up a cellular phone loading station, sells call cards and other cell phone accessories. Has F any liability under the circumstances? a. No, there is no showing that the business of the partnership is being prejudiced. b. Yes, because he is precluded by law to engage in any other business, except if there is stipulation allowing him. c. No, since his other business is not competing with the business of the partnership. d. Yes, because he can’t engage in business for himself. Explanation: Article 1789. An industrial partner cannot engage in business for himself, unless the partnership expressly permits him to do so; and if he should do so, the capitalist partners may either exclude him from the firm or avail themselves of the benefits which he may have obtained in violation of this provision, with a right to damages in either case. This applies even if the business is of a kind different from the partnership business. 7. Paul, Peter, John, and Lucas formed a partnership. Paul owns 30% interest in the partnership, Peter owns 30%, John owns 20% and Lucas owns 20%. Paul and Peter were delegated as managing partners without a stipulation as to their specific duties. Paul seeks to bind the partnership by entering into a contract of sale of merchandise. Peter opposed. For the sale to be allowed, a. Peter must vote in favor of the contract. b. Paul, John and Lucas must vote in favor of the contract. c. All of the partners must vote in favor of the contract. d. No vote required. Paul is authorized to bind the partnership. Explanation: Article 1801 – Multiple Managing Partners without Specification of their Respective Duties: a. Should one of the managing partners oppose the act of another, the matter shall be decided by a majority of the managing partners per head count; b. Should there be a tie in the votes of the managing partners, the controlling interest of ALL the partners shall prevail. 8. A, a managing partner who is authorized to collect the credits of the partnership, 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. B may decide that he is paying only A’s credit if the personal credit of A is more onerous to B. c. If A gives a receipt for his own credit, it is A’s credit that has been collected d. If A gives a receipt for his own credit, P500 will be given to him, P500 to the partnership Explanation: Article 1792 – Application of Payment when a Person owes a Separate Demandable Debts to the Partnership and to the Partner To prevent the managing partner from furthering his personal interest to the detriment of the firm, if such a managing partner collects a sum from a common debtor who owes money both to said partner and to the partnership. a. If the managing partner issued a receipt in the name of the partnership: payment shall be applied to the partnership credit. b. If the managing partner issued a receipt in his name: payment shall be applied proportionate to the amounts of the two debts. EXCEPT: When the debt owned by the debtor to the managing partner is more onerous, the debtor may choose to apply the payment exclusively to such. 9. 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? a. Managing partner b. Liquidating partner c. Ostensible partner d. Partner by estoppel Explanation: According to Article 1825, Simon is considered as a partner by estoppel since all the actual partners consent to such misrepresentation, a partnership by estoppel is created between the actual partners and the person who made the misrepresentation. A person not a partner may become a partner by estoppel, and thus be held liable to third persons as if he were a partner. 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. Assuming that JAW Enterprises was unable to pay the loan on due date at which time the assets of the partnership amounted only to P120,000.00. 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 P120,000.00; thereafter, John Albert, Wilfred and Simon from their separate assets at P7,500.00 each. Explanation: Here, a partnership liability result. Thus, the assets of the partnership shall be used to pay the liability and after their exhaustion, both the actual partners and the person who made the misrepresentation shall be liable with their separate properties. A partnership by estoppel is created among the actual partners who consented to the misrepresentation and the person who made the misrepresentation, each one of whom shall be liable jointly or pro-rata with their separate properties. 11. Gregory, Edmond and Mark are partners in GEM Company with contributions of P10,000.00, 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.

Explanation: Under Article 1797, the losses and profits shall be distributed in conformity with the agreement. If only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion. 12. Belinda, Ara, Rica and Klaudia are partners in BARK Enterprises, a pet shop, with Belinda contributing P50,000; Ara, P20,000; and Rica, P30,000. 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. Explanation: The facts are: a. Belinda is a capitalist partner and may engage in business in different kind from the partnership business. (Art. 1808) b. Klaudia is an industrial partner and cannot engage in business for himself unless the partnership expressly permits him to do so. (Art. 1789) c. Klaudia is an industrial partner and shall not share in the losses. (Art. 1797) d. All partners, including industrial ones, shall be liable pro rata with all their property and after all the partnership assets have been exhausted. (Art. 1816) 13. Sanchez and Suarez are both real estate brokers. The two have not entered into any partnership agreement, but to save on costs, they share at the Avenue Twin Towers the same office space on the front door of which is the signage “Sanchez and Suarez, Real Estate Brokers”. They also use the same stationery showing the name appearing on the signage and one telephone number, and share the services of the same secretary. Sanchez, using the stationery, ordered a laptop computer worth P100, 000.00 from Cyber Computers owned by Camarino, who himself delivered the computer to the office. Camarino also issued a receipt acknowledging the down payment of P40, 000.00 from “Sanchez and Suarez” without any objection from Suarez. Sanchez later failed to pay the balance of P60, 000.00. Camarino now seeks to recover the amount of P60, 000.00 from both Sanchez and Suarez as partners. a. Only Sanchez can be held liable by Camarino since the purchase of the laptop computer is the personal transaction of Sanchez. b. Only Sanchez can be held liable by Camarino since Sanchez and Suarez did not enter into any partnership. c. Both Sanchez and Suarez can be held liable by Camarino since the two are considered as partners insofar as Camarino is concerned. d. Only “Sanchez and Suarez, Real Estate Brokers”, as a juridical entity is liable to Camarino since an actual partnership exists. Explanation: The problem states that Suarez did not object on the transaction made between Camarino and Sanchez even if the receipt was issued in the name of Sanchez and Suarez. As such, as to Camarino, they are considered as partners and that the thing was purchased for the benefit of the partnership. As such, both partners are to be held liable on the unpaid balance of P60, 000.00. Note: What if Suarez objected or he did not have the opportunity to object? It will then depend on the circumstance. If the computer set was incurred for the benefit of the partnership, then, the partnership and the partners are liable. However, if the computer set was solely for the benefit of Sanchez, then, the partnership, nor Suarez, is NOT liable. 14. Where an immovable property or real rights are contributed to a partnership, the partnership contract must be in a public instrument to which shall be attached an inventory of the immovable property contributed and signed by the parties. Failure to comply with the said requirements: a. makes the partnership void b. makes the partnership unenforceable c. makes the partnership voidable d. does not affect the acquisition by the partnership of a juridical personality Explanation: Article 1773 states that 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. So, failure to comply with the said requirements makes the partnership void. Note: What is needed to be in a public instrument is the contract of partnership. The written inventory need not be in a public instrument. It is sufficient that the inventory is in writing and signed by the partners. Article 1773 is the only instance where the partnership is void if not in public instruments. 15. X and Y formed a universal partnership of profits. Which of the following properties belong to the partnership? a. Coconut plantation inherited by X before the formation of the partnership. b. Salary received by Y as professor of a college in Manila during the first year of the partnership. c. Lotto prize won by X during the first year of the partnership. d. Agricultural lot donated to Y during the first year of the partnership. Explanation: Article 1780 states that universal partnership of profits comprises all that the partners may acquire by their industry or work during the existence of the partnership. Properties acquired through inheritance, donation or through other means without the effort of the partners cannot be considered part of the partnership property. In the case mentioned above, the salary of Y as professor was received through his exercise in his industry as a professor. Thus, the same will be considered part of the partnership property. The other properties were acquired either through inheritance, donation or by luck. As such, the said properties are not considered partnership properties. 16. Jessica and Sienna want to put up an internet café business. Jessica is an expert in information technology and computers but has no funds or property to invest. Sienna knows nothing about internet and computers but she is willing to contribute the funds and property needed. If Jessica and Sienna decide to enter into a limited partnership, who between the two of them will be the limited partner? a. Jessica only. b. Sienna only. c. Both Jessica and Sienna. d. Neither Jessica nor Sienna; hence, they cannot enter into a limited partnership. Explanation: Sienna is the only one who will be the limited partner because in accordance to Article 1845, the contribution of a limited partner may be cash or other property, but not services. From the foregoing, it is clear that a pure industrial partner CANNOT become a limited partner. Since Jessica is a pure industrial partner since her contribution in the partnership is services only, Jessica cannot become a limited partner in the partnership. Note: If aside from her services, she also contributed property or money, Jessica can become a limited partner. 17. X and Y are equal partners in XY Partnership by contributing P50,000 each on July 1, 2019. On July 2, 2019, the partnership contracted an obligation to pay A the amount of P180,000 on August 15, 2019. On August 1, 2019, Z was admitted as a new partner. Z contributed P50,000. How will the obligation be paid? a. X, P60,000; Y, P60,000; Z, P60,0000 b. X, P90,000; Y, P90,000; Z, None c. X, P65,000; Y, P65,000; Z, P50,0000 d. X, P180,000; Y, P180,000; Z, None Explanation: According to Article 1826, the liability of incoming partner for existing obligations shall be satisfied only out of the partnership property, unless there is a stipulation on the contrary. It shall be noted that the liability shall be paid only out of the partnership property, meaning, the new partner’s liability is limited only to his share. In case of subsequent obligations, that is the time subsequent creditor have rights against separate property of newly admitted partner. 18. A parcel of land in the name of Comptech Company, a partnership engaged in the sale and service of computers, was sold by A, one of the partners, in the name of Comptech Company, without express authority, to X, who was not aware of A’s lack of authority. Which of the statements is true? a. The conveyance by A to X passed the title to the parcel of land to X.

b. Comptech Company cannot recover the parcel of land from X. c. Both (a) and (b) are incorrect. d. The conveyance by A to X passed only the equitable interest in the property to X. Explanation: For a sale of a real property on behalf of the partnership to be valid, the sale must be made by: a. a partner who is authorized by the partnership to make the sale; b. by the Managing Partner; and c. by any partner provided that the act is apparently made for the business of the partnership. Since the sale is NOT apparently made for the busi...