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RFBT.3704 VILLEGAS/APRADO/MAGUMUN/CELIZ/VILLAMIN
Partnerships (RA 386) OCTOBER 2024

LECTURE NOTES

Partnership 7. On dissolution, the partnership is not terminated but

continues until the winding up of partnership is
It is a contract whereby two or more persons bind completed (Art. 1829).
themselves to contribute money, property, or industry to a
common fund, with the intention of dividing the profits Kinds of Partners
among themselves. (Art. 1767)
1. As to the extent of liability
Characteristics a. Capitalist – contributes either money or
1. Bilateral – It is entered into by two or more persons and property to the common fund; he can also
the rights and obligations arising therefrom are always contribute an intangible like credit, such as
reciprocal; promissory note or other evidence of
2. Onerous – Each of the parties aspires to procure for obligation or even a goodwill.
himself a benefit through the giving of something; b. Industrial – contributes only his industry.
3. Nominate – It has a special name or designation in our
law; 2. As to the time of entry
4. Consensual – Perfected by mere consent, upon the a. Original – one who became a partner at the
express or implied agreement of two or more persons; time of the constitution of partnership
5. Commutative – The undertaking of each of the partners b. Incoming – one who became a partner as a
is considered as the equivalent of that of the others; new member of an existing partnership
6. Principal – It does not depend for its existence or
validity upon some other contracts; 3. Other kinds
7. Preparatory – Because it is entered into as a means to a. Managing – one entrusted with the
an end; and management of the partnership (Art. 1800
8. Profit-oriented (Art. 1770) and 1801).
b. Liquidating – one who takes charge of the
Essential Features liquidation and winding up of the
1. There must be a valid contract partnership affairs (Art. 1836).
2. The parties (two or more persons) must have legal c. Retiring – those who cease to be the part of
capacity to enter into the contract; the partnership.
3. There must be a mutual contribution of money, d. Continuing – one who continues the
property, or industry to a common fund; business of a partnership after it has been
4. The object must be lawful; and dissolved by reason of the admission of a
5. The primary purpose must be to obtain profits and to new partner, or the retirement, death or
divide the same among the parties. expulsion of one or more partners.
e. Dormant, Silent, Secret – one whose
Note: An Oral Partnership is valid even though not in connection to the partnership is concealed
writing. However, if it involves contribution of an immovable and who does not take any active part in it.
property or a real right, an oral contract of partnership is f. Partner by Estoppel – although not an
void. In such a case, the contract of partnership, to be valid, actual partner, he has made himself as such
must be in a public instrument (Art. 1771) and the inventory by holding himself out as a partner of
of said property signed by the parties must be attached to allowing himself to be so held out. (Art.
said public instrument (Art. 1773). 1815).

Typical Incidents of Partnership Formalities needed for the creation of a partnership

1. The partners share in profits and losses (Arts. 1767, As a rule, no special form is required for its validity or
1797-78); existence (Art. 1771). The contract may be made orally or
2. The partnership has a juridical personality separate and in writing regardless of the value of contributions.
distinct from that of each of the partners. Such juridical
personality shall be automatically acquired despite the However, if property or real rights have been contributed to
failure to register in SEC (Art. 1768); the partnership, the following shall apply:
3. Partners have equal rights in the management and
conduct of the partnership business (Art. 1803); 1. Personal property
4. Every partner is an agent of the partnership, and a. Less than P3,000 – may be oral
entitled to bind the other partners by his acts, for the b. P3,000 or more – must be:
purpose of its business (Art. 1818). He may also be i. In a public instrument; and
liable for the entire partnership obligations; ii. Registered with the Securities and
5. All partners are personally liable for the debts of the Exchange Commission (Art. 1772)
partnership with their separate property (Art. 1816,
1822-24) except limited partners are not bound beyond 2. Real property or real rights – must be:
their amount of investment (Art. 1843); a. In a public instrument;
6. A fiduciary relation exists between the partners (Art. b. With an inventory of said property
1807); i. Signed by the parties;
ii. Attached to the public instrument; and
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iii. Registered in the Registry of Property of particular undertaking stipulated in the contract
the province where the real property is of partnership.
found to bind third persons.

3. Limited Partnership – must be registered as such with

the SEC, otherwise, it is not valid as a limited
partnership but may still be considered a general
partnership with juridical personality.

Note: The failure to register the contract of partnership

(general) does not invalidate the same as among the
partners, so long as the contract has the essential
requisites, because the main purpose of registration is to
give notice to third parties, and it can be assumed that the
members themselves knew of the contents of their contract.
Non-compliance with this directory provision of the law will
not invalidate the partnership.

Classifications of Partnership

1. Object
a. Universal partnership
i. Of all present property (Art. 1778)– The
partners contribute all the property
which actually belongs to them to a Professional Partnership
common fund, with the intention of It is a partnership formed by persons for the sole purpose
dividing the same among themselves as of exercising their common profession, no part of the
well as all profits they may acquire income of which is derived from engaging in any trade or
therewith. The following become the business.
common fund of all the partners:
1. Property which belonged to In a professional partnership, it is the individual partners
each of the partners at the time who are deemed engaged in the practice of profession and
of the constitution of the not the partnership. Thus, they are responsible for their own
partnership acts.
2. Profits which they may acquire
from all property contributed. Rules to Determine Existence of Partnership
ii. Of all profits (Art. 1780) – comprises all 1. Except as provided by Art. 1825 (partnership by
that the partners may acquire by their estoppel), persons who are not partners as to each
industry or work during the existence of other are not partners as to third persons;
the partnership as well as the usufruct 2. Co-ownership or co-possession does not itself establish
of all movable or immovable property a partnership, whether such co-owners or co-
which each of the partner may possess possessors do or do not share ant profits made by the
at the time of the celebration of the use of the property;
contract of partnership 3. The sharing of gross returns does not itself establish a
b. Particular partnership – it is one which has for partnership, whether or not the persons sharing them
its object, determinate things, their use and have a joint or common right or interest in any property
fruits, or a specific undertaking or the exercise from which the returns are derived;
of a profession or a vocation (Art. 1783) 4. The receipt by a person of a share of the profits of a
business is prima facie evidence that he is a partner in
2. Liability of Partners the business, but no such inference shall be drawn if
a. General Partnership – One where all partners such profits were received in payment:
are general partners who are liable even with
respect to their individual properties, after the a. As a debt by installments or otherwise;
assets of the partnership have been exhausted. b. As wages of an employee or rent to a landlord;
b. Limited partnership – One formed by two or c. As an annuity to a widow or representative of a
more persons having as members one or more deceased partner;
general partners and one or more limited d. As interest on a loan, though the amount of
partners, the latter not being personally liable payment varies with the profits of the business;
for the obligations of the partnership (Art. e. As the consideration for the sale of a goodwill of
1843) a business or other property by installments or
otherwise (Art. 1769)
3. Duration
a. Partnership at will – the partnership has an Obligation to contribute
indefinite term and it would be dissolved only Unless there is a stipulation to the contrary, the partners
when an act or cause of dissolution happens or shall contribute equal shares to the capital of the
arises. partnership (Art. 1790). It is not applicable to an industrial
b. Partnership with a fixed period or Partnership partner unless, besides his services, he has contributed
for a Particular Undertaking – the partnerships capital pursuant to an agreement.
are automatically dissolved upon the expiration
of the stipulated term or the achievement of the

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Liability of capitalist partner to contribute additional partnership enterprise is termed sub-

capital partnership.
A capitalist partner is not bound to contribute to partnership
more than what he agreed to contribute, unless in case of 6. Right to free access and to inspect and copy at any
imminent loss of the business and there is no agreement to reasonable hour the partnership books (Art. 1805);
the contrary. 7. Right to formal account as to partnership affairs:
a. If he is wrongly excluded from the partnership
Requisites before capitalist partners are compelled to business or possession of its property by his co-
contribute additional capital partners;
1. Imminent loss of the business of the partnership b. If the right exist under the terms of any
2. Majority of the capitalist partners are of the opinion that agreement;
an additional contribution to the common fund would c. Duty to account as provided by Art. 1807;
save the business; d. Whenever there are circumstances which
3. Capitalist partner refuses deliberately to contribute (not render it just and reasonable
due to financial capability); and 8. Right to have the partnership dissolved; and
4. There is no agreement to the contrary. 9. Property rights of a partner (Art. 1810)
- This is not assignable except in connection
Obligations of managing partners who collect his with assignment of rights of all partners in
personal receivable from a person who also owes the same property
partnership
1. Apply sum collected to 2 credits in proportion to their Rules regarding distribution of profits and losses
amounts; A. Distribution of Profits
2. If he received it for the account of partnership, the i. The partners share in the profits according
whole sum shall be applied to partnership credit. to their agreement;
ii. In the absence of such:
Application of payment a. Capitalist partner – in proportion to his
Note: The debtor is given the right to prefer payment of the contribution
credit of the partner if it should be more onerous to him in b. Industrial partner – what is just and equitable
accordance with his right to application of payment. under the circumstances

Rules regarding the prohibition to engage in another B. Distribution of Losses

business i. The partners share in the losses according
The capitalist partner may engage in a business which is not to their agreement
the same kind of business that the partnership is engaged ii. In the absence of such, according to their
in. On the other hand, the industrial partner may not engage agreement as to profits
in any other business unless their partnership expressly iii. In the absence of profit agreement, in
permits him to do so because as an industrial partner, he proportion to his capital contribution
has to devote his full-time to the business of the partnership
(Art. 1789)
Obligations of partners among themselves
Duty to keep partnership book belongs to managing 1. Contribution of property
or active partner 2. Contribution of money and money converted to
The duty to keep true and correct books showing the firm’s personal use
accounts, such as books being at all times open to 3. Prohibition in engaging in business for himself
inspection of all members of the firm, primarily rests on the 4. Contribute additional capital
managing or active partner or the particular partner given 5. Managing partner who collects debt
record-keeping duties (Art. 1805) 6. Partner who receives share of partnership credit
7. Damages to partnership
Accountability of partners to each other as fiduciary 8. Render information
Every partner must account to the partnership for any 9. Accountable as fiduciary
benefit, and hold as trustee for it any profits derived by him
without the consent of the other partners from any Obligations of Partnership/ Partners to Third
transaction connected with the formation, conduct, or Persons
liquidation of the partnership or from any use by him of its 1. Every partnership shall operate under a firm name
property (Art. 1807) (Art. 1815);
2. All partners shall be liable for contractual obligations
Rights of Partners of the partnership with their property, after all
partnership assets have been exhausted:
1. Right to reimbursement for amounts advanced to the a. Pro rata
partnership and to indemnification for risks in b. Subsidiary
consequence of management (Art. 1796);
2. Interest in the partnership; By way of exception, all partners shall be liable
3. Right on the distribution of profits (Art. 1797); solidarily with the partnership for everything
4. Right to participate in management; chargeable to the partnership under Art. 1822 and
5. Right to associate with another person with him in his 1823.
share without the consent of the other partners (Art.
1804) 3. Partner as an agent of the partnership (Art. 1818)
4. Conveyance of real property belonging to the
Note: Such partnership formed between a partnership (Art. 1819(
member of a partnership and a third person for 5. Admission or representation made by any partner
a division of the profits coming to him from the concerning partnership affairs within the scope of his

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authority is evidence against the partnership (Art. Each partner is liable to his co-partners for his share of
1820) any liability created by any partner for the partnership, as
6. Notice to partner of any matter relating to partnership if the partnership had not been dissolved.
affairs operates as notice to partnership except in case
of fraud (Art 1821) However, partners will not be liable when:
7. Partners and the partnership are solidarily liable to 3rd 1. The dissolution, being by act of any partner, the
persons for the partner’s tort or breach of trust (Art. partner acting for the partnership had knowledge
1822-24) of the dissolution; or
8. Liability of incoming partner is limited to: 2. The dissolution, being by the death or insolvency
a. His share in the partnership property for of a partner, the partner acting for the partnership
existing obligations; had knowledge or notice of the death or insolvency
b. His separate property for subsequent (Art. 1833)
obligations (Art. 1826)
9. Creditors of partnership are preferred in partnership
property & may attach partner’s share in partnership Ways of Winding Up
assets (Art. 1827) The winding up of the dissolved partnership may be done
either:
Remedies to the creditors of a partner 1. Judicially, under the control and direction of the
1. Separate or individual creditors should first secure a proper court upon cause shown by any partner, his
judgment on their credit; and legal representative, or his assignee; or
2. Apply to the proper court for a charging an order 2. Extrajudicially, by the partners themselves without
subjecting the interest of the debtor-partner in the the intervention of the court.
partnership for the payment of the unsatisfied amount
of the judgment debt with interest thereto. Order of payment in winding up
A. In General Partnership
Dissolution and Winding Up 1. Those owing to creditors other than the
partners;
Final stages of Partnership 2. Those owing to partners other than for capital
1. Dissolution – it is a change in relation of the partners or profits;
caused by any partner ceasing to be associated in 3. Those owing to partners in respect of capital;
carrying on the business. 4. Those owing to partners in respect to profits
(Art. 1839 [2])
2. Winding up – Settling the partnership business or affairs
after dissolution. B. In a Limited Partnership
1. Those to creditors, in the order of priority as
3. Termination – Point in time when all partnership affairs provided by law, except those to limited partners
are completely wound up or completed; end of on account of their contributions, and to general
partnership life. partners;
2. Those to limited partners in respect to their share
Causes of Dissolution of the profits and other compensation by way of
1. Without violating the agreement income on their contributions;
a. Termination of the definite term or specific 3. Those to limited partners in respect to the capital
undertaking of their contributions;
b. Express will of any partner in good faith, when 4. Those to general partners other than for capital
there is no definite term and no specified and profits;
undertaking 5. Those to general partners in respect to profits;
c. Express will of all partners either before or 6. Those to general partners in respect to capital.
after the termination of any specified term or (Art. 1863)
particular undertaking
d. Expulsion of any member in good faith of a Doctrine of Marshalling of Assets
member The doctrine of marshalling of assets provides that:
2. Violating the agreement; 1. Partnership creditors have preference in partnership
3. Unlawfulness of the business; assets.
4. Loss; 2. Separate or individual creditors have preference in
5. Death of any of the partners; separate or individual properties.
6. Insolvency of any partner or of the partnership; 3. Anything left from either goes to the other.
7. Civil interdiction of any partner;
8. By decree of the court under Art. 1831. Persons that are required to render an account
1. Winding up partner
Effects of dissolution 2. Surviving partner
1. Partnership is not terminated; 3. Person or partnership continuing the business
2. Partnership continues for a limited purpose;
Note: The partner’s power of representation is
confined only to acts incident to winding up of LIMITED PARTNERSHIP
completing the transactions begun but not then
finished (Art. 1832) It is one formed by two or more persons having as members
3. Transaction of new business is prohibited. one or more general partners and one or more limited
partners, the latter not being personally liable for
Liability of partner where the dissolution is caused partnership debts (Art. 1843)
by the act, death or insolvency of a partner

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Limited Partner 4. When he takes part in the control of the

partnership
Contribution 5. When he receives partnership property as
The contribution of a limited partner may be cash or other collateral security, payment, conveyance, or
property, but not services (Art. 1845). release in fraud of partnership creditors
6. When there is failure to substantially comply
Otherwise, he shall be considered an industrial and general with the legal requirements governing the
partner, in which case, he shall not be exempted from formation of limited partnerships.
personal liability.
C. To Separate Creditors
Interest in partnership is freely assignable. As in a general partnership, the creditor of a limited partner
may, in addition to other remedies allowed under existing
Rights of Limited Partner laws, apply to the proper court for a charging order
1. To have partnership books kept at principal place of subjecting the interest in the partnership of the debtor
business. partner for the payment of his obligation.
2. To inspect/copy books at reasonable hours.
3. To have on demand true and full information of all Effect of retirement, death, civil interdiction, insanity
things affecting partnership. or insolvency of a partner
4. To have formal account of partnership whenever 1. General partner – The partnership is dissolved (Art.
circumstances render it just and reasonable. 1860) unless the business is continued by the remaining
5. To ask for dissolution and winding up by decree of court general partners:
6. To receive share of profits/other compensation by way a. Under the right stated in the certificate; or
of income b. With the consent of all the partners.
7. To receive return of contributions, provided the 2. Limited partner – The partnership is not dissolved
partnership assets are in excel of all its liabilities. except all limited partners cease to be such.

Transactions allowed or prohibited in a limited

partnership BASIC PRINCIPLES IN PARTNERSHIP
1. Allowed
a. Granting loans to partnership 1. Principle of delectus personarum – No one can become a
b. Transacting business with partnership member of the partnership without the consent of all the
c. Receiving pro rata share of partnership assets other partners.
with general creditors if he is not also a 2. There is mutual trust and confidence among the partners.
general partner 3. As a general rule, there is no special form of the
2. Prohibited partnership contract. (Exception – where immovable
a. Receiving/holding partnership property as property or real rights are contributed thereto, hence
collateral security execution of the public instrument is necessary for validity
b. Receiving any payment, conveyance, release of the contract)
from liability if it will prejudice right of third 4. No one will be forced to become or remain as a partner.
persons (Art. 1767, NCC)
5. Relation of partners to third person is founded on the
Substituted limited partner doctrine of mutual agency. (Art. 1818 NCC)
6. Partners are agents of the partnership. (Art. 1818 NCC)
It is a person admitted to all the rights of a limited partner 7. Partnership has a separate personality apart from the
who has died or assigned his interest in the partnership. partners. (Art. 1768 NCC)
8. Property purchased with partnership funds belongs to the
He has all the rights and powers and is subject to all partnership, unless…
restrictions and liabilities of his assignor, except those 9. Partnership creditors have preference over partnership
liabilities which he was ignorant of at the time he became a properties while separate or individual creditors have
limited partner and which could not be ascertained from the preference over the separate properties of a partner.
certificate. 10.Delivery of the property to the partnership determines
the ownership of the property.
Obligations 11.Liability for contractual obligations is pro rata and
subsidiary while solidary liability arises from partner’s
A. To the Partnership wrongful act or breach of trust.
Since limited partners are not principals in the transaction 12.Art. 1816 refers to liabilities while Art. 1797 refers to
of a partnership, their liability as a rule, is to the losses.
partnership, not to the creditors of the partnership. The 13.Pro rata liability is based on the number of partners while
general partners cannot, however waive any liability of the in losses apply Art. 1797 (agreement, profit sharing or
limited partners to the prejudice of such creditors. capital contribution)
14. Acts of Strict Dominion or Ownership v. Acts of
B. To the Partnership Creditors and other Partners Administration
1. A limited partner is liable for partnership 15.Management of the partnership (Art. 1800 NCC) a)
obligations when he contributed services Where there are two or more managing partners whose
instead of only money or property to the respective duties are unspecified (Art. 1801 NCC) b) Where
partnership unanimity of action is stipulated (Art. 1802 NCC) c) Where
2. When he allows his surname to appear in the manner of management has not been agreed upon (Art.
firm name 1803 NCC) 16. Rules for Distribution of profits and losses
3. When he fails to have a false statement in the (Art. 1797 NCC)
certificate corrected, knowing it to be false

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PARTNERSHIP MC QUESTIONS
1. The following are the causes for judicial dissolution of a 4. The following are the instances when the partner can
partnership, except: demand formal accounting, which is not?
a. death of a partner a. when the partner is liable as a trustee or fiduciary
b. insanity of a partner under Art. 1807 of the Civil Code
c. business can be carried on only at a loss b. whenever just and equitable under the
d. misconduct and persistent breach of partnership circumstances
agreement c. in the case of the sub-partner who manages the
business
2. A, B, C, D and E decided to create a partnership. All of d. when a partner is wrongfully excluded from the
them contributed P30,000.00 each for the creation of affairs of the partnership
the partnership. They orally agreed that A and B are the e. in case there is a stipulation
managing partners. They orally agreed also that the
distribution of profits and loss would be equally among 5. One who, not being a member of the partnership,
all the partners. The likewise orally agreed that the contracts with a partner with reference to the latter’s
partnership existence of the partnership would share in the partnership.
commence after fourteen (14) months from today to a. retiring partner
give the other partners sufficient time to prepare for b. silent partner
their capital contribution. What is the status of the c. special partner
partnership? d. sub-partner
a. valid between the parties e. None of the above
b. valid not only to the parties but as well as to third
persons 6. Romeo and Juliet each contributed PhP10,000.00 to
c. valid but rescissible engage in the operation of a fishpond business. There
d. valid but unenforceable was no formal agreement and there was no public
e. valid until annulled instrument. Later on, the partnership acquired a
fishpond, an immovable property.
3. All, except one, are the characteristics of a partnership a. The partnership is void because of non-compliance
contract: with formal requirements of the law.
a. onerous d. commutative b. The partnership is void because it was not
b. preparatory e. real registered with the SEC.
c. consensual c. The partnership is valid because the fishpond
(immovable) was acquired after the partnership had
been legally constituted.
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d. Both a and b 12. When the manner of management has not been agreed
e. None of the above upon –
a. Unanimous consent of all the managing partners is
7. A capitalist partner engaged for his own account in an required
operation which is of the same kind of business in which b. Vote of the partners owing the controlling interest
the partnership is engaged, he can be: prevails
a. compelled to sell his interest in the partnership to c. All the partners are considered as managing
the other partners partners
b. compelled to dissolve or discontinue the operation d. Decision of the majority prevails
of his business e. None of the above
c. compelled to bring to the common fund of the
partnership any profits accruing to him from his 13. The following are the property rights of a partner, which
transactions one is the assignable?
d. denied his share in the profits of the partnership a. right in specific partnership property
e. None of the above b. interest in the partnership
c. right to participate in management
8. A partnership suffered losses in the first year of d. right to formal account
operation. O, a capitalist partner, refused to contribute e. right to use the partnership property
additional share to the capital because he has other
concerns. Can O be obliged to sell his interest to the 14. A partnership without a definite period of existence and
other partners on the ground of such refusal? which can be dissolved at any time by any of the
a. Yes. O’s refusal to contribute his additional share partners is called:
reflects his lack of interest in the continuance of the a. Universal partnership of all present property
partnership b. Universal partnership of profits
b. No, because there is actually no imminent loss of c. Particular partnership
the business d. Partnership at will
c. Yes, provided that O be paid the value of his interest e. Correct answer not given
d. No, because his refusal is justifiable
e. None of the above 15. If a partner is insolvent, the first in the order of
preference in the distribution of his assets is:
9. A, B and C are partners. C is a limited partner. Suppose a. Partner's contribution to the partnership
D is a creditor of the firm to the amount of b. Partnership creditor
PhP100,000.00, and after exhausting all the assets of c. Separate creditor of the partner
the partnership, there is a balance of PhP30,000.00. d. Pro-rata between the separate creditors and
How can D recover the PhP30,000.00? partnership creditors
a. D must sue the firm and get the PhP30,000.00 from e. Correct answer not given
all the partners jointly
b. D must sue the firm and get the PhP30,000.00 from 16. The remedy of capitalist partners against an industrial
A and B partner who engaged in a business for himself without
c. D must sue the firm and get the PhP30,000.000 the express permission from the partnership is:
from all the partners solidarily a. To compel the industrial partner to sell his interest
d. D must sue the firm and get the balance based on to the said capitalist partners.
the partners' capital contribution b. To exclude him from sharing in the profits of the
e. None of the above partnership.
c. To remove him as manager if he is appointed as
10. In the certificate of limited partnership, X as limited manager of the partnership.
partner is indicated to have contributed PhP20,000.00. d. To expel him from the partnership and claim for
X actually paid into the partnership fund only damages.
PhP15,000.00. e. Correct answer not given
a. X is liable for PhP15,000 only as this is the nature
of the liability of the limited partner. 17. A, B and C are partners. Their contributions are as
b. X is liable for the difference of PhP5,000 which is the follows: A-P60,000; B-P40,000; C-services. The
difference between his contribution as actually partners did not agree on how to divide profits and
made and stated in the certificate of limited losses. If there is a loss of P10,000, how should the
partnership. said loss of P10,000 be shared by the partners?
c. X is liable for the difference of PhP5,000 because he a. A-P6,000; B-P4,000; C-nothing
owes the limited partnership personally. b. A-P3,000; B-P2,000; C-P5,000
d. Only b and c c. A-P3,500; B-P2,000; C-P3,000
e. Correct answer not given. d. A-P3,500; B-P2,500; C-P4,000
e. Correct answer not given
11. A, B, C, D and E are partners. E, managing partner of
the said partnership, received the amount of PhP 18. In case of imminent loss of the business of the
20,000.00 as payment from X who owes E 20,000.00 partnership, the following partners are required to give
due today and the partnership PhP 20,000.00 due on additional contribution, except:
March 21, 2021. E accepted and a receipt was made in a. Industrial partner
E’s name. How much is the share of the partnership? b. Capitalist partner
a. 20,000.00 c. General partner
b. 10,000.00 d. None of the above
c. 5,000.00
d. none 19. Three (3) of the following are rights of a partner. Which
one (1) is not?
a. Right to associate to another person to his share
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b. Right to admit another partner partnership purposes, he has absolutely no right,

c. Right to inspect partnership books however, to possess such property for any other
d. Right to ask dissolution of the firm at the proper purpose.
time d. A partner’s right in specific partnership property is
e. Correct answer not given not assignable except in connection with the
assignment of rights of all the partners in the same
20. A limited partner shall not become liable as a general property.
partner unless: e. Correct answer not given
a. He takes part in the control of the business
b. His surname appears in the partnership name 26. In all the following cases, except one, dissolution of the
c. The word "LIMITED" is not added to the partnership partnership is caused without violation of the
name agreement between the partners. Which should not be
d. All of the above included?
e. Correct answer not given a. By the termination of the definite term or particular
undertaking specified in the agreement
21. Which of the following is considered prima facie b. When there is no definite term or particular
evidence of the existence of partnership? undertaking is specified, by the express will of any
a. Payment of interest on a loan with the profits of the partner
business. c. By the express will of all the partners who have not
b. The receipts by a person of a share of the profits assigned their interests or suffered them to be
c. The sharing of the gross returns of a business. charged for their separate debts
d. Where the parties are established as co-owners of a d. By the expulsion of any partner from the business
property. bona fide even if no such power was conferred by
e. Correct answer not given the agreement between the partners
e. Correct answer not given
22. Which of the following may be a cause for involuntary
dissolution? 27. Of all the property rights of the partners, only one is
a. Express will of any partner transferable. Which is it?
b. Insolvency of any partner a. His rights in specific partnership property
c. Termination of term b. His right to participate in the management
d. Expulsion of any partner c. His right to inspect the partnership books
e. Correct answer not given d. His interest in the partnership
e. Correct answer not given
23. Which of the following contracts of partnership need not
appear in a public instrument? 28. X and Y are partners in a certain business, X being the
a. Limited Partnership managing partner. Z owes X P5,000.00 and the
b. Partnership where immovables are contributed partnership P10,000.00, and both credits are
c. Partnership having a capital of P3,000.00 or more demandable. Z pays P3,000.00 and the latter issues a
d. All of the above receipt in his name.
e. Correct answer not given a. X should collect only P1,000.00 for himself and
apply the balance of P2,000.00 to the partnership
24. The liabilities of the partnership shall rank in the order credit.
of payment as follows: b. X should collect the entire P3,000.00 for himself.
a. Those owing to creditors other than partners, those c. X should apply the entire P3,000.00 to the
owing to partners in respect of capital, those owing partnership credit.
to partners other than for capital and profits, and d. X should collect only P2,000.00 for himself and
those owing to partners in respect of profits apply the balance of P1,000.00 to the partnership
b. Those owing to creditors other than partners, those credit.
owing to partners in respect of capital, those owing e. Correct answer not given
to partners in respect of profits, and those owing to
partners other than for capital and profits 29. A partnership which has for its object determinate
c. Those owing to creditors other than partners, those things, their use or fruits, or a specific undertaking, or
owing to partners other than for capital and profits, the exercise of a profession or vocation.
those owing to partners in respect of capital, and a. Universal partnership of all present property
those owing to partners in respect of profits b. General partnership
d. Those owing to partners other than for capital and c. Particular partnership
profits, those owing to partners in respect of capital, d. Limited partnership
those owing to partners in respect of profits, and e. Universal partnership of Profits
those owing to creditors other than partners.
e. Correct answer not given 30. The following, except one, are the property rights of
partners. Which one is not?
25. A partner is co-owner with his partners of specific a. His rights in specific partnership property
partnership property. The following, except one, are b. His interest in the partnership
the incidents of this co-ownership. Which is the c. His right to participate in the management
exception? d. His right to inspect the partnership books
a. A partner’s right in specific partnership property is e. Correct answer not given
not subject to attachment or execution, except on a
claim against the partnership. 31. The remedy of the partner where the partnership is not
b. A partner’s right in specific partnership property is written in a public instrument.
not subject to legal support. a. Action for damages
c. While a partner has an equal right with his partners b. Rescission with damages
to possess specific partnership property for c. Annulment with damages
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d. Specific Performance III. A partner’s interest in the partnership is his share

e. Correct Answer Not given only in the profits.
a. S1 is True, S2 and S3 are False
32. A, B, C, D and E are partners. A promised to deliver a b. S1 is False, S2 and S 3 are True
specific car to their partnership. M, a separate creditor c. S1 and S2 are True, S3 is False
of A, attaches the car as payment for the outstanding d. All are True
obligation of A to him. Can M attach the property? e. All are False
a. Yes, because the partner is still the owner of the
property. 39. Which of the following is not an exception to formal
b. Yes, because there was delivery of the object. accounting?
c. No, since the partnership is the owner of the a. when the partner is liable as a trustee or fiduciary
property. under Art. 1807 of the Civil Code
d. No, since only the interest of the partner may be b. Whenever just and equitable under the
attached. circumstances
e. None of the above. c. in the case of the sub-partner who manages the
business
33. Demand is not necessary to put in delay the partner who d. when a partner is wrongfully excluded from the
promised to contribute a specific property to the affairs of the partnership
partnership. e. in case there is a stipulation.
a. Yes, as an exception to the general rule
b. No, demand is necessary to put the debtor in delay. 40. A, B and C are partners in ABC & Company, where A is
c. None of the above. the managing partner. Dao Ming owes the partnership
Php 4,000.00. At the same time, Dao Ming owes A
34. A, B and C formed a partnership with the following personally Php 4,000, for which D executed a chattel
contributions, namely – mortgage to guarantee said debt. Dao approached A
with P5,000 to pay his debts, A issued 2 receipts, one
A ------------------------- Php 20,000.00 for ABC & Company in the amount of P1,000.00, and
B ------------------------- 30,000.00 the other for his personal account in the amount of
C ------------------------- 50,000.00 P4,000.00. The application of A of the credit is:
a. Proper (more onerous)
The partnership earned 50,000.00. How much is the b. Not proper as the application should be pro rata
share of B in the income? c. Not proper as full payment should have been
a. 25,000.00 credited to the partnership.
b. 15,000.00 d. All of the above
c. 50,000.00 e. None of the above.
d. none of the above
41. What if in the above problem, Dao owes C instead of A.
35. In the same problem, if the partnership suffered a loss C issued 2 receipts, one for ABC & Company in the
of 50,000.00. How much is the share of A in the loss? amount of P1,000.00, and the other for his personal
a. 25,000.00 account in the amount of P4,000. The application of C
b. 15,000.00 of the credit is:
c. 10,000.00 a. Proper (not MP)
d. none of the above b. Not proper as the application should be pro rata.
c. Not proper as full payment should have been
36. In the same problem, after their agreed period of 20 credited to the partnership.
years, A, B and C continued the partnership. What kind d. None of the above.
of partnership was established?
a. de facto c. at will 42. Allan owns a high-tech Xerox machine. He agreed to
b. limited d. with a period form Copy Matrix Partnership with Boy for a period of
two years, wherein Boy would contribute P50,000, while
37. I. A partnership begins from the time the partnership is Allan would contribute his Xerox machine. Before
registered with the Securities and Exchange delivery of the Xerox machine, Allan’s house caught fire,
Commission (SEC). which destroyed all his belongings, including his high
II. A person who is prohibited from giving each other tech Xerox machine. Which of the following is correct?
any donation or advantage cannot enter into universal a. Allan becomes a debtor of the partnership as to the
partnership. value of the high-tech Xerox machine.
III. A capitalist partner cannot engage in any business b. Allan is liable for damages even without demand.
for himself unless the partnership expressly permits him c. The Copy Matrix Partnership is dissolved.
to do so. d. Allan will not be liable as the Xerox machine is a
a. S2 is True, S1 and S3 are False specific thing and its loss was due to a fortuitous
b. S1 is False, S2 and S3 are True event.
c. S1 and S2 are True, S3 is False e. A and B only
d. All are True f. C and D only
e. All are False g. None of the above

38. I. When the manner of management has not been 43. A, B, C, D, E, F, G, H, I and J are partners of Pares
agreed upon, all the partners shall be considered as Restaurant. All of them contributed P10,000 each. A, B
agents of the partnership. and C were designated as managers of the partnership.
II. A partner’s right in specific partnership property may While looking for a location of their restaurant, A wanted
be attached and may be executed by his personal the same to be placed in front of UST, while B wanted
creditors. the same to be in Morayta in FEU. C agreed with B but

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D, E, F and G opposed the same and wanted the b. S1 is False, S2 and S 3 are True
restaurant be placed inside the SM City. c. S1 and S2 are True, S3 is False
a. The decision of the majority of the partners shall d. All are True
prevail e. All are False
b. The decision of B and C shall prevail
c. The decision of A shall prevail. 48. A partner who does not take an active part in the
d. Unanimity of votes shall prevail business and is not known or held out as a partner.
e. None of the above a. ostensible partner d. dormant partner
b. secret partner e. retiring partner
44. A and B formed a partnership with a capital of P30,000. c. silent partner
On January 1, 2020, the partnership incurred an
obligation of P90,000 to C payable on April 30, 2020. 49. In a limited partnership, the creditor of a limited partner
On February 1, 2020, D was admitted as a new partner may charge the interest of the indebted limited partner,
contributing P15,000. D will: the interest so charged may be redeemed with:
a. Not be liable for partnership obligations contracted a. partnership property
prior to his admission to the partnership b. separate property of the general partner
b. Be liable for partnership obligations contracted prior c. both partnership and separate property of a general
to his admission to the partnership and will extend partner cumulatively
to his own individual properties d. both the partnership property and separate
c. Be liable for partnership obligations contracted prior property of a general partner alternatively
to his admission to the partnership but his liability e. both the partnership property and the separate
will extend to his share in the partnership property, property of general property successively
not his own individual properties.
d. None of the above 50. In the partnership of A, B and C, A was appointed in the
Articles of Partnership as managing partner. As such
45. 45 A and B entered into a universal partnership of all manager and acting in good faith:
present property. No stipulation was made regarding a. his power is revocable even without his consent
other properties. Subsequently, A received a car with a b. his power can be revocable at any time even without
taxi line as a donation from his uncle who won the just cause provided that it is approved by the
lottery and another parcel of land as remuneration for partners owning the controlling interest
his work as a professor of IABF-FEU. c. he may execute all acts of administration despite
a. The car with taxi-line and the parcel of land the opposition of B and C
including their fruits belong to the partnership. d. He can be removed for a valid cause without the
b. The car with taxi-line and the parcel of land vote of the partners owning the controlling interest.
including their fruits do not belong to the
partnership 51. Partnership as distinguished from corporation
c. The car with taxi-line and the parcel of land belong a. acquires juridical personality upon approval by the
to the partnership but not the fruits thereof as the SEC and the issuance of the certificate of
same belong to A only. incorporation
d. The car with taxi-line and the parcel of land belong b. has limited liability
to A but the fruits shall be enjoyed by the c. created by operation of law
partnership d. no power of succession
e. None of the above
52. Essential features or elements of partnership, except:
46. The common property of a universal partnership of all a. must have a lawful object or purpose
present property shall be: b. there must be contribution of money, property or
a. All the properties which shall belong to each of the industry to a common fund
partners after the constitution of the partnership. c. with intention to divide and contribute whatever
b. All the properties which belongs to each of the profits they make to other people
partners at the time of the constitution of the d. must be established for the common benefit or
partnership. interest of the partners
c. All the properties which belong to each of the
partners at the time of the constitution of the 53. One of the following is not a characteristic of contract
partnership as well as all the profits which they may of partnership, except:
acquire therewith. a. real, in that the partners must deliver their
d. All the properties which belong to each of the contributions in order for the partnership contract
partners at the time of the constitution of the to be perfected
partnership as well as the properties which they b. principal, because can stand by itself
may acquire thereafter. c. preparatory, because it is means by which other
e. None of the above contracts will be entered into
d. Onerous, because the parties contribute money,
47. I. The law on compensation does not apply with respect property or industry to the common fund
to the damages caused by the partner to the
partnership and the profits or benefits which he may 54. The power of the managing partner refers to:
have earned for the partnership by his industry. a. Acts of Administration
II. With respect to fungible things or things which b. Acts of Ownership
cannot be kept without deteriorating even if they are c. Acts of Alteration
contributed only for the use of the partnership, the risk d. Acts of Strict Dominion
of loss is borne by the partnership.
III. The partnership creditors have preference over the 55. Partner who is both a secret and a silent partner
separate properties of the partner. a. Nominal c. Limited
a. S1 is True, S2 and S3 are False b. Ostensible d. Dormant
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56. May contribute money, property or industry to the absence of any partnership agreement specifically
common fund covering the division of losses among the partners.
a. limited partner
b. general partner 64. Angelie, despite being a limited partner in ABC
c. both limited and general partner Partnership, takes an active participation in the
d. dormant partner management of the partnership. Angelie shall become:
a. Managing Partner
57. Where at least one partner is a general partner and b. Liable as general partner
the rest are limited partners c. General Partner
a. general partnership d. Limited Partner with management rights
b. partnership by estoppels
c. partnership de facto 65. I. Justin, a newly admitted partner, is not liable for pre-
d. limited partnership existing obligations of the partnership at the time of his
admission in favor of partnership creditors.
58. The following are disqualified to form a universal
partnership, except: II. An industrial partner shall share in the losses and his
a. husband and wife share in the profits shall be just and equitable under the
b. brother and sister circumstances.
c. those guilty of adultery or concubinage
d. those guilty of the same criminal offense, if the a. Both statements are correct.
partnership is entered into in consideration of the b. Both statements are incorrect.
same c. Statement I is correct while statement II is
incorrect.
59. Partner who winds up the affairs of the firm after it has d. Statement I is incorrect while statement II is
been dissolved correct.
a. liquidating d. industrial
b. managing e. capitalist 66. Which among the following partners cannot engage in
business for himself, unless the partnership
60. Bears the risk of things contributed to the partnership: expressly permits him/her to do so.
a. general partner a. Lily, the industrial partner
b. limited partner b. Kelsey, the silent partner
c. partner contributing usufructuary rights over c. Ben, the general partner
fungible things d. Nilo, the managing partner
d. partner contributing usufructuary rights over non-
fungible things 67. Perez, Lopez, and Castillo formed a law partnership.
Perez, the senior lawyer, died. Can Lopez and Castillo still
61. One of the following is a characteristic of partnership as continue using the name of such deceased partner?
a contract. a. Yes, since Perez has been part of the partnership
a. Innominate c. Gratuitous from the very beginning.
b. Consensual d. Accessory b. Yes, as long as they will put a mark in that name
indicating that such partner is already deceased.
62. I. The partnership has a juridical personality separate c. No, since death of Perez will dissolve the
and distinct from that of each of the partners. Such partnership.
juridical personality shall be automatically acquired d. No, since he is no longer part of the partnership.
despite the failure to register in the SEC.
68. The following are the rights of a partner except:
II. On dissolution, the partnership is not terminated, but a. Right to associate another to his share
continues until the winding up of partnership is b. Right to inspect partnership books
completed. c. Right to admit another partner
d. Right to ask dissolution of the firm
a. Both statements are correct.
b. Both statements are incorrect. 69. Allan, Ben, and Carlo are partners in ABC Enterprises.
c. Statement I is correct while statement II is To help them secure a loan, they tapped Diego, a wealthy
incorrect. businessman, to secure the loan from BPI. Allan, Ben, and
d. Statement I is incorrect while statement II is Carlo agreed Diego to represent himself as a partner in ABC
correct. Enterprises. Thereafter, BPI granted the loan. What kind of
partner is Diego?
63. Evan, Jasper, and Shanti decided to form a universal a. Silent Partner c. General Partner
partnership of all present property. The contract of b. Ostensible Partner d. Partner by estoppel
partnership was executed on October 1, 2021 but they
commenced business on October 1, 2022. One of the 70. Which of the following can be allowed for a limited
following is not correct? partner?
a. The partnership began its existence on October 1, a. Adding surname of limited partner in the
2021. partnership name.
b. If the partnership is for 10 years, but one of the b. Taking active control in the business.
partners withdraws from the partnership on the c. Can be admitted by a general partner anytime.
8th year, the firm is dissolved. d. May ask for the return of capital contributions
c. If after the expiration of its term, the partners under conditions prescribed by law.
continue to transact business, the partnership is
converted to a partnership at will. 71. The only property right which is assignable
d. They will be deemed to share the losses in a. Right specific partnership property
accordance with their capital contributions in the b. Interest of the partner
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c. Right to manage the partnership S2 – Limited partner can extend loan to the Limited
d. Right to inspect partnership.
a. All are true c. Only S1 is false
72. Who is liable in partnership by estoppel? b. All are false d. Only S2 is false
a. Partners consenting
b. Partnership 82. S1 – Only the separate property of the other partners
c. Third person can be used to redeem the Limited partner’s interest
d. All of the above charged.
S2 – If the partner misappropriates the property of the
73. Latin term which means “choice of the person” partnership, he shall be solidarily liable for damages.
a. Res perit domino a. All are true c. Only S1 is false
b. Delectus personarum b. All are false d Only S2 is false
c. Nemo dat quod non habet
d. Genus nun quam perit 83. S1 - The limited partner’s name as a rule can appear on
the partnership name.
74. Partner not known and does not manage S2 – The limited can extend a loan and ask for a
a. Silent c. Dormant collateral on the loan extended by him.
b. Secret d. Ostensible a. All are true c. Only S1 is false
b. All are false d. Only S2 is false
75. S1 – Partnership is dissolved if the partner fails to
deliver the property he promised to contribute. 84. S1 - The limited partner can decide on acts of
S2 – A partner can be exempted from giving his ownership.
contribution to the partnership. S2 – The limited partner can be sued for partnership’s
a. All are correct c. Only S1 is incorrect obligations since he is liable up to the extent of his
b. All are incorrect d. Only S2 is incorrect separate property.
a. All are true c. Only S1 is false
76. S1 – If the partnership is more than 1 year, it must be b. All are false d. Only S2 is false
in public instrument for it to be enforceable.
S2 – If the partner contributes an immovable property, 85. Allan, Ben, and Carlo are partners in ABC Enterprises.
there must be public instrument and inventory for the To help them secure a loan, they tapped Diego, a
partnership to be valid. wealthy businessman, to secure the loan from BPI.
a. All are correct c. Only S1 is incorrect Allan, Ben, and Carlo agreed Diego to represent himself
b. All are incorrect d. Only S2 is incorrect as a partner in ABC Enterprises. Thereafter, BPI granted
the loan. What kind of partner is Diego?
77. S1 – Sole proprietorship is registered in DTI. a. Silent Partner
S2 – Business name of the partnership is registered in b. Ostensible Partner
DTI. c. General Partner
S3 – Partnership is registered in SEC. d. Partner by Estoppel
a. All are correct
b. All are incorrect 86. Which among the following partners cannot engage in
c. Only S1 is incorrect business for himself, unless the partnership expressly
d. Only S2 is incorrect permits him/her to do so.
e. Only S3 is incorrect a. Lily, the industrial partner
b. Kelsey, the silent partner
78. S1 – A limited partner cannot sue since he is a mere c. Ben, the general partner
contributor to the limited partnership. d. Nilo, the managing partner
S2 – If the limited partnership erroneously believes that
he is a limited partner when in fact the Certificate of 87. Perez, Lopez, and Castillo formed a law partnership.
Limited Partnership provides that he is a general Perez, the senior lawyer, died. Can Lopez and Castillo
partner, then the certificate must be amended or still continue using the name of such deceased partner?
cancelled. a. Yes, since Perez has been part of the partnership
a. All are correct c. Only S1 is incorrect from the very beginning.
b. All are incorrect d. Only S2 is incorrect b. Yes, as long as they will put a mark in that name
indicating that such partner is already deceased.
79. S1 – Limited partner can ask for a collateral in case the c. No, since death of Perez will dissolve the partnership.
partnership enters into a loan agreement with the d. No, since he is no longer part of the partnership.
limited partner.
S2 – Limited partner cannot transact business with the 88. Angelie, despite being a limited partner in ABC
partnership. Partnership, takes an active participation in the
a. All are correct c. Only S1 is incorrect management of the partnership. Angelie shall become:
b. All are incorrect d. Only S2 is incorrect a. Managing Partner
b. Liable as general partner
80. S1 – Substituted limited partner is entitled to all the c. General Partner
rights of the limited partner. d. Limited Partner with management rights
S2 – Under the law, a capitalist partner who engages in
the same business as the partnership will be removed 89. I A limited partner's interest is assignable.
from the partnership. II. The contributions of a limited partner may be cash or
a. All are correct c. Only S1 is incorrect property, but not services.
b. All are incorrect d. Only S2 is incorrect
a. Both statements are correct.
81. S1 – Interest of the partner comprises only his share in b. Both statements are incorrect.
the profits of the partnership.
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c. Statement I is correct while statement II is

incorrect. 96. This is the proper remedy of other partners if one
d. Statement I is incorrect while statement II is partner failed to contribute what he has promised?
correct. a. Cancel the contract of partnership
b. Other partners to withdraw what they have
90. A conveyance by a partner of his whole interest in the contributed
partnership to a third person (assignee) will give rise c. Remove the said erring partner from the
only to: partnership
a. Assignee's right to receive profits. d. Specific performance against the said erring
b. Assignee's right to inspect partnership books. partner
c. Assignee's right to participate in the
management. 97. Which of the following statements is not correct?
d. Assignee's right to information or account a. A partner may withdraw or disposed of his
regarding the partnership. contribution from the partnership without the
consent or approval of other partners.
91. A limited partner whose surname appears in a b. The designation of losses and profits in the
partnership name contrary to the provisions of the first partnership cannot be entrusted to one of the
paragraph is liable as a __________ to partnership partners.
creditors xxx. c. Under Article 1790, the rule on equal
a. General partner c. Limited Partner contributions of partners is not absolute.
b. Industrial partner d. Managing Partner d. As to the giving of partnership profits, industrial
partner must be given his share first ahead of
92. Which of the following statements is correct? the capitalist partners.
a. A stipulation which excludes one or more
partners from any share in the profits or losses 98. This is a partner’s share of profits and surplus:
is valid as long as majority of the partners a. a partner’s rights in specific partnership
agree. property
b. A partner who has been appointed manager b. a partner’s interest in the partnership
after the partnership was formed may execute c. a partner’s right to participate in the
all acts of administration despite the opposition management
of his partners. d. all of the above
c. An industrial partner may engage in business
e. none of the above
without need of consent from capitalist partners
as long as such business is not the same or
similar of that of the partnership. 99. As for the profits, the industrial partner shall receive:
d. Any partner who is not a managing partner may a. 1/3 of profits
object or oppose in the acts of administration of b. equal to the share of the capitalist partners
the partnership. c. in proportion to the shares of the capitalist
partners
93. The partnership books shall be kept, subject to any d. such share as may be just and equitable under
agreement between the partners, at the: the circumstances
a. Residence address of the managing partner.
b. Residence address of the partner with 100. Statement 1: The designation of losses and profits
controlling interest/biggest contribution. cannot be entrusted to one of the partners.
c. Any of the office addresses of the partnership. Statement 2: A partner who has undertaken to
d. Principal place of partnership's business. contribute a sum of money and fails to do so
becomes a debtor for the interest and damages
94. Which of the following statements is not correct? from the time demand is made.
a. As a general rule, a partner is not entitled to a. True, False c. False, True
compensation (other than his share of the
b. True, True d. False, False
profits) for the services he rendered in the
partnership.
b. A partner can designate his entire profits from 101. Statement 1: A partner is co-owner with the
the partnership to a sub-partner. partnership of specific partnership property.
c. A managing partner may, without the consent Statement 2: Any partner shall have the right to a
of the other partners, make any important formal account as to partnership affairs every fiscal
alteration in the immovable property of the year.
partnership as long as it is useful to the a. True, False c. False, True
partnership. b. True, True d. False, False
d. A partner cannot designate to his partner his
share in the profits and losses in the DETERMINATION
partnership.
“Every morning you have two choices: continue to sleep
95. Under Article 1796, which of the following is not an with your dreams, or wake up and chase them.”
obligation of the partnership to each partner?
a. To answer for risks as a result of management. “Believe in yourself, take on your challenges, dig deep
b. To answer for partner's debt. within yourself to conquer fears. Never let anyone bring
c. To answer for the obligation contracted by you down. You got to keep going.”
partner for the partnership.
d. To refund partner's expenses on behalf of the End of RFBT.3704
partnership.

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