PHILIPPINE LAW

Choose the correct answer.

Question 1

I.A partnership is a separate juridical entity, the shares to be paid out to the partners is necessarily limited only to its total resources

II. A partnership must refund the shares of the partners, the amount to be refunded isnecessarily limited to its total resources.

III. Before the partners can be paid their shares, the creditors of the partnership must first be compensated. After all the creditors have been paid, whatever is left of the partnership assets becomes available for the payment of the partner's shares.

a. Only I is correct

b. Only II is correct

c. All are true

d. All are false

Question 2

The change in the relation of the parties caused by any partner ceasing to be associated in the carrying on, as might be distinguished from the winding up of, the business.

a. Dissolution

b. Liquidation

c. Termination

d. Winding up

Question 3

X, Y and Z are partners in XYZ partnership. X and Y contributed P10,000 each while Z contributed his service.After payment of the partnership liabilities to creditors, only P15,000 remains.In the absence of stipulation to the contrary the share of Z shall be:

a. P5,000.00

b. P10,000.00

c. P3,000.00

d. Zero

Question 4

If a partner is insolvent, the first in the order of preference in the distribution of his assets is:

a. Partnership creditors

b. Separate creditors of the partner-debtor

c. Partner's contribution to the partnership

d. Pro-rata between the separate creditors and the partnership creditors

Question 5

I. The dissolution of the partnership means that the juridical entity was immediately terminated and that the distribution of the assets to its partners should perfunctorily follow.

II. The partnership, although dissolved, continues to exist until its termination, at which time the winding up of its affairs should have been completed and the net partnership assets are divided and distributed to the partners.

a. Only I is correct

b. Only II is correct

c. Both are true

d. Both are false

Question 6

I. A universal partnership of present property shall include the profits which the partner's may acquire therewith such as properties to be acquired through legacy, donation or inheritance.

II. After dissolution, the partners may still enter into contracts in the name of the dissolved Partnership if it is for the purpose of winding up.

a. Only I is correct

b. Only II is correct

c. Both are true

d. Both are false

Question 7

I. The legal personality of the expiring partnership persists for the limited purpose of winding up and closing of the affairs of the partnership.

II. After dissolution, all the transactions of the partnership should not only pertain to liquidation which will happen over a period of time.

a. Only I is correct

b. Only II is correct

c. Both are true

d. Both are false

Question 8

I.The transfer by a partner of his partnership interest does not make the assignee of suchinterest a partner of the firm, nor entitle the assignee to interfere in the management of thepartnership business or to receive anything except the assignee's profits.

II. Generally understood to mean an organization formed for some temporary purpose, a joint Venture is likened to a particular partnership.

a. Only I is correct

b. Only II is correct

c. Both are true

d. Both are false

Question 9

I.As a rule, when a partnership is dissolved, any of the partners can bind the partnership.

II. Where the dissolution is caused by the act, death or insolvency of a partner, each partner is Liable to his co-partners for his share of any liability created by any partner acting for the Partnership as if the partnership had not been dissolved.

a. Only I is correct

b. Only II is correct

c. Both are true

d. Both are false

Question 10

I. The dissolution of the partnership discharges the existing liability of any partner.

II. The individual property of a deceased partner shall be liable for all obligations of the partnership incurred while he was a partner, but subject to the prior payment of his separate debts.

a. Only I is correct

b. Only II is correct

c. Both are true

d. Both are false

Question 11

In extra-judicial liquidation, the following will wind-up the partnership, except:

a. The liquidating partner or partners as agreed upon by all of the partners.

b. The partner who have not wrongfully dissolved the partnership.

c. The legal representative of the last surviving partner who is not insolvent.

d. The managing partner who has the controlling interest.

Question 12

The following are the rights of a partner who has not caused dissolution wrongfully, except:

a. To have the partnership property applied to discharge the liabilities of the partnership.

b. To have the surplus, if any, applied to pay in cash the net amount owing to the respective partners.

c. To be indemnified for damages caused by the partner who did not caused the dissolution wrongfully.

d. To continue the business in the same name either by themselves or jointly with others during the agreed term of the partnership and for that purpose may possess the partnership property.

Question 13

Where a partnership contract is rescinded on the ground of fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is entitled to, except:

a. Right of lien or right of retention

b. Right of subrogation

c. Right of dissolution

d. Right of indemnification

Question 14

I. Generally, in the pursuit of a partnership business, its capital is either increased by profitsearned or decreased by losses sustained.

II. As a general rule, upon the dissolution of a commercial partnership the succeeding partners or parties have the right to carry on the business under the old name.

a. Only I is correct

b. Only II is correct

c. Both are true

d. Both are false

Question 15

I. The use by the person or partnership continuing the business of the partnership name, or the name of a deceased partner as part thereof, he shall make the individual property of the deceased partner liable for any debts contracted by such person or partnership.

II. The liability of a third person becoming a partner in the partnership continuing the businessto the creditors of the dissolved partnership shall be satisfied out of the partnershipproperty only, unless there is a stipulation to the contrary.

a. Only I is correct

b. Only II is correct

c. Both are true

d. Both are false

Study each case below. Then answer the questions that follow by typingYES or NO. Explain your answer.

Dissolution. Malubay Partnership, Ltd. had been in operation for the past 5 years with Martha designated as its managing partner. She entered into an outsourcing contract to set-up andmaintain a more efficient record-filing system of its numerous transactions, which had to entail additional company expense.Mr. Jay, the limited partner opposed Martha's decision citing as his ground that it is quite expensive, even threatened to disassociate himself from the partnership if his decision will not be followed.

1. Is the act of Martha of entering into such a contract valid?

2. Does Mr. Jay have the right to question the act of Martha, considering that he is a limited partner?

3. If Mr. Jay disassociate, will his act create partnership dissolution?

4. If it is Martha who decides to retire, will the partnership be dissolved?

5. If on account of the partnership decision to incur the expense of entering into an out-sourcing contract, Mr. Jay, assigned instead his entire interest to his good friend Mr. Tan, is the partnership dissolved by his act?

Liquidation.Z, Y and W formed Z and Y Partnership Ltd. Z and Y are general partners who contributed P45,000 each; and W, the limited partner contributed P60,000. The partners share profits and losses equally. The total assets consisting of cash upon dissolution is P430,000 and the liabilities are the following:Z (general partner) P20,000; W (limited partner) P50,000; G (outside creditor) P100,000; and M (outside creditor) P50,000. Liquidation of partnership commenced in close observance of the step-by-step distribution of the P430,000 cash.

1. In the liquidation process, the limited partner will be given preference together with outside creditors in satisfaction of respective credits

2. General partner Z, aside from profit and capital will receive the P20,000 owed to him by the partnership ahead of what is owed in profit and capital to W, their limited partner.

3. The capital of general partners will be returned first before the profit they are to receive from the distribution.

4. Limited partners are entitled to receive their share in partnership profit before the return of their capital contribution.

5. Z will enjoy the same preference as W, G and M in the payment of their respective credits.

REQUIRED:Calculate how much will each of the partner share in the division of profit or bear in terms of losses.

Ted, Ronald and Geno formed a partnership, whereby each of them contributed P30,000.00 They agreed that should the partnership realize profit, the same shall be distributed in the following proportions:

Ted, as managing partner -----------------------40%

Ronald---------------------------------------------30%

Geno---------------------------------------------30%

After a year of operation, the partnership's profit amounted to P100,000.00. How much will be the share of each partner?

Suppose they did not stipulate as to how much will be the share of each partner, how will the profits be divided?

Suppose there is a fourth partner, who is classified as an industrial partner, how much will be the share of such partner in the partnership.

Suppose that the partnership instead suffered losses, how will this be distributed among the partners?