REVIEWER (PAST QUIZZES)
PARTNERSHIP
I. BASIC TYPES OF BUSINESS
ORGANIZATIONS
True or False:
FALSE 1. Corporations and partnerships (organized for
business) are also merchants from the time they are
registered with the Securities and Exchange Commission.
FALSE 2. One of the qualification of being a merchant is
to be at least 21 years old.
TRUE 3. One of the qualification of being a merchant is
to habitually involve themselves in commerce
TRUE 4. In partnership two or more persons bind
themselves to contribute money, property, or industry to
a common fund with intention of dividing the profits
among themselves.
TRUE 5. Registration with the Securities and Exchange
Commission (SEC) is necessary where the capital of the
partnership is P3, 000.00 or more.
TRUE 6. Registration with the SEC is not necessary for
a partnership to acquire juridical personality
TRUE 7. From Joint account in concept an arrangement
whereby merchants may interest
themselves in the transaction of other merchants.
JOINT ACCOUNT 8. This is commonly called an
accidental partnership; and there is no indication to the
public that there is an existing arrangement because only
the ostensible partner is conducting the business.
FALSE 9. A joint account has juridical personality while
a partnership has a personality separate and distinct from
the partners.
FALSE 10. As to business name Commercial name is
common to all participants that can be adopted in joint
accounts.
TRUE 11. A joint account has no juridical personality
while a partnership has a personality separate and
distinct from the partners.
TRUE 12. As to management, the general partners are all
managers in the partnership.
FALSE 13. A joint account in a bank cannot be
considered as a simple type of business organization.
TRUE 14. A Business Trust is a type of business
organization.
TRUE 15. A sole proprietorship does not possess a
juridical personality and has no legal personality to file
or defend an action in court
TRUE 16. A Business Name is any name that is different
from the true name of an individual which is used or
signed in connection with her/his business.
TRUE 17. A proprietor is required to register his
business name other than his true name with the Bureau
of Trade Regulation and Consumer Protection of the
Department of Trade and Industry.
FALSE 18. Even without registration with DTI, a sole
proprietor can exhibit his business name in a tarpaulin
for public view.
FALSE 19. Juridical persons need not register the names
that are registered with the Securities and Exchange
Commission when they use a different name for selling
their products.
FALSE 20. "Sex Merchandise store" as a business name
maybe allowed in the Philippines.
FALSE 21. Since a business person can make delicious
hamburgers very similar to or even better than
McDonalds, he can put up s sign in his store: Affordable
McDonalds burgers.
FALSE 22. “DOLE manpower agency" can be allowed
as a business name.
FALSE 23. There must not be separate registration of a
Business name for a branch or satellite office.
Enumeration: What are some prohibited names for
registration of business name?
1. The name in itself is illegal, offensive, scandalous,
or improper.
2. Names identical or resemble a business name
already registered with authorized agencies.
3. Names composed of purely generic or geographic
words.
4. Names which by law or regulation cannot be
appropriated.
5. Names or terms to designate or suggest any class of
goods, articles, merchandise, or services.
6. The names or abbreviation used by governments.
7. The names or abbreviation of names of any nation,
intergovernmental or international.
8. Names which are deceptive, misleading, or which
misrepresent the nature of business.
II. Chapter 1: GENERAL PROVISIONS
Enumeration: Essential features of contract of
partnership (Art. 1767)
1. There must be a valid contract;
2. The parties (two or more persons) must have legal
capacity to enter into the contract;
3. There must be a mutual contribution of money,
property, or industry to a common fund;
4. The object must be lawful;
5. The primary purpose must be to obtain profits and to
divide the same among the parties.
Enumeration: Basic requisites of contract of partnership
(Art. 1767)
1. Consent and capacity of the contracting parties;
2. Object which is the subject matter of the contract;
3. Cause which is established.
Identification: Other Characteristics of Partnership (Art.
1767)
NOMINATE 1. Has specific or specified name.
ONEROUS 2. Each partner must have contributions.
Separate and DISTINCT from the partners.
Enumeration: Classification of Partnership (Art. 1776)
As to Liability
 General Partnership
 Limited Partnership
As to Object
 Universal Partnership
 Particular Partnership
Kinds of Universal Partnership
 Universal Partnership of All Present Property
 Universal Partnership of All Profit
As to Representation to Others
 Ordinary or Real Partnership
 Ostensible Partnership or Partnership by Estoppel
As to Duration
 Partnership with a Fixed Term
 Partnership at Will
As to Legality of its Existence
 De Facto Partnership
 De Jure Partnership
Enumeration: Kinds of Partners (Art. 1776)
1. Capitalist Partner
2. Industrial Partner
3. Capitalist-Industrialist Partner
Enumeration: How is Partnership created? (Art. 1767)
1. Created Orally
2. Created in Publist Instrument
3. Created in Private Instrument registered in SEC
Enumeration: Examples of persons who cannot give
consent to a contract of partnership (Art. 1767)
1. Unemancipated minors
2. Insane or demented persons
3. Deaf-mutes who do not know how to write
4. Persons who are suffering from civil interdiction
5. Incompetents who are under guardianship
III. Chapter 2: OBLIGATIONS OF THE
PARTNERS
SECTION 1. — Obligations of the Partners Among
Themselves.
True or False:
TRUE 1. Partners can stipulate that their partnership
shall begin from the moment the cash contributions of
partners have actually been transmitted to the partnership.
(Art. 1784)
TRUE 2. A continuation of the business by the partners
or such of them as habitually acted therein during the
term, without any settlement or liquidation of the
partnership affairs, is prima facie evidence of a
continuation of the partnership. (Art. 1785)
TRUE 3. A partner is also bound for warranty in case of
eviction with regard to specific and determinate things
which he may have contributed to the partnership, in the
same cases and in the same manner as the vendor is
bound with respect to the vendee. (Art. 1786)
FALSE 4. partner shall also be liable for the fruits of the
things he promised to deliver from the time they should
have been delivered, provided there is demand. (Art.
1786)
FALSE 5. A partner who has undertaken to contribute a
sum of money and fails to do so becomes a creditor for
the interest and damages from the time he should have
complied with his obligation. (Art. 1788)
TRUE 6. For any amount a partner may have taken from
the partnership coffers, his liability shall begin from the
time he converted the amount to his own use. (Art. 1788)
TRUE 7. An industrial partner cannot engage in business
for himself, unless the partnership expressly permits him
to do so. (Art. 1789)
TRUE 8. When an industrial partner engages in business
for himself without express permission from the
partnership, the capitalist partners may exclude him from
the firm with a right to damages. (Art. 1789)
TRUE 9. Unless there is a stipulation to the contrary, the
partners shall contribute in equal shares to the capital of
the partnership. (Art. 1790)
TRUE 10. If there is no agreement to the contrary, in
case of an imminent loss of the business of the
partnership, any partner who refuses to contribute an
additional share to the capital, except an industrial
partner, to save the venture, shall he obliged to sell his
interest to the other partners. (Art. 1791)
TRUE 11. If a partner authorized to manage collects a
demandable sum which was owed to him in his own
name, from a person who owed the partnership another
sum also demandable, the sum thus collected shall be
applied to the two credits in proportion to their amounts,
even though he may have given a receipt for his own
credit only. (Art. 1792)
TRUE 12. A partner who has received, in whole or in
part, his share of a partnership credit, when the other
partners have not collected theirs, shall be obliged, if the
debtor should thereafter become insolvent, to bring to the
partnership capital what he received even though he may
have given receipt for his share only. (Art. 1793)
FALSE 13. The risk of indeterminate things, which are
not fungible, contributed to the partnership so that only
their use and fruits may be for the common benefit, shall
be borne by the partner who owns them. (Art. 1795)
TRUE 14. The partnership shall be responsible to every
partner for the amounts he may have disbursed on behalf
of the partnership and for the corresponding interest,
from the time the expense are made. (Art. 1796)
FALSE 15. 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, If the
absence of stipulation, the share of each partner, except
the industrial partner, in the profits and losses shall be in
equal shares. (Art. 1797)
TRUE 16. A partnership begins from the moment of the
execution of the contract, unless it is otherwise
Stipulated. (Art. 1784)
TRUE 17. When a partnership for a fixed term or
particular undertaking is continued after the termination
of such term or particular undertaking without any
express agreement, the rights and duties of the partners
remain the same as they were at such termination, so far
as is consistent with a partnership at will. (Art. 1785)
TRUE 18. Every partner is a debtor of the partnership for
whatever he may have promised to contribute thereto.
(Art. 1786)
TRUE 19. Every partner shall also be bound for warranty
in case of eviction with regard to specific and
determinate things which he may have contributed to the
partnership, in the same cases and in the same manner as
the vendor is bound with respect to the vendee. (Art.
1786)
FALSE 20. If the things contributed are fungible, or
cannot be kept without deteriorating, or if they were
contributed to be sold, the risk shall be borne by the
partner who owns them. (Art. 1795)
FALSE 21. The losses and profits shall be distributed in
conformity with the amount of efforts exerted by each
partner. (Art. 1797)
FALSE 22. The industrial partner shall be liable for the
losses. (Art. 1797)
FALSE 23. The designation of losses and profits can be
entrusted to one of the partners. (Art. 1798)
TRUE 24. Partnership begins from the moment of the
execution of the contract, unless it is otherwise stipulated.
(Art. 1784)
TRUE 25. When a partnership for a fixed term or
particular undertaking is continued after the termination
of such term or particular undertaking without any
express agreement, the rights and duties of the partners
remain the same as they were at such termination, so far
as is consistent with a partnership at will. (Art. 1785)
TRUE 26. Every partner is a debtor of the partnership for
whatever he may have promised to contribute thereto.
(Art. 1786)
FALSE 27. When the capital or a part thereof which a
partner is bound to contribute consists of goods, their
appraisal must be made in the manner prescribed in the
contract of partnership, and in the absence of stipulation,
it shall be made by the partners, and according to current
prices. (Art. 1787)
TRUE 28. The partners may contribute unequal shares to
the capital of the partnership. (Art. 1790)
TRUE 29. Every partner is responsible to the partnership
for damages suffered by it through his fault, and he
cannot compensate them with the profits and benefits
which he may have earned for the partnership by his
industry. (Art. 1794)
TRUE 30. If the things contributed are fungible, or
cannot be kept without deteriorating, or if they were
contributed to be sold, the risk shall be borne by the
partnership. In the absence of stipulation, the risk of the
things brought and appraised in the inventory, shall also
be borne by the partnership, and in such case the claim
shall be limited to the value at which they were appraised.
(Art. 1795)
TRUE 31. partnership shall also answer to each partner
for the obligations he may have contracted in good faith
in the interest of the partnership business, and for risks in
consequence of its management. (Art. 1796)
FALSE 32. As for the profits, the industrial partner shall
receive such share as may be just and equitable under the
circumstances. If besides his services he has contributed
capital, he shall also receive a share in the profit in
proportion to his capital. The industrial partner shall be
equally liable for the losses. (Art. 1797)
FALSE 33. A stipulation which excludes one or more
partners from any share in the profits or losses is
voidable. (Art. 1799)
Identification:
1. In the obligation of a Managing Partner (MP) who
collects from a Debtor who owes the MP personally and
the partnership as well, when is the debtor given the right
to prefer payment of credit to the partner as to his
application of payment?
Answer: If the credit is ONEROUS to the debtor.
2. What is needed when the contribution consists of
Goods?
Answer: APPRAISAL
Enumeration: List down 5 obligations of partners
among themselves (Art. 1786)
1. To contribute at the beginning of the partnership or at
the stipulated time the money, property, or industry
which he may have promised to contribute;
2. To answer for eviction in case the partnership is
deprived of the determinate property contributed; and
3. To answer to the partnership for the fruits of the
property the contribution of which he delayed, from the
date they should have been contributed up to the time of
actual delivery.
4. To preserve said property with the diligence of a good
father of a family pending delivery to the partnership.
5. To indemnify the partnership for any damage caused
to it by the retention of the same or by the delay in its
contribution.
Enumeration: Write the Obligations of a partner with
respect to contribution of money and money converted to
person use. (Art. 1788)
1. To contribute on the date due the amount he has
undertaken to contribute to the partnership;
2. To reimburse any amount he may have taken from the
partnership coffers and converted to his own use;
3. To pay the agreed or legal interest, if he fails to pay
his contribution on time or in case he takes any amount
from the common fund and converts it to his own use;
and
4. To indemnify the partnership for the damages caused
to it by the delay in the contribution or the conversion of
any sum for his personal benefit.
IV. Chapter 2: OBLIGATIONS OF THE
PARTNERS
SECTION 2. — Property Rights of a Partner.
True or False:
TRUE 1. A conveyance by a partner of his whole interest
in the partnership does not of itself dissolve the
partnership, or, as against the other partners in the
absence of agreement. (Art. 1813)
TRUE 2. A partner may contribute to the partnership
only the use or enjoyment or property, reserving the
ownership thereof. (Art. 1810)
TRUE 3. A partner's right in specific partnership
property is not subject to legal support. (Art. 1811)
FALSE 4. Ordinarily, a partner has equal right to possess
any specific partnership property, including intangible
thing, for partnership purposes. (Art. 1811)
TRUE 5. A partner's right in specific partnership
property is not assignable except in connection with the
assignment of rights of all the partners in the same
property. (Art. 1811)
TRUE 6. A partner is a co-owner with his partners of
specific partnership property. (Art. 1811)
TRUE 7. Any partner may enter into a separate
obligation to perform a partnership contract. (Art. 1816)
TRUE 8. Persons who are not really members of the
partnership, but included their names in the firm name,
shall be subject to the liability of a partner. (Art. 1815)
Enumeration: What are the Principal property rights of
a partner? (Art. 1810)
 His rights in specific partnership property
 His interest in the partnership
 His right to participate in the management.
Enumeration: What are the Related property rights of a
partner? (Art. 1810)
 The right to reimbursement for amounts advanced to
the partnership and to indemnification for risks in
consequence of management.
 The right of access and inspection of partnership
books.
 The right to true and full information of all things
 affecting the partnership.
 The right to a formal account of partnership affairs
under certain circumstances.
 The right to have the partnership dissolved also
under certain conditions.
Enumeration: What comprises the partner's interest in
the partnership? (Art. 1812)
 His proportionate share in the undistributed profits
during the life of the partnership as a going concern.
 His share in the undistributed surplus after its
dissolution.
Enumeration: What are the rights withheld from the
Assignee in case of assignment of a partner's whole
interest in the partnership? (Art. 1813)
 To interfere in the management;
 To require any information or account; or
 To inspect any of the partnership books.
V. Chapter 2: OBLIGATIONS OF THE PARTNERS
SECTION 3. — Obligations of the Partners with
Regard to Third Persons.
True or False:
TRUE 1. Partners are principals to the other partners and
agents for them and the partnership. (Art. 1816)
FALSE 2. All partners shall be liable "pro rata" with all
their property after the partnership assets are exhausted
for unpaid partnership debts. "Pro rata" shall be
understood to mean proportionately based on the amount
of their contribution. (Art. 1816)
TRUE 3. The personal liability of partners for unpaid
partnership debts is subsidiary or secondary in nature.
(Art. 1816)
FALSE 4. Third persons are bound, in entering into
contract with one of the partners, to ascertain whether or
not the partner with whom the transaction is made has
the consent of the other partners. (Art. 1818)
TRUE 5. The apparent scope of the partner's authority is
the whole scope of the partnership customary business.
(Art. 1818)
TRUE 6. After dissolution, admission made by a partners
will bind the partnership only if necessary to wind up
partnership affairs. (Art. 1820)
TRUE 7. A firm name is necessary to distinguish the
partnership which has a distinct and separate juridical
personality. (Art. 1815)
TRUE 8. A partnership cannot continue to use in its firm
name the names of deceased partners, unless the firm
indicates in all its communications that said partner is
deceased. (Art. 1815)
TRUE 9. Persons who, not being partners, include their
names in the firm name do not acquire the rights of a
partner, but subject to liability of a partner insofar as 3rd
persons without notice are concerned. (Art. 1815)
FALSE 10. Admissions by a party as testified to by a 3
person are not admissible in evidence against him in
litigation. (Art. 1820)
FALSE 11. As a general rule, the particular partner who
undertakes to bind his co-partners by a contract without
authority is not personally liable on such contract. (Art.
1818)
TRUE 12. An admission or representation made by any
partner concerning partnership affairs within the scope of
his authority in accordance with law is evidence against
the partnership. (Art. 1820)
TRUE 13. As a general rule, notice to any partner of any
matter relating to partnership affairs, and the knowledge
of the partner acting in the particular matter, acquired
while a partner or then present to his mind, and the
knowledge of any other partner who reasonably could
and should have communicated it to the acting partner,
operate as notice to or knowledge of the partnership. (Art.
1821)
FALSE 14. The creditors of the partner shall be preferred
to that of the partnership as regards the partnership
property. (Art. 1827)
FALSE 15. Where, by any wrongful act or omission of
any partner acting with the authority of his co-partners,
loss or injury is caused to any person, not being a partner
in the partnership, the partner who acted or committed it
is liable not the partnership. (Art. 1822)
FALSE 16. All partners are liable jointly with the
partnership for everything chargeable to the partnership.
(Art. 1824)
FALSE 17. The partner is bound to make good the loss
where the partnership in the course of its business
receives money or property of a third person and said
money or property was misapplied by any partner while
it is in the custody of the partnership. (Art. 1823)
TRUE 18. When a person, by words or by conduct,
represents himself as a partner in an existing partnership,
he is liable to such persons to whom he made such
representation who believed on such representation as
though he was actual partnership member when
partnership liability results. (Art. 1825)
TRUE 19. A person admitted as a partner into an
existing partnership is liable for all the obligations of the
partnership arising before his admission as though he had
been a partner when such obligations were incurred, to
be satisfied only out of partnership property, unless there
is a stipulation to the contrary. (Art. 1826)
Enumeration: Except when authorized by other partners
or others have abandoned the business, one or more but
less than all partners have no authority to do certain acts.
(Art. 1818)
1. Assign the partnership property in trust for creditors or
on the assignee’s promise to pay the debts of the
partnership;
2. Dispose of the goodwill of the business;
3. Do any other act which would make it impossible to
carry on the ordinary business of a partnership;
4. Confess a judgment;
5. Enter into a compromise concerning a partnership
claim or liability;
6. Submit a partnership claim or liability to arbitration;
7. Renounce a claim of the partnership.
Enumeration: The real property of the partnership may
be registered or owned in the name of: (Art. 1819)
1. The partnership
2. One or more but not all the partners
3. One or more or all the partners, or in a third person in
trust for the partnership
4. All the partners.
Enumeration: What are the two requisites in order that
the partnership will not be liable for the act of a partner?
(Art. 1818)
1. The partner so acting has in fact no authority;
2. The third person knows that the acting partner has no
authority
Enumeration: What are the three (3) groups of acts of
partners in Article 1818 as to the liability of partnership
for acts of partners? (Art. 1818)
1. Acts for apparently carrying on in the usual way the
business of the partnership.
2. Acts of strict dominion or ownership.
3. Acts in contravention of a restriction on authority.
Enumeration: What are the three (3) cases when notice
to a partner considered as knowledge or notice on the
part of partnership? (Art. 1821)
1. Knowledge of the partner acting in the particular
matter acquired while a partner;
2. Knowledge of the partner acting in the particular
matter then present to his mind; and
3. Knowledge of any other partner who reasonably could
and should have communicated it to the acting partner.
VI. Chapter 3: DISSOLUTION AND WINDING UP
True or False:
FALSE 1. Notice of Dissolution to partnership creditors
through advertisement to local newspaper is not
sufficient notice. Actual notification is necessary. (Art.
1834)
TRUE 2. The law allows newspaper notification
regarding the dissolution of partnership is allowed as
giving proper notice. (Art. 1834)
TRUE 3. The dissolution of the partnership does not of
itself discharge the existing liability of any partner. (Art.
1835)
TRUE 4. The individual creditors of the deceased
partners are to be preferred over partnership creditors
with respect to the separate property of the said deceased.
(Art. 1835)
FALSE 5. The right to an account of his interest shall
accrue to any partner, or his legal representative as
against the winding up partners or the surviving partners
or the person or partnership continuing the business, at
the end date of winding up, in the absence of any
agreement to the contrary. (Art. 1842)
TRUE 6. When partnership property and the individual
properties of the partners are in possession of a court for
distribution, partnership creditors shall have priority on
partnership property and separate creditors on individual
property, saving the rights of lien or secured creditors.
(Art. 1839)
FALSE 7. In settling accounts, except if agreed
otherwise, the assets of the partnership includes the
partnership property and contributions of the partners
necessary to pay all liabilities, but excluding goodwill.
(Art. 1839)
FALSE 8. The top priority in application or payment out
of partnership assets is the share of the profits, if any,
due to each partner. (Art. 1839)
TRUE 9. The individual property of a deceased partner
shall be liable for his share of the contributions necessary
to pay partnership debts incurred while he was a partner.
(Art. 1839)
TRUE 10. Where a partnership contract is rescinded on
the ground of the fraud or misrepresentation, the injured
partner is entitled to a lien on, or right of retention of, the
surplus of the partnership property after satisfying the
partnership liabilities to third persons for any sum of
money paid by him for or advances contributed by him.
(Art. 1838)
TRUE 11. When any partner retires or dies, and the
business is without settlement of accounts, he or his legal
representative as against the partnership the value of his
interest ascertained at the date of dissolution. (Art. 1841)
TRUE 12. When a partner is expelled and the remaining
partners continue the business either alone or with others
without liquidation of partnership affairs, creditors of the
dissolved partnership are also creditors of the person or
partnership continuing the business. (Art. 1840)
FALSE 13. After dissolution, a partner can bind the
partnership By any act appropriate for winding up
partnership affairs or completing transactions unfinished
at dissolution. (Art. 1834)
TRUE 14. The guilty partner (who contravened the
partnership agreement) is entitled to his share of the
appraised value of the business less the damages due to
innocent partners. (Art. 1837)
FALSE 15. The partner who wrongfully caused the
dissolution, shall not be released from existing and future
liabilities of the partnership, if the business is continued.
(Art. 1837)
TRUE 16. A mailed letter to a former dealer to inform of
a partner's retirement from the partnership is insufficient
notice to relieve the retiring partner from subsequent
liability, even when the mall was not received. (Art. 1834)
Enumeration: Who are the persons authorized to wind
up the partnership? (Art. 1836)
1. The partners designated by the agreement.
2. In the absence of such agreement, all the partners who
have not wrongfully dissolved the partnership.
3. The legal representative (executor or administrator) of
the last surviving partner (when all the partners are
already dead), not insolvent.
VII. Chapter 4: LIMITED PARTNERSHIP
True or False:
TRUE 1. A limited partnership is one formed by two or
more persons, having as members one or more general
partners and one or more limited partners. (Art. 1843)
TRUE 2. Two or more persons desiring to form a limited
partnership shall, among other requirements, sign and
swear to a certificate, which shall state the name of the
partnership, with the word "Limited." (Art. 1844)
TRUE 3. The contributions of a limited partner may be
cash or property, but not services. (Art. 1845)
TRUE 4. The surname of a limited partner shall not
appear in the partnership name unless it is also the
surname of a general partner, or before creation of
limited partnership, the business has a name in which his
surname appeared. (Art. 1846)
TRUE 5. A limited partner whose surname appears in a
partnership name is liable as a general partner to
partnership creditors who extend credit to the partnership
without actual knowledge that he is not a general partner.
(Art. 1846)
FALSE 6. A limited partner shall become liable as a
general partner when he exercise of his rights and
powers as a limited partner. (Art. 1848)
FALSE 7. After the formation of a limited partnership,
additional limited partners may not be admitted into the
partnership. (Art. 1849)
TRUE 8. A general partner shall have all the rights and
powers and be subject to all the restrictions and liabilities
of a partner in a partnership without limited partners.
(Art. 1850)
TRUE 9. Without the written consent or ratification of
the specific act by all the limited partners, a general
partner or all of the general partners have no authority to
Confess a judgment against the partnership. (Art. 1850)
FALSE 10. General rule: A general partner may possess
partnership property, or assign their rights in specific
partnership property, for other than a partnership purpose.
(Art. 1850)
TRUE 11. A person may be a general partner and a
limited partner in the same partnership at the same time,
provided that this fact shall be stated in their certificate.
(Art. 1853)
FALSE 12. A person who is a general and at the same
time a limited partner, shall have all the rights and
powers and be subject to all the restrictions of a general
partner without exception. (Art. 1854)
FALSE 13. A limited partner may loan money to and
transact other business with the partnership, and achieve
on account of resulting claims against the partnership,
with general creditors, a pro rata share of the assets. (Art.
1854)
FALSE 14. Where there are several limited partners, the
members may not agree that one or more of the limited
partners shall have a priority over other limited partners
as to the return of their contributions, as to their
compensation by way of income, or as to any other
matter. (Art. 1855)
FALSE 15. General rule: A limited partner may not
receive from the partnership the share of the profits or
the compensation by way of income stipulated for in the
certificate. (Art. 1851)
Enumeration: Difference between General Partnership
and Limited Partnership
1. A general partner is personally liable for partnership
obligations, while a limited partner’s liability extends
only to his capital contribution.
2. The general partners have an equal right in the
management of the business, whether or not the general
partner has made any capital contribution, while a
limited partner has no share in the management of a
limited partnership.
3. A general partner may contribute money, property, or
industry to the partnership, while a limited partner must
contribute cash or property to the partnership but not
services;
4. Unlike a general partner, a limited partner is not a
proper party to proceedings by or against a partnership
unless he is also a general partner, or where the object of
the proceeding is to enforce a limited partner’s right
against, or liability to, the partnership.
5. A general partner’s interest in the partnership may not
be assigned as to make the assignee a new partner
without the consent of the other partners, while a limited
partner’s interest is freely assignable, with the assignee
acquiring all the rights of the limited partner subject to
certain qualifications.
6. The name of a general partner may appear in the firm
name, while, a limited partner must not.
7. A general partner is prohibited from engaging in a
business which is of the kind of business in which the
partnership is engaged, if he is a capitalist partner, or in
any business for himself if he is an industrial partner
while there is no such prohibition in the case of a limited
partner.
8. The retirement, death, insanity, or insolvency of a
general partner dissolves the partnership, while the
retirement, etc. of a limited partner does not have the
same effect, for his executor or administrator shall have
the rights of a limited partner for the purpose of selling
his estate.
Enumeration: Reasons for allowing the formation of
Limited Partner (Art. 1843)
1. Secure capital from others for one’s business and still
retain control.
2. Share in profits of a business without risk of personal
liability.
3. Associate as partners with those having business skill.
Enumeration: What are the rights given to both general
and limited partner? (Art. 1851)
1. Have the partnership books kept at the principal place
of business of the partnership, and at a reasonable hour
to inspect and copy any of them.
2. Have on demand true and full information of all things
affecting the partnership, and a formal account of
partnership affairs whenever circumstances render it just
and reasonable.
3. Have dissolution and winding up by decree of court.
Enumeration: What are the prohibited transactions for a
limited partner on loan transactions? (Art. 1852)
1. Receiving or holding as collateral security any
partnership property.
2. Receiving any payment, conveyance, or release from
liability if it will prejudice the right of third persons.
CORPORATION
TITLE I : GENERAL PROVISIONS
Fill in the blanks:
A corporation is an 1 ARTIFICIAL being, created by
operation of 2 LAW, having the right of 3
SUCCESSION and the powers, attributes, and properties
expressly authorized by law or 4 INCIDENTAL to its
existence.
Enumeration: What are the tests of nationality or
citizenship of a corporation?
1. Incorporation Test
2. Control Test
3. Center of Management Test or Business Domicile
Test
Fill in the blanks:
A corporation has a personality 1 SEPARATE and 2
DISTINCT from that of each shareholder.
When valid grounds exist, the legal fiction that a
corporation is an entity separate and distinct from its
members or stockholders may be 3 DISREGARDED.
When the veil of corporate fiction is used as a shield to
perpetuate fraud, or defend crime, the stockholders or
individuals composing it will be treated 4 THE SAME as
the corporation.
5 CORPORATORS are those who compose a
corporation, whether as stockholders or shareholders in a
stock corporation or as members in a non-stock
corporation.
True or False:
FALSE 1. No share may be deprived of voting rights
except those classified and issued as "treasury" or
"common” shares, unless otherwise provided in the code.
(Sec. 06)
TRUE 2. General rule: The shares or series of shares
may or may not have a par value. (Sec. 06)
FALSE 3. Holders of non-voting shares shall not be
entitled to vote on Increase or decrease of authorized
capital stock and on Merger or consolidation of the
corporation with another corporation. (Sec. 06)
TRUE 4. Public corporations generally refer to those
created for governmental functions. (Sec. 03)
FALSE 5. Redeemable shares are shares which may be
purchased by the corporation from the holders of such
shares upon the expiration of a fixed period only when
there are unrestricted retained earnings in the books of
the corporation. (Sec. 08)
TRUE 6. De facto corporation is one so defectively
created as not to be a de jure corporation, but
nevertheless the result of a bonafide attempt to
incorporate under existing statutory, authority, coupled
with the exercise of corporate powers. (Sec. 03)
FALSE 7. De jure corporation is one so defectively
created as not to be a de jure corporation, but
nevertheless the result of a bonafide attempt to
incorporate under existing statutory, authority, coupled
with the exercise of corporate powers. (Sec. 03)
FALSE 8. Civil corporations are those which are created
for purposes of charities, such as hospitals, schools, and
the like. (Sec. 03)
FALSE 9. Public Corporations are created wholly or in
part, for purposes of private emolument. (Sec. 03)
TRUE 10. Close Corporation is one in which the
stockholders or members are limited to a few persons
such as members of a family. (Sec. 03)
FALSE 11. Open corporation is one in which the
stockholders or members are limited to a few persons
such as members of a family. (Sec. 03)
FALSE 12. A corporation which is so related to another
that a majority of its directors can be elected directly or
indirectly, by such other corporation is called a Holding
corporation. (Sec. 03)
FALSE 13. Corporation by Estoppel is one where
corporate powers have been exercised by a body of men
for such a length of time. (Sec. 03)
FALSE 14. Corporation by Prescription is one which
really is not a corporations, but which has represented
itself to the public as a real corporation, and which
cannot be permitted to deny such representation. (Sec.
03)
FALSE 15. Quasi-private Corporation are private
corporations which have accepted from the state the
grant of a franchise or contract involving the
performance of public duties. (Sec. 03)
TRUE 16. If a corporation is created as an agency or
instrumentality of the state for political or public purpose
connected with the administration of government, then it
is a public corporation. (Sec. 03)
Choose One:
1. ELEEMOSYNARY or Civil - Those which are
created for purposes of charities, such as hospitals,
schools, and the like.
2. Domestic or FOREIGN CORP. - Created by or
existing under the laws of some other state or country.
3. Open or CLOSE CORPORATION - One in which the
stockholders or members are limited to a few persons
like family members.
4. Parent or SUBSIDIARY - One which is so related to
another corporation that it has the power through another
corporation, to elect a majority of the directors of such
other corporation.
5. WASTING ASSETS CORP or Affiliated - One the
sole purpose of which is to invest its capital in a specific
property and afterward to consume that property or
extract its value at a profit.
6. Aggregate or SOLE CORPORATION - One which is
composed of a single member and his successors in
office.
7. ECCLESIASTICAL or Lay Corp. - One created to
secure the public worship of God.
8. Stock or NON-STOCK - One which there is no such
stock, but the membership is otherwise represented.
9. De jure or DE FACTO - One so created not according
to law, but nevertheless the result of a bonafide attempt
to incorporate under existing statutes which exercised
corporate powers.
10. QUASI-PUBLIC CORP or Trading Corporation Private corporations which have accepted from the state
the grant of a franchise or contract involving the
performance of public duties.
11. Corporation by Estoppel or TRAMP CORP. - A
corporation organized in one state without any intention
of doing business in that state, but instead it will carry its
business operations in other states.
TITLE II : INCORPORATION AND
ORGANIZATION OF PRIVATE
CORPORATIONS
True or False:
FALSE 1. Any person, partnership, association or
corporation, singly or jointly with others but not more
than ten (10) in number, may organize a corporation for
any lawful purpose/s or purposes.(Sec. 10)
TRUE 2. Each incorporator of a stock corporation must
own or be a subscriber to at least one (1) share of the
capital stock to become a stockholder. (Sec. 10)
FALSE 3. A corporation shall have fifty years of legal
existence unless its Articles of incorporation provides
otherwise. (Sec. 11)
TRUE 4. A corporate term for a specific period may be
extended or shortened by amending the Articles of
incorporation. (Sec. 11)
TRUE 5. Stock corporations shall not be required to have
minimum capital stock, except when provided by
special law. (Sec. 12)
TRUE 6. All corporations shall file with the SEC
Articles of incorporation in any of the official languages
containing substantial matters, including the specific
purpose or purposes for which the corporation is being
formed. (Sec. 13)
TRUE 7. Any matter in the Articles of Incorporation
may be amended by a majority vote of the board of
directors or trustees and the written vote of the
stockholders representing at least two-thirds (2/3) of
outstanding capital stock. (Sec. 15)
FALSE 8. The amendments in the Articles of
Incorporation (AOInc.) shall take effect upon approval
by SEC or from date of filing with the SEC if not acted
upon within one month from date of filing, cause not
attributable to the corp. (Sec. 15)
TRUE 9. SEC may disapprove any amendment to AOInc.
if the same is not compliant with the requirements of the
Revised Corporation Code of the Phils (RCCP) without
further notice to the applicant-corporation. (Sec. 16)
TRUE 10. SEC may disapprove the AOinc. when the
purpose of the corporation are patently unconstitutional.
illegal, immoral or contrary to government rules and
regulations. (Sec. 16)
FALSE 11. No corporate name shall be allowed by SEC
if it is distinguishable from that already reserved or
registered for the use if another corporation, or if such
name is already protected by law, rules and regulations.
(Sec. 17)
TRUE 12. A person or group of persons desiring to
incorporate shall submit the intended corporate name to
the SEC for verification. (Sec. 18)
TRUE 13. A private corporation organized under RCCP
commences its corporate existence and juridical
personality from the date the SEC issues the certificate
of incorporation under its official seal.
TRUE 14. All persons who assume to act as a
corporation knowing it to be without the authority to do
so shall be liable as general partners for all debts,
liabilities and damages incurred or arising as a result
thereof. (Sec. 20)
FALSE 15. The incorporation of any corporation
claiming in good faith to be a corporation and its right to
exercise corporate powers, shall be required into
collaterally in any private suit to which such corporation
may be a party. (Sec. 19)
FALSE 16. Each incorporator of a stock corporation
must own or be a subscriber to at least ten (10) shares of
the capital stock to become a stockholder. (Sec. 10)
FALSE 17. Stock corporations shall be required to have
minimum capital stock, except when provided by special
law. (Sec. 12)
FALSE 18. Any matter in the Articles of Incorporation
may be amended by a majority vote of the board of
directors or trustees and the written vote of the
stockholders representing at least majority of outstanding
capital stock. (Sec. 15)
TRUE 19. SEC may disapprove the AOInc. any
amendment thereto if the same is not compliant with the
requirements of the Revised Corporation Code of the
Phils. (RCCP), after reasonable time given to modify the
SEC objections. (Sec. 16)
TRUE 20. No corporate name shall be allowed by SEC if
it is not distinguishable from that already reserved or
registered for the use if another corporation, or if such
name is already protected by law, rules and regulations.
(Sec. 17)
TRUE 21. If a corporation does not formally organize
and commence its business within five (5) years from the
date of its incorporation, its certificate of incorporation
shall be deemed revoked as of the day following the end
of the five (5)-year period. (Sec. 21)
TITLE III : BOARD OF
DIRECTORS/TRUSTEES AND OFFICERS
True or False:
TRUE 1. the board of directors or trustees shall exercise
the corporate powers, conduct all business, and control
all properties of the corporation. (Sec. 22)
FALSE 2. Directors shall be elected for a term of two (2)
year from among the holders of stocks registered in the
corporation’s books. (Sec. 22)
TRUE 3. A director who ceases to own at least one (1)
share of stock or a trustee who ceases to be a member of
the corporation shall cease to be such. (Sec. 22)
FALSE 4. The board of the following corporations
vested with public interest shall have directors
constituting at least twenty percent (20%) of such board.
(Sec. 22)
FALSE 5. An independent compliance officer is a person
who, apart from shareholdings and fees received from
the corporation, is independent of management and free
from any business or other relationship which could, or
could reasonably be perceived to materially interfere
with the exercise of independent judgment in carrying
out the responsibilities as a director. (Sec. 22)
FALSE 6. A stockholder or member who participates
through remote communication or in absentia, shall not
be deemed present for purposes of quorum. (Sec. 23)
FALSE 7. In stock corporations, stockholders entitled to
vote shall have the right to vote the number of shares of
stock standing in their own names in the stock books of
the corporation at the time fixed in the articles of
incorporation. (Sec. 23)
FALSE 8. members of non-stock corporations may cast
as many votes as there are directors to be elected but
may not cast more than one (1) vote for one (1)
candidate.(Sec. 23)
FALSE 9. Immediately after their election, the directors
of a corporation must formally organize and elect a
president and a vice president. (Sec. 24)
TRUE 10. Should a director, trustee or officer die, resign
or in any manner cease to hold office, the secretary, or
the director, trustee or officer of the corporation, shall,
within seven (7) days from knowledge thereof, report in
writing such fact to the Commission. (Sec. 24)
FALSE 11. Any director or trustee of a corporation may
be removed from office by a vote of the stockholders
holding or representing the majority of the outstanding
capital stock, or in a non-stock corporation, by a vote of
the majority of the members entitled to vote. (Sec. 27)
FALSE 12. Directors shall be elected for a term not
exceeding three (3) years from among the members of
the corporation. (Sec. 22)
TRUE 13. The election must be by ballot if requested by
any voting stockholder or member. (Sec. 23)
FALSE 14. The directors or trustees elected shall
perform their duties as prescribed by law, rules of good
corporate governance, and in the articles of incorporation.
(Sec. 23)
TRUE 15. At all elections of directors or trustees, there
must be present, either in person or through a
representative authorized to act by written proxy, the
owners of majority of the outstanding capital stock, or if
there be no capital stock, a majority of the members
entitled to vote. (Sec. 23)
TITLE IV: POWERS OF CORPORATIONS
True or False:
FALSE 1. Provisions in the articles of incorporation or
amendment thereto cannot deny the exercise of preemptive right. (Sec. 38)
TRUE 2. Pre-emptive rights shall not extend to shares to
be issued in compliance with laws requiring stock
offerings or minimum stock ownership by the public.
(Sec. 38)
TRUE 3. A corporation may, by a majority vote of its
board of directors or trustees, sell, lease, exchange,
mortgage, pledge or otherwise dispose of all or
substantially all of its property and assets, including its
goodwill, upon such terms and conditions and for such
consideration approve by at least two-thirds (2/3) of vote
stockholders or member owning outstanding capital.
(Sec. 39)
FALSE 4. Once properly approved by the Board and
stockholders or members, no dissenting stockholder may
exercise his appraisal right under the conditions provided
by law. (Sec. 39)
TRUE 5. A sale or other disposition shall be deemed to
cover substantially all the corporate property and assets
if thereby the corporation would be rendered incapable
of continuing the business or accomplishing the purpose
for which it was incorporated. (Sec. 39)
FALSE 6. A stock corporation does not have the power
to purchase or acquire its own shares for the purpose to
pay dissenting or withdrawing stockholders entitled to
payment for their shares. (Sec. 40)
FALSE 7. Any corporation has the power to invest
corporate funds in another corporation or business or for
any other purpose. (Sec. 41)
TRUE 8. Where the investment by the corporation is
reasonably necessary to accomplish RS primary purpose
as stated in the articles of incorporation, the approval of
the stockholders or members shall not be necessary. (Sec.
41)
FALSE 9. The board of directors of a stock corporation
may declare dividends out of the restricted retained
earnings shall payable in cash, in property, or in stock to
all stockholders on the basis of outstanding stock held by
them. (Sec. 42)
FALSE 10. Any stock dividends due on delinquent stock
shall first be applied to the unpaid balance on the
subscription plus costs and expenses. (Sec. 42)
FALSE 11. Stock corporations are prohibited from
retaining surplus profits in excess of fifty 50% percent of
that paid in capital stock. (Sec. 42)
TRUE 12. Stock corporations are not prohibited from
retaining surplus profits in excess of the limit provided
by when justified by definite corporate expansion
projects or programs approved by the board of directors.
(Sec. 42)
TRUE 13. Corporation maybe prohibited by a Loan
agreement with any financial institution of creditor from
declaring dividends without its/his consent. (Sec. 42)
TRUE 14. No corporation shall conclude a management
contract with another corporation unless such contract
shall have been approved by the majority of the board of
directors and stockholders or members owning at least
the majority of the outstanding capital. (Sec. 43)
FALSE 15. Where stockholder's representing the same
interest of both the managing and the managed
corporations own or control more than one-half (1/2) of
the total outstanding capital stock, the management
contract must be approved by 2/3 vote of the
stockholders or members of the managed corporation.
(Sec. 43)
FALSE 16. No management contract shall be entered
into for a period longer than ten years for any one term.
(Sec. 43)
TRUE 17. Corporate acts which not conferred by law nor
necessary or incidental to the exercise of the powers are
considered Ultra-Vires Acts. (Sec. 44)
TRUE 18. Every corporation has the power and capacity
to enter into merger or consolidation with other
corporation. (Sec. 35)
TRUE 19. Corporations are allowed to make reasonable
donations for public welfare or for hospital, charitable,
cultural, scientific or similar purposes. (Sec. 35)
FALSE 20. Corporation, domestic or foreign, can give
donations in aid of any political party or candidate or for
purposes of partisan political activity. (Sec. 35)
Enumeration: What do you call the right of first refusal
to purchase additional stock issuances of the corporation
to existing stockholders? PRE-EMPTIVE RIGHTS
Enumeration: List down general powers of a corporation:
1. To sue and be sued in its corporate name;
2. To have perpetual existence unless the certificate of
incorporation provides otherwise;
3. To adopt and use a corporate seal;
4. To amend its articles of incorporation in accordance
with the provisions of this Code;
5. To adopt bylaws, not contrary to law, morals or public
policy, and to amend or repeal the same in accordance
with this Code;
6. In case of stock corporations, to issue or sell stocks to
subscribers and to sell treasury stocks in accordance with
the provisions of this Code; and to admit members to the
corporation if it be a nonstock corporation;
7. To purchase, receive, take or grant, hold, convey, sell,
lease, pledge, mortgage, and otherwise deal with such
real and personal property, including securities and
bonds of other corporations, as the transaction of the
lawful business of the corporation may reasonably and
necessarily require, subject to the limitations prescribed
by law and the Constitution;
8. To enter into a partnership, joint venture, merger,
consolidation, or any other commercial agreement with
natural and juridical persons;
9. To make reasonable donations, including those for the
public welfare or for hospital, charitable, cultural,
scientific, civic, or similar purposes: Provided, That no
foreign corporation shall give donations in aid of any
political party or candidate or for purposes of partisan
political activity;
10. To establish pension, retirement, and other plans for
the benefit of its directors, trustees, officers, and
employees;
11. To exercise such other powers as may be essential or
necessary to carry out its purpose or purposes as stated in
the articles of incorporation.
Enumeration: List down the specific powers of a
corporation:
1. Extend or shorten corporate term.
2. Increase or decrease corporate stock
3. Declare dividends.
4. Incur or create bonded indebtedness.
5. Deny pre-emptive rights.
6. Sell or other disposition of corporate assets.
7. Purchase or acquire own shares.
8. Invest in another corporation, business or any other
purposes.
9. Enter into management contract.
TITLE V: BYLAWS
True or False:
TRUE 1. For the adoption of bylaws by the
corporation, the affirmative vote of the stockholders
representing at least a majority of the outstanding
capital stock, or of at least a majority of the
members in case of nonstock corporations, shall be
necessary. (Sec. 45)
FALSE 2. bylaws shall not be effective upon the
issuance by the SEC of a certification that the
bylaws are in accordance with this Code. (Sec. 45)
TRUE 3. The Commission shall accept for filing the
bylaws or any amendment thereto of any bank,
banking institution, building and loan association,
trust company, insurance company, public utility,
educational institution, or other special corporations
governed by special laws that is accompanied by a
certificate of the appropriate government agency to
the effect that such bylaws or amendments are in
accordance with law. (Sec. 45)
FALSE 4. A majority of the board of directors or
trustees, and the owners of at least a 2/3 of the
outstanding capital stock, or at least 2/3 of the
members of a nonstock corporation, at a regular or
special meeting duly called for the purpose, may
amend or repeal the bylaws or adopt new bylaws.
(Sec. 47)
FALSE 5. any power delegated to the board of
directors or trustees to amend or repeal the bylaws
or adopt new bylaws shall not be considered as
revoked whenever stockholders owning or
representing a majority of the outstanding capital
stock or majority of the members shall so vote at a
regular or special meeting. (Sec. 47)
TITLE VI : MEETINGS
True or False:
TRUE 1.Notice of any meeting may be waived,
expressly or impliedly, by any stockholder or
member. (Sec. 49)
TRUE 2.All proceedings and business transacted at
any meeting of the stockholder/members, if within
the powers or authority of the corporation, shall be
valid even if the meeting be improperly held,
provided all the stockholders or members of the
corporation are present or duly represented at the
meeting. (Sec. 50)
TRUE 3.Regular meetings of the board of directors
or trustees of every corporation shall be held
monthly, unless the bylaws provide otherwise. (Sec.
52)
TRUE 4.Special meetings of the board of directors
or trustees may be held at any time upon the call of
the president or as provided in the by-laws. (Sec. 52)
TRUE 5.Meetings of directors or trustees or
corporation may be held anywhere in or outside of
the Philippines, unless the by-laws provide
otherwise. (Sec. 52)
TRUE 6.A director or trustee may waive the
requirement of one day written notice for a regular
or special meeting, either expressly or impliedly.
(Sec. 52)
FALSE 7.In case of pledged or mortgaged shares in
stock corporations, the pledgor or mortgagor shall
have the right to attend and vote at meetings of
stockholders, unless the pledgee or mortgagee is
expressly given by the pledgor or mortgagor such
right in writing which is recorded on the appropriate
corporate books. (Sec. 54)
TRUE 8.Executors, administrators, receivers, and
other legal representatives duly appointed by the
court may attend and vote in behalf of the
stockholders or members without need of any
written proxy. (Sec. 54)
TRUE 9.In case of shares of stock owned jointly by
two or more persons, in order to vote the same, the
consent of all the co-owners shall be necessary,
unless there is a written proxy, signed by all the coowners, authorizing one or some of them or any
other person to vote such share or shares. (Sec. 55)
TRUE 10.Proxies shall in writing, signed by the
stockholder or member and filed before the
scheduled meeting with the corporate secretary.
Unless otherwise provided in the proxy, it shall be
valid only for the meeting for which it is intended.
(Sec.57)
Fill in the blanks:
Meetings of directors, trustees, stockholders, or
members may be REGULAR or SPECIAL.
REGULAR meetings of stockholders or members
shall be held annually on a date fixed in me by-laws,
or if not so fixed, on any date in April of every year
as determined by the board of directors or trustees.
Written notice of regular meetings shall be sent to
all stockholders or members of record atleast 21
DAYS prior to the meeting, unless a different period
is required by the by-laws.
Special meetings of stockholders or members shall
be held at any time deemed necessary provided in
the by-laws, at least 1 WEEK prior written notice
shall be sent to all holders/members, unless
otherwise provided in the bylaws.