Review School of Accountancy

Review School of Accountancy (ReSA)

Law on Contracts 1. A sent B a letter wherein the former offered to sell his car to the latter for Php 1M. B signified his intention to buy the same. In A’s letter he gave B two weeks to raise the amount. After one week, A raised the price to Php 1.5M. Can B compel A to accept the Php 1M first offered by A and deliver to him the car? a. Yes, since there was already offer and acceptance. b. Yes, because A cannot change his offer without the consent of B. c. Yes, because A cannot withdraw the offer within two weeks as he is under estoppel. d. No, because there was no acceptance yet of the offer.

2. A sold a parcel of land to B by word of mouth and delivered to the latter the Transfer Certificate of Title of the land. Can B compel A to execute the deed of sale of the land? a. B cannot compel A to execute the deed of sale as the sale being oral is unenforceable. b. B cannot compel A because the sale is void being oral. c. B can compel A because the contract is enforceable due to delivery of the TCT to him. d. B can compel A because the sale is merely voidable and therefore enforceable, binding until annulled.

3. Statement 1: As a rule, contracts take effect only between the parties. Statement 2: Mere incidental benefit of the third person is enough for stipulation pour autri to exist provided he accepts the same. a. b. c. d.

S1 is true, S2 is true. S1 is true, S2 is false. Both statements are false. S1 is false and S2 is true.

4. Three of the following things may be objects of the contract, except: a. b. c. d.

Those things within the commerce of men. Services which are not contrary to law, morals and good customs. Intransmissible rights. Hereditary rights.

5. Statement 1: Contracts without cause are voidable because cause is presumed to exist in a contract. Statement 2: Offer must be absolute and acceptance must be certain before can there be meeting of the minds of parties. a. b. c. d.

S1 is false, S2 is true. Both statements are true. Both statements are false. S1 is true, S2 is false.

6. Statement 1: Contract of lease of a parcel of land for a term of one year must be written, otherwise, unenforceable. Statement 2: Contract of sale of a parcel of land must be in public instrument, otherwise, unenforceable. a. b. c. d.

S1 is false, S2 is true. Both statements are true. S1 is true, S2 is false. Both statements are false.

7. A contract wherein both contracting parties are incapable of giving consent and yet ratified by the guardian of either of the parties is: a. b. c. d.

Rescissible Voidable Unenforceable Void

8. Three of the following contracts are void. Which one is not? a. Oral contract of partnership wherein more than P3,000 has been contributed by the partners. b. Agent given oral authority to sell the land of the principal. c. Partnership contracts in private instrument wherein immovables have been contributed. d. Oral contract of limited partnership.

9. Which one of the following constitutes fraud? a. Misrepresentation made not in bad faith. b. Misrepresentation by a third person and both parties mistaken. c. Usual exaggerations in trade or dealer’s/sale’s talk.

d. Failure to disclose facts when there is a duty to reveal them as when the parties are bounded by confidential relations.

10. These are principles in contracts. Which is not? a. b. c. d.

Freedom of autonomy of wills. Relativity of contracts. Perfection by mere consent. Binding on third persons.

11. Which of the following constitutes an offer? a. b. c. d.

Business advertisements of things for sale. Advertisements for bidders. An offer made through agent. Before acceptance is conveyed, either of the parties dies, civilly interdicted, becomes insane or insolvent.

12. Statement 1: There is acceptance of the offer only after it has come to the knowledge of the offeror. Statement 2: Lesion or inadequacy of cause shall as a rule make a contract defective. a. b. c. d.

Both statements are true. S1 is false, S2 is true. Both statements are false. S1 is true, S2 is false.

13. Statement 1: If the cause is not stated in the contract, it is presumed that it does not exist and therefore the contract is void. Statement 2: In order that a contract may be voidable, there must be damage. a. b. c. d.

Both statements are false. Both statements are true. S1 is false, S2 is true. S1 is true, S2 is false.

14. The action to annul voidable contract is extinguished by: a. Novation b. Ratification c. Rescission

d. Estoppel

15. Which of the following contracts is unenforceable? a. b. c. d.

One of the contracting parties is incapable of giving consent. Contract of lease of a car for two years orally entered into. Oral contract of sale of land. Mortgage contract in private instrument.

16. Which of the following contracts is not void ab initio? a. b. c. d.

Those Those Those Those

whose object is outside the commerce. whose object did not exist at the time of transaction. which contemplate an impossible service. undertaken in fraud of creditors.

17. Contract which cannot be sued upon unless ratified, thus, it as if they have no effect yet: a. b. c. d.

Voidable Rescissible Void Unenforceable

18. Which of the following contracts is valid? a. Oral contract of agency giving authority to an agent to sell the land of the principal. b. Oral partnership agreement where immovables are contributed. c. Oral contract of sale of an immovable entered into by an agent who was given oral authority by the principal. d. Oral agreement to answer all the expenses for the wedding reception if A marries B.

19. A sold to B a genuine bottle of Fundador brandy. However, upon delivery, the former substituted a fake. B now wants to annul the sale. Decide: a. b. c. d.

The contract is void ab initio. Therefore, it can be annulled. The contract can be annulled since it is voidable due to fraud. The contract cannot be annulled because it is only incidental fraud. There is dolo incidente. Therefore, it can be annulled.

20. G was appointed as the guardian of M who owns a parcel of land valued at P1M. M sold the land only for P.7M to B. The contract is defective because: a. b. c. d.

Unenforceable Rescissible Voidable Void

21. S was intimidated by B to sell to the latter his parcel of land at a very low price. C, the creditor of S was thus damaged since the former has no other means of collecting from S. The remedy of S: a. b. c. d.

Rescission Annulment Have it declared by the court as void. Reformation of the contract.

22. Which of the following contracts must be in writing to be enforceable? a. Acts and contract for the creation, transmission, modification, extinguishments of real rights. b. The cession, repudiation, renunciation of hereditary rights. c. Contract of guaranty d. Contract of partnership.

23. S made an offer to B for the sale of his car which was received by the latter on January 2, 2001. On January 4, 2001, B sent a letter of acceptance by mail. On January 3, 2001, S sent another letter to B withdrawing his offer. In this case; a. There was a perfected sale because of the acceptance of the offer by B before he had knowledge of its withdrawal by S. b. There was perfected sale because S was estopped from withdrawing his offer unless B had knowledge thereof before acceptance. c. No sale took place because before acceptance was conveyed, the offer had been withdrawn. d. The offer was ineffective for lack of certainty as to the object.

24. Statement 1: An offer made by the principal is accepted from the time acceptance is conveyed to him or his agent. Statement 2: The object of a contract may be future things including future inheritance.

a. Both statements are true. b. Both statements are false. c. S1 is true, S2 is false. d. S1 is false, S2 is true.

25. Statement 1: A contract which is the direct result of a void contract is voidable. Statement 2: If the object of the contract did not exist at the time of the transaction, it is void. Therefore, this may include sale of future things. a. b. c. d.

S1 is true, S2 is false. S1 is false, S2 is true. Both are false. Both are true.

26. A sold in writing to B his stereo set for P600. There is no delivery from A and no payment of the price from B. Contract is: a. b. c. d.

Voidable Unenforceable Void Enforceable

27. Statement 1: If the words of the contract are clear and leave no doubt on the intention of the parties, interpretation of contracts may be proper. Statement 2: In case of gratuitous contracts, doubt shall be resolved in favor of greatest reciprocity of interest. a. b. c. d.

S1 is false, S2 is true. S1 is true, S2 is false. Both statements are true. Both statements are false.

28. S sold his parcel of land only for P1M. Although the value of the same is P2M, he thus suffered damage or lesion in the sale due to the inadequacy of the price. Therefore, the contract is: a. b. c. d.

Voidable Unenforceable Valid, not defective Rescissible

29. Statement 1: In case of doubt, a contract purporting to be sale shall be construed as mortgage. Statement 2: In annulment of contracts, there shall always be mutual restitution of both parties thereof. a. b. c. d.

S1 is false, S2 is true. Both statements are false. Both statements are true. S1 is true, S2 is false.

30. Statement 1: Just like the voidable and unenforceable contracts, rescissible contracts may also be ratified. Statement 2: In case of fraud or mistake, the action for annulment must be made within four years from the commission of the vice of consent. a. b. c. d.

Both statements are true. Both statements are false. S1 is true, S2 is false. S1 is false, S2 is true.

31. D, fearing that his creditor C, would go after his only parcel of land to satisfy his claim for payment of D’s debt, sold his land to X who did not know of D’s intention. Decide: a. C can ask for annulment of the sale as this is voidable contract. b. C may ask for damages against X since he was damaged by the sale. c. C can file an action for rescission of the sale. d. C cannot ask for the rescission of the sale. 32. Statement 1: Mutual error as to the legal effect of an agreement when the purpose of the parties is frustrated may result in the reformation of the instrument. Statement 2: Mutual mistake of the parties and the instrument does not express the true agreement will make the contract voidable. a. b. c. d.

Both statements are false. Both statements are true. S1 is true, S2 is false. S1 is false, S2 is true.

33. A without authority from B sold the latter’s car in the name of the latter. The contract is therefore: a. b. c. d.

Rescissible Voidable Unenforceable Void

34. Statement 1: A threatened B with an administrative charge for immorality if the latter does not marry her because she is already pregnant with their child. Fearing that she may do so, B married her. Statement 2: The contract of marriage is therefore voidable because of threat. A simple mistake of account may give rise to the annulment of the contract because of mistake. a. b. c. d.

S1 is false, S2 is true. Both statements are false. Both statements are true. S1 is true, S2 is false.

35. A appointed B to sell his land: Statement 1: If the authority of B is oral and the sale is in public instrument, the sale is void. Statement 2: If the authority of B is in writing and the sale is oral, the contract is unenforceable. a. b. c. d.

S1 is false, S2 is true. S1 is true. S2 is false. Both statements are true. Both statements are false.

36. The three following contracts are cleansed of its defect by ratification. Which is not so ratified? a. Contract where the creditor was damaged by the act of the debtor intended to defraud him. b. Contract entered into by a person incapable of giving consent. c. Sale of chattels orally entered into for a price not less than five hundred pesos. d. Lease of real property for more than one year orally entered into.

37. A gave B P1M for the latter to kill C. Before B could accomplish his criminal intent to kill C, A changed his mind and demanded the return of the money from B. Decide: a. A cannot recover the payment he made to B because it was a void contract which does not allow recovery by the guilty party. b. A cannot recover the money because the contract is unenforceable. c. A can recover the money although the contract is void, since the crime was not committed. d. No recovery and both A and B will be prosecuted for their crime.

38. Because A wants to sell his land to B but the latter does not want to buy the same; A forced B to buy his land. The contract: a. b. c. d.

Not binding upon B since his consent was vitiated. It is unenforceable as against B but not against A. May be ratified expressly or tacitly by A. It is valid, binding and enforceable.

39. D borrowed a sum of money from C with G as guarantor. The loan is in writing but the guaranty is oral. D failed to pay C. Who now is demanding payment from G? Can G be compelled to pay? a. b. c. d.

Yes, because he is the guarantor to pay in case the debtor defaults. No, because the guaranty is void having been orally made. No, because the guaranty is unenforceable against G, it being oral. Yes, because the guaranty is enforceable, writing not needed.

40. A and B agreed on February 3, 2000 that B will construct the house of A in January 2002. The contract was orally entered into. B received a down payment from A with the balance payable after completion of the house. The contract is: a. Voidable because it is not in public instrument. b. Enforceable even if not in writing, having been ratified. c. Unenforceable because it is not in writing and yet performance there is after one year from perfection. d. Void because it is not in writing as required by law.

41. A sold to B a fake Rolex watch on January 3, 2001. On January 13, 2001, B discovered that the watch he bought from A was an imitation. The law provides that he can annul the sale as a voidable contract within four years. Prescription starts from: a. b. c. d.

January 3, 2001 when the sale was perfected. The time of delivery of the watch to B. The time they first talked about the sale of the watch. January 3, 2001 when the fraud was discovered by B.

42. A and B agreed on a contract of pledge. However, they entered into a contract of mortgage in the honest belief that the mortgage and pledge are the same. The instrument may be reformed: a. No, the document cannot be reformed since the contract is void.

b. No, it cannot be changed. They are bound by the document which speaks for itself. c. Yes, it can be reformed because it does not express the true agreement of the parties. d. No, it cannot be reformed because there was no meeting of minds between the parties and the remedy is annulment of contract.

43. A and B entered into a contract of mortgage. However, as written the document states it is a contract of sale with right of repurchase, the error due to the fault of the clerk/typist. Hence: a. The contract of sale must be annulled since it is voidable. b. The instrument has to be enforced as is for it is the proof of the agreement between the parties. c. Because of the negligence of the parties in signing without first reading the instrument, they are bound by the contents of the same. d. The instrument may be reformed because it does not express the true agreement of the parties.

44. S sold to B his parcel of land worth P1M for only half a million pesos. After the sale and realizing his damage, S is now seeking to set aside the sale. Decide: a. The contract is voidable because of mistake of the seller. b. It is rescissible because of the lesion or damage suffered by S. c. S has the right for an increase in the price to prevent unjust enrichment on the part of B. d. The sale is valid, binding and enforceable because as a rule, lesion or inadequacy of cause or price in a sale does not invalidate a contract.

45. Statement 1: If the cause is not stated in the contract, it is presumed that it does not exist. Statement 2: Lesion or inadequacy of cause, as a rule, invalidates a contract. a. b. c. d.

S1 is false, S2 is true. S1 is true, S2 is false. Both statements are true. Both statements are false.

46. D borrowed a sum of money from C with a certain rate of interest. C now wants to increase the rate of interest without the consent of D. What principle in contracts prohibits C from doing so? a. Autonomy of contracts

b. c. d. e.

Relativity of contracts Mutuality of contracts Consensuality of contracts Obligatory force and compliance in good faith

47. Three of the following contracts must be in writing to be valid. Which is the exception? a. b. c. d.

Contract of partnership where immovable are contributed. Contract of agency to sell the land of the principal. Contract where the amount involved exceeds five hundred pesos. Negotiable instruments.

48. A threatened to kill B if the latter would not marry the former’s daughters who was pregnant with B’s child. Intimidated, B married A’s daughter against his will. a. The contract is not voidable because the threat was made by a third person not by one of the parties. b. The contract is not voidable because the claim for marriage is just or legal and therefore, consent is not vitiated. c. The contract is not voidable since B has to answer for his fault that A’s daughter became pregnant. d. Voidable is the contract due to intimidation even if employed by a third person.

49. The following are characteristics of a void contract. Which is the exception? a. The action or defense for the declaration of the inexistence of a contract does not prescribe. b. It cannot be ratified. c. A contract which is the direct result of a void or illegal contract is voidable. d. The defense or illegality of a void contract is not available to third person whose interests are not directly affected.

50. The following are attributes of a voidable contract. Which is not? a. b. c. d.

It is binding, valid and enforceable before annulment. Damage is material to be voidable contract. It can be ratified and ratification has retroactive effect. The capacitated cannot allege the incapacity of the other party.

Law on Partnership 1. Which of the following is not correct? a. b. c. d.

A A A A

– – – –

cash (Ltd.); B – cash (Gen.); C – service (Gen.) property (Ltd.); B – cash (Gen.); C – service (Gen.) service (Ltd.); B – cash (Gen.); C – service (Gen.) cash (Ltd.); B – property (Gen.); C – service (Gen.)

2. A and B orally agreed to form a partnership two years from today, each one to contribute P10,000.00. At the arrival of the said, if one refuses to go ahead with the agreement, can the other enforce the agreement? a. Yes, since the agreement is to be enforced after one year from the making thereof, the same should be in writing to be enforceable. b. Yes, because the prior agreement was voluntarily made. c. Yes, the contract of partnership is not governed by the Statute of Frauds. d. No, because the agreement was merely oral. 3. If a partner is insolvent, the first order of preference in the distribution of his asset is a. Partnership creditors b. Partner’s contribution to the partnership c. Separate creditors of the debtor d. Pro-rata between the separate creditors and the partnership creditors 4. The following, except one, are common characteristics of the partnership and corporation. Which is the exception? a. The individuals composing both organizations have little voice in the conduct of the business. b. Both can only act through agents. c. Both are business organizations composed of a number of individuals. d. Both have juridical personalities separate and distinct from that of the members composing it. 5.

Which of the following is not requisite prescribed by the law in order that the partners maybe held liable to a third party for the acts of one of the partners

a. The partners bind the partnership by the acquiescence for the obligations he may have contracted in good faith. b. The partner must have the authority to bind the partnership. c. The contact must be in the name of the partnership or for its own account. d. The partner must act on behalf of the partnership. 6. X, Y and Z are partners in Ace and Co. W represented himself as a partner in the said partnership to A, who, on the faith of such representation, granted P1M loan to the partnership. Assuming only X and Y consented to such representation, who shall be liable to A? a. Since the partnership benefited from the credit extended by A, all partners X, Y, and Z are liable. b. Only X, Y and W are partners by estoppel and are liable are pro rata. c. Since the loan was extended to the partnership, all the partners and W are liable. d. Only W who made the representation shall be liable. 7. Based on the preceding facts: a. D can participate in the management of the partnership. b. D cannot inspect the books nor copy them for any information on the partnership affairs as a partner can. c. C has ceased to have the rights to use the partnership property. d. C cannot take part in the control of the business anymore. 8. Still based on the facts: a. If A and B want to dissolve the partnership, C as a partner need not consent thereto because he has assigned his interest to D. b. D may himself ask the court for its dissolution being the assignee of C’s interest in the partnership. c. A, B and D may dissolve the partnership even without the consent of C. d. A, B, and C cannot dissolve the partnership without the consent of D. 9. Spouses A and B formed a limited partnership to engage in real state business and A contributed P1M only. Is the partnership between the spouses is valid? a. The partnership is not valid because spouses cannot enter into a limited partnership. b. The partnership is valid because spouses can enter into a partnership, limited or general, universal or particular. c. The partnership is not valid because spouses cannot enter into any kind of partnership for business except conjugal partnership. d. The partnership is valid because spouses are prohibited to enter into a universal partnership only. 10. Statement I: A corporation cannot enter into a partnership contract with a natural person but with a juridical person it can. Statement II: A general partner is always the capitalist in a limited partnership. a. Both statements are false. b. First is true, second is false. c. Both are true.

d. First is false, second is true. 11. If a. b. c. d.

the partner is insolvent, the first in the order of preference is: Partnership creditors. Partner’s contributions to the partnership. Separate creditors of the partner. Pro rata between the separate creditors and the partnership creditor.

12. A, B and C are partners in a partnership. A and B contributes P10,000.00 each while C contributes his service. After payment of the partnership liabilities to creditors, only P6,000.00 remains. In the absence of stipulation to the contrary, the share of C shall be: a. Equal to the share of A. b. Equal to the share of B. c. P2,000.00 d. Nothing. 13. A and B are partners in real estate business. The partnership owns a parcel of land which C desires to buy. C contacted A and information his in his intention to buy the said land. A did not B such intention of C. A bought B out of the partnership and afterwards sold the land to C at a profit. a. The partnership was dissolved when A became the sole owner. b. The sale is void because it was without the knowledge of B. c. A is not liable to B for his share of the profits. d. A is liable to B for his share in the profits. 14. May contribute money, property and industry to a common fund: a. Limited partner b. General partner c. Both limited and general partner d. Both limited and industrial partner 15. One of the following incidents is a clause for involuntary dissolution of the partnership: a. Termination of the definite term of partnership. b. Insolvency of a partner. c. Express will of a partner in a partnership at will. d. Expulsion of a partner for cause as stated in the articles of part. 16. The following are disqualified to for a universal partnership except one: a. Brother and sister. b. Husband and wife. c. Those guilty of adultery and concubinage. d. Those guilty of the same offense, if the partnership is entered into in consideration of the same. 17. A is the capitalist partner and B the industrial one. A engaged personality in the same kind of business as that of the partnership: a. If there are losses, the partnership will bear the losses. b. If there are profits, they will be shares by A and the partnership. c. If there are profits, A shall give them to the partnership. d. A maybe excluded from the partnership with liability for damages.

18. A and B are capitalist partners while C is industrial partner. Both A and B equally contributed P15,000.00 each to the capital. A contractual liability in favor of X was incurred in the amount of P40,000.00. After exhausting partnership assets there is a balance recoverable from a. A and B only. b. A, B and C. c. A, B and C and C can get reimbursement from A and B. d. A, B and C without reimbursement from A and B in C’s favor. 19. Statement I: After dissolution, the partners can still enter into new business transactions in the name of the dissolved partnership although not for the purpose of winding up partnership affairs. Statement II: Insanity of either general or limited partner is a limited partnership shall dissolve the partnership. a. b. c. d.

Both statements are false. Both are true. First is false, second is true. First is true, second is false.

20. A and B orally entered into a partnership with each of them contributing P3,000.00 each and some personal properties in the amount of P1,000.00each. the partnership contract is: a. Unenforceable because the amount involved exceeds P500.00. b. Void because it is not in public instrument. c. Valid. d. Void because it is not registered with the SEC. 21. A partnership which must b in public instrument to be valid is: a. Contribution immovable or real rights therein regardless of the value thereof. b. Contribution is P3,000.00 or more or personal property. c. General partnership. d. Particular partnership. 22. Statement I: A universal partnership entered into without designation is considered one of profits. Statement II: A limited partner’s surname cannot appear in the partnership name if it is also the surname of a general partner to prevent misinterpretation to third person. a. Both statements are false. b. First is true, second is false. c. Both are true. d. First is false, second is true. 23. Which of the following statement is not correct? a. A partnership contract is not covered by the statutes of frauds. b. A limited partnership shall not be bound by the obligations of the partnership.

c. A limited partner who takes part in the control of the business shall be liable as a general partner. d. A stipulation which includes a partner for sharing in the profits or loss is void. 24. Which of the following is incorrect? a. An industrial partner who engages in business for himself maybe excluded from the firm. b. An industrial partner may not engage in business for himself unless there is a contrary stipulation. c. A capitalist partner may engage in the same line of business as that of the partnership. d. An offending capitalist partner may not be excluded from the firm. 25. Statement I: A partner’s interest in the partnership is not assignable unless the other partners consent. Statement II: An act of strict dominion may be performed by a partner without the consent of his co-partner if it is advantageous to the partnership. a. Both statements are false. b. Both are true. c. First is true, second is false. d. First is false, second is true. 26. Statement I: The death, insanity, insolvency or civil interdiction of a limited partner does not dissolve the partnership. Statement II: In a general partnership, the fact that the business can only be carried on at a loss does not result in the dissolution of the partnership. a. First statement is false, second is true. b. First is true, second is false. c. Both are true. d. Both are false. 27. Statement I: A partnership contract begins from the moment of the execution of the contract unless it is otherwise stipulated. Statement II: even if a third person in good faith, the partnership is not bound in the contract entered into by a partner after the dissolution of the partnership if the business of the partnership has become unlawful. a. First statement is false, second is true. b. First statement is true, second is false. c. Both are false. d. Both are true. 28. Statement I: A substituted limited partner becomes as such from the time the certificate of limited partnership is properly amended. Statement II: Only those interest have not been assigned may dissolve the partnership. a. Both statements are true. b. Both are false. c. First is true, second is false. d. First is false, second is true.

29. A, B and C formed a partnership with the name ABC & co. Partnership as a limited partnership in mind. It is therefore: a. Limited partnership. b. General partnership. c. If registered with the SEC, it is a limited partnership. d. Partnership by estoppel. 30. Stamen I: In the absence of stipulation, the share of the industrial partner in the profits shall be equal to the share of a capitalist partner with the smallest share. Statement II: the industrial partner shall not share in the losses unless stipulated. a. First statement is false, second is true. b. First statement is true, second is true. c. Both are true. d. Both are false. 31. A, B and C were partners. While acting within the scope of his authority in the conduct of business. A committed a tort against X, a third person. Who shall be liable and to what extend? a. All partners are liable jointly or pro rata after the partnership assets have been exhausted. b. All partners shall be liable solidarily after the partnership assets have been exhausted. c. All partners and the partnership are liable solidarily. d. All the partners and the partnership are liable solidarily. 32. Statement I: A limited partner shall not be bound by the obligations of the partnership. Statement II: a general partner shall be bound by the obligations of the partnership. a. Both statements are true. b. Both are false. c. First is false, second is true. d. First is true, second is false. 33. A and B entered into universal partnership of profits. Subsequently A became a professor in a university. Will A’s salary belong to the partnership? a. Yes, because the salary was acquired through A’s industry or work. b. No, unless it is stipulated that his salary shall be deemed contributed. c. No, because it is not considered a profit acquired from a property. d. Yes, if stipulated by the partner. 34. A and B entered into a universal partnership of profits. Later, A purchased a parcel of land. Will the fruits of the said land belong to the partnership? a. Yes because universal partnerships means contribution of all properties, present and future. b. No, because the land and the fruits are future properties, nor existing at the time of the celebration of the contract. c. No, even if stipulated, both as to the fruits and the land. d. Yes, if there was stipulation that the land to be inhered shall be considered contributed.

35. A and profits a. b. c. d.

B entered into a universal partnership without specification whether it is of or of all present property. It shall be: Universal partnership of all present property. Universal partnership of present profits. Universal partnership of property and profits. Universal property of profits.

36. A and B agreed on a profit sharing ratio in their partnership. A being the industrial partner and B a capitalist partner. It was also stipulated that A shall also share in the same ratio as to the losses. Is A liable for losses? a. No, because the law exempts the industrial partner losses. b. No, because the partners cannot stipulate that the industrial partner shall be liable for losses. c. Yes, even if the absence of stipulation. d. Yes, because it was so stipulated. 37. Partnership Assets and Liabilities are as follows: December 31, 2006 December 31, 2007 Assets P 200,000 P 50,000 Liabilities 100,000 200,000 Capital A- P 50,000 100,000 150,000 B- P 50,000 A and B general partners have fully paid the capital contributions. What is the remedy of creditor C? a. b. c. d.

Collect partnership liability from the partnership. Collect partnership liability from B only. Collect partnership liability from A only. Collect partnership liability from A and B capital contributions including personal assets. 38. A is the managing partner of A and B Company. x is indebted to a for P 20,000 and to the partnership for P 60,000.when both debts mature. X par A for P 20,000 and the latter issues a receipt for his personal credit. The payment for P 20,000 shall be applied: a. To the whole debt owing to A. b. ¼ in favor of A and ¾ in favor of partnership. c. Debt owing to the partnership. d. ½ in favor of A and ½ in favor of partnership.

39.

XYZ partnership composed of three (3) capitalist partners and one industrial

partner suffered business losses. Its remaining asset remaining to P 100,000. The partnership is indebted to its supplier in the amount of P 160,000. How can recover the P 60,000.

a. Can recover from the partnership P 100,000 and the balance of P 60,000 from the other capitalist.

b. Can recover from the partnership P100,000 and the balance of P 60,000 from any of the partners.

c.

Can recover from the partnership P100,000 and the balance of P 60,000 from the (4) partners jointly including the industrial partner. d. Can recover from the partnership P 100,000 only and suffer as his list in the balance of P 60,000. 40. Which of the following persons are not disqualified from a universal partnership? a. Those guilty of adultery and concubinage. b. Husband and wife. c. Brother and sister. d. Those guilty of the same of the criminal offense. If the partnership is entered into a consideration of the same. 41. A limited partnership formed in 2004 by X as general partner and Y and Z as limited partners in 2006. X and Z got married. Did the marriage dissolve or change the form of the partnership. 1st answer – Yes, partnership is dissolved by the marriage because there is a change in equity and status among the partners. 2ns answer – No, because spouses can enter into a universal partnership. a. Both answers are correct b. 1st answer wrong, 2nd answer correct c. Both answers are wrong d. 1st answer correct, 2nd answer wrong 42. Which of the following incidents maybe a cause for involuntary dissolution of a partnership? a. Expulsion of any partner. b. Insolvency of any partner. c. Express will of any partner. d. Termination of term of the partnership. 43. Which of the following liabilities of the partnership shall rank first in the order of payment? a. Those owing to creditors others than partners. b. Those owing to partners in respect to profits. c. Those owing to partners in respect to capital. d. Those owing to partners other than for capital and profit. 44. X, Y and Z are partners and contributed. To the partners and partnership P 40,000, P 30,000 and services, respectively. The partnership was later liquidated and after payment of the partnership indebtedness, only P20, 000 worth of asset remained. How much is the share of Z? a. Zero b. Equal to the share of X c. Equal to the share of Y d. P6, 000 45. The following are instances, except one, when a partnership is unlawful. Which is the exception a. a partnership formed to furnished apartment houses to be used as venue for illegal gambling b. a partnership formed to create cartel for monopoles c. a partnership formed for smuggling of contrabands

d. a partnership formed for the purpose of buying public lands 46. A person in a partnership who is not really a partner, not being a party to the partnership agreement but is made liable as a partner for the protection of innocent third persons is known as: a. Dormant partner b. Secret partner c. Partnership by estoppels d. Partner by estoppels 47. A, B and C are partners engaged in retail business. Their contribution is P20, 000 each. D is admitted partner with a contribution of P12. At the time of his admission, the partnership has an outstanding obligation to E in the amount of P80, 000. In this case: a. D is liable to E for this obligation so that the assets of the partnership amounting to P68, 000 will be exhausted leaving a balance of P12, 000. Only A, B and C shall be liable jointly or pro rata, out of their separate property. b. D is not liable to E for this obligation c. D is liable to E for this obligation so that the assets of the partnership will be exhausted; leaving a balance of P12, 000 all the partners shall be liable jointly or pro rata, out of their separate property. d. Answer not given 48. A, B and C are equal partners in X Partnership. On April 29, 2008, partner died. Not knowing that C died, on May 01, 2006, A contracted a liability to D who also does not know the death of C, the liability is P90, 000. After D exhausted the net assets of X Partnership in the amount of P60, 000, he can collect a. P10, 000 from estate of C, P10, 000 from B b. P15, 000 from A and P15, 000 from B c. P20, 000 from A and 10, 000 from B d. P30, 000 from A 49. A and B are partners of X Partnership. A is the managing partner. E owes A P10, 000 and X Partnership P30, 000. The obligations of E are both due. A collected from E the debt of E to A in the amount of P10, 000 and issue a receipt in the name of A. a. The whole of the P10,000 will be applied to debt of E to A b. P 10, 000 will be applied to debt of E to the partnership c. P2, 500 to debt to E to A and P7, 500 to debt of E to the partnership d. P5, 000 each to debt of E to A and to the partnership 50. A, B and C are general partners ion ABC partnership. G is debtor to the partnership in the amount of P15, 000. A receive from the debtor G the sum of P5, 000 and issued a receipt indentifying the amount collected as P5, 000. a. A can be compelled to share B and C their P5, 000 b. B and C should automatically sue G to collect the P10, 000 c. B and C can change the capital of A with their share of the P5, 000 d. A cannot be compelled to share the P5, 000 with B and C