ATP Sample Questions

1. A, B, and C entered into a partnership to operate a travel agency with D, as a) E has the right to get whatever C would have obtained, or E has the right to receive in accordance with
industrial partner. After a year of operation, C conveyed her interest in the his contract the profits accruing to the assigning partner; to receive C’s interest in case of dissolution;
partnership to E without the consent of the other partners. D, on the other hand, to avail himself of the usual remedies provided by law in the event of fraud in the management; and to
ventured into a new business, a computer shop while B operated a vehicle for require an account of partnership affairs in case the partnership is dissolved.
rent business. b) D, as an industrial partner cannot engage in business for himself unless the partnership expressly
a. What are the rights of E as the assignee of C’s interest in the permits him to do so. B, may engage or operate a computer shop because it is not the same kind of
partnership? business the partnership is engaged in.
b. May D and B operate their own businesses? c) If A becomes insolvent the claims against his separate property shall rank in the following order: those
c. In case one of the partners retires and the remaining partners decided owing to separate creditors, those owing to partnership creditors, those owing to partners by way of
to continue the business, what are the rights of the retiring partner? contribution.
d. If A becomes insolvent, how will his individual properties be
distributed.

2. A limited partnership, named “XYZ Co, Ltd.” Was formed on by herein respondent
as Mr. X, the general partner, Ms. Y and Mr. Z, as the limited partners. The
partners contributed respectively, P100,000, P80,000, and P20,000 to the
a. No, the partnership was not dissolved upon the marriage of X and Y.
partnership. The firm engaged, among activities, in the importation, marketing,
Legally married spouses are prohibited from entering into a universal partnership, however, they
distribution and operation of automatic phonographs, radios, television sets and
can enter into particular partnership. A universal partnership requires either that the object of the
amusement machines, their parts and accessories. It had an office and held itself
association must be all present property of the partners as contributed by them to a common fund, or
out as a limited partnership, handling and carrying merchandise, using invoices,
all else that the partners may acquire by their industry or work.
bills and letterheads bearing its trade-name, maintaining its own books of
Here, the contributions were fixed sums of money and neither one of them were industrial
accounts and bank accounts, and had a quota allocation with the Central Bank.
partners. Thus, the firm is not a partnership which the spouses are forbidden to enter into. The
Sometime 2015 however, general partner X and limited partner Y got married
subsequent marriage cannot operate to dissolve it because it is not one of the causes provided by law.
and, thereafter, on January 2, 2018, limited partner Z sold his share in the
The capital contributions were owned separately by them before their marriage and shall remain to be
partnership to X and his wife Y.
separate under the Spanish Civil Code. Their individual interest did not become common property
a) Was the partnership dissolved upon the marriage of X and Y?
after their marriage.
b) What is the effect if the surname of a limited partner appears in the
b. A limited partner whose surname appears in a partnership name is liable as a general partner to
partnership name?
partnership creditors who extend credit to the partnership without actual knowledge that he is not a
c) What are the rights of Mr. Y as a limited partner?
general partner.
c. Ms. Y has the right to receive a share of the profits or other compensation by way of income, and to
the return of his contribution.

3. C,D, and E entered into general partnership engaged in realty with D acting as
managing partner. The partners agreed that in the event of death of any of the a. The Sale to A is valid. D’s wife was not a mere agent, because she had become a partner upon her
partners, the deceased partner will be represented by his heirs. On September husband’s death, as agreed upon by the partners. By authorizing her to manage partnership property,
20, 2019, D was able to collect some payments from a debtor who happens to C and E recognized her as a general partner with authority to administer and alienate partnership
owe the partnership some debts. When D died a year later, his wife took over his property.
role as managing partner. She sold some partnership properties to A Co. on b. As a managing partner, D should apply the sum collected to the credits owed to him and to the
January 21, 2021. C and E now questions the validity of the sale since it was made partnership in proportion to their amounts.
without their consent. c. Yes, it can still be held liable for any transaction entered into by any of the partners.
a) Rule on the validity of the sale to A Co. ARTICLE 1834. After dissolution, a partner can bind the partnership, (1) By any act appropriate for
b) As a managing partner, what should D do as far as the amount he winding up partnership affairs or completing transactions unfinished at dissolution; (2) By any
collected from a partnership debtor is concerned? transaction which would bind the partnership if dissolution had not taken place, provided the other
c) In case the partners decide to dissolve the partnership, can it still be party to the transaction: (a) Had extended credit to the partnership prior to dissolution and had no
 held liable for any transaction entered into by any of the partners? knowledge or notice of the dissolution; or (b) Though he had not so extended credit, had nevertheless
known of the partnership prior to dissolution, and, having no knowledge or notice of dissolution, the
fact of dissolution had not been advertised in a newspaper of general circulation in the place (or in
each place if more than one) at which the partnership business was regularly carried on.
4. A, B, and C entered into a partnership agreement. They sought your opinion as
regards the options available to them. As their lawyer-friend, what advice can you
give ABCE on the following:
a. The profits and losses shall be distributed in conformity with the agreement. If only the share of
a. The distribution of profits and losses.
each partner in the profits has been agreed upon, the share of each in the losses shall be in the
b. Whether to form a general or limited partnership.
same proportion. In the absence of stipulation, the share of each partner in the profits and losses
shall be in proportion to what he may have contributed.
b. They should form a limited partnership - no answer yet
5. Distinguish a partnership from a corporation.
1. With regard to creation
 A partnership is created by mere agreement of parties or by contract; a o A partnership is created by voluntary agreement of the partners, whereas
corporation is created by law. o a corporation is always created by some express legislative authority either in the
 The purpose of partnership is the realization of profits; while the purpose of a form of a special law or of a general law.
corporation depends on the Articles of Incorporation. 2. With regard to liability of members
 There is a minimum of two incorporators in partnership; while a minimum of o Partners are usually liable to partnership creditors not only to the extent of their
one person in corporation. capital contribution to the firm but even with their own private property, whereas
 The juridical personality commences from the moment of execution of contract o the stockholders of a corporation after they have paid for their share, are not
of partnership; while it commences from the date of issuance of the certificate subject to any further liability, unless otherwise provided by law.
of incorporation. 3. With regard to effect of transfer of interest
 Each partner is an agent of partnership; while management is vested with the o Because of the rule of “delectus personarum”, the third person to whom a partner
Board of Directors in a corporation. has transferred his interest in the partnership does not become a partner without
 A partnership may be dissolved anytime by the will of any or all of the partners; the consent of all the other partners, whereas
while a corporation can only be dissolved with the consent of the State. o the third person to whom a stockholder has transferred his shares becomes
automatically a stockholder even without the consent of the other stockholders.
4. With regard to effect of death or bankruptcy of members
o The death or bankruptcy of a partner usually causes dissolution of the firm,
whereas
o the death or bankruptcy of a stockholder does not result in such dissolution.
5. With regard to effect of acts of members
o As a general rule, the partners are the agents of the partnership; hence, acts of the
partners done for the account of the partnership are binding not only on the
partnership but also on the members.
o On the other hand, whatever acts the stockholders might execute for the account
of the corporation, either individually or collectively, are not binding on the
corporation.

6. Mariano had taken over the installment payments over a purchased subdivision TRUST
lot of his brother Leon who had fallen ill, until the whole purchase price had been
fully satisfied under the arrangement that “although Leon had no more interest
over the lot, the subsequent payments made by Mariano until fully paid were
made in the name of Leon, with the understanding that the necessary documents
of transfer will be made later, the reason that the transaction being from brother
to brother.” Years later, when the certificate of title was issued in the name of
 Leon, his heirs refused to reconvey the property to the heirs of Mariano.

In an action for reconveyance filed by the heirs of Mariano, the trial court
dismissed the complaint holding “that the express and not implied trust was
created as may be gleaned from the facts alleged in the complaint, which is
unenforceable without any writing, and since (the tittle) covering the land in
question had been issued to Leon way back in 1918 or 38 years before the filing
of the complaint, the action has already prescribed.

a. Do you agree with the trial court’s ruling on the case?

b. Distinguish express trust from implied trust.

7. Ramos brought suit against Luis and Berto, to recover from them individually the
sum of P100,650, the balance of a debt of P301,950 owing for merchandise
bought on credit from the plaintiff’s store, by the firm Luis & Berto, which had
already been dissolved. In previous case prosecuted in the same court by the a.
creditor Ramos against the said firm of Luis & Berto, paid P100,650 on account of
the debt. There still remains to be paid P201,3000. The plaintiff prayed the court
to order the defendants jointly or severally to pay him, the plaintiff, this last
mentioned amount, together with the legal interest thereon from the date of the
complaint, and the costs. After due summons the defendants appeared, Luis in
his amended answer denied generally and specifically each and all of the facts
alleged in each and all of the paragraphs of the complaint; that the issues raised
by the complaint had already been decided in case No. 10908, in which firm Luis
& Berto was acquitted, without costs; (3) that the defendant Luis was merely an
industrial partner in the partnership with Berto being the partner thereof who
furnished the capital; that the assets of the firm had not been exhausted (by
attachment), wherefore the present action is premature;
a. As partners of a dissolved partnership, what if any are the obligations
of the partners?
b. Will the suit filed against the partners prosper?

8. Jose, Peter, Paul, all capitalist partners, amended the articles of partnership to
include Maria, as industrial partner. The amended Articles provided, that “the
contribution of Maria consists of her industry being an industrial partner”, and
a. The share of each partner in the losses shall be distributed in what they may have
that the profits and losses “shall be divided and distributed among the partners…
contributed to be divided them equally, but Maria, being an industrial partner shall not be
in the proportion of 70% for the first three partners, to be divided among them
liable for the loss.
equally; and 30% for the fourth partner Maria.”
b. When the manner of management has not been agreed upon, all partners shall be
considered agents and whatever any one of them may do alone shall bind the partnership;
Herein respondent filed suit against the three partners in the RTC of Manila, and none of the partners may, without the consent of others, make any important alteration
alleging that the partnership, which was also made a party-defendant, had in the immovable property of the partnership, even if it may be useful to the partnership.
been paying dividends to the partners except to her; and that But if the refusal of consent by the other partners is manifested prejudicial to the interest of
notwithstanding her demands the defendants had refused and continued to the partnership, the court’s intervention may be sought.
 refuse and let her examine the partnership books or to give her information c. Yes, Maria can demand for a formal accounting of the partnership affairs.
regarding the partnership affairs to pay her any share in the dividends d. Yes, Maria is liable.
declared by the partnership. 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
The defendants, in their answer, denied ever having declared dividends or obligations were incurred, except that this liability shall be satisfied only out of partnership
distributed profits of the partnership; denied likewise that the plaintiff ever property.
demanded that she be allowed to examine the partnership books.

a) In case the partnership incurs losses, how will the losses be

9. Edgardo, representing the heirs of Juan, and his uncle, Tonio, obtained joint TRUST
registration as co-owners of a large tract of land which they bought from the
Bureau of Lands. Subsequently, the heirs of Tonio also bought the one-half
interest of Juan’s heirs and took over full possession of the property. After the
war, Juan’s heirs file a petition for the reconstitution of title to the property with
an agreement with Tonio’s heirs that the latter’s claim would be litigated after
the reconstitution of the title.

The reconstituted title was issued over the property in the name of Edgardo
representing the Juan heirs, who thereafter refused to honor the rights of the
heirs of Tonio. When suit was filed seeking reconveyance of the title to the
property to the Tonio heirs, it was ruled by the trial court that the action had
prescribed having been filed beyond the 10-year period from the registration of
title as mandated for a resulting trust.
a. Was a resulting trust created?
b. What is a constructive trust?

10. Distinguish partnership from co-ownership.  A partnership is created by mere agreement of parties or by contract; a co-ownership is generally
created by law and can exist without a contract.
 In partnership there is a separate and distinct juridical personality from that of each partner; while
there is no separate and distinct juridical personality in co-ownership.
 The purpose of partnership is the realization of profits; while the purpose of co-ownership is common
enjoyment of a thing or right.
 There is no limitation in the duration or term of existence of partnership; while 10 years is a maximum
(though may be extended by a new agreement) duration or term of existence of a co-ownership.
 A partner may not dispose of his individual interest unless agreed upon by all partners; a co-owner
may freely do so.
 Each partner is an agent of partnership; while management is vested with the Board of Directors in a
corporation; a co-owner cannot represent the co-ownership.
 Death of a partner results in dissolution of partnership; death of a co-owner does not necessarily
dissolve co-ownership.