Practice question
A lender receives interest whose amount varies with the borrower's business profits. The transaction is a genuine loan, and no other facts establish partnership. How does Article 1769 treat the profit-linked interest?
- As conclusive proof of a partnership.
- As automatic ownership of the borrower.
- As an express exception to the profit-receipt inference, even though the interest varies with profits.
- As a legally impossible payment in every case.
- As automatic incorporation.
Legal references
- Civil Code, RA 386, Articles 1767 and 1769, https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
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