COLLEGE DEPARTMENT

MIDTERM EXAMINATION
BUSINESS LAW AND REGULATIONS
FIRST SEMESTER
A.Y. 2019-2020

Name: ______________________________________________________ Year/Course: ___________________________ Score: _________________

GENERAL INSTRUCTIONS TO THE EXAMINEE:

1. Turn off your cellphones before you begin and must be in your bag, not in pocket.
2. All erasures are wrong.
3. This Examination is good for two hours (2 hours).
4. Check the completeness and clarity of the questionnaire.
5. Read and Follow the instructions carefully.
6. You may write on any portion of this questionnaire.
7. Once finished, submit your examination with the questionnaire.
8. Please be reminder that the CHEATING is a major offense, as provided for in the Student
handbook. In addition to the major offense, anybody caught cheating will automatically receive a
final failing grade.
9. Write all your answers in your examination questionnaire.
10. After reading the above General Instructions, you may begin.

PART I.TRUE OR FALSE: On the space provided write TRUE if the statement is correct and FALSE if the
statement is incorrect. (1 pt. each/ 20 pts.)

____________ 1. A partnership begins from the moment of meeting of the minds.

____________ 2. The risk of specific and determinate things contributed to the partnership shall be borne by
the partner who owns them.
____________ 3. A stipulation which excludes one or more partners from any share in the profits or losses is
voidable.
____________ 4. In case it should have been stipulated that none of the managing partners shall act without
the consent
of the others, the concurrence of majority shall be necessary for the validity of the acts.
____________ 5. A conveyance by a partner of his whole interest in the partnership dissolves the partnership.
____________ 6. A corporation can enter into a partnership contract with natural person.
____________ 7. A limited partner whose surname appears in a partnership name is liable as a general
partner
to partnership creditors, as a rule.
____________ 8. A universal partnership entered into without designation is considered one of profits.
____________9. In case of a dissolution of the partnership, the assignee is entitled to receive his assignor’s
interest and may require an account from the date only of the last account agreed by all
partners.
___________10. The partner who has been appointed manager in the articles of partnership may execute all
acts of ownership.
____________11. A general partner is always the capitalist in a limited partnership.
____________12. A limited partner’s interest is not assignable.
____________13. Winding up is that point of time the partners cease to carry on the business together.

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____________14. A general partner is liable only to the extent of his contribution while a limited partner is
liable beyond his contribution.
_____________15. Reasonable Hour should be on business days chosen by a partner.
_____________16. The partners are governed by fiduciary relationship, that is, mutual trust and confidence.
_____________17. No formal accounting is demandable until after the dissolution of the partnership.
_____________18. Every partnership shall operate under a firm name.
_____________19. As a rule, the general partners in a limited partnership can do only acts of ownership.
____________ 20. An industrial partner can engage in business for himself , unless partnership expressly
permits him to do so.

PART II. MULTIPLE CHOICE: Analyze the following questions and choose among the options which you think is
the correct answer. Write the letter of your choice. (2 pts. each/ 60 pts.)

_______1. A, B, C and D organized a general partnership with A and B as industrial partners and C and D as capitalist
partners. C contributed P 800,000 and D contributed 600,000 to the common fund. A and B were appointed
as managing partners. J applied as office assistant and K applied as accountant of the partnership. The
hiring of J was decided upon by A and B but was opposed by C and D. Whose decision shall prevail?

a. Decision of C and D shall prevail because they are capitalist partners.

b. Decision of C and D because they have controlling interest.
c. Decision of A and B because it is an act of ownership.
d. Decision of A and B shall prevail because they are the managers.

_______2. In the preceding problem, suppose the hiring of K was decided upon by A and D, but was opposed by B and
C, whose decision shall prevail?

a. The decision of A and D because A is the managing partner and the hiring is an act of administration.
b. The decision of B and C because in case of tie in the decision of managing partners, that of the controlling
interest shall prevail.
c. That of A and D because D is also a capitalist partner.
d. The decision of A and B because they are the managing partners.

______3. Those who contribute money or property or both money , property and industry to the common fund.

a. Capitalist partner
b. Industrial partner
c. Capitalist-industrial partner
d. General Limited partner

_______4. X and Y verbally agreed to form a contract of partnership 18 months from today, each one to contribute
P15,000. At the arrival of the said date, 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. No, because the agreement was merely verbal.
c. Yes, because the prior agreement was voluntarily made.
d. Yes, because the contract of partnership is not governed by the Statute of Frauds.

_______5. A, B and C are partners in ABC partnership. A and B contributed P10,000 each while C contributed his
service.
After payment of the partnership liabilities to creditor’s, only P15,000 remains. In the absence of stipulation to
the contrary the share of C shall be:
a. P5,000
b. P10,000
c. P 5,000
d. Zero

_______6. I. The dissolution of the partnership means that the juridical entity was immediately terminated and that the

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

a. Both are true

b. Only I is correct
c. Only I is correct
d. Both are false

_______7. The three final stages of a partnership are the following , except :

a. Dissolution
b. Winding-up
c. Termination
d. None of the above.

_______8. In extra-judicial liquidation, the following will wind-up the partnership, except:

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

b. The partners who have not wrongfully dissolved the partnership.
c. The legal representative of the last surviving partner who is not insolvent.
d. The managing partner who has controlling interest.

_______9. The following are rights of partner who has not caused dissolution wrongfully, except :

a. To have the partnership property applied to discharge the liabilities of the partnership.
b. To have surplus, if any, applied to pay in cash the net amount owing to the respective partners.
c. To be indemnified for damages caused by the partner who did not caused the dissolution wrongfully.
d. To continue the business in the same either by themselves or jointly with others during the agreed term of
the partnership and for that purpose may possess the partnership property.

________ 10. Where a partnership contract is rescinded on the ground of fraud or misrepresentation of one of the parties
thereto, the party entitled to rescind is entitled to, except:

a. Right of lien or right of retention

b. Right of subrogation
c. Right of Dissolution
d. Right of Indemnification

________ 11. Spouses H and W formed a limited partnership to engage in real estate business and H contributed
P500,000. Is the partnership between the spouses valid?
a. The partnership is not valid because the spouses cannot enter into a limited partnership.
b. The partnership is valid because spouses are prohibited to enter into a universal partnership only.
c. The partnership is valid because spouses can enter into a partnership, limited or general, universal or
particular.
d. The partnership is not valid because spouses cannot enter into any kind of partnership for business.

________ 12. The following are the characteristics of a limited partnership, except :

a. One or more special partners contribute to the capital and share in the profits but do not participate in
the management of the business.
b. The limited partners are not personally liable for partnership obligations beyond their capital
contributions.
c. The limited partners may ask for the return of their capital contributions.
d. The partnership debts are paid out of the common fund and the separate properties of the limited
partners.

_______ 13. Those who do not take active part in the business or affairs of the partners though they share in the profits
or losses.
a. Silent Partner
b. Managing Partner
c. Ostensible Partner

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 d. Dormant Partner

_______ 14. A, B and C formed a partnership . They contributed P250,000 each. They also agreed on equal distribution
of profit. After 5 years of operation however, C conveys her whole interest in the partnership to D, without knowledge and
consent of A and B. Is the partnership dissolved?

a. The partnership is not dissolved because the assignment made by C of his whole interest was without the
knowledge and consent of A and B.
b. The partnership was dissolved because the assignee, D automatically becomes a new partner.
c. It is dissolved since C has ceased to be a partner because of the assignment of his whole interest to D.
d. The partnership is not dissolved because the conveyance of a partner’s interest in the partnership does not of
itself dissolve the partnership.

_______ 15. The following are obligations of partners, except:

a. To give their promised contribution.

b. To engage in any business which is the kind in which the partnership is engaged.
c. To account and hold as trustee for any profits derived without the consent of the other partners.
d. Not to convert partnership money to their own use.

_______ 16. A, B and C formed a commercial partnership. D represented himself as a partner in the partnership to E who,
on the belief of such representation , extended credit of P50,000 to the partnership. Assuming only B and C consented to
such representation, who shall be liable to E?

a. All of A, B , C and D are liable because of partnership liability for the credit extended to the partnership
b. It is for the advancement of the employer’s interest
c. It violates the right to security of tenure of employees
d. It is not for the purpose of circumventing or defeating the rights of the employees under special laws or under
valid agreements.

______ 17.A, B and C are general partners in ABC partnership. X is a debtor to the partnership in the amount of
P180,000. A received from the debtor X the sum of P60,000 and issued a receipt identifying the amount collected as
P60,000.

a. A can be compelled to share with B and C their P60,000.

b. B and C should automatically sue X to collect the P120,000.
c. B and C can deduct from the capital of A their share of P60,000.
d. A cannot be compelled to share the P60,000 with B and C.

______ 18. It is one where it will exist until the purpose is accomplished .
a. Partnership for a particular undertaking.
b. Partnership with a fixed term.
c. Partnership at will.
d. None of the above.

______ 19. A, B, C and E are partners. They contributed to the capital as follows: A-P50,000; B-P100,000; C-P150,000;
and E as the industrial partner, his services. The partnership obligation to outsiders exceeds the total net assets by
Php200,000. Who and by how much will the partners be liable for the payment of the P200,000?

a. A-zero; B-zero; C-zero; E-zero

b. A- 33,333; B-66,666; C-100,000; E-zero
c. A- 45,000; B-45,000; C-55,000; E-55,000
d. A-50,000; B- 50,000; C-50,500; E-50,000

______ 20. A and B are capitalist partners while C is an industrial partner. Both A and B equally contributed P50,000. A
contractual liability in favor of X was incurred in the amount of P150,000. 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. B and C only.

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______ 21. A, B and C are partners in a partnership with each contributing P100,000 each. D is admitted as a new
partner with a contribution of Php 50,000. At the time of his admission , the partnership has a pre-existing obligation to E
in the amount of Php 150,000.

a. D is not liable to E for this obligation incurred when he was not yet a partner.
b. D is liable up to P25,000.
c. D is liable up to P16, 667.
d. D is liable up to 50,000.

______ 22. Who can demand true and full information?

a. Any partner
b. Legal representative of any deceased partner.
c. Legal representative of any partner under legal disability.
d. All of the above.

______ 23. A and B are capitalist partners while C is an industrial partner. There is no agreement as to the profits and
losses. The partnership realized profit in the amount of P150,000. The share of C in the profits shall be:

a. A and B will determine C’s share in the profits.

b. C’s share shall be P150,000.
c. Pro rata to his contributed capital.
d. Just and equitable under the circumstances.

______ 24. A and B are partners with A as the managing partner. C owes A Php100,000 and the partnership P300,000
which are now both due. A issued a receipt for the payment of C in the amount of P100,000 in his own name . The
payment shall be applied to:

a. The partnership credit totally.

b. The payments shall be applied proportionately to both credits.
c. The credit of A only since the receipt is in his name .
d. The payment shall be applied equally in both credits.

_______ 25. Arises if all the partners consented to the misrepresentation of a third person who is not a real partner.

a. General Partnership
b. Partnership by Estoppel
c. Limited Partnership
d. None of the above.

______ 26. This is the order of priority in general partnership liabilities:

a. Outside creditors, creditor partner, partner’s profit, partner’s capital.

b. Creditor partner, outside creditor, partner’s profit, partner’s capital.
c. Outside creditors, creditor partner, partner’s capital, partner’s profit.
d. Creditor partner, outside creditor, partner’s capital, partner’s profit.

______ 27. Is one formed by two or more persons having as members one or more general partners and one or more
limited partners.

a. General Partnership
b. Limited Partnership
c. Real Partnership
d. Partnership by Estoppel

_____ 28. The certificate of limited partnership shall state the following , except:

a. The term for which the partnership is to exist.

b. The amount of cash and a description of and the agreed value of the other property contributed by each
limited partner.
c. The additional contributions , if any, to be made by each limited partner and the times at which or events on
the happening of which they shall be made.
d. The time, if agreed upon, when the contribution of each general partner is to be returned.

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______ 29. A limited partner shall be liable as general partner unless:

a. He takes part in the control of the business.

b. He renounces his share in the profits after knowledge of the error that he was made a general partner.
c. His surname appears in the firm name.
d. His contribution is industry.

______ 30. The surname of a limited partner shall not appear in the partnership name unless:

I.It is also the surname of a limited partner

II. Prior to the time when limited partner became such, the business has been carried on under a name in which
his surname appeared.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

PART III. ENUMERATION/DEFINITION: Write your answers on the space provided for each number. You can
also use the extra sheet of paper for your answer. (10 pts.)

1. Enumerate five causes for the judicial dissolution of a partnership (1pt. each/ 5pts).
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2. Enumerate the persons who cannot enter into a universal partnership because they are prohibited from giving each
other any donation or advantage: (5pts.)

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PART IV. ESSAY: Write legibly and ANSWER each question concisely. You can also use the extra
sheet of paper for your answer. (10 pts.)

1. A, B and C are partners contributed the following: A -P6,000; B-4,000; and C- industry. They agreed
that the profits and losses shall be distributed as follows tow it: A-35%; B-25% and C-40%. How shall
the loss of P10,000 be distributed among A, B and C? ( 10pts.)

Prepared by:

Atty. Shain Ann C. Castillo

Subject Course Instructor

Checked by: Noted by:

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MRS. JENNIFER R. CRUZ MR. JULIO R. ESMADE
Program Coordinator Dean/College Coordinator