PRELIM EXAMINATION (BL 2 Business Laws and Regulations) SCORE: _________________

Name: (Surname, First Name, Middle Initial) Date: ___________________

Year and Section: _________________________ Prof.: ______________________________

Instructions: Read carefully before answering. Encircle the letter of your answer.

1. In the ABC partnership. A and B contributed P20,000 each and C his services. After paying all creditors of the partnership,
Only P18,000 in cash remains. In the absence of terms to the contrary, the share of C as to losses is equal to ___.
a. P6,000
b. The share of A
c. The share of B
d. Nothing
2. X and Y established a partnership by contributing P50,000 each, Z, a third party allowed his name to be included in the firm
name of the partnership. The partnership was insolvent and after exhausting all the remaining assets, there was left a liability
to third persons the amount of P30,000. The creditors can compel:
a. Z to pay the P30,000 remaining liability
b. X, Y and Z to pay P10,000 each
c. X or Y to pay the P30,000 remaining liability
d. X and Y to pay P15,000 each
3. W, X, Y and Z formed a partnership W, X and Y are general partners and contributed P50,000.00 each while Z, an industrial
partner, contributed his services only. All the partners signed an agreement stipulating that the liability of W is limited to his
contribution. After all the assets of the partnership were exhausted, there remain an unpaid liability of P40,000.00 The
creditors of the partnership can compel:
a. X and Y to pay the P40,000
b. X, Y, and Z to pay the P40,000
c. W, X, Y and Z to pay P10,000 each and W and Z can demand reimbursement from X and Y.
d. X and Y to pay the P40,000
4. Which of the following liabilities of the partnership shall first in the order of payment?
a. Those owing to partners in respect to capital
b. Those owing to creditors other than partners
c. Those owing to partners other than capital and profits
d. Those owing to partners in respect to profits
5. The change in the relation of partners caused by any partners ceasing to be associated in the carrying on of the business is:
a. Winding up
b. Dissolution
c. Liquidation
d. Termination
6. Which of the following is not correct? In a limited partnership composed of A, B and C, the contribution may be as follows:
a. A- property (limited partner); B- services (general partner); C- cash (general partner)
b. A-cash (limited partner); B- property (general partner); C- services (general partner)
c. A-services (limited partner); B- cash (general partner); C- services (general partner)
d. A-cash (limited partner); B- cash (general partner); C- services (general partner)
7. A person who directly represent himself or consent or follows himself to be represented as a partner in a existing partnership
or with one or more persons who are not actually partners is:
a. Partner by estoppel
b. Silent partner
c. Ostensible parter
d. Managing partner
8. ABC partnership becomes insolvent due to mismanagement and cannot pay its liability to XYZ Corp. With the approval of its
directors and stockholders, XYZ Corp. entered into a management contract with ABC partnership to manage their partnership
business with the agreement that 50% of the net profits will be applied to the payment of the partnership debt to the
corporation.
QUESTION 1: Can XYZ Corp. validly enter into the above management contract?

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 QUESTION 2: Is XYZ Corp considered a partner of the ABC partnership by the fact that it is receiving a share of the net profits
of the partnership?
ANSWER 1: Yes, a corporation has the power to enter into such management contract provided the contract is approved by
the Board of Directors and majority of the outstanding capital stock.
ANSWER 2: No, XYZ Corp. cannot be considered a partner because it is receiving a share of the net profit not as actual share
of the profits but merely as payment for the partnership’s obligation to the corporation.
a. 1st answer correct, 2nd answer wrong
b. 1st answer wrong, 2nd answer correct
c. Both answers are correct
d. Both answers are wrong
9. Strictly speaking, the following are all essential elements of a partnership, except:
a. Contract or voluntary agreement
b. Contribution to a common fund
c. Intention to divide profits
d. Mutual agency
10. The following are all grounds for a judicial decree of dissolution, except:
a. Where the partners are guilty of such conduct as tends to prejudicially affect the partnership.
b. When the business can only be carried at a loss.
c. By any event which makes it unlawful for the partnership to carry on the business.
d. All of the above.
11. A, B and C are general partners in the merchandising firm. Having contributed equal amounts to the capital, they also agreed
on equal distribution of whatever profit is realized per fiscal period. After two 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 conveyance of a partner’s interest in the partnership does not of itself
dissolve the partnership.
b. 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.
c. The partnership was dissolved because the assignee, D automatically becomes a new partner and strictly speaking, there
is a new entity.
d. It is dissolved because C has ceased to be a partner because of the assignment of his whole interest to D.
12. Spouses A and B formed a limited partnership to engage in real estate business and A contributed P1M only. 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 the 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 universal partnership only.
13. May contribute money, property or industry to a common fund.
a. Limited partner
b. General partner
c. Both limited and general partner
d. Both limited and industrial partner
14. A and B are capitalist partners while C is an industrial partner. Both A and B equally contributed P15,000 each to the capital. A
contractual liability in favor of X was incurred in the amount of P40,000. After exhausting the 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.
15. A and B are partners with A as the managing partner. C owes A P10,000.00 and the partnership P30,000.00 which are now
both due. A issued a receipt for the payment of C in the amount of P10,000.00 in his own name. Payment shall be applied to:
a. The partnership credit totally.
b. The credit of A only since the receipt is in his name.
c. The payment shall be applied equally in both credits.
d. The payments shall be applied proportionately to both credits.
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16. X and Z entered into a universal without specification whether it is of profits or all present property. What is the presumption?
a. Universal partnership of present profits
b. Universal partnership of profits
c. Universal partnership of all present property
d. Universal partnership of profits and property
17. A partnership which comprises all that the partners may acquire by their work or industry during the existence of the
partnership is:
a. Particular partnership
b. General partnership
c. Universal partnership of all present property
d. Universal partnership of profits
18. X and Y orally agreed to form a partnership. Each contributed cash and personal properties worth P10,000 to common fund.
But they did not register the partnership with the Securities and Exchange Commission.
a. The partnership is void.
b. The partnership is voidable.
c. The partnership is still valid.
d. The partnership is unenforceable.
19. 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 issued a receipt in the name
of A.
a. The whole of the P10,000 will be applied to the debt of E to A.
b. P10,000 will be applied to the debt of E to the partnership.
c. P2,500 to the debt of E to A and P7,500 to the debt of E to the partnership.
d. P50,000 each to the debt of E to A and to the partnership.
20. A partner 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 person is known as:
a. Dormant partner
b. Secret partner
c. Partnership by estoppel
d. Partner by estoppel
21. Three of the following are property rights of a partner. Which is not?
a. Right to specific partnership property.
b. Right to participate in the management.
c. Right to demand formal accounting of partnership affairs.
d. Interest of the partner in the partnership.
22. Which of the following is incorrect?
a. An industrial partner who engages in business for himself may be 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.
23. A partnership which must be in public instrument to be valid is:
a. Contribution of immovables or real rights therein regardless of the value thereof.
b. Contribution is P3,000.00 or more personal property.
c. General partnership.
d. Particular partnership.
24. One who takes charge of the winding up of partnership affairs upon dissolution
a. Silent partner
b. Ostensible partner
c. General partner
d. Liquidating partner
25. A and B entered into a universal partnership of all present property. The common property of the partnership shall be:
a. All the properties which belonged to each of the partners at the time of the constitution of the partnership.
b. All the properties which shall belong to each of the partners after the constitution of the partnership.
c. All the properties which belonged to each of the partners at the time of the constitution of the partnership as well as the
profits which they may acquire therewith.
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 d. All the properties which belonged to each of the partners at the time of the constitution of the partnership as well as
properties which each may acquire thereafter.
26. Which one of the following is not a requisite prescribed by law in order that a partnership may be held liable to a third party for
the acts of one of its partners?
a. The contract must be in the partnership name or of its account.
b. The partner binds the partnership by acquiescence for obligations he may have contracted in good faith.
c. The partner must act on behalf of the partnership.
d. The partner must have the authority to bind the partnership.
27. A capitalist partner is engaged for his own account in an operation which is of the same kind of business in which the
partnership is engaged. Said partner can be:
a. Compelled to sell his interest in the partnership to the other capitalist partners.
b. Compelled to dissolve or discontinue the operation of his business.
c. Compelled to bring to the common funds of the partnership any profits accruing to him from his transactions.
d. Denied his share in the profits of the partnership.
28. X, Y and Z were partners. X is an industrial partner. During the first year of operation, the firm received a profit of P60,000.
During the second year, the firm sustained a loss of P30,000. In the Articles of Partnership, it was agreed that the industrial
partner would get 1/3 of the profit but would not share in the losses. How much will X, the industrial partner get?
a. X will get only P20,000 which is 1/3 of the profit of the 1st year of operation.
b. X will get only P10,000 which is 1/3 of the net profit.
c. X will get only P20,000 in the first year and none in the second year.
d. X will share in the loss in the second year.
29. A, B and C, capitalist partners, each contributed P30,000, P20,000 and P10,000, respectively and, the industrialist partner,
contributed his services. Suppose X, a customer, is the creditor of the firm to the amount of P180,000. Can he recover the
P180,000?
a. X must sue the firm and get P60,000. X can still recover the balance of P120,000 from the four partners jointly, including
D, the industrial partner.
b. X can recover from the firm P60,000. X can still recover the balance of P120,000 from the capitalist partners only.
c. X can recover from the firm P60,000. X can recover the balance of P120,000 from any of the partners solidarily.
d. X can recover from the firm P60,000 and consider the balance of P120,000 as loss.
30. X, Y, and Z are equal partners to XYZ Partnership. A owes the XYZ Partnership for P9,000. Z, a partner collected from A
P3,000 before X and Y received anything. Z issued a receipt amounting P 3,000, his share of what A owes. When X and Y
collected from A, A was insolvent.
a. Partner Z shall share with partners’ X and Y with the P3,000.
b. Z cannot be required to share X and Y with the P3,000.
c. X and Y should first exhaust all remedies to collect from A.
d. X and Y can automatically deduct from the capital contribution of Z in the partnership their respective share in the P3,000.
31. A and B are partners in a real estate partnership. The partnership owns a piece of land which C desires to buy. C contacted A
and informed him of his desire to buy the land and A did not inform B about it. A bought B out of the partnership and
afterwards sold the land to C with a big profit.
a. The partnership is dissolved when A became the sole owner.
b. The sale of the land to C is void because it was without the knowledge of B.
c. A is not liable to B for the latter’s share in the profits.
d. A is liable to B for the latter’s share in the profits.
32. A and B are partners in a real estate business. A and B were approached by X who offered to buy a parcel of land owned by
the partnership. Thereafter, B sold to A, his share in the partnership. Then A sold the land to X at a big profit.
a. A is liable to B for B’s share in the profits.
b. The partnership is dissolved when A became the sole owner
c. A is not liable to B for the latter’s share in the profits.
d. The sale of the land to X is valid.
33. One of the following incidents may be a cause for involuntary dissolution of a partnership. Which is it?
a. Termination of the partnership
b. Insolvency of any partner
c. Express will of any partner
d. Expulsion of any partner

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34. A and B are general partners in AB and Company. Y represented himself as a partner in AB and Company to Z, who relying
on such representation extended a P50,000 credit to AB and Company. Of the two partners, only B knew and consented to
the representation of Y. Who should be held liable to Z?
a. Only Y, who presented himself as a partner is liable.
b. Since the credit was created so the two partners and Y are liable.
c. Partners A and B who benefited from the credit extended to the partnership AB and Company shall be liable to Z.
d. B and Y are partners by estoppels and thus are liable to Z.
35. The following persons are not disqualified to form a universal partnership.
a. Brother and sister.
b. Husband and Wife.
c. Those guilty of adultery and concubinage.
d. Those guilty of the same criminal offense, if the partnership is entered into the consideration of the same.
36. A is the capitalist partner and B is the industrial partner. A engaged personally in the same kind of business the partnership is
engaged in.
a. If there are losses, the partnership will bear the loss.
b. If there are profits, the profits will be shared by A and the partnership
c. If there are profits, A will give the profits to the partnership.
d. A will be excluded from the partnership and pay damages.
37. A is the managing partner of ABC and Company. X owes A personally and ABC and Company P20,000 each. A collected and
received from X P10,000 and he is issued a receipt wherein it is stated that the amount is applied against his personal credit.
a. The amount received will be applied in favor of the partnership credit.
b. The amount received will be applied in proportion to both credits.
c. The amount received will be applied in the credit of A.
d. All the partners will decide as to whose favor it will apply.
38. A, B and C are general partners in ABC Partnership. A, the managing partner engaged personally in a business that is the
same the business of the partnership without the consent of B and C.
a. If there are profits, A will give the profits to the partnership.
b. If there are losses, the partnership will bear the losses.
c. If there are profits, they will be shared by partner A and ABC Partnership.
d. If there are losses, the partnership will share in the losses.
39. Three of the following are rights of a general partner and also of a limited partner in limited partnership. Which is not?
a. To inspect and copy at reasonable hours the book of the partnership and have them kept at the principal place of
business.
b. To demand true and full information of all matters affecting the partnership and a formal account of the partnership affairs.
c. To have dissolution and winding up by decree of court.
d. None of the above.
40. Bears the loss of property contributed to the partnership.
a. Capitalist partner
b. Limited partner
c. Partners contributing usufructuary rights
d. None of the above
41. Partnership is not dissolved on the death of a:
a. General Partner
b. Industrial Partner
c. Limited Partner
d. None of the above
42. When the capital of a partnership is P3,000 or more, it must be in a public instrument and must be recorded with the Securities
and Exchange Commission (Art.1772). A, B, and C agreed to form a partnership and each contributed P10,000 as capital of
the partnership. There was no compliance in the provisions of Art. 1772. Decide.
a. The partnership was not established.
b. The partnership did not have juridical personality.
c. The partnership was established and any partner may compel
d. The partnership is void.
43. This is the order of preference in the liquidation of a partnership

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 a. 1. Outside creditors c. 1. Outside creditors
2. Partners with respect to their capital 2. Partners aside from capital and profit
3. Partners with respect to their profit 3. Partners with respect to their capital
4. Partners aside from capital and profit 4. Partners with respect to their profit

b. 1. Partners with respect to their capital d. 1. Partners aside from their capital and profit
2. Partners with respect to their profit 2. Outside creditor
3. Partners aside from their capital and profit 3. Partners with respect to their capital
4. Outside creditors 4. Partners with respect to their profit

44. . Three (3) of the following are rights of a partner. Which one (1) is not?
a. Right to associate another person to his share.
b. Right to admit another partner.
c. Right to inspect and copy partnership book.
d. Right to ask dissolution of the firm at the proper time.
45. In the partnership of A, B, and C, A was appointed in the Articles of Partnership as managing partner. As such manager and
acting in good faith:
a. His power is revocable even without his consent.
b. His power is revocable at any time even without just cause provided that it is approved by the partners owning the
controlling interest.
c. He may execute all acts of administrations despite the opposition of B and c.
d. He can be removed for valid cause even without the vote of the partners owning the controlling interest.
46. X, Y, and Z entered into a partnership to operate a hardware business. After more than two years of profitable business, Z
died. X and y continued the business without dissolving the partnership.
a. The partnership became a partnership for a particular undertaking.
b. The partnership became a partnership for a fixed period.
c. The partnership became a partnership at will.
d. None of the above.
47. I. A general partner cannot demand the return of his contributions during the existence of the partnership.
II. A limited partner can ask for the return of his contributions.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
48. Can a husband and wife form a limited partnership to engage in real estate business, with the wife being a limited partner?
a. No, because the Civil Code prohibits a husband and wife from constituting a universal partnership.
b. No, because spouses cannot enter into a universal partnership; hence, they cannot enter into a limited partnership.
c. Yes, since a limited partnership is not a universal partnership, a husband and wife may validly from one.
d. Yes, since a husband and a wife can enter into any kind of partnership such as universal partnership.
49. X and Y formed a partnership to operate a barber shop. X provided the capital while Y contributed his labor and industry. On
one side of their shop, X opened and operated a coffee shop, while on the other side, Y put up a book store. May they engage
in such separate businesses?
a. Y may engage in a book store business.
b. X may not engage in a coffee shop business.
c. X may engage in a coffee shop business.
d. None may engage in another business.
50. A, B, and C entered into a partnership. After 2 years, when the business started to garner considerable profits, C died. A and
B continued the business without dissolving the partnership. They in fact opened a branch, incurring obligations. Creditors
started demanding for the payment of their obligations. Who are liable for the settlement of the partnership’s obligations?
a. Only A and B are liable.
b. A, B, and C’s estate are liable for the entire obligations of the partnership.
c. Only A is liable.
d. Only B is liable up to extent of his separate properties.

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