SUAREZ
Merger
OBLIGATION
1. Statement no. 1: The creditor may be compelled to
accept payment in checks as long as the check is
negotiable.
Statement no. 2: An obligation payable should the
client die of diabetes is an obligation subject to a
period.
a. Statement No. 1 is false while statement No.2 is
true.
b. Statement No. 1 is true while statement No. 2 is
true.
c. Both Statement are false
d. Both Statement are true
2. The buyer has the right to the fruit of the thing
from:
a. The time the thing is delivered
b. The time the contract is perfected
c. The time the obligation to deliver the thing arises
d. The time the fruits are delivered
3. Statement no. 1: Just before the obligation became
due and demandable, the debtor proposed to the
creditor that he would give him a specific car instead
of paying 150,000.00, and which proposal was
accepted by the creditor. Here, there is
extinguishment of an obligation by way of dacion en
pago.
Statement no. 2: After substitution in facultative
obligations, the loss of the principal through the fault
or negligence of the debtor shall render him liable for
damages in favor of the creditor.
a. Both are true
b. Both are false
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No. 2 is true
4. Meeting in one person of the characteristics of
both the debtor and creditor in one and the same
obligation extinguishers the obligation by way of:
a. Novation
b. Compensation or set-of
c. Condonation or remission
d. Merger or confusion
5. Consignation alone, as a special form of payment,
may extinguish an obligation under any of the
following instances. Which is the exception?
a. When the creditor is absent, or is unknown or does
not appear in the place of payment.
b. When the creditor is capacitated to receive
payment
c. When the creditor refuses to issue receipts
d. When there are two or more persons claiming title
to one and the same obligation
e. When title to the same obligation has been lost
b.
6. Statement no. 1: in alternative obligations, it is the c. Compensation
notice of which prestation to perform made by the d. Death of creditor
debtor shall convert the alternative obligation into a e. None of the above
pure or simple one.
Statement no. 2: In the case of a joint obligation, the 13.S owns an oil painting. Being in need of money, S
co-debtors may be held liable for the share of an sold the painting to B for 1,000.00. After the sale S
insolvent co-debtor. discovered that the painting was valuable and worth
a. Both Statement are true 5,000.00.
b. Both statement are false a. B is entitled to the benefit of the contract because
c. Statement no. 1 is true while statement no. 2 is it is valid and binding.
false b. S may annul the contract on ground of error
d. Statement no. 1 is false while statement no. 2 is c. S may annul the contract on ground of fraud
true d. S may rescind the contract on ground of lesion or
inadequacy of cause.
7. An obligation based on positive law and give right
to enforce its performance. 14.A and B are jointly and severally liable to C for
a. Civil Obligation 20,000.00. A is a minor.
b. Moral Obligation a. C can collect 20,000.00 from B
c. Legal Obligation b. C can collect 10,000.00 from B
d. Natural Obligation c. C can collect 10,000.00 from A that is the share of
8. An obligation wherein various things are due, but B.
the payment of one of them is sufficient to extinguish d. C can collect 20,000.00 because minority is not a
the obligation is called: defense
a. Simple obligation
b. Conjoint obligation 15.Every obligation whose performance does not
c. Alternative Obligation depend upon a future or uncertain event, or upon a
d. Facultative Obligation past event unknown to the parties, is demandable at
once. This refers to:
9. An obligation wherein various things are due but a. Divisible and Indivisible obligation
the complete performance of all of them is necessary b. Joint and Solidary obligations
to extinguish the obligation c. Pure obligation
a. Facultative obligation d. Obligations with a period
b. Conjoint obligation
c. Alternative obligation 16.DR promised to give DE, his grandson, a car if the
d. Pure or simple obligation latter will pass the bar examinations. When his
grandson passed the said examinations, which of the
10.Statement no. 1: I will give you 10,000.00 if you following statement is true?
will not marry X this year. If by the end of the year, a. DR may refuse to deliver because the condition is
X entered the convent, my obligation is extinguished. purely a potestative one.
Statement no. 2: I will give you 10,000.00 when my b. The obligation is valid because the condition
means permit me to do so. This is a conditional depends upon the sole will of the debtor.
obligation for the benefit of the debtor. c. Both the obligation and the condition are
a. Both are true inefective because they depend upon the sole will of
b. Both are false the donor.
c. No. 1 is true; no. 2 is false d. The obligation is valid although potestative
d. No. 1 is false; no. 2 is true because they depend upon the sole will of the done.
11. Change of persons or objects: 17.A, B and C executed a promissory note worded as
a. Solutio indebiti follows: We promise to pay to X, Y and Z the sum of
b. None of the above 90,000.00 (Sgd.) A, B and C.
c. Novation a. A is obliged to pay to X, Y and Z 90,000.00
d. Confusion b. A is obliged to pay to X 30,000.00
c. A is obliged to pay to X 60,000.00
12.Which of the following is not a ground for the d. A is obliged to pay to X 10,000.00
extinguishment of an obligation?
a. Remission
18. Ill give you my car one year after your death.
The obligation is
a. Valid because the event is sure to come
b. Void, not legally possible
c. Valid, the obligation is conditional
d. Valid, but disregard the condition.
19.Statement no. 1: D oblige to give a specific car to
C on Dec. 20, 2006. If on the date stated D did not
comply with his obligation, the next day he is
considered in default without the need of demand.
Statement no. 2: S sold to B a specific car for
10,000.00. Both parties promise to comply with their
obligations the day after tomorrow. If on the date
stated S delivers the car to B, but B is not ready to
comply with his obligation, from thereon he is
considered in default without the need of a demand.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
20.It refers to joint obligation:
a. One which each of the debtors is liable only for a
proportionate part of the debt and each creditor is
entitled only for a proportionate part of the credit.
b. One in which each debtor is liable for the entire
obligation, and each creditor is entitled to demand
the whole obligation
c. One in which either one of the parties is
indispensable and the other is not necessary
d. One in which the obligation of one is a resolutory
condition of the obligation of the other, the non-
fulfillment of which entitles the other party to rescind
the contract.
21.Conrad and Charlie are jointly indebted to Pete for
100,000.00. Pete assigned his interest to Crispin who
assigned it back Conrad.
a. The debt is totally extinguished by compensation
b. The debt is totally extinguished by merger
c. The debt is partially extinguished by compensation
d. The debt is partially extinguished by merger
22.In three of the following cases, compensation
shall not be proper. Which is the exception?
a. Commodatum
b. Gratuitous support
c. Civil liability arising out of criminal ofenses
d. Bank deposit
23.The passage of time extinguishing obligations.
Which is the exception?
a. Prescription
b. Fulfillment of resolutory condtion
c. Arrival of resolutory period
d. Remission
e. Rescission
a. When a person voluntary takes charge of anothers
24.A is indebted to B for 20,000.00. X is the
guarantor of A. B is also indebted to A for 8,000.00.
how much will X be liable as guarantor if B sues A,
and cannot pay?
a. 12,000.00
b. 20,000.0
c. 8,000.00
d. X has no liability
25.Statement no. 1: The debtor of a thing cannot
compel the creditor to receive a diferent one,
although the latter may be of the same value or
more valuable than that which is due.
Statement no. 2: In dation in payment, ownership of
the thing delivered is transferred to the creditor;
while in cession, it merely authorizes the creditor to
convert the property into cash and out of the
proceeds to extinguish the obligation partially.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
26.I will give you specific car if you will marry X this
year, 20016. Which of the following statement in
incorrect?
a. If on December 25, X died, without marriage, my
obligation is efective because one party is dead,
marriage is impossible to take place.
b. If on December 25, X died, without marriage, my
obligation is extinguished because one party is dead.
Marriage is impossible to take place.
c. If the year has ended, no marriage taking place,
both parties are alive, just the same my obligation is
extinguished because the time indicated has already
elapsed
d. If you marry X on December, my obligation is to
give you the car
27.Mr. Debtor owes Mr. Creditor who has two (2)
legitimate children, 50,000.00 payable on December
31, 2006.
a. If Mr. Debtor dies before December 31, 2006, Mr.
Creditor cannot collect from the heirs of Mr. Debtor.
b. If Mr. Debtor dies before December 31, 2006, Mr.
Creditor can collect from the heirs of Mr. Debtor.
c. If Mr. Creditor dies, his two (2) legitimate
emancipated children cannot recover from Mr. Debtor
his obligation.
d. If both Mr. Debtor and Mr. Creditor die, the heirs of
Mr. Creditor can collect from the heirs of Mr. Debtor.
28.A judicial relation known as negotiorum gestio
takes place.
abandoned business or property without the owners
consent.
b. When something is received and there is no right
to demand it and it was delivered through mistake
c. When a person is appointed by a court to take the
property of business of another.
d. None of the above.
29.A owes B 2,000.00 demandable and due on
September 10, 2006. B on the other hand, owes A
2,000.00 demandable and due on or before
September 30, 2006. If B claims compensation on
September 10, 2006, can A rightfully oppose?
a. No. B who was giving the benefit of the term, may
claim compensation because he could then choose to
pay his debt on September 10, 2006 which is actually
on or before September 30, 2006.
b. Yes, A can properly oppose because for
compensation to take place, mutual consent of both
parties is necessary.
c. Yes, A c ab properly oppose and if B still refuses to
accept his payment made on September 30, 2006, A
can deposit his payment in court.
d. None of the above.
30.Statement no. 1: Merger taking place in the
person of the guarantor shall extinguish only the
secondary contract such as the contract of guaranty
but not the principal obligation.
Statement no. 2: when the debtor promises to pay
his obligation whenever his means permit him to do
so the obligations is with a period.
a. Both statement are true
b. Both statement are false
c. Statement no. 1 is true while statement no. 2 is
false
d. Statement no. 1 is false while statement no. 2 is
true
31.D obliged himself to paint the house of C or to
paint the picture of C, in a standing position, using 10
by 10 canvass. Later because of financial reverses, C
sold his house to X. which of the following statement
is correct?
a. The obligation of D is extinguished because he
cannot make a choice.
b. D may paint the picture of C
c. D may cancel the contract and ask for damages
d. None of the above
32.D obliged himself to give a specific car to C on
December 25, 2006, stipulating that D is liable even
if the thing is lost due to fortuitous event, and
without the need of a demand. On the due date, the
car got lost due to fortuitous event.
Which of the following is correct?
a. Obligation remains to subsist, but converted into
monetary consideration
b. C can compel D to deliver another car
c. C can require another person to deliver a car,
expenses chargeable to D.
d. Obligation is totally extinguished
33.Statement no. 1: The debtor of a thing cannot
compel the creditor to receive a diferent one,
although the latter maybe of the same value or more
valuable than that which is due.
Statement no. 2: In dation of payment, ownership of
the thing delivered is transferred to the creditor;
while cession, It merely authorize the creditor to
convert the property into cash and out of the
proceeds to extinguish the obligation partially.
a. Both are true
b. Both are false
c. No.1 is true, no. 2 is false
d. No.1 is false, no.2 is true
34.A is obliged to give B his only car on September 1,
2006. On the said date, A did not deliver. On
September 2, 2006, an earthquake completely
destroyed the car.
Is A still liable?
a. No. Considering that no demand to deliver was
made by B and the specific thing was lost due to
fortuitous event, the obligation is extinguished.
b. No. the obligation is extinguished, even if the
debtor is already in default because the debtor can
plead impossibility of performance
c. Yes. A is already in legal delay thus the obligation
to deliver the lost specific thing is converted into
monetary claim for damages.
d. Yes. The creditor can instead demand for a
substitute of equivalent value from the debtor.
35.A sold his cow to B for 2,500.00. No date was
stipulated for the delivery of the cow. While still in
the possession of A, the cow gave birth to a calf.
a. A is entitled to the calf because it was born before
his obligation to deliver the cow arises.
b. A is entitled to the calf as B has not paid the price
c. B is entitled to the calf which was born after the
perfection of the contract
d. B, in order to be entitled to the calf, should pay
additional cost for the calf to be agreed upon by both
parties.
36.The kind of compensation which may only be
raised by the creditor and not by the debtor in the
obligation to give gratuitous support:
a. Judicial compensation
b. Conventional compensation
c. Facultative compensation
d. Legal compensation
37.Statement no. 1: Legal compensation takes place
by operation of law even if the parties may not be
aware of it.
Statement no. 2: The indivisibility of an obligation
necessarily implies solidarity.
a. Both statement are true
b. Both statement are false
c. Statement no. 1 is true while statement no .2 is
false
d. Statement no. 1 is false while statement no. 2 is
true
38.Debtor obliged himself to deliver to creditor 100
cavans of rice on 06/01/2001. On
said date, D failed to make delivery despite repeated
demands by C. In this case:
a. C has no remedy under the law
b. C can compel D to deliver 100 cavans of rice plus
damages
c. C may ask a third person to deliver 100 cavans of
rice to him, the value
recoverable from D plus damages
d. None of the above.
39.The kind of compensation which arises by way of
proved counterclaim in a case called:
a. Legal compensation
b. Voluntary compensation
c. Judicial compensation
d. Facultative compensation
40.Statement no. 1: Payment made to an
incapacitated person is good only up to the extent
that he was benefited or up to the amount that he
was able to keep.
Statement no. 2: In obligations arising from quasi-
contracts, consent of the parties is not necessary.
a. Both statements are true
b. Both statements are false
c. Statement no. 1 is true while statement no.2 is
false
d. Statement no. 1 is false while statement no. 2 is
true
41.Solidary debtors A, B and C owes joint creditors X,
Y, Z and W 12,000.00. X, T and Z can collect from A
a. 12,000
b. 6.000
c. 9,000
d. 3,000
42.X, Y and Z solidary bound themselves to pay to
solidary creditors A, B and C the amount of
75,000.00. The loan was secured by a mortgage on
Bs land. Out of gratuity, A, in a public instrument,
renounced the obligation in favor of X, with the
formality required by law. In this case, which
statement is correct?
a. The principal obligation is extinguished
b. The real estate mortgage is extinguished
c. Both the principal obligation and the mortgage are
extinguished by remission
d. Both the principal and accessory obligations
subsist.
43.Which of the following is not an obligation with a
period?
a. Payable soonest
b. An obligation payable little by little
c. Will pay you 10,000.00 if I like
d. Payable within 2 years from today
e. All of the above
44.In order that fraud may make a contract voidable
a. It may be serious and the parties must be in pari
delicto
b. It may be incidental but both parties should not be
in pari delicto
c. It should be serious and should not have been
employed by both contracting parties
d. It may be incidental but should have been
employed by both parties
45.Bernie ofered Zo a specific parcel of land at a
specified price. Bernie gave Zo 60 days within which
to accept. Zo agreed.
a. Within 60 days, Bernie cannot withdraw but may
increase the price
b. There cant be no withdrawal because the period is
binding
c. Bernie may withdraw or increase the price within
the 60 day period
d. There can be no withdrawal because there is a
perfected option contract
46. I will give you this book provided that if I like to
have it back, you will return the same to me
a. The obligation is void, because the fulfillment
depends upon the will of the debtor
b. The obligation is void, because the fulfillment
depends upon the will of the creditor
c. The obligation is valid, because the condition
merely causes the loss of rights already acquired.
d. Combination of A and B
47. I will give you this book provided that if I like to
have it back, you will return the same to me
a. The obligation is void, because the fulfillment
depends upon the will of the debtor
b. The obligation is void, because the fulfillment
depends upon the will of the creditor.
c. The obligation is valid because the condition
merely causes the loss of rights already acquired
d. Combination of A and B.
5. S ofers to sell his house to B for P100, 000. B asks
48.The following, except one, are requisites of him if he would accept P80, 000. Which of the
payment as a mode of extinguishing an ordinary following is correct?
obligation. Which is the exception? a. Because of ambiguity, both ofers are terminated
a. Complete or full payment by operation of law.
b. Payment in due course when the obligation is due b. Bs response is a counter- ofer efectively
and demandable terminating the P10, 000 ofer and instigating an
c. Payment using negotiable instrument ofer for P80, 000.
d. Payment using legal tender, except if payable in c. Bs response is a more inquiry, the P100, 000 ofer
foreign currency. by S is still in force.
d. Bs response is a rejection of the P100, 000 ofer,
49.Not ground for damages: and there is no ofer for P80, 000 because it is too
a. Culpa indefinite to be an ofer.
b. Bad faith
c. Dolo causante 6. Example No. 1: G, guardian of W, sold Ws house
d. Mora valued at P50, 000 for P37, 500 or a lesion by one-
fourth of the value.
50.Fruits as resulting from spontaneous products of Example No. 2: S sold his house valued to P50, 000
the soil without the intervention of human labor, as for only P10, 000 because S did not know the true
well as animal ofspring are: value of the house.
a. Industrial fruits a. Both contracts are rescissible.
b. Civil fruits b. Only No. 1 is rescissible.
c. Natural fruits c. No. 2 is voidable because there is an error or
d. All of above fruits mistake.
d. Both contracts are valid and enforceable.
CONTRACTS 7. B1 Company bought out a competitor, B2
1. Which of the following can be considered as a Corporation, with a stipulation that B2 Corporation
feature of a void contract? should not thereafter engage in any business in the
a. Subject to ratification Philippines unless consented to and approved by B1
b. They exist Company.
c. Action or defense for nullity is subject to a. The stipulation is void because it is contrary to
prescription public policy.
d. None of them b. The stipulation is defective but subject to
ratification.
2. L entered into a contract of lease with X. T, the c. The stipulation is valid because the parties are free
clerk of L, typed the document. Due to Ts to enter into any business in the Philippines unless
negligence, the document made was that of sale consented to and approved by B1 Company.
instead of lease. d. The stipulation is unenforceable as there was no
a. The remedy is annulment showing that the was done in writing
b. Parties may go to court for interpretation
c. Parties may enforce their right because it is 8. Which of the following contract is not valid?
enforceable a. Mutual promise to marry entered into orally
d. None of the above b. Sale of immovable property orally entered into
c. One of parties in a contract is incapable of giving
3. These persons are bound by contracts: consent
a. Contracting Parties d. None of the above
b. Assigns or Assign
c. Heirs 9. D forced C to lend him P10, 000. The promissory
d. All of them note is in writing.
a. The contract is rescissible because the contract is
4. Who is liable for the loss of the subject matter by fraudulent
fortuitous event? b. Contract remains to be valid
a. Creditor c. The contract is void
b. Debtor d. C cannot demand payment from D because the
c. Both creditor and debtor contract is unenforceable
d. None of them
10 .Example 1 S sold to B in a private instrument
his land. Later, B wanted to have the sale registered,
but registration requires a public instrument. In here,
B may compel S to execute the needed public
instrument.
Example 2 S sold to B orally his specific land. After
B paid S the price of the sale, he want to registered
the land in his name but he needed a public
instrument of sale. In here B may compel S to
execute the needed public instrument.
a. Both examples are also
b. Only 1 is true
c. Only 2 is true
d. Both examples are true
11. In a contract of sale executed by S and B, it
appears S sold his motor vehicle to B and B bought it
for P10, 000. It turned out however, S has three
motor vehicles. Gallant valued P80, 000: Hi-Ace van
valued P70, 000; and a Jeep valued P60, 000. Which
of the following is correct?
a. The contract shall be reformed because there was
mistake
b. The parties can ask for interpretation because the
word Motor vehicle is ambiguous.
c. There is no contract.
d. The parties can ask for annulment of the contract
12.An agreement is restraint of trade.
a. Void
b. Perfectly valid
c. Voidable
d. Unenforceable
13.Three of the following are rescissible, which is
not?
a. Sale of property under litigation made defendant
without the knowledge of plaintif and authority of
the court.
b. Those made to defraud creditors when the
creditors has no other means to recover his claim
c. Those agreed upon in representation of absentees,
if the absentee sufers lesion by more than of the
value of the property subject of the contract.
d. None of the above
14.S and M agreed in print that, debtor for P3, 000
will work as a servant of M without pay until she
could find money with which to pay her debt.
Meantime, S absconded re obligation and failed to
comply with her promise. Under this premise, which
of the following statements is correct?
a. The agreement to work as a servant is void
because it is immoral
b. To act as a servant without pay is unconstitutional
because this is equivalent to involuntary servitude
c. The obligation to pay is enforceable because this is
in accordance with law
d. All of the above
15.Which of the following contracts is not required to
appear in a public document?
a. Acts and contracts which have for their object the
creation, transmission, modification or
extinguishment of real rights over immovable
property, sales of real property or of an interest.
b. The cession, repudiation or renunciation of
hereditary rights
c. The power to administer property
d. Sale of immovable property
e. None of the above.
16.In order that a stipulation in favor of a third
person in a contract would be valid and binding upon
the parties thereto, three of the requisites are
mentioned in the following enumeration. Which
among them is not a requisite?
a. There must be a stipulation in favor of a third
person.
b. That there must be an existing agency between
either of the contracting parties and the third person.
c. The contracting parties must have clearly and
deliberately conferred a favor upon that third person.
d. The third person communicated his acceptance to
the obligor before its revocation.
17.Statement No. 1: Dolo incidente entitles the
person against whom, it was employed the right to
seek the annulment of the contract.
Statement No. 2: A stipulation pour autrui is an
exception to the rule on relativity of contracts.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
18.Example No.1: W, 16 year old, sold his house
valued at P1 M for P50, 000 or a lesion by more than
one-fourth of the value of the said house.
Example No. 2: S sold his house valued at P1 M for
only P400, 000 because S did not know the true
value thereof.
a. Both examples are unenforceable
b. No. 1 is rescissible; while No. 2 is unenforceable
c. Both contracts are binding
d. No. 2 is unenforceable
19.S owns an oul painting. Being in need of money, S
sold the painting to B for P1, 000. After the sale it
was discovered that the painting was valuable and
worth P5, 000.
a. B is entitled to the benefit of the contract because
it is valid and binding.
b. S may rescind the contract on ground of lesion or
inadequency of cause
c. S may rescind the contract on ground of fraud
d. S may annul the contract on the ground the error
20. A, bachelor lawyer, raped W twice. Upon
learning this, F the father of W, was able to force A
to marry W under pain of being sued in court and
dibarred from the practice of his law profession.
Which statement is correct?
a. There was no defect, the marriage was perfectly
valid
b. The marriage may be annulled on the ground of
force or violence
c. The marriage may be annulled on the ground of
threat of intimidation
d. The defective marriage may, however, be ratified
21.Statement No. 1: If the cause is not stated in the
contract it is presumed that it is unlawful.
Statement No. 2: the action for rescission is
subsidiary, it cannot be instituted except when there
is no other legal means to obtain reparation for
damages sufered.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
22.In an invitation to bud, B proposes the following:
I will buy the property for P10, 000 if the bid of any
other oferrors or bidders shall be considered the
best terms of amount and conditions, I am to equal
that ofer.
a. The ofer is speculative, because it cannot be
considered as against another ofer which is certain.
b. The ofer is considered a counter ofer
c. The advertiser is not bound to accept the highest
bidder.
d. This is a continuing ofer which is very certain
23.In the preceding question, which of the following
statements is correct?
a. If there is no more ofer made, the contract is
perfected on the ofer of B because he will be
considered as the highest bidder
b. However, if another bidder, X, bid P15, 000, he will
be considered as the highest bidder and the contract
is perfected.
c. In letter (b), if X increase his bid for P20, 000, and
no more bid equals his bid, the contract is perfected
for P20, 000
d. Answer not given
24.Reluctantly and against her good sense and
judgment, Rosemarie entered into a contract for the
delivery of 5 tables to Corazon for a price of P15,
000. Contract is:
a. Void
b. Voidable
c. Unenforceable
d. Valid
25.G was appointed guardian of S, the latter being 16
years old. S sold his parcel of land in writing to B
valued at P100, 000 for P75, 000, sufering lesion by
pf the value. What is the status of the contract:
a. Rescissible
b. Unenforceable
c. Enforceable
d. Voidable
26.One of the stipulations contained in the contract
between M Company and its employees is that the
company shall pay a bonus to employees of the
company who shall continue its employment for at
least 2 consecutive years, unless be quits or is
discharged before the expiration of the period of 2
years. X, an employee of the company was
discharged without just cause, one week before
the completion of the two-year period.
a. X is not entitled to the bonus because his
discharge was in accordance with the contract.
b. X is entitled to the bonus because the debtor
company has voluntarily prevented the happening of
the condition.
c. X is not entitled to the bonus, because the
employers right to terminate is superior than the
right of the employee to be employed.
d. X is entitled to the bonus whether the discharge is
with or without cause.
27.Statement No. 1: if one party was mistaken and
the other acted fraudulently or inequitably in such a
way that the instrument does not show their true
intention, the former may ask for the annulment of
the instrument.
Statement No. 2: The statement of a false cause in
contracts shall render them void, if it should not be
proven that they were founded upon another caused
which is true and lawful.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both are false d. No. 1 is false; No. 2 is true
28.Must be in writing to be enforceable:
a. Lease of land for 12 months
b. Lease of care for 18 months
c. Both of a and b
d. None of a and b
29.Which of the following is not a requisite for the
validity of a contract?
a. Consent
b. Object
c. Delivery of the thing
d. Cause or consideration
e. None of the above
30.D owes C P500. However, Cs right has already
prescribed. Notwithstanding the knowledge of thus
fact, D paid the amount. Realizing this mistake, D
wants to recover the amount he paid.
a. D can be made to recover on ground of mistake.
b. D can be made to recover on the ground that his
obligation is not legally enforceable.
c. D can be made to recover because this will enrich
C at the expense of D.
d. D cannot recover.
31.Three of the following contracts are void. Which is
the exception?
a. Those whose cause, object or purpose is contrary
to law, morals, good customs, public order or public
policy.
b. Those which re absolutely stimulated or fictitious.
c. Those where both parties are incapable of giving
consent to a contract.
d. Those which cause or object did not exist at the
time of the transaction.
32.X, a former government employee, sufered from
severe paranoia and was confined in the mental
hospital in 2006. After his release he was placed
under the guardianship of his wife to enable his to
get his retirement pay. In 2009, he became a mining
prospector and sold some mining claims. In 2012, he
sues to annul the sale claiming that he was not
mentally capacitated at the time of sale. The sale in
question was
a. Illegal c. Void
b. Valid d.Voidable
33.Which of the following is presumed not to be legal
subrogation?
a. When a creditor pays another creditor who is
preferred
b. When a third person, not interested in obligation,
pays with the approval of the debtor
c. When a third person interested in the obligation,
pays even without the approval of the debtor
d. None of them
34.Essential requisites of a contract:
a. Consent c. Subject
b. Cause d. All of them
35.Which of the following instruments is not subject
to reformation?
a. Simple donations inter vivos wherein no condition
is imposed
b. Wills
c. When the real agreement is void
d. All of the above
36.Valid until annulled unless there has been a
ratification
a. Rescissible contract c. Voidable contract
b. Inexistence contract d. None of the above
37.In three of the following defective contracts,
ratification ceases the defects.
Which is the exception?
a. Sale of piece of land thru an agent the authority is
oral
b. Sale of immovable property or interest orally
entered into
c. Contracts entered into by a person who has been
given no authority.
d. Both parties are incapable of giving consent.
38.S makes an ofer to B on January 1, 2007. B
makes known his acceptance in a letter sent on
January 2, and received by S on January 10.
Meantime, on January 5, S become insane.
a. The contract is voidable because on party is
insane
b. The contract is not binding because there is no
meeting of minds.
c. There is already a meeting of minds, the contract
is perfected.
d. None of the above
39.In the preceding number S is perfectly sane but
only an un- emancipated minor of the time the
acceptance is communicated to him.
a. There is no meeting of minds between the parties,
unless ratified by the guardian of S.
b. The contract is not binding because the party is
incapacitated
c. The contract is binding between the parties
d. None of the above
40.Which of the following contracts is voidable?
a. Those where one of the parties is incapacitated.
b. Those whose object is outside the commerce of
men.
c. Those which are absolutely fictitious.
d. Those which contemplate an impossible service
41.The stipulation in a contract to the efect that the
debtor should remain as a servant in the house and
in the service of her creditor so long as she had not
paid her debt is void because it is:
a. Contrary to good custom
b. Contrary to public policy
c. Contrary to law and morality
d. None of the above.
42.X, after the death of his father, sold his
inheritance though its amount has not yet been
determined to B, for a consideration of P50, 000.
a. The contract is valid only if the inheritance valued
at least equal or more than 50, 000
b. The contract is rescissible.
c. The contract is valid even though nothing remains
of the inheritance to be turned over to B.
d. Contract is void, future inheritance cannot be the
object of sale.
43.X, alleged that Y promised to give X one hectare
of land. This is in consideration Ys meritorious
services to Y. Y pleads in defense that since the
promise was not in writing, it is unenforceable under
the Statute of Frauds. Decide.
a. The promise is unenforceable because it is not in
writing
b. The Statute of Frauds is applied because A has
rendered services
c. The Statute of Frauds can apply to partially
executed contract.
d. The Statute of Frauds is inapplicable here, because
the promise to give the land is not a sale of really
property.
44.Statement No. 1: In voidable contracts, there is no
need to ratify same before they can be considered
valid. In unenforceable contracts, however
ratification is mandatory before they can be
considered enforceable.
Statement No. 2: There is undue influence if insidious
words or machinations were employed by a party on
the other just to obtain the latters consent, without
which the latter would not have entered into
contract.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both re false d. No. 1 is false; No. 2 is true
45.Three of the following are void contracts. Which is
the exception?
a. Contracts where the cause is immoral
b. Contracts to prevent a known supporter of a
political rival from voting for his candidate for a
valuable consideration
c. Contracts with valid consideration but with
unlawful motives
d. Absolutely simulated contracts
46.Statute of Frauds is applicable to
a. Contract not to be performed within a year from
the making thereof
b. Partially executed contracts
c. Oral contract of loan when the amount involved is
less than P500
d. All of the above.
47.Which of the following is correct?
a. An action to enforce judicially a natural obligation
prescribes in 4 years
b. An action to declare a contract void is not subject
to prescription
c. An action for annulment of contract is
imprescriptible
d. An action for rescission of contract prescribes in
five (5) years counted from the execution of the
contract.
48.B fraudulently induces S to sell to him (B) a
masterpiece painting for P10, 000. Subsequently, B
sold it to X for P12, 000, a good faith purchaser. S is
entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
c. Recover damages from B
d. Rescind the contract between B and X
49.Which of the following contracts is not rescissible?
a. Those which are entered into by guardians
whenever the wards whom they represent sufer a
lesion of more than of the value of the object of
the contract.
b. Those where one of the parties is incapable of
giving consent to a contract.
c. Those executed in representation of an absentee,
if the latter sufer a lesion
of more than of the value of the object of the
contract.
d. Those undertaken in fraud of creditors when the
latter cannot in any other manner collect the claims
due them.
e. Those which refer to things under litigation if they
have been entered into by the defendant without the
knowledge and approval of the litigants or of
competent judicial authority.
50.When there is concurrence of ofer and
acceptance, there is
a. Payment c. Revocation
b. Consent d. none of the above
PARTNERSHIP
1. Common Property in a universal partnership
a. All present property and all property that they may
acquire thereof
b. All present property and all profits that they may
acquire therewith
c. All future property
d. All present property
2. A, B and C are partners of A and Company. They
agreed that in case of loss, the share of A is 50%, B
30%, and C 20%.After three years of total assets of A
and Company is P100,000 as against total liability of
P112,000. If D is the only creditor, D can collect from
A,
a. 6,000
b. 12,000
c. 4,000
d. 8,000
3. One or more but less than all the partners have no
authority to perform the following acts, except:
a. Do any act which would make it impossible to
carry on the ordinary course of business
b. Submit a partnership claim or liability to
arbitration.
c. Renounce a claim of the partnership
d. Convey partnership property in the ordinary
course of business
e. None of the above
4. A, B, and C are partners in ABC Company. D
introduced himself as a partner in ABC Company to
X, who in the belief of such introduction, extended a
P60,000 credit to ABC Company. These facts are
known by A, who did not oppose. Who shall be liable
to X?
a. Since X extended the credit tot the partnership, a
partnership liability exists, thus, partners A, B, C and
D are liable.
b. Only A, who knows the transactions and D, are
partners by estoppel and liable pro-rata to X.
c. D who represented himself as partner in ABC
Company is liable.
d. A and C who benefited in the P60,000 credit shall
be liable to X.
5. Which of the following contracts of partnership
may not appear in a public instrument?
a. Limited partnership
b. Partnership where immovable are contributed
c. Partnership having a capital of 3,000 or more
d. None of the above
6. The following persons are disqualified to form a
universal partnership. Who are the exception?
a. Brother and sister
b. Husband and wife
c. Those guilty of adultery and concubinage
d. Those guilty of the same criminal ofense, if the
partnership is entered into the consideration of the
same
7. May be required additional contribution in case of
imminent loss:
a. Capitalist partner
b. Limited partner
c. Industrial partner
d. None of the above
8. A, B and C formed a limited partnership, with A as
general partner, while B and C as limited partners,
with the following contributions:
1. A contribute a specific parcel of land
2. B to contribute P10,000, the first P5,000 upon
formation, and the last P5,000, 10 days after
formation.
3. C contributed a specific car as was stated in the
articles of partnership, when in fact it was not
contributed.
If the partnership was dispossessed of the land
contributed by A after delivery to the partnership by
the real owner, the efect will be:
a. A is considered a debtor of the partnership
b. A is considered a trustee of the land for and in
behalf of the partnership
c. The partnership will be dissolved
d. A is to answer for warranty against eviction
9. In the preceding number, if B did not deliver the
last P5,000 to the partnership, the efect will be:
a. B holds a trustee for in behalf of the partnership
the P5,000
b. B is considered a debtor of the partnership of
P5,000 plus interest without the need of a demand
c. B may be expelled from the firm plus the damages
incurred
d. B is considered a debtor of the firm for P5,000 plus
interest after a demand is made
10. A, B and C are partners where C as a capitalist
partner is engaged in the same business in which the
partnership is engaged in. In this situation,
a. the partnership may oust C from the partnership
and at the same time avail of Cs profit in her
separate business
b. the partnership may oust C from the partnership
c. the partnership may avail of Cs profits in her
separate business
d. the partnership has nothing to do with C since it is
her right to engage in any business
11. Antonio is an industrial partner. Besides his
service, he also contributed capital in the
partnership. There is no agreement or stipulation
regarding profit or losses. His share on the
partnership profit is:
a. Depends upon the agreement of the other
partners
b. Pro-rata in his interest
c. Such share that is just and equitable
d. Combination of B and C
12. Unless otherwise provided in a general
partnership agreement, which of the following
statements is correct when a partner dies?
The deceased partners The deceased The
partnership
executor would partners estate would be
automatically become would be free from dissolved
automatically
a partner any partnership
liability
a. Yes Yes Yes
b. Yes No No
c. No Yes No
d. No No Yes
13. A, B and C wish to go into the business together
to bottle mineral water. Each contributed P50,000
but C wanted to limit his liability to the extent of his
contribution, and his name to appear in the
partnership name. Which form of partnership as
business
organization should they choose?
a. General partnership
b. Limited partnership
c. No partnership organization is available
d. Limited
14. A, B and C, capitalist partners, each contributed
P30,000, P20,000and P10,000, respectively; and D,
the industrial partner contributed his services.
Suppose X, a customer, is the creditor of the firm to
the amount of P180,000. How can X recover the
P180,000?
a. X must sue the firm and get P60,000 from all the
partners including D, the industrial partner. X can still
recover the balance of P120,000 from the four
partners, jointly.
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 still
recover the balance of P120,000 from any of the
partners, solidary.
d. X can recover from the firm P60,000 and consider
the balance of P120,000 a loss.
15. A partnership is dissolved:
a. In contravention of the partnership agreement by
the express will of any partner at any time.
b. By any event which makes it unlawful for the
business of the partnership to be carried on or for the
members to carry it on in the partnership.
c. When a specific thing which a partner had
promised to contribute to the partnership perishes
before its delivery to the partnership
d. By the loss of the thing, whether before or after its
delivery to the partnership, when the partner who
contributed it having reserved the ownership thereof,
has only transferred to the partnership the use or
enjoyment of the same.
e. All of the above.
16. X, Y and Z are in partnership business. X
contributed P10,000, Y contributed P5,000, and Z his
services only. After payment of partnership debts,
what remains of the partnership assets is P6,000
only. In the absence of terms to the contrary, the
share of Z will be equal to:
a. That of X
b. 2,000
c. That of Y
d. Nothing
17. When the manner of management has not been
agreed upon, who shall manage the afairs of the
partnership?
a. Capitalist partners
b. Industrial partners
c. Capitalist-Industrialist partners
d. All of the partners
e. None of the above
18. As a general rule, a partner cannot ask for a
formal accounting of the afairs of the partnership
during its existence and before it is dissolved,
except:
a. When he is wrongfully excluded from the
partnership business
b. When the right exists under the terms of any
agreement
c. As provided by the Article 1807
d. Whenever other circumstances render it just and
reasonable
e. All of the above
19. Sometimes termed as a dormant partner:
a. Limited partner
b. Capitalist partner
c. Secret partner
d. None of the above
20. Every contract of partnership having a capital of
P3,000 or more in money or property shall appear in
public instrument which must be recorded in the
Securities and Exchange Commission. Failure to
comply with said requirements
a. will not afect the liability of the partnership and
the members thereof to third persons
b. will render the partnership void
c. will not give the partnership a legal personality
d. will give the partnership a de facto existence
21. A partner in a limited partnership cannot
contribute
a. Cash
b. Property
c. Services
d. Partly cash and partly property
e. None of the above
22. Statement No. 1: Every partner is responsible to
the partnership for damages sufered by it through
his fault, and he may compensate them with the
profits and benefits which he may have earned for
the partnership by his industry of work.
Statement No. 2: When an unlawful partnership is
dissolved by a judicial decree, the profits, but not the
partners contributions, shall be confiscated in favor
of the state.
a. Both are true
b. Both are false
c. 1 is true, 2 is false
d. 1 is false, 2 is true
23. Statement No. 1: If property has been promised
by a partner as contribution to the partnership, the
fruit arising from the time the property should have
been delivered, should also be given without need of
a demand.
Statement No. 2: The partner who has been
appointed manager in the Articles of Partnership may
execute al acts of administration despite the
opposition of his partners, unless he should act in
bad faith and his power is irrevocable without just or
lawful cause.
a. Both are true
b. Both are false
c. 1 is true, 2 is false
d. 1 is false, 2 is true
24. A, B and C formed a general partnership with a
gross capital of P90,000. They agree that the profit
and loss sharing is: A-50%, B-25%, and C-25%. Upon
dissolution and after exhausting partnership capital,
X has still collectible amount of P30,000 from
the firm. How much can X collect from C alone?
a. 7,500
b. 15,000
c. 30,000
d. 10,000
25. In the preceding question, supposing there is no
profit or loss sharing, and A contributed P24,000, B-
P21,000 and C-P15,000. How much is the obligation
of C to X?
a. 7,500
b. 15,000
c. 30,000
d. 10,000
26. C, a partner in C partnership, assigns his
interest in Y partnership to X, who is not made a
partner. After assignment, X assert the right to
1. Participate in the management of Y partnership
2. Cs share in the surplus profit
3. May compel the other partners that he(X)
becomes a partner
X is correct as to which of these rights?
a. 1 and 3
b. 3 only
c. 2 only
d. 2 and 3
27. A and B are partners engaged in the real estate
business, A learned that C was interested in buying a
certain parcel of land owned by the partnership, even
for a higher price. Without informing B, A was able to
make B sell to him (A) his (Bs) share in the
partnership. Then A sold the land at a higher profit.
a. A is liable to B for the latters share in the profit.
b. C is liable to B for the latters share in the profit.
c. The partnership is dissolved when A become the
sole owner.
d. The sale of the land to C is void is void since it was
without the knowledge of B.
28. Which of the following may be a cause for
involuntary dissolution?
a. Express will of any partner
b. Insolvency of any partner
c. Termination of the term
d. Expulsion of any partner
29. The remedy of capitalist partners against an
industrial partner who engaged in a business for
himself without the expressed permission from the
partnership is:
a. To compel the industrial partner to sell his interest
to the said capitalist partners.
b. To exclude him from the sharing in the profits in
the partnership.
c. To remove him as manager if he is appointed as
manager of the partnership.
d. To expel him from the partnership and claim for
damages.
30. Management of a partnership is usually conferred
upon the
a. Manager
b. President
c. Partners
d. None of the above
31. Which of the following is not an element of a
partnership?
a. There must be a valid contract.
b. There must be a mutual contribution of money,
property or industry to a common fund.
c. There must be an intent to engage in a lawful
business, trade or profession.
d. None of the above.
32. A substituted limited partner is:
a. a person is admitted as a partner by the other
partners
b. a buyer of right of the deceased partner
c. an assignee admitted to all the rights of a limited
partner
d. all of the above
33. A partnership having for its object determinate
things, their use or fruits, or a specific undertaking,
or the exercise of a profession or vocation is called:
a. Partnership by estoppel
b. Particular partnership
c. Universal partnership of al present property
d. Universal partnership of profits
e. None of the above
34. Which of the following is false?
a. An industrial partner cannot, without the consent
of all the other partners, engage in a business similar
to the business of the partnership.
b. As to liability to third persons, an industrial partner
is considered as a general partner.
c. An agreement among the partners that the
managing partner shall determine the share of all
partners in the profit is void.
d. All partners including industrial ones can be
compelled to give additional contribution if the
purpose is to save the business from certain loss.
35. A, B and C are partners. Their contributions are
as follows: A, P60,000; B, P40,000; and C, services.
The partners agreed to divide profits and losses in
the following proportions: A, 35%, B, 25%, and C,
40%. If there is a profit of P10,000, how should the
said profit be distributed among the partners?
a. A, P6,000; B, P4,000; C, Nothing
b. A, P3,000; B, P2,000; C, P5,000
c. A, P3,500; B, P2,500; C, P4,000
d. A, P3,500; B, P3,500; C, P3,000
e. None of the above
36. A partnership is dissolved on the death of a:
a. General partner
b. Industrial partner
c. General-Limited partner
d. Limited partner
e. None of the above
37. In case of imminent loss of the business of a
partnership, the following partners are required to
give additional contribution, except:
a. Capitalist partner
b. General partner
c. Capitalist-Industrialist partner
d. Industrial partner
e. None of the above
38. Coverage of Statute of Frauds in a partnership
contract, which is the exemption?
a. Promise to answer for the debt, default or
miscarriage of another by a partnership must be in
writing
b. If the agreement to reform a partnership shall be
performed within a year the same must be in writing
c. Contracts for the sale of real property or any
interest therein or leasing of partnership immovable
property for more than one year must be in writing
d. Sale of partnership personal property at a price
not less than P500 must be in writing, unless there is
delivery or payment
39. Which of the following contracts of partnership
will not afect its validity even if not in a public
instrument?
a. Limited partnership
b. Partnership where immovables are contributed
c. Partnership having a capital of P3,000 or more
d. None of the above
e. All of the above
40. A partner whose connection with the partnership
is open and pubic, such as by including his name in
the firm name of the partnership is called:
a. Nominal partner
b. Ostensible partner
c. Secret partner
d. Dormant partner
e. None of the above
41. Which of the following statements is correct
regarding the division of profits in a general
partnership when the written partnership agreement
only provides that losses
be divided equally among the partners?
a. Based on the partners ratio of contribution to the
partnership
b. based on the partners participation in day to day
management
c. Equally among the partners
d. Profits will be divided according to the managing
partner
42. Which of the following statements is incorrect?
a. An industrial partner who engaged in business for
himself may be excluded from the partnership plus
damages.
b. An industrial partner may not engage in business
for himself without the consent of his co-partners.
c. A capitalist partner may engage in the same line of
business in which the partnership is engaged
d. An ofending capitalist partner may not be
excluded from the partnership.

43. Statement No. 1: The arrival of the term of the
partnership with a fixed term or a period shall not
dissolve the partnership of the partners continue with
the business of the partnership but such a
partnership may be terminated anytime dependent
in the will of the continuing partners.
Statement No. 2: The general rule is that the loss of
the specific thing contributed to the partnership
dissolves the partnership when only the use of the
thing is contributed by the partner and such thing
after its subsequently lost, the partnership is not
dissolved.
Which is correct?
a. Both statements are false
b. Both statements are true
c. 1 is true, 2 is false
d. 1 is false, 2 is true
44. Which of the following statement is correct
concerning liability when a partner in a general
partnership commits a tort while engaged in
partnership business?
a. The partnership committing the tort is the only
partly liable
b. The partnership is the only partly liable
c. The partners are jointly and severally liable
d. None of the above
45. A limited partner shall not become liable as a
general partner unless:
a. He takes part in the control of the business
b. He contributes his services to the capital of the
firm
c. His surname appears in the partnership name
d. The word limited is not added to the partnership
e. All of the Above
46. A partner whose connection is concealed and has
no voice nor say in the management of the afairs of
the partnership is called:
a. Nominal partner
b. Secret partner
c. Silent partner
d. Dormant partner
e. None of the above
47. Three of the following are rights of a partner.
Which one is not?
a. Right to associate another person to his share.
b. Right to admit another partner
c. Right to inspect and copy partnership books
d. Right to ask dissolution of the firm at the proper
time.
48. A partnership
a. is created by mere agreement of the partners.
b. has a juridical personality separate and distinct
from that of each of the partners.
c. may be constituted in any form, except, except
where immovable property or real rights are
contributed thereto, in which case a public
instrument shall be necessary.
d. is dissolved by the death of a partner.
e. All of the above.
49. Three of the following do not prove the existence
of a valid partnership. Which is the exception?
a. The sharing of gross receipts
b. There is the intention of dividing the profits among
themselves
c. Receipts by a person of a share of the profits for
the payment of a partnership debt by installments
d. When two or more partners are co-owners and
they share correspondingly in the profits made from
the sale or use of their property.
50. Can only be made with the consent of all
partners:
a. Waiver or compromise
b. Sell equipment
c. Borrow money
d. None of the above
CORPORATION
1. Which of the following cannot be lawfully exercised
by a non-stock corporation?
a. Pay dividend
b. Elect trustees
c. Amend the Articles of Incorporation
d. Adopt by-laws
2. A bond issue to pay-of prior floating indebtedness
of the corporation issuing it is called
a. Convertible bond
b. Equipment bond
c. Collateral bond
d. Funding bond
e. None of the above
3. A bond secured by stocks or other bonds or both
which are owned by the debtor, the securities being
deposited with a trustee for the bondholder is called:
a. Mortgage bond
b. Collateral trust bond
c. Equipment bond
d. Debenture bond
e. None of the above
4. Involuntary dissolution of the corporation is caused
by
a. an expiration of the period for which it was lawfully
formed.
b. judicial decree of forfeiture or by order of the SEC.
c. legislative enactment.
d. failure to organize formally and commence the
transaction of its business within two years from the
date of incorporation.
e. All of the above.
5. To revoke the power granted to the board to make
the by-laws.
a. Majority vote of the board and of the outstanding
capital stock of the members
b. 2/3 of the outstanding capital stock of the
members.
c. Majority of the quorum of the board and 2/3 of the
outstanding capital stock of the members.
d. Majority of the outstanding capital stock or of the
members.
6. A corporate officer or director cannot take
advantage their personal benefit in business
opportunity which the corporation is financially able
to undertake.
a. Doctrine of corporate fiction
b. Trust fund doctrine
c. Doctrine of corporate opportunity
d. Doctrine of limited capacity
e. None of the above
7. One of the following does not require stockholders
approval.
a. Merger or consolidation
b. Change of corporate name
c. Investment of corporate funds for a purpose
outside of the main purpose of the corporation
d. Declaration of cash dividend
8. The required minimum authorized capital stock for
stock corporation is:
a. Not less than P5,000
b. 25% must be subscribed and 25% must be paid
c. At least 25% must be subscribed and at least 25%
must be paid and in no case shall it be less than
P5,000
d. None
9. Which of the following must be contained in a
corporations Articles of Incorporation?
a. Names of stockholders
b. Name of temporary treasurer
c. Provisions for issuance of par and no par value
shares
d. Quorum voting requirement
10.Shares deposited by the seller or his agent with a
bank or third party to be delivered to the buyer or
subscriber only upon the fulfillment of the stipulated
suspensive condition
a. Promotion shares
b. Founders shares
c. Redeemable shares
d. Escrow shares
11. A corporation cannot be an incorporator in the
Philippines because only natural persons may
become incorporators, except
a. Cooperative as incorporator of rural bank
b. Eleemosynary corporations
c. Charitable organizations incorporated under the
Philippines laws
d. Corporation sole
12.Every decision of the directors or trustees shall be
valid as a corporate act at which there is quorum by
a. Majority of all members of the board
b. Majority of the directors or trustees present
c. 2/3 vote of the members of the board
d. 2/3 vote of the directors or trustees present
13.The following are expressed powers of a patently unconstitutional, illegal or immoral
corporation, except:
a. To sue and be sued
b. The power of succession
c. To adopt and use a corporate seal
d. To amend its Corporate Charter
e. None of the above
14.The right of pre-emption shall not apply:
a. When such profit is denied in the corporate charter
b. To share to be issued in compliance with the laws
requiring stock ofering or minimum stock ownership
by the public
c. To share to be issued in good faith with the
approval of the
stockholders owning 2/3 of the outstanding capital
stock in exchange for property needed for corporate
purpose of a previously contracted debt
d. All of the above
e. None of the above
15.Ultra vires act
a. Acts which are beyond the powers expressly or
impliedly conferred upon the corporation
b. Unenforceable
c. May be ratified by the stockholders
d. May not be attacked by competitors in business
e. All of the above
16.The diference of a proxy and a voting trust
agreement is
a. Proxy is required to be notarized
b. Voting trust agreement is not required to be
notarized
c. Presence of the stockholder in the meeting where
the proxy is given automatically cancels the proxy
d. Voting trust must only be written
17. A, B, C, D and E organized a corporation. An
article of incorporation was prepared, signed and
acknowledge before a notary public and filed with
the SEC. The corresponding certificate of
incorporation was issued. It turned out, however, that
A, B and C are not residing in the Philippines. What is
the status of the
corporation?
a. De jure corporation
b. De facto corporation
c. Corporation by estoppel
d. Corporation by prescription
e. None of the above
18. The SEC may reject the article of incorporation or
disapproved any amendments thereto if
a. It is not substantially in accordance with the form
prescribed by law
b. The purpose or purposes of the corporation
c. The treasurers affidavit concerning in the amount
of capital stock subscribed and/or paid is false
d. The required percentage of ownership of the
capital stock to be owned by the citizen of the
Philippines has not been complied with
e. All of the above
19. Incorporators
a. Any number of natural persons not less than 5 but
more than 15
b. Majority are residents of the Philippines
c. Must own or be subscriber to at least 1 share of
the capital stock of the stock corporation to be
formed
d. Need not be citizen of the Philippines
e. All of the above.
20. Director or trustees who willfully and knowingly
vote for or assent to patently unlawfully act of the
corporation or who are guilty of gross negligence or
bad faith in directing the afairs of the corporation or
acquire any personal or pecuniary interest in conflict
with their duty shall be liable
a. As a trustee for the corporation
b. Criminally for violation of the corporation code
c. Jointly and severally liable for the damages
sufered by the corporation
d. None of the above
21. Which of the following is(are) valid consideration
for the purchase of stocks of a corporation
I. Real estate
II. A negotiable promissory note in money
III. Monetary consideration for services to be
performed
a. I only
b. II only
c. Both I and III
d. Both II and III
22. Suppose X Corporation has an authorized
capital stock of 100,000 divided into 1000 shares of
stock with par value of 100 each Subscribers:
A 100 shares and paid 8,000
B 160 shares and paid 100
C 250 shares and paid 4,000
D 50 shares and paid 5,000
E 200 shares and paid 600
Which of the following subscription will qualify the
Pre-subscription requirement of Incorporation.
a. Combination of A and E
b. Combination of C and D
c. Combination of A and B
d. All of the above
23. Which of the following must be contained in a
Corporations Articles of Incorporation?
a. Names of stockholders
b. Name of the temporary treasurer
c. Provisions for issuance of par and no par value
shares
d. Quorum voting requirement
24. X company is a stock corporation composed of
the Reyes family engaged in the real estate business.
Because of the regional crisis, the stockholders
decided to convert their stock corporation into a
charitable non-stock and non-profit association
by amending the articles of incorporation. Could this
be legally done? Would your answer be the same if at
the inception. X company is a nonstock corporation
to a stock corporation? Why?
Answers:
A. Yes, by amending the articles of incorporation. Be
it noted that the stock corporation is not distributing
assets to the stockholders.
B. No, because in a non-stock corporation the
members are not entitledto share in the profit.
a. Letter A is false; letter B is true
b. Both answer are false
c. Letter A is true; letter B is false
d. Both answers are true
25. Suppose that X Corporation has already issued
the 1000 originally authorized shares of the
corporation so that its board of directors and
stockholders wish to increase Xs authorized capital
stock. After complying with the requirements of the
law on increase of capital stock, X issued an
additional 1000 shares of the same value. S
presently holds 200 shares out of the original 1000
shares. Which of the following statement is true?
a. S must be ofered equivalent 200 shares under
his pre-emptive right of stated in the articles of
incorporation
b. Such preemptive right shall only be given if it is
stated in the by-laws of the corporation.
c. The increased in share must be ofered first to the
stock-holders of record under the doctrine of first
refusal. If they refuse it will be ofered to the general
public.
d. If ever there is a preemptive right, the same must
be exercised within a reasonable time as fixed by the
board of directors if the articles and theby-laws are
silent.
26. Plaintifs filed a collection action against X
Corporation. Upon execution of the courts decision,
X Corporation was found to be without assets.
Thereafter plaintifs filed an action against its present
and past stockholder including Y Corporation
which owned substantially all of the stocks of X
corporation. The two corporations have the same
board directors and Y corporation financed the
operations of X corporation. May Y corporation be a fixed period, regardless of the existence of
held liable for the debts of X corporation?
a. Yes, under the principle of corporate opportunity
of interlocking directors.
b. Yes, under the principle of trust fund doctrine
c. No, under the doctrine of separate entity
d. Yes, under the principle of piercing the veil of
corporate entity.
27. Which of the following is a disadvantage of
forming a corporation?
a. The existence of the entity is not afected by the
personal vicissitudes or of the individual
stockholders;
b. Free and ready transferability or ownership of
shares
c. Subservience of minority stockholders to the
wishes of the majority subject only to equitable
restraints
d. The shareholders are not liable for the debts of the
business.
28. In the matter if managing the business if the
corporation, the exercise if corporate power and
handling of corporate properties, this is supreme:
a. 2/3 approval of the stockholders of the corporation
b. Majority vote of the outstanding capital
stockholders of the corporation
c. Majority vote of the Board of Directors
d. The president of the corporation
29.To adopt by-laws
a. Majority of the outstanding capital stock or of the
members
b. Majority vote of the board and of the outstanding
capital stock or of the members
c. 2/3 of the outstanding stock or of the members
d. Majority vote of the board and 2/3 of the
outstanding capital stock or of the members.
30. In no case shall the total yearly compensation of
directors exceeds.
a. 5% of the net income before income tax during the
preceding year
b. 10% of the net income before income tax during
the preceding year
c. 10% of the net income after income tax during the
preceding year
d. 10% if the net income before income tax during
the current year
31. Statement no. 1: Directors can attend and vote
by proxy at board meetings.
Statement no. 2: The articles of incorporation may
expressly provide that redeemable shares by a
corporation may be purchased upon the expiration of
37. Statement no. 1: The corporate powers of a
unrestricted retained earnings in the books of the
corporation.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
32. Three of the following statement are true; which
is the exception?
a. Redemption of redeemable stock is required even
if the corporation at that time has no unrestricted
earnings
b. The requirement that at least 25% of authorized
capital must be subscribed applies only to non-stock
corporation
c. Directors are entitled to compensation as a matter
of rights
d. Derivatives suits can be filed only by dissenting
stockholders.
33. Shall constitute a quorum for the transaction of
corporate business
a. 2/3 of the number of directors or trustee
b. Majority of the directors or trustees present
c. Majority of the number of directors or trustee as
fixed in the articles of incorporation
d. of the number of directors or trustee
34. To issue stock dividends
a. Majority vote of the board and 2/3 of the
outstanding capital stock
b. 2/3 of the outstanding capital stock
c. Majority of the outstanding capital stock
d. Majority of the quorum of the board and 2/3 of the
outstanding capital stock.
35. An action brought by a stockholder against the
corporation for direct violation of his contractual
rights
a. Representative suit
b. Individual suit
c. Derivative suit
d. Corporate suit
36. To enter into management contracts, as a rule
a. Majority of the quorum of the board and majority
of the outstanding capital stock or of the members of
both the managing and managed corporations
b. Majority of the quorum of the board and 2/3 of the
outstanding capital stock of the managed corporation
c. Majority vote of the board and majority of the
outstanding capital stock or of the members
d. 2/3 of the outstanding capital stock or of the
members.
corporation shall be exercised by the stockholders.
Statement no. 2: The entire consideration received
by the corporation for its nopar value shares shall be
treated as capital and shall not be available for
distribution as dividends.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
38. The stockholders or members mentioned in the
articles of incorporation originally forming and
composing the corporation and who are signatories
thereof are called
a. Incorporators
b. Promoters
c. Corporators
d. Subscribers
e. None of the above
39. Unless the by-laws provide otherwise, written
notice of regular meetings shall be sent to all
stockholders or record
a. At least one day prior to the meeting
b. At least two days prior to the meeting
c. At least one week prior to the meeting
d. At least two weeks prior to the meeting
40. Which of the following is true
a. Delinquent stock can be voted
b. Unpaid stock is necessary delinquent
c. Delinquent stock cannot be sold at public auction
d. Unpaid stocks are entitled to payment of cash
dividend
41. A corporation is a citizen of
a. The state of the country where its principal office
is situated
b. The state country where its principal business is
situated
c. The state or country where it is incorporated
d. The state or country of its controlling stockholders
e. All of the above
42. Statement no. 1: the liability of the stockholders
for the payment of corporate debts is limited to the
value of the shares.
Statement no. 2: the entire consideration received by
the corporation for its nopar value share shall be
treated as capital and shall not be available for
distribution as dividends.
a. Both are true
b. Both are false
c. No. 1is true; No. 2 is false
d. No. 1 is false; No. 2 is true
43. Stocks which has been issued by a corporation as
fully paid up when in fact it is not, because it has
been issued as bonus or otherwise, without any
consideration at all, or for less than par, or for
property, labor or services at an overvaluation.
a. Watered stocks
b. Over issued stocks
c. Treasury stocks
d. Redeemable stocks
e. None of the above
44. Which of the following qualifications is necessary
in order that one may be elected secretary of the
corporation?
a. He must be a citizen and a resident of the
Philippines
b. He must be a director of the corporation
c. He must be a stockholders of the corporation
d. He must be a secretary of any other corporation
e. All of the above
45. Three of the following are similarities between a
partnership and corporation. Which is not?
a. The individuals composing both have little voice in
the conduct of the business
b. Both have juridical personality separate and
distinct form that the individuals composing them
c. Like a partnership, a corporation can act only
through agents
d. Both are organizations composed of an aggregate
of individuals
46. The right given to stockholder to dissent and
demand payment of the fair value of their shares is
called
a. Right of proxy
b. Appraisal right
c. Pre-emptive right
d. Stock right
e. None of the above
47. All of the close corporations issued shares shall
be held of record by bot more than
a. 10 persons
b. 15 persons
c. 20 persons
d. None of the above
48. A bond which is payable to a particular individual
whose name is entered on the books of the
corporation as the registered owner is called
a. Registered bond
b. Coupon bond
c. Convertible bond
d. Guaranteed bond
e. None of the above
49. The authorized capital stock of a proposed
corporation is 100,000 dividend 1,000 shares with a
par value of 100 each. At least 25,000 or 250 shares
was subscribed by 25 subscribers. To meet the
minimum amount of subscription that must be paid
a. It is enough that 25% of the total subscription is
paid, regardless of the amount paid by each
individual subscription
b. Each and every subscriber must always pay 250
which is 25% of their individual subscription
c. Seven of the subscribers paid 6,250 and the rest of
the subscribers
d. None of the above
50. The owners of share in stock corporation are
called
a. Incorporators
b. Promoters
c. Members
d. Stockholders
e. None of the above