ACCTG 161 GROUP 8

AMPONGAN AND ABAO MCQS

OBLIGATIONS
1. The duty not to recover what has been voluntarily paid although payment was no longer required:
a. Natural obligation
b. Moral obligation
c. Civil obligation
d. None of the above
2. When A voluntarily takes charge of the neglected business of B without the latters authority
where reimbursement must be made for necessary and useful expenses, there is a
a. Quasi delict
b. Quasi contract
c. Negotorium gestio
d. Solutio indebiti
3. A has been missing for some time leaving no one to manage his properties. B and C jointly took
charge of the management thereof. However, due to the fault of B, the properties of A were
damaged. The liability thereof to A for damages shall be
a. Only B shall be liable.
b. Both shall be jointly liable.
c. Both shall be solidarily liable.
d. They are not liable since A is at fault for having abandoned his properties.
4. Culpa aquillana as distinguished from culpa contractual
a. Proof of due diligence in the selection and supervision of employees is not available as a
defense.
b. Proof of the contract and of its breach is sufficient prima facie to warrant recovery.
c. The negligence of the defendant is merely an incident in the performance of the obligation.
d. The source of liability is the defendants negligent act or omission itself.
5. The creditor has a right to the fruits of the thing from
a. The time the thing is delivered.
b. The time the obligation to deliver the thing arises.
c. The time the sale is perfected.
d. The time the fruits are delivered
6. On June 1 2015, Dichoso obliged himself to deliver to Concolon a specific land on July 1, 2015.
This property is being leased to Lalaso at P5,000 per month. Which is correct?
a. Dichoso has to deliver to Corcolon the land including its rental income from June 1, 2015.
b. Dichoso has to deliver to Corcolon the land including its rental income from January 1, 2015.
c. If Dichoso delivers only the land to Corcolon on August 1, 2015 he should also deliver the
rental income from July 1, 2015.
d. If Dichoso delivers only the land to Corcolon on August 1, 2015 he shall be entitled to the
fruits from August 1, 2015.
7. 1st Statement: If the thing is determinate, the debtor can be compelled to deliver the thing
promised and upon failure, the creditor has a right to ask for damages.
2nd Statement: If the object is generic and the debtor does not comply with the obligation, the
creditor can ask a third person to comply with the prestation at the expense of the debtor, plus
damages.
a. Only the 1st statement is true.

b. Only the 2nd statement is true.

c. Both statements are true.
d. Neither statement is true.
8. Which is not a requisite in order that obligation shall be extinguished by the destruction of a thing
due?
a. When the thing is lost before the debtor incurred delay.
b. When the obligation is to deliver a brand new Hyundai Getz.
c. When the thing is lost without the fault of the debtor.
d. When the obligation is to deliver the Bonnevie Bldg. at 32 Ortega St., San Roque, Iriga City.
9. The delay on the part of the creditor to accept the performance of an obligation:
a. Dolo incidente
b. Mora accipiende
c. Compensatio morae
d. Mora solvendi
10. Dayanan binds himself to sell to Gagatlun his car for P250,000. Which of the following
statements is false?
a. If no period has been agreed upon, the performance of the respective obligation is deemed to
be simultaneous.
b. If Dayanan delivers the car, Gagatlun will only be in delay from the time demand has been
made by Dayanan.
c. Dayanan cannot demand payment if he does not deliver the car.
d. Gagatlun cannot demand delivery if he does not pay the price.
11. Demand is not needed to put debtor in default except:
a. When the law so provides.
b. When demand would be useless as when the obligor has rendered it beyond his power to
perform.
c. When the thing is lost due to fortuitous event.
d. When time is of the essence of the contract.
12. Who is liable for the loss of the subject matter by fortuitous event?
a. Creditor
b. Debtor
c. Both creditor and debtor
d. None of them
13. Antigua obliged himself to deliver a specific cow to Braganza which will be butchered and served
to the latters guests on the occasion of his wedding on June 20. On June 20 Antigua did not
deliver the cow. The following day, it was killed due to a flood that occurred in their place.
a. Antigua is liable for the loss of the cow because he was in delay.
b. Antiguas obligation has been extinguished.
c. Antigua is obliged to replace the cow.
d. Antigua is not liable because the cause of the loss is a fortuitous event.
14. Statement 1: The receipt of the principal obligation without reservation as to the payment of
interest shall give rise to the presumption that the interest has been paid.
Statement 2: The receipt of the latter installment of a debt without reservation as to prior
installment, shall not raise a conclusive presumption that the prior installment is also paid.
a. Both are true
b. Both are false

c. No. 1 is false, No. 2 is true

d. No. 1 is true, No. 2 is false
15. Which of the following is not an exception to the rule that all rights acquired in virtue of an
obligation are transmissible?
a. When the parties agreed against its transmission.
b. When the law prohibits the transmission of rights.
c. When the nature of the obligation is purely personal.
d. When the obligation is real.
16. Demandable at once
a. Conditional obligation
b. Pure obligation
c. Obligation with a period
d. Alternative obligation
17. Statement 1: When the fulfillment of the suspensive or resolutory condition depends upon the
sole will of the debtor, the conditional obligation shall be void.
Statement 2: If the original obligation is subject to a suspensive or resolutory condition and the
contract is novated the new obligation shall be under the same conditions unless otherwise
stipulated.
a. Both are true
b. Both are fals
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No. 2 is true
18. I will give you this car provided that if I like to have it back, you will return the same to me.
a. The obligation is valid, because the condition merely causes the loss of rights already
required.
b. Combination of C and D.
c. The obligation is void, because the fulfillment depends upon the will of the debtor.
d. The obligation is void, because the fulfillment depends upon the will of the creditor.
19. Which of the following is an obligation with a period for the benefit of the debtor?
a. An obligation payable little by little.
b. An obligation payable when the debtors means permit him to do so.
c. An obligation payable within 2 years on demand.
d. An obligation payable soonest
e. An obligation payable on or before December 25, 2015.
20. The debtor loses the benefit of the period, and his obligation becomes demandable when
a. Demand by the creditor would be useless.
b. The guarantees as promised and delivered by the debtor are not acceptable to the creditor.
c. After contracting the obligation, the creditor suspects that the debtor is becoming insolvent.
d. The debtor attempts to abscond.
21. Facultative as distinguished from alternative obligation
a. The right of choice is given only to the debtor.
b. Various things are due, but the giving of one is sufficient.
c. If one of the prestations is illegal, the others may be valid and the obligation remains.
d. If it is impossible to give all except one, that last one must still be given.
22. Effect of the loss of thing in a facultative obligation. Which is incorrect?

a. Before substitution, if the principal thing is lost due to fortuitous event, there is no more
obligation.
b. Before substitution, if the substitute thing is lost due to debtors fault, there is no more
obligation.
c. After substitution, if the principal thing is lost, the debtor is no longer liable if it was lost due to
his fault.
d. None of the above.
23. Statement 1: The concurrence of two or more creditors or of two or more debtors in one and the
same obligation implies that the obligation is solidary.
Statement 2: When the obligation is joint, the debt shall be divided into as many shares as there
are creditors or debtors.
a. Only the first statement is true.
b. Only the second statement is true.
c. Both statements are true.
d. Neither statement is true.
24. A, B, and C secured a loan from D. The promissory note which evidenced the obligation states: I
promise to pay D or order P10,000 payable on demand (Sgd.) A B C. The obligation is:
a. Solidary
b. Divisible
c. Indivisible
d. Joint
25. Indivisibility distinguished from solidarity
a. Refers to legal tie or vinculum.
b. Refers to the prestation which constitutes the object of the obligation.
c. When the obligation is converted onto one of indemnity for damages because of breach, the
character of the obligation remains.
d. Plurality of the subject is indivisible.
26. Didith, Diana, and Dura executed a promissory note worded as follows: We promise to pay to
Carlito, Colinares, and Colico the sum of P180,000. (Sgd.) Didith, Diana, and Dura.
a. Didith is obliged to pay Carlito, Colinares, and Colico P180,000.
b. Didith is obliged to pay Carlito P80,000.
c. Didith is obliged to pay Carlito P20,000.
d. Didith is obliged to pay Carlito P60,000.
27. A, B, and C solidarily bound themselves to deliver to X a Honda Motorcycle. The obligation was
not fulfilled through the fault of A, thereupon, X filed an action in court against C and the court
awarded P36,000 to X. Which of the following situations is correct.
a. If C pays X the P36,000, C can collect from A P24,000 and B P12,000. Later, B can ask for
reimbursement from A P12,000.
b. X has to collect P12,000 each from A, B, and C to satisfy the courts award of P36,000.
c. If C pays X the P36,000, C can collect from B P10,000 and from A P16,000.
d. X cannot collect the whole amount of P36,000 from C.
28. D1, D2, and D3 are solidary debtors of C for P30,000. The obligation was in writing. After the
lapse of the ten-year prescriptive period, which of the following statements is incorrect?
a. If D1 paid C not knowing that the obligation has already prescribed, his right is to proceed
against C because there was undue payment.
b. If D1 paid C knowing that the obligation has already prescribed, D1 cannot ask
reimbursement from D2 and D3.

c. If D1 paid C not knowing that the obligation has already prescribed, D1 cannot ask
reimbursement from D2 and D3.
d. None of the above
29. Atienza and Bandana are jointly and severally liable to Cantada for P50,000. Atienza is a minor.
a. Cantada can collect P25,000 from Bandana.
b. Cantada can collect P25,000 from Atienza, that is the share of Bandana.
c. Cantada can collect P50,000 from Bandana.
d. Cantada can collect P50,000 because minority is not a defense.
30. In obligations with a penal clause, the creditor as a rule may recover from the debtor in case of
non-compliance the following:
a. The principal, the penalty as agreed upon, plus damages and interest.
b. The principal, the penalty plus interest.
c. The principal and the penalty.
d. The principal, the penalty, and damages.
31. Statement 1: The nullity of the penal clause does not carry with it that of the principal obligation.
Statement 2: The nullity of the principal obligation carries with it that of the penal clause.
a. Only the 1st statement is false.
b. Only the 1st statement is true.
c. Both statements are true.
d. Both statements are false.
32. In tender of payment and consignation, if after the consignation is made and the creditor allowed
the debtor to withdraw the thing deposited in court, which of the following statements is incorrect?
a. Co-debtors, guarantors, and sureties are released from the obligation unless they consented.
b. The obligation remains to subsist.
c. The obligation is extinguished.
d. None of the above.
33. Distrito owes Cantores P20,000. Without the consent of Distrito, Ababa paid the debt which was
accepted by Cantores. If Ababa does not intend to be reimbursed
a. The payment did not extinguish the debt of Distrito because it was made without his consent.
b. The payment is valid as to the creditor who has accepted it.
c. The payment is not considered valid because of Ababas intention.
d. The payment did not extinguish the debt because it was not made by the debtor.
34. Dondon owes Cena P20,000 due on April 20, 2015. When the debt matured, Dondon is paying
Cena a managers check worth P20,000.
Question 1: Can Cena accept the check?
Question 2: Can Cena refuse to accept the check?
Question 3: If Cena accepts the check, is the acceptance equivalent to payment?
Question 1
a. Yes

Question 2
Yes

Question 3
Yes

b. Yes

Yes

No

c. No

Yes

Yes

d. No

No

Yes

35. This is not an essential element of an application of payment

a. There must be one debtor and one creditor.
b. Two or more debts and two or more creditors.
c. There are two or more debts of the same kind and nature.
d. The debts are all due and demandable.
36. A debtor owes his creditor several debts, to wit:
I.
An unsecured debt.
II.
A debt bearing of interest 12% per annum.
III.
A debt secured with a real mortgage of debtors lot.
Later, partial payment was made by the debtor without specifying the debts to which the payment
should be applied and on the other hand, the creditor had not specified in the receipt to be issued
the application of payment. Which of the following is the order of preference in which the payment
should be applied?
a. I, II, III
b. II, III, I
c. III, I, II
d. III, II, I
37. The abandonment of all property of the debtor for the benefit of his creditors in order that the
latter may apply the proceeds thereof to the satisfaction of their credit
a. Application of payment
b. Payment by cession
c. Dation in payment
d. Tender of payment
38. Debtor Batista is indebted to John Cena, King Booker, and Big Show a total amount of P300,000
made up of: John Cena P100,000; King Booker P50,000 and Big Show P150,000. On
maturity, Batista cannot pay his obligation so he assigns or cedes to them all his property, to be
sold by the creditors and the proceeds thereof applied to their corresponding credits. The
creditors sold Batistas properties for only a total of P180,000. Is the obligation extinguish?
Decide.
a. Yes, the obligation is extinguished.
b. John Cena, Big Show and King Booker will divide the P180,000 equally.
c. John Cena will get P60,000, King Booker P30,000 and Big Show P90,000.
d. None of the above
39. Cession as distinguished from dacion en pago
a. Does not require plurality of creditors.
b. Not an act of novation.
c. Does not affect all the assets of the debtor
d. Transfers ownership upon delivery.
40. Consignation alone without any tender of payment is sufficient in the following cases, except:
a. When the creditor is absent or unknown or does not appear at the place of payment.
b. When without just cause, the creditor refuses to give a receipt.
c. When the creditor presents the title to the obligation for collection.
d. When two or more persons claiming the same right to collect.
41. A thing is not deemed lost when it
a. Perishes.

b. Disappears in such a wat as its existence is unknown or it cannot be recovered.

c. Goes out of commerce.
d. Deteriorates.
42. One of the following is not a requisite of a valid remission
a. Must be in public instrument.
b. Must be gratuitous.
c. Obligation is due and demandable.
d. Acceptance by the debtor.
43. When two persons in their own right are reciprocally creditors and debtors of each other and
extinguishes both debts to the concurrent amount, what takes place is known as
a. Compensation
b. Novation
c. Confusion or merger
d. Remission
44. Dante and Django are jointly indebted to Crystal for P10,000. Crystal endorsed the instrument to
Augusto, Augusto to Julio, Julio endorsed it back to Dante only. Whose obligation has been
extinguished?
a. Dante only.
b. Django only.
c. Both Dante and Django.
d. Neither Dante nor Django.
45. If the substitution is without knowledge of the original debtor and the new debtor is insolvent and
cannot pay the obligation:
a. The original debtor and the new one will share the value of the obligation.
b. The old debtor can still be liable to pay the obligation.
c. The old debtor is free from any liability after the substitution.
d. The old debtor, the new debtor and the creditor will share the value of the obligation.
46. When a third person assumes the payment of the obligation even without the knowledge and
consent of the debtor but with the consent of the creditor
a. There is novation.
b. There is delegacion if debtor is released.
c. There is subrogation.
d. There is expromision if debtor is released.
47. On June 2, 2015, Atanacio borrowed from Bondying P50,000, to be paid 20 days thereafter.
Atanacio proposed to Bondying that Xandra will pay Atanacios debt, and that Atanacio will be
free from all liabilities. Bondying and Xandra agreed to the proposal. On June 22, 2015, when
Bondying tries to collect from Xandra, Xandra was already insolvent but this was not known to
Atanacio. This insolvency is not of public knowledge. So Bondying sues Atanacio on the ground
that it was Atanacio who made the proposal and that Atanacio really guaranteed Xandras
insolvency. Decide.
a. Atanacio is not liable because he does not know the insolvency of Xandra at the time of
delegacion and neither was the insolvency of public knowledge.
b. Atanacio is liable because he did not exercise due diligence in determining the insolvency of
Xandra.
c. Atanacio is liable because he is presumed to have guaranteed Xandras insolvency.
d. Atanacio is not liable because Xandra agreed to the proposal to make himself solidarily liable
for the obligation.

48. If a third person pays without the debtors knowledge or against his will, the payor is entitled to:
I.
Reimbursement of what he has paid.
II.
Subrogation to the rights of the creditor
a. False, True
b. True, False
c. False, False
d. True, True
49. C is the creditor of D in the amount of P30,000. G is the guarantor of D. D paid C P10,000. F, a
friend of D, not knowing the partial payment made by D, paid C the P30,000 without the
knowledge of D. What is the effect of this payment on the obligation?
a. The obligation is extinguished but F can demand reimbursement from G in the amount of
P30,000.
b. The obligation is extinguished but F can demand reimbursement from D in the amount of
P30,000.
c. The obligation is not extinguished because Fs payment was made without the knowledge of
D.
d. The obligation is extinguished but F can recover P20,000 from D, but he cannot proceed
against the guarantor G.
50. If an obligation is modified by changing the object and also changing the principal condition
a. There is mixed novation.
b. The original obligation remains.
c. There is real novation.
d. There is personal novation.
CONTRACTS
1. Which of the following is not a valid stage of a contract?
a. Introduction
b. Conception
c. Perfection
d. Termination
2. A contract is in stage of conception when:
a. There is meeting of the mind.
b. Negotiations are in progress.
c. The parties come to an agreement.
d. The contract is perfected.
3. The contracting parties may establish such stipulations, clauses, terms, and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order,
or public policy.
a. Liberty to contract
b. Mutuality of contract
c. Relativity
d. Consensuality
4. Contracts which must be in the form provided by law for their perfection
a. Consensual contracts
b. Real contracts
c. Onerous contracts
d. Solemn contract
5. An innominate contract which means I do that you may give.

a.
b.
c.
d.

Do ut des
Do ut facias
Facio ut des
Facio ut facias

6. Contracts are effective and binding only between the parties, their assigns and heirs. Three of the
following enumerations are exceptions as provided by law. Which does not belong to the
exception?
a. When there is stipulation in favor of a third party.
b. Where one of the parties to the contracts dies and thereafter a suit is filed on the basis of the
contract.
c. Where the obligation arising from contract are not transmissible by their nature.
d. Where the stipulation arising from contract are not transmissible by stipulation or by provision
of law.
7. Which of the following is not an exception to the principle of relativity?
a. When the obligations arising from the contract are not transmissible by their nature, by
stipulation, or by provision of law.
b. When there is stipulation pour autrui.
c. When a third person induces to violate his contract.
d. None of them.
8. These are the basic principles or characteristics of a contract. Which is the exception?
a. Freedom or liberty to stipulate
b. Obligatory force and compliance in good faith
c. Binding to third parties
d. Perfection by mere consent
9. 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 enumerations. Which
among them is not a requisite?
a. There must be a stipulation in favor of a third person.
b. The contracting parties must have clearly and deliberately conferred a favor upon that third
person.
c. The third person communicate his acceptance to the obligor before its revocation.
d. That there must be an existing agency between either of the contracting parties and the third
person.
10. Dante borrowed P100,000 from Conti payable in 2 years. The contract stipulates that Dante will
pay 1% monthly interest equivalent to P1,000 per month, directly to Tisiko, Contis brother, on the
25th of each month for Tisikos support. Tisiko signifies his acceptance before it could be revoked.
a. Tisiko has no right to receive the monthly paymen on the interest not being a party to the
contract.
b. Tisiko is not entitled to the monthly interest unless the money loaned is his.
c. Tisiko is entitled to the monthly interest because the amount involved per month is very
minimal.
d. Tisiko is entitled to the monthly interest even if he is not a party to the contract because this is
a clear case of stipulation pour autrui.
11. Tindero sold to Mamimili the computer owned by Mabait without Mabaits authority. The contract
is
a. Perfectly valid
b. Voidable
c. Void
d. Unenforceable

12. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. Which of the following constitutes the offer?
a. An offer made through an agent.
b. Business advertisement of things for sale.
c. Advertisement for bidders
d. Answer not given
13. When there is concurrence of the offer and acceptance, there is
a. Consent
b. Payment
c. Revocation
d. None of the above
14. Mr. Santos signed a letter addressed and delivered to Mr. Aguas. The terms of the letter are:
i. An offer to sell a 500 sq. m for P300,000
ii. An option time up to October 21, 2015 for Mr. Aguas to raise the P300,000
iii. Upon payment of the P300,000, Mr. Santos will execute and sign a Deed of Sale
On October 31, 2015, Mr. Santos sent a letter to Mr. Aguas asking for a new price of P350,000 for
the 500 sq. m lot. Can Mr. Aguas compel Mr. Santos to accept the P300,000 and make him sign
the and execute a Deed of Sale?
a. No. Mr. Aguas did not accept the offer of Mr. Santos.
b. Yes. Mr. Santos is already estopped by his signed letter and offer.
c. Yes. There was an actual meeting of the minds.
d. Yes. The contract has been perfected.
15. France offered to sell her cellular phone for P10,000 to her friend, Serra. Serra accepted the offer
but is willing to pay only P8,000. Is ther a perfected contract?
a. Yes, for a price of P8,000.
b. Yes, for a price of P8,000.
c. No, because the acceptance was qualified and it constituted a counter-offer.
d. No, because the offer was rejected.
16. On July 1, Abaca offered in writing to sell Batangueo his car for P300,000. Batangueo
accepted the offer and mailed the letter of acceptance on July 10 which was received by Abaca
on July 20. However on July 15, Batangueo had already mailed a letter revoking his acceptance.
Is there a perfect contract?
a. Yes, despite the revocation made by Batangueo.
b. None if the acceptance was received by Abaca ahead of the letter of revocation.
c. Yes, even if the letter of revocation was received ahead of the acceptance.
d. None, because at the time of the receipt of the letter of acceptance, there had already been a
prior revocation of said acceptance.
17. An offer made through an agent is accepted from the time acceptance is communicated to the
a. Agent
b. Principal
c. Agent and principal
d. Agent and/or the principal
18. Money paid or promised to be paid in consideration for an option
a. Option period
b. Option money
c. Earnest money
d. Payment

19. In the Classified Ads section of a national daily newspaper, an advertisement appears as follows:
Car for sale, Honda City, Model 2003, call or text 09192638367 or see Ventigo, 25 Abella St.,
Naga City. Ayalin proceeded to the address indicate in the newspaper to see Ventigp
a. Ventigo cannot refuse to sell the car even if he decides not to sell the car anymore.
b. Ayalin is now compelled to buy the car from Ventigo.
c. Ventigo may refuse to sell his car even if the price offered is fair and equitable.
d. Ventigo may refuse to sell his car to prospective buyers except Ayalin.
20. Which of the following is qualified to give consent to a contract?
a. Unemancipated minors.
b. Insane or demented persons.
c. Deaf mutes who do not know how to write.
d. Deaf mutes who know how to read but do not know how to write.
21. A contract entered into during a lucid interval
a. Voidable
b. Unenforceable
c. Void
d. None of the above
22. Esguerra, a former government employee, suffered from severe paranoia and was confined in the
mental hospital in 2010. After his release, he was placed under the guardianship of his wife to
enable him to get his retirement pay. In 2013, he became a mining prospector and sold some
mining claims. In 2015, he sued to annul the sale claiming that he was not mentally capacitated at
the time of sale. The sale in question was
a. Illegal
b. Void
c. Voidable
d. Valid
23. Reluctantly and against her good sense and judgment, Rosemarie entered into a contract for the
delivery of five (5) tables to Corazon for the price of P15,000. The contract is
a. Void
b. Valid
c. Voidable
d. Unenforceable
24. Choose the contracts which are voidable:
a. Those undertaken in fraud of creditors when the latter cannot in any manner collect the claims
due them.
b. Those here the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
c. Those whose subject is outside the commerce of man.
d. Those where both parties are incapable of giving consent to a contract.
25. Statement 1: A simple mistake of account shall give rise to its correction.
Statement 2: In order that mistake may invalidate consent, it should refer to the substance of the
thing which is the object of the contract.
a. True, False
b. True, True
c. False, True
d. False, False
26. Which of the following contracts may not be annulled on ground of mistake?

a. Eddie sold to Atty. Malaya 200 copies of Transfer and Busieness Taxes by Ampongan at P250
each. Atty. Malaya paid P50,000 for the books but the amount appeared in the receipt issued
was P45,000 only.
b. ARTS Review Center hired the services of Atty. Dipasipa as lecturer in Business Law. His
resume which was made as the basis for iring him indicates that he is a CPA-Lawyer when in
fact he is not a CPA although he graduates with a degree of Bachelor of Science in
Accountancy.
c. A owns a piece of untitled land which to his knowledge measures 15 hectares and sold it to
B for P300,000 and B thinking it really contains 15 hectares.
d. None of the above.
27. When a person takes improper advantage of his power over the will of another, depriving the
latter of a reasonable freedom of choice, there is
a. Violence
b. Intimidation
c. Undue Influence
d. Mistake
28. Through insidious words or machinations, Abion was able to induce Blanco to enter into a
contract which without them Blanco would not have agreed to it. There is
a. Undue influence
b. Fraud
c. Mistake
d. Misrepresentation
29. Case 1: Upon misrepresentation made by S that the liquors are genuine, B bought from S ten
(10) bottles of Fundador Brandy. Unknown to B, the contents of the bottles are mixtures of
Fundador and Matador Brandies.
Case 2: S and B agreed to deliver to B 100 kilos of iodized salt. Upon delivery, S delivered 100
kilos of sugar instead of an iodized salt.
a. Dolo causante; Dolo incidente
b. Dolo incidente, Dolo causante
c. Mistake; Dolo incidente
d. Dolo causante; Mistake
30. Statement 1: Dolo causante is annullable, while dolo incidente obliges only the person employing
it to pay damages.
Statement 2: S sold to B shoes which they honestly believed to be imported. It turned out,
however, that the shoes are locally made in Marikina. In this case, the contract can be annulled
on the ground of mistake but not fraud because the misrepresentation was made in good faith.
a. True, False
b. True, True
c. False, True
d. False, False
31. Simulation of a contract may be absolute or relative. It is relative when
a. The parties do not intend to be bound at all.
b. The contract is void.
c. The parties conceal their true agreement.
d. Answer not given

32. Mr. Gamboa owes Mr. Evangelista P100,000. Mr. Gamboa knows that on maturity date, he will
not be able to pay Mr. Evangelista, and in order to prevent attachment of his property by Mr.
Evangelista, Mr. Gamboa, before maturity of his debt, executes a contract pretending to sell to
Mr. San Diego his property. Which of the following is not correct?
a. The contract is not valid for lack of consideration.
b. The contract is binding between Mr. Gamboa and Mr. San Diego.
c. The contract being simulated and executed to defraud Mr. Evangelista is void.
d. Mr. Evangelista can seek rescission of the fictitious contract.
33. There shall be no reformation of contract in the following cases, except:
a. In testament wills.
b. Simple donation inter vivos when no condition is imposed.
c. A contract of sale agreed upon by the parties but the document signed was a contract of
mortgage.
d. A contract of sale of a condominium unit wherein the seller offered for sale Suit 10-D of Tower
1 while the buyer bought Suit 10-D of Tower 2.
34. The proper remedy is annulment of contract and not reformation when:
a. Mistake, fraud, inequitable conduct or accident has prevented a meeting of the minds of the
parties.
b. A mutual mistake of the parties causes the failure of the instrument to disclose their real
agreement.
c. One party was mistaken and the other knew believed that the instrument did not state their
real agreement, but concealed the fact of the former.
d. Answer not given.
35. This contract will cause damage or injury to one of the contracting parties or to a third person
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
36. Gorgonio, legal guardian of Nio, 13 years old, sells Nios property worth P100,000 for P70,000
only, without court approval. The contract is
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
37. Cecilio had Eduardo kidnapped and tortured for refusing to sell his (Eduardo) land to Cecilio.
Eduardo who could no longer bear the pans inflicted upon him signed a document of sale in favor
of Cecilio. The sale is
a. Void
b. Voidable
c. Valid
d. Answer not given
38. The contract entered into by the persons who cannot give consent is
a. Void ab initio because actually there is no consent.
b. Unenforceable only because the contract may be ratified.
c. Rescissible because of the damage caused to the person incapacitated.
d. Voidable as there is consent although vitiated or defective.
39. Datan bought a car from Bata, a minor, for P100,000. One week later, Datan discovered that Bata
was a minor at the time of sale so he filed a complaint in court to annul the sale. Will the action
prosper?

a.
b.
c.
d.

Yes, Bata being a minor is incapacitated to enter into a contract.

No, the right to annul the sale is given to Bata.
Yes, Bata cannot file the action to annul the sale because he is a minor.
No, unless there is lesion of more than of the value of the property.

40. Anay, insane, sold his land to Bengua, 21 years old for P200,000. Anay spent P120,000 in buying
another piece of land, P15,000 for his clothing and medicines, P25,000 for food, and P40,000 he
lost to gambling. After annulment of the contract, how much must Anay return to Bengua?
a. None
b. P200,000
c. P120,000
d. P160,000
41. X pointed a dagger at S and compelled S to sell his land to B at a very cheap price. Who among
the three can ask for annulment of the contract?
a. X only
b. B only
c. S only
d. Anyone of them
42. On July 15, 2014, X entered into a contract with Y. On February 10, 2015, X discovered that fraud
was committed at the time he entered into the contract, a fraud that vitiated his consent. The
action for annulment shall be brought
a. Within three years from the time of the fraud.
b. Within four years from Febrauary 10, 2015.
c. Within four years from the time X entered into the contract.
d. On February 10, 2015.
43. Today, A and B entered into a contract. Three years later, A discovered that B used fraud in the
performance of their contract.
a. A can no longer ask for annulment because his right has already prescribed.
b. A can ask for annulment within 4 years from perfection of the contract.
c. A can still ask for annulment within 4 years after the discovery of the fraud.
d. A should have annulled the contract immediately upon its execution.
44. A defective contract because it was entered into in the name of another without or in excess of
authority, or it is verbal is
a. Unenforceable
b. Voidable
c. Void
d. Rescissible
45. Which of the following contracts is not unenforceable?
a. That where both parties are incapable of giving consent.
b. That where one party is incapable of giving consent.
c. That which is entered into in the name of another person by one who has given no authority
or legal representation.
d. That which does not comply with the Stature of Frauds.
46. The following contracts are defective. Which one is unenforceable?
a. Contract of sales by which a guardian acquires the property of the ward without the approval
of court.
b. Contract of services whereby Mayor Mads entered into a contract with the city government to
the effect that Mayor Mads will be the contractor in the construction of a new city hall building.

c. Contracts whose objects is outside the commerce of man.

d. Those where both parties are incapable of giving consent to a contract.
47. The following contracts, except one, are void ab initio. Which is the exception?
a. That whose object is outside the commerce of men.
b. That whose object did not exist at the time of the transaction.
c. That which contemplates an impossible service.
d. That which is undertaken in fraud of creditors.
48. Abonal sold Bartilets car in his (Abonal) name to Camila without any authority from Bartilet. The
contract of sale is
a. Rescissible
b. Unenforceable
c. Void
d. Valid
49. The contract is without effect unless ratified
a. Marriage between first degree cousins.
b. Contract of sale between two insane persons.
c. Contract of sale between husband and wife.
d. Donation between husband and wife.
50. Which of the following contracts cannot be ratified?
a. Those whose cause or object did not exist at the time of the transaction.
b. Unauthorized contracts.
c. Those where both parties are incapable of giving consent.
d. Those that fail to comply with the Statute of Frauds.
PARTNERSHIP
1. Partnership distinguished from a co-ownership.
a. May or may not exist for profits.
b. Has a separate and distinct juridical personality from the personalities of persons composing it.
c. Created by voluntary agreement or by inheritance.
d. Rights are transmissible to heirs.
2. Which of the following is a characteristic of a partnership contract?
a. Formal
b. Innominate
c. Gratuitous
d. Preparatory
3. Which of the following is an essential element of a partnership?
a. There must be a contribution of money, property and industry to a common fund.
b. It must be an association for profit with the intention to profits among themselves.
c. There must be a valid and voluntary agreement.
d. All of them.
4. The receipt by a person of a share of the profits of a business is a prima facie evidence that he is
a partner in the business, but this presumption can be controversed by evidence to the contrary
as in the following instances, except:
a. As a debt by installments or otherwise.

b. As wages of an employee or rent to a landlord.

c. As an annuity to a widow or representative of a deceased partner.
d. As a share of the net profits of the business.
5. A partnership must have a lawful object or purpose and must be established for the common
benefit or interest of the partners. Which of the following instances is lawful?
a. A partnership formed to furnish apartment houses which would be used for prostitution.
b. A partnership wherein the partners contributed all their present properties.
c. A partnership for illegal gambling purposes.
d. A partnership formed to create illegal monopolies or contributions in restraint of trade.
6. Type of partnership in which the partners enjoy practically all the profits.
a. General partnership
b. Universal partnership
c. Limited partnership
d. De facto partnership
7. Partnership which compromises all that the partners may acquire by their work or industry during
the existence of the partnership is:
a. Universal partnership of present property.
b. Universal partnership of profits.
c. Particular partnership
d. General partnership
8. May contribute money, property or industry to the common fund:
a. Limited partner
b. General partner
c. Both limited and general
d. None of them

9. May be required additional contribution in case of imminent loss.

a. Capitalist partner
b. Limited partner
c. Industrial partner
d. none of the above
10. One who takes charge of the winding up of partnership affairs upon dissolution:
a. Silent partner
b. Liquidating partner
c. Ostensible partner
d. None of the above
11. Management of partnership is usually conferred upon the
a. Manager
b. President
c. Partners
d. None of the above
12. Sometimes termed as dormant partner
a. Limited partner
b. Capitalist partner

c. Secret partner
d. None of the above
13. One who takes active part in the business, but is not known to be a partner by outside parties is:
a. Silent partner
b. Dormant partner
c. Nominal partner
d. Secret partner
14. Alcantara, Beranda and Castoria are partners of ABC and Company. If Daniela, a third person,
allows his name to be used in the firm name of the partnership as ABCD and Company, then he
becomes liable for being
a. Dormant partner
b. Secret partner
c. Silent partner
d. Nominal partner
15. Bears the risk of loss of things contributed to the partnership
a. Contributing partner
b. Limited partner
c. Partner contributing usufructory rights
d. All of the above
16. A limited partner who takes active part in the management of the firm becomes
a. A managing partner
b. Liable as general partner
c. A general partner
d. A general and limited partner at the same time
17. Which of the following statements is correct?
a. To be valid, a partnership must be in writing.
b. A contract of partnership having a capital of P5,000 must be in a public instrument, otherwise
void.
c. Where there is contribution of immovable property, the partnership contract must be duly
notarized in order to be valid.
d. A contract of partnership having a capital of P3,000 which is not registered in the Sec cannot
sue but can be sued.
18. 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 affect 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
19. Ralph and Vi orally engaged to form a partnership. Each contributes cash and properties worth
P10,000 to a common fund. But they did not register the partnership with the SEC.
a. The partnership is still valid
b. The partnership is void
c. The partnership is voidable
d. The partnership is unenforceable

20. Which of the following persons are not disqualified in forming a universal partnership?
a. Those guilty of adultery or concubinage
b. Husband and Wife
c. Those guilty of the same criminal offense, if the partnership is entered into a consideration of
the same
d. Brother and sister
21. A, B and C formed a partnership with A and B as capitalist partners and C as industrial partner. C
engaged in a business for himself without the express consent of the capitalist partners. Which of
the following remedies is best for A and B?
a. Expel C from partnership
b. They may appropriate all the benefits which C may have obtained in his separate business
c. Make C liable for damages
d. Expel C or appropriate all the benefits which C may have obtained in his separate business,
with damages in either case.
22. A limited partnership was formed in 1994 by X as general partner and Y and Z as limited partners.
In 1995, X and Y got married. Did the marriage dissolve or change the form of the partnership?
1st Answer: Yes, partnership is dissolved by marriage because there is a change in equity and
status among the partners.
2nd Answer: No, because spouses can enter into a universal partnership.
a. Both answers are correct.
b. 1st answer is wrong, 2nd answer is correct.
c. Both answers are wrong.
d. 1st answer is correct, 2nd answer is wrong.
23. Alterra and Bavada agreed on May 30, 2015 that they will contribute P20,000 each to form a
partnership for the purpose of engaging in the business of buying and selling palay for a period of
3 years. They agreed to organize it on July 1, 2015 and start with the operation on July 15, 2015.
They registered it with SEC and the certificate of registration was issued on July 30, 2015. When
is the partnership formed?
a. May 30, 2015
b. July 1, 2015
c. July 15, 2015
d. July 30, 2015
24. The remedy of capitalist partners against an industrial partner who engaged in a business for
himself without the express 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 sharing in the profits of 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.
25. A, B and C are general partners in ABC Partnership. D is debtor to the partnership in the amount
of P15,000. A received from the debtor D the sum of P15,000 and issued a receipt collected to be
P10,000.
a. A cannot be compelled to share the P5,000 with B and C.
b. B and C can change the capital of A with their share of the P5,000.
c. A can be compelled to share B and C their P5,000.

d. B and C should automatically sue D to collect the P10,000.

26. Property rights of a partner, except
a. To use specific partnership property for partnership purposes.
b. To share in the profits.
c. To participate in the management.
d. To exercise appraisal right.
27. A capitalist partner is engaged for his own account in an operation which is of the same kind
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. Statement 1: The name of the partnership may not include the name of one or more of the
partners.
Statement 2: The name of the partnership may include a name of a person and a partner of the
partnership.
a. True True
b. True False
c. False
False
d. False

True

29. Refers to persons who represent themselves or consent to another or others to represent them to
anyone that they are partners.
a. General partnership
b. Limited partnership
c. Partnership by estoppel
d. None of the above.
30. A partner in a partnership who is not really a partner, not being a party to the partnership
agreement but made liable as a partner for the protection of innocent third persons is known as
a. Secret partner
b. Dormant partner
c. Nominal partner or partner by estoppel
d. Answer not given.
31. Act 1: A managing partner renounced a partnership claim against the debtor.
Act 2: The partner is engaged in sale of merchandise, a partner included in the business of the
partnership the sale of shabu.
Which act requires consent of all partners?
Act 1
a. Yes
b. Yes
c. No

Act 2
Yes
No
Yes

d. No No
32. Cause of dissolution which does not violate the agreement between the partners, except

a. Termination of the definite term or particular undertaking

b. Express will of any partner who must act in good faith
c. Expulsion of any partner
d. Contravention of partnership agreement
33. Which of the following may be a cause of involuntary dissolution
a. Express will of any partner
b. Insolvency of any partner
c. Termination of the terms
d. Expulsion of any partner
34. Which of the following is not included in winding up or liquidation of a partnership?
a. Payment of all partnership liabilities to third party creditors and partner/creditor.
b. Officially ceases operation and bows out of existence.
c. Return of partners contributions
d. Distribution of net assets among the partners
35. Which of the following is not included in the winding up of partnership?
a. Consolidation of the partnership assets and receivables
b. Payment of all partnership liabilities
c. Return of partners respective contributions
d. Distribution of profits
36. Does not cause partnership dissolution
a. Partners contribution which becomes a property of the partnership assets
b. Death of one partner
c. Insolvency of any partner
d. Irrevocable withdrawal of partners from the partnership without justifiable reason.
37. The partnership is insolvent. They are preferred as regards to the partnership property.
a. Partnership creditors
b. Partners separate creditors
c. Partners with respect to their capital
d. Partners with respect to their profits
38. The change in the relation of the partners caused by any partner ceasing to be associated in the
carrying on of the partnership
a. Realization
b. Winding-up
c. Dissolution
d. Termination
39. This involves the process of liquidating partnership business after dissolution
a. Dissolution
b. Winding up
c. Termination
d. Consolidation
40. Abrera, Belleza and Corporal, partners, while on their way home from a seminar, had a car
accident. Abrera and Belleza died on the spot, while Corporal was hospitalized but died two days
later. Who may wind up the partnership affairs?
a. None.

b. Any of the heirs of the three partners

c. Legal representatives of the heirs of each partner
d. Legal representative of Corporal.
41. If a partner is insolvent, the first order of preference in the distribution of his assets is
a. Partner contribution to the partnership
b. Partnership creditor
c. Separate creditor of the debtor
d. Pro-rata between the separate creditors and the partnership creditors
42. This is the order of preference in the liquidation of a general partnership
a. Outside creditors, Partners as creditors, Partners capital, Partners profits
b. Partners as creditors, Outside creditors, Partners capital, Partners profits
c. Partners capital, Outside creditors, Partners as creditors, Partners profits
d. Outside creditors, Partners creditors, Partners profits and Partners as creditors
43. Which of the following liabilities of the partnership shall rank first in the order of payment?
a. Those owing to creditors other than partners.
b. Those owing to partners in respect to profits
c. Those owing to partners in respect to capital
d. Those owing to partners other than for capital and profits
44. Has priority over partnership assets
a. Debtors
b. Creditors
c. Partners
d. All of them
45. X, Y and Z are partners and contributed to the partnership P40,000, P30,000 and services
respectively. The partnership was later liquidated and after payment of the partnership
indebtedness, only P20,000 worth of assets remained. How much is the share of Z?
a. Zero
b. Equal to the share of x
c. Equal to the share of y
d. P6,000
46. X, Y and Z are partners. X contributed his service only; Y P40,000 and Z, P20,000. The
partnership was liquidated. After payment of the partnership obligations, only P18,000 worth of
assets remained. How much will be the share of X?
a. Equal to the share of Z
b. P6,000
c. Zero
d. Equal to the share of Y
47. X, Y and Z are in partnership business. X contributed P10,000, Y contributed P5,000 and Z his
services only. After payment of the partnership debts, what remains of the partnership assets is
P6,000 only. In the absence of the terms to the contrary, the share of Z will be equal to
a. That of Y
b. P2,000
c. That of Y
d. Nothing

48. A limited partner is not liable as a general partner. Which is not an exception?
a. His name appears on the partnership name
b. In addition to the exercise of his rights and powers as a limited partner, he takes part in the
control of the business
c. When he is also a general partner
d. The surname which appears in the partnership name is also the surname of a general partner.
49. Which of the following acts will make a limited partner liable as a general partner?
a. Mere dealing with a customer
b. Mere consultant on one occasion with the general partners
c. Supervision over a superintendent of the business of the firm
d. All of the above
50. NO 1: A substituted limited partner has the right to inquire any information or account of the
partnership transactions and to inspect the partnership books.
NO 2: A substituted limited partner shall be subject to all restrictions and liabilities of the assigning
limited partner.
a. True, False
b. False, True
c. True, True
d. False, False
CORPORATION
1. A corporation where vacancies in the Board of Directors are filled only by the remaining member
of the Board is
a. Open corporation
b. Close corporation
c. Corporation sole
d. Quasi-public
2. How many numbers of votes of the BODs are required to change the name of a corporation?
a. 2/3 of all members of the board
b. 2/3 vote of all present
c. Majority vote of all present constituting a quorum
d. Majority vote of the board
3. One of the following does not require stockholders approval
a. Merger or consolidation
b. Change of corporate name
c. Investments of corporate funds for a purpose outside of the main purpose of the
corporation
d. Declaration of cash dividend
4. A corporate doctrine which states that the stockholders are not personally liable for corporate
debts
a. Trust fund doctrine
b. Separate legal entity
c. Right of succession
d. Piercing the veil of corporate fiction
5. Articles of incorporation and organization of private corporations must be registered with
a. DTI

b. PSE
c. SEC
d. NSO
6. Cash dividend as distinguished from stock dividend
a. It does not involve any disbursement
b. It is still part of the corporate asset
c. It increases legal capital
d. It is declared by the Board of Directors
7. The voting requirements for delegating power to adopt, amend or repeal the by-laws in favor of
the board of directors is:
a 2/3 vote of the outstanding shares
b Majority of the vote of the directors plus the vote of a majority of the outstanding shares
c Majority vote of the director plus the vote of 2/3 of the outstanding shares
d 2/3 of the vote of the directors
8. Who may be removed as a director without cause during their term of service?
a. A director representing the majority stockholders.
b. A director representing the minority stockholders.
c. Either (a) or (b)
d. Neither (a) nor (b) because they can only be replaced upon the expiration of their term of
office though the election of another in their place since the removal is without cause
9. These statements are presented to you:
I.
The members of board of directors of a corporation may provide for themselves
compensation other than per diems.
II.
A director who receives compensation as such may also be given separate compensation
if the serves the corporation in another capacity like the president who is required to be a
director.
In your evaluation of the foregoing statements:
a.
b.
c.
d.

Both statements are true.

Both statements are false.
Only Statement I is true.
Only Statement II is true.

10. The power to invest corporate funds in another corporation or business or for any other purpose
as a corporate power is classified as a (an)
a. Express power
b. Incidental power
c. Implied power
d. Discretionary power
11. Three of the following are attributes of a corporation. Which is not?
a Created by agreement of the incorporators
b An artificial being
c Has a right of succession
d Has powers, attributes and property expressly authorized by law or incident to its
existence.
12. S and ABC Corporation entered into a Deed of Sale of Shares of Stock for the acquisition by S
of 1,000 of the unissued shares of the latter at P100.00 par value per share. S was to give a

down payment of 50% with the balance to be paid after 30 days. What kind of contract was
entered into between S and ABC Corporation?
a. Contract of sale
b. Contract of purchase
c. Contract of subscription
d. Some other contract.
13. The nationality of the corporation is determined by the place of the controlling stockholders. This
test is
a. Controlling test
b. Domicile test
c. Incorporation test
d. Management test
14. The following are acts within the implied powers of a corporation except
a. Acts is the usual course of business
b. Acts to protect debts owing to the corporation
c. Embarking in different businesses in which it is not a part of the regular business
d. Acts to increase its business
15. The Meralco, Bayantel, Cebu Pacific Air, and Victory Liner are
a. Quasi-public corporation
b. Tramp corporation
c. Quasi corporation
d. Public corporation
16. For the past three years, XYZ Corporation has been earning tremendously in excess of 100% of
the corporations paid in capital. All of the stockholders have been claiming that they share in the
profits of the corporation by way of dividends but the board of directors failed to lift its finger. Is
the corporation obliged to declare dividends?
a. No, because the corporation can retain surplus profits in excess of 100% of its paid-up
capital
b. Yes, because a corporation cannot retain surplus profits in excess of 100% of its paid-up
capital always.
c. Yes, because a corporation as a rule cannot retain surplus profits in excess of 100% of its
paid-in capital.
d. No, because it is a management prerogative of the board of directors whether or not it will
declare dividends.
17. Which of these conditions comply with the minimum requirement of law to corporate formation?
Authorized Subscribed Paid-up
Capital
Capital
Capital
a. 200,000

10,000

10,000

b. 64,000

16,000

5,000

c.

100,000

25,000

12,500

d. 200,000

50,000

10,000

18. For the purpose of determining the validity of the contract entered into between two corporations
with interlocking directors whose interest in one corporation is nominal and substantial in the
other, the presence of the interlocking director should not be necessary to constitute a quorum

and his vote should not be necessary for the approval of the contract in the meeting of board of
directors:
a. Of the corporation where his interest is substantial.
b. Of the corporation where his interest is merely nominal.
c. Of both corporations.
d. Of neither corporation for as long as there is no fraud and the contract is fair and
reasonable under the circumstances because he has a personality separate and distinct
from both corporations.
19. Shares that may be issued at a price higher than P5.00 per share are:
a. Par value shares.
b. No-par value shares.
c. Both (a) and (b).
d. Neither (a) nor (b).
20. Director Angela is instrumental in making a contract on behalf of Dana Corporation of whose
board she is a member, with Bea Corporation of which she has a larger interest
a. Corporate opportunity
b. Limited capacity
c. Interlocking directorate
d. Business judgment rule
21. A stock that is issued without consideration or below par value or the issued price is known as:
a Watered stock
b Delinquent stock
c Redeemable stock
d Preferred stock
22. These statements are presented to you:
I.
A director is an agent of the corporation by virtue of his being elected as a director.
II.
A director who owns the controlling interest in a corporation has only one vote in the
meeting of board of directors.
In your evaluation of the following statements.
a.
b.
c.
d.

Both statements are true.

Both statements are false.
Statement I is true; Statement II is false.
Statement I is false; Statement II is true.

23. Amendment of the articles of incorporation requires

a.
b.
c.
d.

Vote of Directors

Vote of stockholders

Majority
Majority of quorum
Two-thirds
Majority

2/3 of outstanding capital stock

2/3 of outstanding capital stock
Majority of outstanding capital stock
Majority of quorum

24. Which of these purpose can be combined in just one corporation?

a Bank and trust purposes
b Educational and insurance purposes
c Railroad and bank purposes
d Insurance and railroad purpose
25. These statements are presented to you:

I.

A person may become a stockholder of a corporation through the receipt of a stock

dividend given to him in payment of services previously rendered.
A contract of subscription has for its object unissued or issued shares such as treasury
shares.

II.

In your evaluation of the following statements.

a.
b.
c.
d.

Both statements are true.

Both statements are false.
Only Statement I is true.
Only Statement II is true.

26. Which of the following may be held outside the Philippines?

I. Board of Directors meetings
II. Members meeting of a non stock corporation
III. Stockholders meeting of a corporation going to public
a
b
c
d

I only
I and II
II and III
I, II, and III

27. Which of the following documents may be submitted before or after incorporation?
a Verification certificate as to the name of the corporation.
b By-laws
c Certificate of bank deposit as to the paid-up capital.
d Articles of incorporation
28. Which of the following conditions will allow corporation formation and SEC registration?
Authorized
Capital Stock

Subscribed
Capital Stock

Paid-up
Capital

a.

90,000

12,500

3,125

b.

60,000

15,000

6,000

c.

120,000

25,000

5,000

d.

100,000

20,000

5,000

29. Samorano is the owner of 500 shares of stock of Center Sales Corporation whose articles of
incorporation provide for 5 directors. In the annual election of directors, the following ran for the
position of director: Abanes, Baricuatro, Castillo, Doromal, Elmora, and Filamor. Samorano asks
you which of the following is the incorrect way of casting his votes.
a. 500 votes each for each candidates.
b. 500 votes each for Abanes, Baricuatro, Castillo, Doromal and Elmora.
c. 2,500 votes for Abanes.
d. 1,000 votes for Abanes, 1,000 votes for Baricuatro, and 500 votes for Castillo.
30. Which of the following is not required to be included in the Articles of Incorporation?
a. Duties of the president
b. Name of the corporation
c. Period of existence
d. Location of the principal office

31. The article of incorporation of an Eastex Computer Corporation provide for 15 directors. Which
of the following is invalid concerning its by-laws?
a. That the quorum in the meetings of directors be at least 8 directors
b. That the quorum in the meetings of directors be at least 10 directors.
c. That the quorum in the meetings of directors be at least 7 directors.
d. The by-laws do not mention anything about the quorum in the meetings of directors.

32. Which of the following expresses the minimum capital formation of a corporation?
Authorized
Capital Stock

Subscribed

Paid-up

a.

100,000

20,000

5,000

b.

100,000

25,000

5,250

c.

60,000

15,000

4,000

d.

50,000

10,000

2,000

33. The following positions in a corporation are presented to you:

I.
President
II.
Treasurer
III.
Corporate Secretary
IV.
Chairman of the Board
Who of the foregoing must be a director of the corporation at the same time?
a.
b.
c.
d.

I and II
III and IV
I and III
I and IV

34. The certificate of incorporation of Parametro Corporation was issued by the Securities and
Exchange Commission despite the fact that only 3 out of its 7 incorporators were residents of
the Philippines. Such inadvertent issuance of the certificate of incorporation:
a. Means Parametro Corporation is unincorporated.
b. Means Parametro Corporation a de facto incorporation.
c. Does not affect the acquisition by Parametro Corporation of the status of a de jure
corporation because non-compliance of the residence requirement is a minor defect that
does not affect corporate existence.
d. Results in the automatic dissolution of the Parametro Corporation upon discovery by SEC
of the corporations failure to comply with the residence requirement for incorporators.
35. An officer of a corporation may hold two or more positions in the corporation but not as
a. Chairman of the Board and President
b. President and treasurer
c. Secretary and Treasurer
d. Vice-president and Secretary
36. Cannot be the secretary of the corporation
a. President
b. Secretary

c. Incorporator
d. Treasurer
37. Which of the following is true?
a. Delinquent stock can be voted
b. Unpaid stock is necessarily delinquent
c. Delinquent stock cannot be sold at public auction
d. Unpaid stocks are entitled to payment of cash dividend
38. Which of the following qualifications is necessary in order that one may be elected president of
the corporation?
a. He must be a citizen and resident of the Philippines
b. He must not be a stockholder or director of a competitor corporation
c. He must not be a president of any other corporation
d. He must be a director of the corporation
39. A corporation operating under the color of law
a. Void corporation
b. Voidable corporation
c. De jure corporation
d. De facto corporation
40. Which of the following is not a qualification of directors of a stock corporation?
a Each director must be the owner of at least 1 share of stock.
b Such shares of stock must stand in their name in the books of the corporation during their
term as directors.
c Majority of the directors must be citizens of the Philippines.
d The number of directors should not be less than 5 nor more than 15.
41. This shares can be acquired by the corporation even without unrestricted earnings
a. Founders shares
b. Redeemable shares
c. Par value share
d. No par value share
42. This group of persons may not be the incorporators of a corporation in the Philippines
a. 15 Chines who are residents of Naga City
b. 5 non-resident aliens and 10 resident aliens
c. 10 Japanese residing in the Philippines and 5 Filipinos residing in Japan
d. 15 Filipinos who are resident of Korea
43. A director of two or more corporations
a. A non-voting director
b. An intermediary director
c. An inter-locking director
d. A void director
44. A distribution by a corporation of shares of stock held by it in another corporation is a
a. Situation equivalent to a sale of assets
b. Situation equivalent to a merger or consolidation
c. Stock dividends
d. Property dividend or an actual distribution of corporate assets
45. I. Pre-emptive right does not apply to shares issued in compliance with laws requiring stock
offering or minimum stock ownership by the public.

II. A corporation can deny the exercise of a stockholder of his pre-emptive right.
a.
b.
c.
d.

True, True
True, False
False, True
False, False

46. These do not form part of the outstanding capital stock

a. Bonus shares
b. Treasury shares
c. Founders shares
d. Redeemable shares
47. Which of the following would result to the automatic dissolution of a corporation?
a Continuous inoperation for a period of at least 5 years.
b Failure to formally organize and commence the transaction of its business or the construction
of its works within 2 years from its incorporation.
c Failure to adopt by-laws and submit the same to the SEC within 30 days from the receipt of
the official notice of the issuance of its certificate of incorporation.
d Commission by the corporation of an ultra-vires act.
48. A director of two or more corporations
a. Non-voting director
b. Intermediary director
c. Interlocking director
d. Void director
49. Corporate act: To disapprove a particular project
Number of directors: 11
Directors present: 8
What is the required number of votes to constitute a valid corporate act?
a 4
b 5
c 6
d 7
50. In a meeting to elect officers only 9 out of 11 members of the board attended. How many votes
will be needed to elect the President of the Corporation?
a. 8
b. 7
c. 6
d. 5