UNIVERSITY OF SAN JOSE RECOLETOS

TAXATION
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1. One of the following is not transaction deemed sale:
a.
Transfer, use or consumption not in the course of business of goods or properties
originally intended for sale or for use in the course of business.
b.
Distribution or transfer to shareholders or investors of goods or properties as share in
the profits of a VAT- registered person or creditors in payment of debt.
c.
Retirement from or cessation from business, with respect to all goods on hand as of the
date of such retirement or cessation.
d.
Consignment of goods if actual sale is made within 60 days following the fate of such
goods were consigned.
2. The allowable transitional input tax is:
a.
The lower between 2% of the value of beginning inventory or actual VAT paid on such
inventory.
b.
The higher between 2%of the value of beginning inventory or actual VAT paid on such
inventory.
c.
The actual VAT paid on the beginning inventory.
d.
2% of the value of beginning inventory.
3. All of the following except one is allowed presumptive input tax. Which one?
a.
Processor of sardines and mackerel.
b.
Manufacturer of refined sugar and cooking oil.
c.
Manufacturer of packed noodle-based instant meals.
d.
Processor of milk and coffee.
4.

5.

Which of the following input taxes can be refunded, converted into tax credit
certificate or carried over to the next quarter at the option of the VAT-registered taxpayer?
a. Input tax on purchase of raw materials.
b. Input tax on importation of supplies.
c. Input tax on zero-rated sales of goods or services.
d. Input tax on purchase of services.
Which of the following statements is incorrect?
The payment of VAT is monthly for both sale of goods and sale of services.
A VAT-registered taxpayer can pass on the VAT even to buyers who are not VATregistered.
c.
Any business pursued by an individual whose aggregate gross sales or receipts do not
exceed P100,000 during any 12-month period shall be considered principally for
subsistence or livelihood and not in the course of trade or business.
d.
A taxpayer whose gross receipts during the previous year exceed P1,500,000 is not
required to pay VAT if he fails to register under VAT system.
a.
b.

6.

The VAT shall apply to goods or properties originally intended for sale or use in
business, and capital goods which are existing as of the occurrence of one of the following:
a.
Change of business activity from VAT taxable status to VAT-exempt status;
b.
Change of control of a corporation by the acquisition of the controlling interest of such
corporation by another stockholder or group of stockholders;
c.
Change in the trade or corporate name of the business;
d.
Merger or consolidation of corporation.

7. 1st Statement:
The input value-added-tax on purchase of capital goods valued at
P1,000,000 shall be spread over 60 months of the life of property is equivalent to 5
years or more.
2nd Statement: The input value-added-tax on purchase of capital goods valued at
P1,000,000 shall be spread over the life of property if the life of property is less than 5
years.
a. True, true
c. False, false
b. True, false
d. False, true
8. Which of the following transactions is subject to zero-rated value-added-tax?
a. Services rendered to persons engaged in international shipping or air transport operations.
b. Services rendered by banks, non-bank financial intermediaries.
c. Generation, transmission and distribution of electricity.
d. Services rendered by professionals such as CPAs, Physicians and Lawyers.
9. Which of the following transactions is exempt from value-added-tax?
a. Sale of books, newspaper and magazines.
b. Sale of work of art.
c. Sale of literary works.

d. Sale of musical composition.

10. Which of the following transactions is subject to value-added-tax?
a.
Services subject to other percentage tax.
b.
Educational services duly approved by Department of
Education, CHED and TESDA or those operated by the Government.
c.
Sale of coal and natural gas.
d.
Lending activities by credit cooperatives.
11. Which of the following transactions is exempt from value-added-tax?
a. Medical services such as dental and veterinary services rendered by professionals.
b. Legal services.
c. Services arising from employee-employer relationship.
d. Services rendered by domestic air transport companies.
12. Denver Corporation has the following sales (inclusive of VAT) during the month:
Sale to private entities
224,000.00
Sale to export-oriented enterprise
100,000.00
Sale of exempt goods
100,000.00
The following input taxes were passed on by its VAT suppliers during the month:
Input tax on taxable goods
5,000.00
Input tax on zero-rated sales
3,000.00
Input tax on sale of exempt goods
2,000.00
Input tax on depreciable capital good not
attributable to any specific activity
20,000.00
The VAT payable for the month:
a. 1,000
b. 7,200

c. 9,000
d. 16,000

13.

During the month of September 2006, XYZ Corporation had domestic sales
amounting to P1,680,000 and export sales amounting to P1,500,000. during the same month,
XYZs total purchases directly attributable to domestic sales amounted to P1,120,000 and total
purchases directly attributable to export sales P1,008,000.
For the month of May, XYZ corporations VAT payable:
a. (48,000.00)
c. 60,000.00
b. 54,000.00
d. 62,000.00

14. 1st Statement: The gross estate of a Filipino residing in the USA shall be composed of
properties situated in the Philippines only.
2nd Statement: The gross estate of an American residing in the Philippines shall be
composed of properties situated in the Philippines excluding intangible personal
properties if there is reciprocity.
a. True, true
b. True, false

c. False, false
d. False, true

15.

Mr. Pacman donated a parcel of land to his brother. Which of the following
statements is CORRECT in connection with this particular donation?
a.
The donation can be made orally when the value is less than P5,000;
b.
The donation shall be made in public instrument and the acceptance of the
donation may be done orally;
c.
The donation shall be made in public instrument and the acceptance shall be made
in another public instrument to be noted in both instruments;
d.
The acceptance of the donation may be made by the donee in the same Deed of
Donation which may be done even after the death of the donor.

16.

The following taxes, fees and charges are deemed to be national internal revenue
taxes, except:
a. Documentary stamp taxes
c. Excise taxes
b. Community taxes
d. Income taxes

17.

Royal Mining is a VAT-registered domestic mining entity. One of its products is silver
being sold to the Bangko Sentral ng Pilipinas. It filed a claim with the BIR for tax refund on
the ground that under Section 106 of the Tax Code, such sale is?
a. Subject to 12% VATABLE transactions.
b. Subject to zero-rated transactions.
c. Is an exempt sale.
d. Is classified as effective zero-rated transaction.

18.

A decedent died single, leaving a family home which consists of a piece of land that
he inherited 3 years ago (with a value at the time of P600,000) with a fair value of

P800,000 at the time of his death, and a house thereon which he built at a cost of P650,000,
and a fair market value at the time of his death of P450,000. Other properties in his gross
estate have a fair market value if P550,000. Unpaid obligations at the time of his death
amounted to P300,000.
The vanishing deduction is:
a. 200,000
c. 40,000
b. 500,000
d. 225,000
19.

A married decedent left the following:

Conjugal properties (including family home of P3,000,000)
P10,000,000
Exclusive properties (excluding proceeds of life insurance
amounting to P1,000,000 where a son was irrevocably
designated as beneficiary and a transfer to the Government
for public purpose amounting to P500,000)
6,000,000
Conjugal deductions (including actual funeral expenses
amounting to P300,000; amount received by heirs under
RA 4917 amounting to P200,000, 60% collectible)
3,000,000
Exclusive deductions (including medical expenses of P600,000)
2,000,000
Note: An exclusive property included above was inherited 3 years before the present
decedent died. It was valued at P700,000 when inherited and P800,000 when the present
decedent died. The total taxable estate is: _________________
a. 9,100,000
c. 5,530,000
b. 5,742,000
d. 11,000,000

20.

In 2006, Jose made the following gifts:

A. On June 1, 2006, P150,000 to Anton, his son, on account of his marriage celebrated May
1, 2005;
B. On July 10, 2006, a parcel of land worth P180,000 to his father, subject to the condition
that his father would assume the mortgage indebtedness of Jose in the amount of
P40,000;
C. On September 30, 2006, P150,000 dowry to his daughter Dana, on account of her
scheduled marriage on October 25, 2006 and another wedding gift worth P20,000 on
November 23, 2006.
How much were the total taxable net gifts during the calendar year?
a. P460,000
c. P440,000
b. P500,000
d. P450,000

21.

Charlie, a widower, has two sons by his previous marriage. Charlie lives with Jill who
is legally married to Mario. They have a child named Jane. The children are all minors and not
gainfully employed. One of the son lives in a dormitory and the other has a child. How much
is total personal exemptions can Charlie and Jill claim?
a. Charlie P20,000; Jill P25,000
c. Charlie P41,000; Jill P40,000
b. Charlie P33,000; Jill P33,000
d. Charlie P48,000; Jill P32,000

22.
a.
b.
c.
d.

One of the following is a head of family for income tax purposes:

Widower supporting a senior citizen who is not related to him;
Unmarried taxpayer supporting his brother, 25 years old;
Married but legally separated taxpayer supporting a niece, 16 years old;
Single taxpayer supporting his live-in partner who is unemployed.

23.

Situation 1:
Mr. A, in trading business, had a receivable of P150,000 from Mr. B. Without
exerting utmost effort to collect, Mr. A cancelled the indebtedness of Mr. B.
Situation 2:
Mr. C sold to Mr. D personal property worth P200,000 for a consideration of
P50,000, to take effect immediately upon receipt of the consideration.
Which statement is correct?
a. Situation 1 involves a donation of P150,000 and should be covered by a donors tax
return within 30 days from the date of cancellation of the indebtedness;
b. Situation 1 is a bad debt expense of the business and should not be treated as involving
a taxable donation;
c. Situation 2 shall be considered a bad bargain and not involving taxable donation;
d. Situation 2 involves a donation of P200,000 and should be covered by a donors tax
return within 30 days from the date of cancellation of the indebtedness.

24.

Which of the following conditions is not necessary for retirement benefits to be

exempted from income tax?
a. The retiring official or employee has been in the service of the same employer for at least
ten (10) years.
b. The benefits granted shall be availed of by an official or employee only once.
c. The retiring employee is not less than fifty years of age.
d. The employee is the sole bread winner of the family.

25.

Which of the following statements is not correct about the Minimum Corporate
Income Tax (MCIT)?

a. Minimum Corporate Income Tax is equivalent to 2% of the gross income beginning on the
fourth taxable year immediately following the year in which such corporation
commenced its business operation.
b. It is imposed only where 2% of the gross income is more than the normal income tax.
c. The excess of MCIT over the normal income tax shall be carried forward and credited
against the normal income tax for the three (3) immediately succeeding years.
d. The MCIT may be applied either on an annual or quarterly basis.
26.

The net operating loss of the business or enterprise for any taxable year
immediately preceding the current taxable year, which had not been previously offset as
deduction from gross income shall:
a. Be carried over as a deduction from gross income for the next three (3) consecutive
taxable years immediately following the year of such loss.
b. Be carried over as a deduction from gross income for the next five (5) consecutive
taxable years immediately following the year of such loss.
c. Not be carried over as a deduction from gross income in any of the succeeding years.
d. Be carried over as a deduction from gross income in any of the succeeding year until it is
fully offset.

27.

Because of dire necessity, Mr. Den sold a parcel of land from Ilocos for P8,000,000
with a cost of P10,000,000. The fair market value of the land was P11,000,000. The proceeds
of the sale were used to purchase principal residence at Manila.
The sale of land resulted a tax consequence of:
a. P480,000 capital gains tax on sale of real property.
b. P600,000 capital gains tax on sale of real property.
c. P660,000 capital gains tax on sale of real property.
d. None. The said transaction is exempt from the CGT.

28.
a.
b.
c.
d.
29.

International Air Carriers shall be taxed by:

Two and one-half percent (2 1/2%) of Net Philippine Billings.
Two and one-half percent (2 1/2%) of Gross Philippine Billings.
Four and one-half percent (4 1/2%) of Net Philippine Billings.
Four and one-half percent (4 1/2%) of Gross Philippine Billings.

Mr. Araki, a non-resident alien stockholder, received a dividend income of P300,000

in 2005 from a foreign corporation doing business in the Philippines for three years preceding
2005 are as follows:
Source of income
2002
2003
2004
From within the Philippines
P16,000,000 P12,000,000 P14,000,000
From without the Philippines
18,000,000 14,000,000 16,000,000
How much of the dividend income received by Mr. Araki is considered income from sources
within the Philippines,
a.
Zero
c. P300,000
b. P150,000
d. P270,000

30.
a.
b.
c.
d.

The term capital assets includes:

Stock in trade or other property included in the taxpayers inventory
Real property not used in the trade or business of taxpayer
Property primarily for sale to customers in the ordinary course of his trade or business
Property used in the trade or business of the taxpayer and subject to depreciation

a.
b.
c.
d.

Which
Separation
Separation
Separation
Separation

31.

of the following is generally a taxable separation pay?

pay due to retirement.
pay due too reorganization of the company.
pay due to companys brink of bankruptcy.
pay due to death, sickness or disability.

32.

Video Rentals, Inc., an accrual basis taxpayer, reported recent receivable of

P70,000 and P50,000 in its 2007 and 2006 balance sheet, respectively. During 2007, Video
received P100,000 in rent deposits. In Videos 2007 income tax return, what amount should
Video include as rent revenue?
a. P130,000
c. P120,000
b. P110,000
d. P100,000
33 to 35 are based on the following: During the month of February 2006, Princess Trading realized
sales of P990,000, VAT exclusive. The owner took goods with a selling price of P50,000 (VAT
exclusive) costing P40,000 for personal use. During the same month, the company also sold goods
worth P300,000 to the Asian Development Bank. The company had an approved zero-rating from
the BIR.
There was also purchases of goods for sale to private customers amounting to P336,000, VAT
inclusive; office supplies for use in the business, P30,000 VAT exclusive and purchase of services
amounting to P11,000, VAT exclusive. The services had not been paid yet.

33.

How much were the total taxable sales?

a. P1,340,000
c. P1,040,000
b. P1,330,000
d. P1,300,000

34.

How much were the total output taxes?

a. P160,800
c. P124,800
b. P159,600
d. P143,571

35.

How much was the VAT payable?

a. P119,880
b. P85,000

36.

Budoy Corporation, a domestic merchandising corporation shows its three-year

operation. The company started in 2002.
2004
2005
2006
Gross income for the year
P1,000,000
P1,200,000
P1,500,000
Less: Allowable deduction for the year
950,000
1,350,000
1,250,000
Net taxable income (loss) for the year
P
50,000
P (150,000) P 250,000

c. P83,880
d. P85,200

The income tax payable in 2006 is:

a. P 7,500
b. P 8,500
b. P 32,500
d. P 32,000
37.

BORGOY acquired his old principal residence in 1992 at a cost of P4M. He sold the
said property on January 1, 2004 for P16M, although the FMV on that date was P20M. Within
the reglementary period BORGOY acquired his new principal residence for P12M. Which of the
following is incorrect?
a. BORGOY has to pay capital gains tax of P300,000.
b. The cost basis for the new principal residence is P5M.
c.The unutilized amount of the gross selling price is P4M.
d. If the proceeds were not used to buy a new principal residence, the capital gains tax should
have been P1.2M

38.

Under RA 9337, all of the following are exempt from VAT, except one:
a. Sale by the artist himself of his works of art.
b. Sale of goods other than those mentioned in paragraphs A to Y and AA to CC of section 109
of the Tax Code where the annual gross receipts does not exceed P1,500,000.
c. Lease of residential unit with monthly rental of P8,000.
d. Sale of agricultural and marine food product in its original state.

Mr. Cute, single, received the following income in the year 2000:
(1) Dividend income, domestic corp.
P 40,000
(2) Lotto winning in the Philippines
200,000
(3) Lotto winning in the U.S.A.
100,000
(4) Prizes, received in the Philippines
10,000
(5) Interest income from bank deposit in Japan
50,000
(6) Leasehold income, Philippines
100,000
(7) Winnings on gambling from CASINO
300,000
(8) Royalty income as a publisher,
- Philippine Publications
500,000
(9) Royalty income, others Philippines
60,000
(10) Other business income, Japan
200,000
(11) Other business income, U.S.A.
1,000,000
Income Taxation
Expense paid:
a. Personal
b. Business, Philippines
c. Business, Japan
d. Business, U.S.A.
Business taxes paid:
a. Philippines (not deductable)
b. Japan
c. U.S.A.

P400,000
300,000
250,000
700,000
P20,000
1,000
105,000

39. Assuming that Mr. Cute is a resident citizen, his taxable income is:
a. P180,000
c. P200,000
b. P190,000
d. P170,000
40. Using the same data, tax due before any credit:
a. P35,000
c. P30,000
b. P25,000
d. P40,000

******** End of examination ********

NORMAL INCOME TAX RATE on Individual taxpayer as of Nov. 1, 2005
Not over P10,000
5%
Over P10,000 but not over P30,000
P500
+ 10% of the excess of over P10,000
Over P30,000 but not over P70,000
P2,500 + 15% of the excess of over P30,000
Over P70,000 but not over P140,000
P8,500 + 20% of the excess of over P70,000
Over P140,000 but not over P250,000
P22,500 + 25% of the excess of over P140,000
Over P250,000 but not over P500,000
P50,000 + 30% of the excess of over P250,000
Over P500,000
P125,000 + 35% of the excess of over P500,000

BUSINESS LAW
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41. A, B, and C are partners contributing services, P20,000 and P40,000 respectively. The
distribution of the P80,000 net assets shall be:
a. A- P20,000
B-P20,000
C-P40,000
b. A- P5,000
B-P25,000
C-P50,000
c. A-P32,000
B-P16,000
C-P32,000
d. A-P26,667
B-P26,667
C-P26,667
42. Statement 1- Shares of stock can be the object of pledge or mortgage
Statement 2- Real estate mortgage is an accessory contract
a. true, true
b. false, false
c. true, false
d. false, true
43. One or more but less than all the partners have no authority to perform the following except:
a. Renounce a partnership claim
b. Submit a partnership claim or liability to arbitration
c. Convey partnership property in the ordinary course of partnership business
d. Do any act which would make it impossible to carry on the ordinary business of the
partnership
44. A limited partnership has A, as general partner, B, as limited partner, and C, as an industrial
partner contributing P50,000; P50,000 and services respectively. The partnership failed and
after disposing all its assets to pay partnership debts there still remains a note payable in the
sum of P30,000. Against whom can the creditor demand payment?
a. A-P30,000
B-P0
C-P0
b. A-P15,000
B-P15,000
C-P0
c. A-P15,000
B-P0
C-P15,000
d. A-P10,000
B-P10,000
C-P10,000
45. Statement 1- Any stipulation authorizing the pledgee to appropriate the thing pledged is void
and without effect.
Statement 2- If after the auction sale, the thing pledged is not sold, the pledgee can
appropriate the thing pledged.
a. true, true
b. false, false
c. true, false
d. false, true
46. A corporation is deemed dissolved
a. Ceased operation for at least five years
b. No commencement of business transactions within 2 years from issuance of certificate of
incorporation
c. A member of the board is convicted of an offense
d. Majority of the members of the board are dead
47. Which of the following corporate acts requires the approval of the majority of the outstanding
capital stock or of the members of the private corporation
a. To invest corporate funds in another corporation or business.
b. To amend the articles of incorporation.
c. To adopt by-laws
d. To dissolve the corporation
48. Except for one, every corporation whose character expires
forfeiture or otherwise, or whose corporate existence for
other manner shall nevertheless be continued as a body
time when it would have been dissolved for the purpose of

by its own limitation, or annulled by

other purpose is terminated in any
corporate for three years after the
the following. The exception is

a. Prosecuting and defending suits by or against it and enabling it to settle and close its
affairs.
b. To dispose and convey its property
c. To distribute its assets
d. Continuing the business for which it was established
49. Which of the following is not correct?
a. A partnership begins from the moment of the execution of the contract, unless it is
otherwise stipulated.
b. Persons who are prohibited from giving each other any donation or advantage cannot enter
into universal partnership.
c. A particular partnership has for its objects determinate things, their use or fruits, or a
specific undertaking or the exercise of a profession or vocation.
d. Articles of universal partnership entered into without specification of its nature, only
constitute a universal partnership of all present property.
50. The following are the rules in case a managing partner collects a demandable debt from a
person who also owes the partnership a demand debt, except
a. The sum collected shall be applied to the partnership credit
b. It shall be applied to the two credits in proportion to their amounts
c. The sum shall be fully applied to the partnership credit, if the receipt given is for the
account of the partnership
d. The debtor has the right to have the payment applied in his debt to the partner if it should
be more onerous to him
51. The duty to make disclosure, where otherwise there would be a great and unfair inequality of
bargaining position by the use of inside position as regards relation of directors to stockholders
a. Special circumstances rule
b. Trust fund theory
c. Doctrine of corporate opportunity
d. Incorporate theory
52. Chattel mortgage as distinguished from pacto de retro sale
a. A principal and independent contract
b. The title and possession are transferred to the vendee
c. Cannot appropriate to himself the property mortgaged, nor dispose of it
d. Seller may exercise the right to repurchase
53. Not an essential requisite of pledge
a. The thing pledged to be placed in the possession of the debtor or of a third person by
common agreement
b. It is constituted to secure the fulfillment of a principal obligation
c. The pledgor is the absolute owner of the thing pledged
d. The person constituting the pledge has the free disposal of the property
54. A, B, C and D are partners. Their contributions are as follows: A-P50,000; B-P30,000; CP20,000; and D-services. The partnership incurred obligations to third persons, which the firm
was unable to pay. After exhausting all the assets of the partnership, there is still an unpaid
balance of P10,000. How much should each partner pay to the creditors?
a. A-P5,000
B-P3,000
C-P2,000
D-P0
b. A-P2,500
B-P2,500
C-P2,500
D-P2,500
c. A-P4,000
B-P3,000
C-P2,000
D-P1,500
d. A-P4,000
B-P4,000
C-P2,000
D-P0
55. A, B and C, co-owners of a particular parcel of land, borrowed P75,000 from X and Y. The three
(3) debtors signed a promissory note on January 10, 2006 promising to pay the creditors on or
before April 3, 2006. In addition, the debtors constituted a mortgage on their property in favor
of the creditors. On maturity date, X demanded payment. How much can X collect from C upon
maturity of the obligations (creditors are solidary)?
a. P50,000 as it represents the actual share of X in the credit.
b. P25,000 as the obligation is presumed to be joint and the amount represents Cs share in
the obligation.
c. P75,000 based on the promissory note
d. P75,000 because the nature of the obligation is solidary
56. Using the preceding number, if C paid X his share in the obligations, can he, as co-owner of the
property, seek a partial release of the mortgage constituted thereon?
a. Yes, because C is answerable only for P25,000
b. Yes, because Cs obligation is already extinguished
c. No, because mortgages are considered indivisible, payment in part shall not extinguish the
obligation
d. No, because the obligation is solidary, payment in part shall not extinguish the obligation
secured by mortgage

57. The following are considered elements of the contracts of pledge and mortgage. Which is the
exception?
a. The pledgor or mortgagor must have the free disposal of the thing pledged or mortgaged
b. The pledgor or mortgagor must be the absolute owner of the thing pledged or mortgaged
c. Both are accessory contracts
d. The thing maybe appropriated if the debtor cannot pay
58. P appointed A as his agent orally to sell his parcel of land for P20,000. ten days later, A sold
the same property for P300,000 through a public instrument executed between him and B.
What is the effect and status of sale between A and B?
a. The sale is valid because A was authorized and it was executed in a public instrument.
b. The sale is unenforceable because the agent went beyond the scope of his authority for
selling the land for a price higher than the price agreed upon.
c. The sale is void because there was no valid appointment of A as agent of P.
d. The sale can be ratified although the appointment of A was done orally because the sale
between A and B was in a public instrument.
59. Where a director by virtue of his office, acquired for himself opportunity which belongs to the
corporation, thereby obtaining profits to the prejudice of such corporation, must account to the
latter for all such profits by refunding the same, unless his act is ratified by
a. A vote at a regular or special meeting by stockholders owning or representing a majority of
the outstanding capital stock.
b. A vote of the stockholders owning or representing at lease one-third of the outstanding
capital stock
c. A unanimous vote of all the stockholders of the corporation
d. A vote of the stockholders owning or representing at least two-thirds of the outstanding
capital stock
60. When a borrower uses the thing for a purpose different from the intended, delays its return to
the owner, receives the thing under appraisal, lends to third person or saves his property
instead of the thing in cases of emergency, shall be liable even in cases of fortuitous events,
because
a. The nature of the obligation requires an assumption of risk.
b. The parties have expressly stipulated on such liability.
c. The debtor in delay.
d. The law expressly so provides
61. A distribution by a corporation of shares of stock held by it in another corporation is
a. Case of declaration of stock dividend
b. Situation equivalent to a sale of assets
c. Situation equivalent to a merger or consolidation
d. Property dividend or an actual distribution of corporate assets
62. A delivered to B 10,000 pieces of Davao fabricated shell craft jewelry for the purpose of selling
them at P1.00 each. Out of the proceeds of the expected sale, B is to receive a 10%
commission. After 3 days, however, B sold all items at P1.50 each to C, but on 30-day credit. A
compelled B to pay. Which is correct?
a. B must pay P10,000 immediately
b. B cannot be compelled to pay at all
c. B must pay P15,000 immediately
d. B must pay P5,000 immediately and P10,000 after 30 days
63. In
a.
b.
c.
d.

real estate mortgage, the mortgagor can sell the mortgaged property
With the consent of the mortgagee in writing
Even without the consent of the mortgagee
Only with the consent of the mortgagee in writing or orally
Only after paying his obligation to the mortgagee

64. P wrote a letter authorizing A to sell his parcel of land situated in Boracay. A sold the land in
writing to X but the agent (A) did not give the money to P. The sale of the land by A to X is
a. Void, because the authority of A is not in public instrument.
b. Unenforceable, because the authority of A is not in public instrument.
c. Inexistent, because the authority of A is in private writing.
d. Valid and enforceable
65. The negotiable character of an instrument is affected by a provision
a. Authorizing the sale of collateral securities in case the instrument is not paid at maturity.
b. Authorizing a confession of judgment if the instrument is not paid at maturity.
c. Giving the marker an election to require something to be done in lieu of payment of money.
d. Waiving the benefit of any law intended for the protection of the obligor.
66. Rules on construction where instrument is ambiguous, except

a. If not dated, the date is considered to be the date of issuance.

b. Where the signature is placed and is not clear in what capacity the person intended to sign,
he is deemed an accommodation party
c. Between printed and written provision, the written provisions prevail
d. Instruments containing the words I promise to pay signed by two or more persons, such
persons are deemed jointly and severally liable
67. Which of the following is not negotiable?
a. Pay to B or order P10,000. Sgd. A to C
Accepted: For P5,000 only Sgd. C
b. Pay to Jose P10,000. Sgd. Juan to Pedro
Accepted: For P10,000 Sgd. Pedro
c. Pay to Maria or bearer P10,000. Sgd. Jose to Juan and Pedro
Accepted: If Maria passes the CPA Board Examination. Sgd. Juan
d. Pay to the order of B P10,000 at 123 CM Recto Avenue, Manila. Sgd. A to C, J.P Rizal St.
Makati
Accepted: Payable at 123, JP Rizal St., Makati City. Sgd. C
68. Where an indorsement is conditional, may the marker make payment although the condition
has not been fulfilled?
a. Yes, he may disregard the condition without incurring any liability.
b. Yes, he may disregard the condition but he becomes liable if the endorsee fails to fulfill the
condition
c. No, the qualified indorsement becomes part of the contract
d. No, the person who received payment will hold the proceeds subject to the right of the
conditional indorser
69. M issues a promissory note payable to P or bearer. Which of the following is not correct?
a. If indorsed by P to A and A also indorsed it to B, B may negotiates the note to C by mere
delivery
b. If indorsed by P to A and A also indorses it to B, P is liable to A and B
c. If indorsed by P to A and A also indorses it to B and B negotiates the note to C by delivery.
A is liable to B and C
d. If P negotiates the note to A by delivery and A indorses it to B, B may negotiate the note to
C by delivery.
70. Which of the following is not correct?
a. Where the instrument is negotiated back to a prior party, all intervening indorsements are
not necessary to the holders title
b. Where the instrument is originally payable to order, the holder may not strike out the
payees indorsement
c. The indorser whose indorsement is struck out and all indorsers are thereby relieved from
liability on the instrument
d. The holder may at anytime strike out an indorsement which is not necessary to his title
71. Statement No. 1 - Juridical personality of partnership begins on the date of the execution of
the articles of partnership unless a specific date is agreed for its existence.
Statement No. 2 Juridical existence of corporation commences on the date of the
execution of the articles of incorporation unless a specific date is agreed for its
existence.
a) Statement No. 1 and Statement No. 2 are both correct.
b) Statement No.1 and Statement No. 2 are both wrong.
c) Statement No.1 is correct while Statement No. 2 is wrong.
d) Statement No. 1 is wrong while Statement No. 2 is correct.
72. A offered to sell his house and lot to B for P1,000,000 giving the latter 30 days to prepare the
P1,000,000, and as soon as B is ready with the money, A will execute the Deed of Sale. On the 15 th
day, A told B that he has increased the price to P1, 500,000. Can B compel A to execute the Deed
of Sale at the price of P1,000,000?
a) Yes, because there was actually meeting of the minds of the parties.
b) No, because B never signified his acceptance of As offer.
c) Yes, because A is already estopped by his offer.
d) No, because P1,000,000 is less than P1,500,000.
73. The following are the qualifications of directors in a corporation. Choose the exception:
a) Majority of the directors must be Filipino citizens.
b) He must at least own one share of stock in his own name in the books of the
corporation.
c) Majority of the directors must be residents of the Philippines.
d) He must not be convicted by final judgment of an offense with imprisonment of more
than 6 years.

74. A, B and C are partners of ABC Partnership sharing profits and losses equally. A is an industrial
partner while B and C contributed P20,000 and P40,000 respectively. The partnership was
liquidated and after payment of partnership obligation, only P90,000 worth of assets remained.
The share of A is:
a) -0-

b) P30,000

c) P45,000

d) P60,000

75. A and B are solidary creditors to X and Y, joint debtors for a total sum of P90,000. A owns 1/3
of the credit while B owns 2/3. But X owes 2/5 of the debt while Y owes 3/5 of the debt. In this
case:
a) B can collect from X P90,000 and from Y P-0-.
b) A can collect from X P45,000 and from Y P45,000
c) B can collect from X P36,000 and from Y P54,000
d) A can collect from X P54,000 and from Y P36,000
76 A guardian of B sold B house and lot worth P480,000 for P240,000. This contract can be:
a) Rescinded because of inadequacy of price.
b) Cannot be rescinded because there is no fraud, mistake or undue influence
c) Cannot be rescinded because all the elements of contract are present.
d) Rescinded because the consent of the ward was not obtained.
77. X entered into an oral contract with Y for the sale of computer table worth P15,000.00. X
delivered the computer but Y failed to pay the price.
a) this contract is unenforceable because it is not in writing as required by the statute of
frauds.
b) this contract is void because there was no consideration paid by Y.
c) this contract is enforceable because it was implemented.
d) this contract is rescissible because of inadequacy of the price.
78. On July 15, 2002, X entered into a contract with Y. On January 10, 2003, X discovered that Y
employed fraud to induce him to enter into the contract, which had he known he would not have
entered into. The action for annulment of contract must be brought:
a) within 3 years from the time of the fraud.
b) within 4 years from discovery of the fraud.
c) within 4 years from July 15, 2002.
d) with in 3 years from January 10, 2003.
79. On September 9, 2002, A, B and C Co. Ltd was formed by A as general partner and B and C as
limited partners. On September 9, 2003, A and B got married. Did the marriage dissolve the
partnership?
a) No, because spouses can enter into universal partnerships.
b) Yes, because there is a change in the equity among partners.
c) No, the marriage did not dissolve the partnership.
d) Yes, because spouses can enter particular partnership.
80.The right of the corporation to continue as a juridical entity for the term stated in the articles of
incorporation despite the death of the stockholders:
a) right of existence
succession
b) pre-emptive right

c) right of
d) right of appraisal

81. The minimum requirement of the corporation to incorporate:

a)
b)
c)
d)

Authorized Capital
P50,000
P16,000
P20,000
P48,000

Subscribed Capital
P10,000
P 4,000
P 5,000
P16,000

Paid In Capital
P5,000
P4,000
P5,000
P4,000

82. This forms part of the outstanding shares:

a) treasury shares
delinquent shares
b) redeemed redeemable shares

c)
d) unissued shares

83. A partnership is not dissolved upon the death of:

a) general partner

c) industrial partner

b) capitalist-industrial partner
estopel

d) partner by

84. X transferred to Y her parcel of land as payment of his obligation of P1,000,000. What kind of
contract entered between them?
a) Sale
b) Lease
c) Exchange
d)
Dation in Payment
85. The P100,000-bills issued by the Bangko Sentral Ng Pilipinas is an example of:
a) Check

b) Bills of Exchange

c)Promissory Note

d) Legal Tender

86. A is obliged to deliver to B his honda civic car or a goats milk taken from a cow or one kilo of
shabu or his diamond ring on September 1, 2003. However A can substitute the prestation with
his house and lot. The right of choice belongs to B. Before the communication of choice, all the
prestations except the house and lot, were destroyed by fortuitous event. What happened to the
obligation of A to B?
a) A's obligation is extinguished.
b) A is liable to pay the value of any of the prestation at the choice of B.
c) A's obligation is still subsisting.
d) A is liable to deliver the substitute.
87. The voting requirement in case of incurring or increasing bonded indebtedness.
a)
b)
c)
d)

majority of the board and majority of the outstanding capital stock

majority of the board and 66 2/3% of the outstanding capital stock
2/3 majority of the board and majority of the outstanding capital stock
2/3 majority of the board and 2/3 of the outstanding capital stock

88. ABC Corporation is engaged in investment of funds as shown in its primary purpose. If today,
ABC Corporation decides to invest in XYZ Corporation, what is the voting requirement?
a)
b)
c)
d)
e)
f)

majority of the board and majority of the outstanding capital stock

majority of the board and 66 2/3% of the outstanding capital stock
2/3 majority of the board and majority of the outstanding capital stock
2/3 majority of the board and 2/3 majority of the outstanding capital stock
majority of the board and none of the outstanding capital stock
none of the board and none of the outstanding capital stock.

89. A day after the issuance of the certificate of incorporation of XYZ Inc., M, one of the directors
discovered that the paid in capital was only 24% of the subscribed capital stock. Nevertheless, it
organized itself and represented to the public as a corporation. What kind of corporation is XYZ
Inc.?
a) de jure corporation
corporation
b) corporation by estoppel
prescription

c) de facto
d) corporation by

90. A, B and C are partners of ABC Partnership. A resigned from the firm. B, who knew this fact,
entered into a transaction with X who knows of the existence of the partnership but did not know
the fact of dissolution. The transaction is not for winding up nor is it for completion of unfinished
business. Who will be liable to X first?
a) ABC Partnership
b) A
c) B
d) C
91. The term which refers to the delivery of a negotiable instrument by the maker or drawer to the
payee-holder:
a) issue
distribution

b) indorsement

c) negotiation

d)

92. X owes ABC Partnership P9,000.00. The partners are composed of A, B and C. X gave to A
P3,000 as his share of the credit. A issued a receipt of his share to X. Few days thereafter, X
became insolvent. How should the P3,000.00 be distributed, if it can be done?
a) A-P3,000, B-0 & C-0
c) A-P1,000, B-P1,000 & CP1,000
b) A-P2,000, B-P1,000 & C-0
d) A-0, B-P1,500 & C-P1,500
93. A contributed to AB Partnership the usufruct of his car for the firms business of car rental. B, a
partner, drove the car from the airport fetching a client but met an accident in the Marcelo B.
Fernan bridge totally destroying the car. The client sustained injuries requiring payment of
damages of P100,000. Who should bear the loss of the car?

a) A
client

b) AB Partnership

c) B

d)

94. In problem no. 23, supposing the car was the one contributed by A as his capital contribution
who should be for damages of the client?
a) A alone b) AB Partnership alone
c) B alone
d) A, B & AB Partnership
solidarily
95. What is status of the contract of sale over an immovable made by an agent with an unsigned
written authority to sell?
a) valid
rescissible

b) void

c) unenforceable

d) voidable

e)

96.Jose condoned the obligation of Pedro of P250,000 without any written document. A day after
the condonation, Jose died. The heirs of Jose, after the burial, demanded from Pedro the sum of
P250,000 as they are going to pay the expenses for the burial of Jose. What is the status of the
condonation of Jose to Pedro?
a) Valid
b) Void
c) Unenforceable
d) Voidable
97. A induced B not to pay the consideration of the sale of P 1,000,000.00 to C on the ground that
the latter is already very rich. C learnt of the inducement of A and intended to file a case to
enforce his right. In case C will recover the price and damages, to whom shall C recover damages?
a) A alone

b) B alone

c) A & B

d) None of them

98. Jose sold to Pedro ecstacy pills for P1M. A day after the sale, the NBI raided the house of Pedro
and recovered all the ecstacy pills and firearms. Pedro instituted a collection case to recover the
P1M. How much can Pedro recover from Jose?
a) P1M

b) P1M plus damages

c) -0-

d) only damages

99. The promissory note reads as follows: We promise to pay to the order of A, B and C the sum
of P180,000 payable within 60 days from issue. SGD (X, Y and Z). This means that:
a) X is obliged to pay A P20,000
b) X is obliged to pay A P60,000
c) X is obliged to pay A, B and C P180,000
d) X is obliged to pay A P180,000 alone.
100. A stockholder cannot exercise his pre-emptive right on any of the following situation, which
is the exception:
a) denied in the by-laws
b) shares issued in compliance of law requiring stock offering to the public
c) shares issued in good faith approved by 2/3 of the outstanding capital stock in exchange for
property needed
d) shares issued in good faith approved by 2/3 of the outstanding capital stock to pay
previously contracted debt
/end