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SUAREZ b.

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