Business Law

1. A subscribed to 1,000 shares of stock to X Corporation. She paid 25% of the said
subscription. During the stockholder meeting, can A vote all her subscribed shares?
a. No, because the subscription has not yet been fully paid
b. No, because As shares has become delinquent which cannot be voted.
c. Yes, as to the paid percentage of subscription
d. Yes, because unpaid shares can be voted

2. A shareholders option to subscribe to allotment of shares in proportion to his holding of

outstanding shares, before new shares are offered to others
a. Voting right
b. Pre-emptive right
c. Ultra vires act
d. Appraisal right

3. S, a minor, sold her bracelet to B for P8,000. Later, B, needing money to pay her daughters
tuition fee, borrowed P15,000 from C and as a security, pledged the bracelet to the latter. B
failed to pay C resulting into the auction sale of the bracelet in favor of D for P10,000 only.
Which of the following statements is correct?
a. The title of B over the bracelet is not valid, hence the pledge, as well as the sale of said
bracelet is likewise defective. The pledgor must be the owner of the thing pledged.
b. The deficiency of P5,000 may still be recovered by C from B if there is a stipulation to this
effect.
c. If D was a purchaser in bad faith as he knew of the defective title of B over the bracelet from
S, ownership will not pass to him (D).
d. C can no longer recover the deficiency of P5,000 from B. the pledge, together with the sale is
valid. The voidable title of B is valid because it is not yet annulled.

4. A, B and C wrote and signed a promissory note which states We promise to pay D and E
P60,000. At the maturity date of the note, D indorsed back the promissory note to A. How much
obligation is extinguished and by what mode of extinguishments of obligation?
a. P20,000 by confusion
b. P60,000 by compensation
c. P30,000 by remission
d. P10,000 by merger

5. 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.

6. A clause providing that the mortgage will automatically own the property mortgaged if the
debt is not paid at maturity is
a. Dacion en pago
b. Payment by cession
c. Pactum commissorium
d. Upset price

7. A corporation existing in fact but not in law

a. De jure corporation
b. De Bal corporation
c. De facto corporation
d. De open corporation

8. 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

9. Under Republic Act 6426, Foreign Currency Deposit Act, what is the only exception provided
by such law from the absolute confidentiality of foreign currency deposit?
a. Upon written permission or consent in writing by the depositor.
b. In cases of impeachment of the President, Vice President, members of the Supreme Court
and Ombudsman for culpable violation of the Constitution, treason, bribery or betrayal of public
trust.
c. Upon order of a competent court in cases of bribery.
d. In cases where the money deposited or invested is the subject matter of the litigation.

10. The assessment of the amount of damages is left to the discretion of the courts, according
to the circumstances of each case, except
a. moral
b. exemplary
c. temperate
d. liquidated

11. A orally offered to sell his rice land to B for P8 million. B orally accepted the offer. The land
is to be delivered through the execution of a notarized Deed of Sale and the price is to be paid
directly two weeks from their oral agreement. Which of the following is most accurate?
a. If A refuses to deliver the land on the agreed date despite payment made by B, the latter may
not successfully sue A because the contract is unenforceable.
b. If A refused to deliver the land, B may successfully sue A for the fulfillment of the obligation
before the payment of the purchase price.
c. The contract between A and B is rescissible.
d. The contract between A and B is subject to ratification by the parties.

12. Covered transaction refers to a

a. A transaction in cash or other equivalent monetary instrument exceeding P500,000.
b. A transaction exceeding P1,000,000 in cases of jewelry dealers in precious metals and
dealers in precious stones.
c. All of the above
d. None of the above,

13. A, a resident of Pasay City has an obligation to deliver a Honda car with plate number
ATTY-004 to B, a resident of Taguig City with a stipulation that the said car shall be delivered in
QC. At the time of constitution of the obligation, the said car is located in Manila City. At the date
of delivery, the said car is located in Makati City. Where shall the car be delivered by A to B
a. Pasay City
b. Makati City
c. Manila City
d. Quezon City

14. Which of the following is not an obligation of a partner?

a. To give his capital contribution.
b. Not to engage in unfair competition with the partnership.
c. To pay partnership for damages suffered by it through his fault.
d. To inspect and copy partnership books.

15. XYZ are solidarily liable to A for P30,000 which matures on July 1, 2015. On May 1, 2015, X
paid A for the whole amount of the debt. If on December 1, 2015, X will be reimbursed by Y, the
latter will be liable for:
a. P10,000 with interest from July 1, 2015 to December 1, 2015
b. P10,000 without interest
c. P10,000 with interest from May 1, 2015 to July 1, 2015
d. P10,000 with interest from May 1, 2015 to December 1, 2015

16. In the matter of management of the business affairs of a corporation, this is supreme
a. president of the corporation
b. 2/3 of the stockholders
c. majority of the stockholders
d. board of directors

17. The assets of the corporation as represented by its capital stock are to be maintained
unimpaired that there can be no distribution of such assets among the stockholders without
provision being first made for the payment of corporate debts
a. Doctrine of corporate fiction
b. Trust fund doctrine
c. Doctrine of corporate opportunity
d. Doctrine of limited capacity

18. A has three outstanding due and demandable obligations to B consisting of: (1) accounts
payable in the amount of P1,000,000; (2) notes payable in the amount of P1,000,000 which is
solidary debt with G; (3) Loans payable with 10% interest in the amount of P1,000,000; and (4)
mortgage payable in the amount of P1,000,000 which is secured by real estate mortgage over
As land. A paid P1,000,000 to B and designated the payment to the accounts payable. In which
debt shall the payment be applied by B?
a. accounts payable
b. notes payable
c. loans payable
d. mortgage payable

19. Without authority from P, A sold Ps car in Ps name. Contract is:

a. Void
b. Voidable
c. Valid
d. Unenforceable

20. In the absence of agreement as to sharing of partnership losses, how shall the losses be
distributed to the partners?
a. It should be divided equally among the partners including the industrial partners.
b. It should be divided proportionately to the capitalist partners in accordance to their capital
contribution ration.
c. It should be divided in accordance with the profit agreement ratio to the capitalist partners
only.
d. It should be divided equally among the capitalist partners only

21. The ratification of directors or trustees contract with the corporation requires the vote of
a. 2/3 of outstanding capital stock of voting shares or 2/3 of the members entitled to vote.
b. majority of outstanding capital stock of voting and non-voting shares or majority of all the
members
c. majority of outstanding capital stock of voting shares or majority of the members entitled to
vote.
d. 2/3 of outstanding capital stock of voting and non-voting shares or 2/3 of all the members.

22. In three of the following cases, compensation is not proper. Which is the exception?
a. deposit
b. commodatum
c. mutuum
d. gratuitous support

23. A, B, C, D and E are partners in ABCDE Partnership with capital contribution ratio of
5:4:3:2:1, respectively. No one is appointed as managing partner in Articles of Co-Partnership.
The partners held a meeting to determine its supplier. A and B voted in favor of SM while C, D
and E voted in favor of Ayala. Who shall be considered the supplier of the partnership?
a. Both SM and Ayala because they are both selected by the partners.
b. SM because it is the supplier selected by the partners having controlling interest
c. Ayala because it is the supplier selected by the majority of the partners.
d. Neither SM nor Ayala because selection of supplier requires unanimity of the partners.

24. Which does not result in the extinguishments of obligation?

a. arrival of resolutory period
b. novation
c. annulment
d. happening of suspensive condition

25. When the obligation modified its object and also the principal conditions.
a. There is real novation
b. There is personal novation.
c. There is mixed novation.
d. There is delegacion.
26. A purchased on installment from B a house and lot. After a year of installment payment, A
died. B refuses to accept the monthly installment being tendered by his heirs contending that
upon the death of their father with whom he has a contract, the contract automatically
terminated or cancelled. B is:
a. Wrong for right acquired in virtue of an obligation is transmissible
b. Wrong for the right to continue the payment is personal only to A
c. Correct for the contract is between him and A only
d. Correct because the parties did not agree on the transmissibility of the right

27. An obligation wherein various things are due, but the payment of one of them is sufficient to
extinguish the obligation is called:
a. Simple obligation
b. Alternative obligation
c. Conjoint obligation
d. Facultative obligation

28. The right of the creditor to exercise all the rights of his debtor to satisfy his claim, except
rights which are inherent and personal on the part of the debtor
a. action subrogatoria
b. action redhibitoria
c. accion pauliana
d. accion qunti minoris

29. A owes B a sum of money evidenced by a promissory note which was prescribed. X, without
the knowledge of A, paid B his debt. Later A reimbursed X for the payment of the latter to B
although he has n obligation to do so. After payment, A now wants to recover his payment to X
on the ground that he was not obliged to reimburse him. Which of the following is correct?
a. A can recover his reimbursement to X to prevent unjust enrichment on X's part at the
expense of A
b. A cannot recover because he has civil obligation to reimburse X for the latter paid his debt to
B
c. A cannot recover because it partakes of a natural obligation
d. A cannot recover since there was reimbursement by mistake
30. A, B and C are partners in ABC Co. D owes the partnership P4,500. A, a partner, received
from D a share of P1,500 ahead of partners B and C, giving D a receipt for his share only. When
B and C were collecting from D, the latter was already insolvent. Which of the following is
correct?
a. Partner A can be required to share the P1,500 with B and C
b. A cannot be required to share the P1,500 with B and C
c. B and C should automatically exhaust first all remedies to collect from D
d. B and C can automatically deduct from the capital contribution of A in the partnership, their
respective share in the P1,500

31. Which of the following is not a right of the unpaid seller?

a. A lien on the goods while in his possession
b. Right of stoppage of goods in transit even if buyer is solvent
c. Right to rescind the sale
d. Right of resale.

32. Which of the following corporations is not allowed to issue no par value common shares?
a. mining company
b. educational institution
c. trust company
d. oil company

33. Elmer bought a gold necklace with a heart-shaped pendant from Ernest for the price of
P20,000. After payment of the price, he requested Ernest to put it in a small box and wrap it with
a birthday wrapper because he will give it as a birthday gift to his girlfriend. After the birthday of
his girlfriend, she happily showed the golden necklace and expressed her gratitude to Elmer,
who discovered that the necklace has a square-shaped pendant and of very low quality, which
is different from the one he purchased from S. What remedy is available to Elmer against Ernest
in this case?
a. File action for the annulment of the contract of sale
b. File action for the rescission of the contract of sale
c. Demand for the return of the purchase price
d. Demand for the payment of damages.
34. It refers to the order included in the Commencement Order issued by the Regional Trial
Court in a rehabilitation proceedings which has the effect of suspending all actions or
proceedings, attachments, in court or otherwise, for the enforcement of claims against the
insolvent debtor.
a. Stay or suspension order
b. Liquidating order
c. Freeze order
d. Injunction order

35. How may the rights in a mark be acquired?

a. trademark rights are acquired through intellectual creation
b. trademark rights are acquired through registration
c. trademark rights are acquired from the moment of creation
d. trademark rights are acquired through first use and adoption of mark.

36. A applied for a life insurance with Sun Life Company. During the medical examination, A
sent his healthy twin brother. Based on the result of the medical examination, Sun Life
Company approved the life insurance applied by A. What is the remedy available to Sun Life
Company upon discovery of the substitution?
a. File an action for damages because A is guilty of incidental fraud or dolo incidente.
b. File an action for annulment of contract because A is guilty of causal fraud which vitiated Sun
Lifes consent.
c. File an action for declaration of nullity because of the want of consent.
d. File an action for rescission of contract because it is intended to defraud creditor.

37. X, a customer, drinks a bottle of soft drinks in a restaurant and is hospitalized due to harmful
substance in the beverage. Is the manufacturer liable for damages in the absence of contractual
relation between them?
a. Yes, because there is actually a contract between them, the restaurant being the agent of the
manufacturer.
b. Yes, because its liability arises out of quasi-contract.
c. No, there being no contract from which liability may arise.
d. Yes, because of quasi delict.
38. What is the minimum prescriptive period to lapse from the filing of the application for
registration as a new cooperative for the inaction of CDA to be considered an implied approval
of the registration?
a. At least 30 days
b. At least 60 days
c. At least 90 days
d. At least 120 days

39. Presentment for acceptance is required when

a. the bill is payable after sight
b. the bill requires it
c. the bill is drawn payable elsewhere than the residence of the drawee
d. all of them

40. In which of the following instances are the goods still in transit, therefore, will allow the
unpaid seller to exercise his right of stoppage in transitu in case the buyer becomes insolvent?
a. If the buyer obtains delivery of the goods before arrival of the appointed destination.
b. If the carrier or other bailee acknowledges to the buyer or his agent, that he is holding the
goods in his behalf, after arrival of the goods at their appointed destination.
c. If the carrier or other bailee wrongfully refuses to deliver the goods to buyer or his agent.
d. If the goods are rejected by the buyer, and the carrier or other bailee continues to in
possession of them, even of the seller has refused to receive them back.

41. Who of the following is party with primary liability?

a. Maker
b. endorser
c. drawer
d. person negotiating by mere delivery

42. Change of persons or objects:

a. Confusion
b. Novation
c. Solutio indebiti
d. None of the above

43. Jane asked Joshua if the latter can grant him a loan of P50,000 payable in one year plus
12% interest and Joshua nodded his head. The contract of loan is in the stage of
a. Preparation
b. Perfection
c. Consummation
d. None of the answers are correct

44. Which of the following requires citizenship as a qualification?

a. corporate director
b. incorporator
c. corporate president
d. corporate secretary

45. A, an insane sold his specific laptop to B at a price of P10,000. After obtaining knowledge of
the contract, C, a childhood friend of A, filed an action before the court for annulment of the
contract of sale. What principle of contract is violated by the filing of such action?
a. mutuality of contract
b. relativity of contract
c. liberality of contract
d. legality of contract

46. In three of the following corporate proposals, a dissenting stockholder has the right to
surrender his shares of stock to the corporation and demand for the payment of their fair market
value. Which is the exception?
a. Entering into management contract with another corporation
b. Sale, mortgage or disposition of all or substantially all of the corporate assets
c. Investment of corporate funds in another corporation or business
d. Shortening or extending the corporate term
47. A obtained a loan from B payable within a year. As security for its payment, A mortgages his
uninsured house. Three months after the loan was given, As house was gutted by an accidental
fire. Thereupon, B demanded payment immediately from A, who refused to pay contending that
the loan was for a one-year period. Is As contention valid?
a. As contention is valid because the contract of loan is explicit that payment is within one year
and the creditor can only demand payment at the end of the year.
b. As contention is not valid because payment is within a year and therefore the creditor B has
the benefit of the period.
c. As contention is not valid because the security has been lost and therefore the obligation is
demandable at once.
d. Not valid because the creditor B as a rule has the benefit of the period in an obligation.

48. Alfred obliged himself to deliver specific car to Arnold on February 1, 2018. However Alfred
failed to deliver the car on February 1, 2018. In this case Alfred is already:
a. Ordinary delay
b. Mora solvendi ex re
c. Mora solvendi ex persona
d. Mora accipiendi

49. A borrowed P100,000 from B and mortgaged his house to secure the payment of the loan.
The contract of real estate mortgage is not notarized and not registered with Registry of Deeds.
The contract of real estate mortgage provides that A is prohibited from selling the mortgaged
house and in case of default of A at the maturity date of the loan, B will become the automatic
owner of the mortgaged house. Which of the following statements is correct?
a. A may still sell the house to third person despite the prohibition in the contract of real estate
mortgage.
b. B becomes the owner of the mortgaged house upon default of A.
c. The contract of real estate mortgage is null and void because of the stipulation of pactum
commissorium which is contrary to law and public policy.
d. The contract of real estate mortgage is unenforceable because it is not in public document
and not registered with Registry of Deeds.

50. X borrowed money from Y. X constituted a real estate mortgage over his house to secure
the loan. It was stipulated that in case X could not pay the loan on time, the house would belong
to Y. Which is correct?
a. Y shall become owner of the house upon default by X by virtue of their written agreement.
b. Y shall become the owner of the house by virtue of the default of X
c. Y shall only enjoy the right of alienation over the land
d. Y shall be entitled to the right of appropriation of the land.

51. The majority vote of its board of directors and by the vote or written assent of the
stockholders representing at least two-thirds of the subscribed capital stock of the corporation is
prescribed under the Corporation Law for this purpose
a. for adoption of any by-law or by-laws
b. to invest its corporate funds in any corporation or business, or for any purpose other than the
main purpose for which it was organized
c. to amend the articles of incorporation
d. for declaration of stock dividends

52. The right given to stockholders to dissent and demand payment of the fair market value of
their shares is called.
a. appraisal right
b. stock right
c. pre-emptive right
d. right of proxy

53. In three of the following cases, all shares have voting rights, except
a. increase or decrease of capital stock
b. merger or consolidation
c. dissolution of the corporation
d. election of directors

54. The contract must bind both contracting parties

a. Co sensuality of contract
b. Simplicity of contract
c. Mutuality of contract
d. Relativity of contract
55. Greggy, Greg, Grain, and George formed a general partnership. Their written partnership
agreement provided that the profits would be divided so that Greggy would receive 40%; Greg,
30%, Grain, 20%, and George, 10%. There was no provision for allocating losses. At the end of
its first year, the partnership had losses of P400,000. Before allocating losses, the partners
capital account balances were: Greggy, P240,000; Greg, P200,000; Grain, P150,000; and
George, P22,000. George refuses to make any further contribution to the partnership. Ignore tax
effects. What would be George's share of the partnership losses?
a. 18,000
b. 40,000
c. 78,000
d. 50,000

56. A check is
a. a bill of exchange
b. the same as a promissory note
c. is drawn by a maker
d. a non-negotiable instrument

57. Three of the following corporations cannot be close corporations. Which one is the
exception?
a. public utilities
b. banks
c. mining companies
d. building and loan associations

58. What is the prescriptive period provided by law to depositors to file their claim before
Philippine Deposit Insurance Corporation from its takeover of the closed bank?
a. 2 years
b. 3 years
c. 4 years
d. 5 years
59. A applied for a life insurance with Sun Life Company. During the medical examination, A
sent his healthy twin brother. Based on the result of the medical examination, Sun Life
Company approved the life insurance applied by A. What is the remedy available to Sun Life
Company upon discovery of the substitution?
a. File an action for damages because A is guilty of incidental fraud or dolo incidente.
b. File an action for annulment of contract because A is guilty of causal fraud which vitiated Sun
Lifes consent.
c. File an action for declaration of nullity because of the want of consent.
d. File an action for rescission of contract because it is intended to defraud creditor.

60. After ten years, five out of the nine incorporators who organized the corporation and signed
the articles of incorporation died. The corporation is:
a. dissolved as there will be only four left which is below the minimum number of five
incorporators required by the law.
b. not dissolved as it enjoys the right of succession.
c. not dissolved as it still has forty years left in its term.
d. dissolved as the Corporation Code requires that the incorporators be alive during the
operation of the business.

61. Under Republic Act 6426, Foreign Currency Deposit Act, what is the only exception
provided by such law from the absolute confidentiality of foreign currency deposit?
a. Upon written permission or consent in writing by the depositor.
b. In cases of impeachment of the President, Vice President, members of the Supreme Court
and Ombudsman for culpable violation of the Constitution, treason, bribery or betrayal of public
trust.
c. Upon order of a competent court in cases of bribery.
d. In cases where the money deposited or invested is the subject matter of the litigation.

62. Which of the following expresses a correct principle of law. Choose the best answer.
a. Failure to disclose facts when there is a duty to reveal them, does not constitute fraud.
b. Violence or intimidation does not render a contract annullable if employed not by contracting
party but by a third person.
c. A threat to enforce ones claim through competent authority, if the claim is legal or just, does
not vitiate consent.
d. Simulation of a contract always results in a void contract.

63. Specific performance may not be possible in this civil obligation

a. A, a painter, obliges himself to paint the portrait of B on January 8,2000
b. C, a farmer, obliges himself to give his only cow to D on February 14, 2011
c. E, a veterinarian, obliges himself to give one of his dogs to F on May 1, 2011
d. G, a registrar of deeds, obliges himself to effect registration of H's parcel of land on June 20,
2011

64. Which of the following cannot be the object of contract of sale?

a. future property
b. transmissible right
c. lawful services
d. present property

65. The corporation has a nine-member board of directors. Two of the members sold their
shares while two others are abroad. To have a quorum, the number required is
a. five
b. four
c. seven
d. three

66. A owes B P1M. A proposed to B that C will pay A's debt and he will be released from all
liabilities to him. B and C agreed to the proposal. Later, when B tried to collect from C, he found
out that he was insolvent.
a. A is no longer liable to B because of the substitution of C in his place if he had no knowledge
of the insolvency despite it being of public knowledge;
b. A is no longer liable to B even if he had knowledge of C's insolvency provided it is not of
public knowledge;
c. A is still liable to B because he was the one who proposed to B that C shall substitute him as
debtor;
d. A is no longer liable to B despite the insolvency of C unless said was of public knowledge or
known to him when he delegated the debt.
67. Which of the following is the disadvantage of forming a corporation?
a. Because of the power of succession, the existence of the entity is not affected by the
personal vicissitudes of the individual stockholders
b. The subservience of minority stockholders to the wishes of the majority subject only to
equitable restraints.
c. The free and ready transferability of ownership.
d. The shareholders are not liable for the debts of the business

68. The following are functions of negotiable instrument; except:

a. used as substitute for money
b. medium of credit transactions
c. medium of exchange for commercial transactions
d. none of them.

69. An officer of a corporation may hold two or more positions in the corporation but not as
a. vice president and secretary
b. president and secretary
c. president and muse
d. secretary and treasurer

70. Which of the following statement is not correct?

a. The validity or compliance of the contract cannot be left to the will of one of the contracting
parties.
b. The determination of the performance may be left to a third person.
c. The contracting parties are bound by the determination of performance by a third person from
the moment a third person decided.
d. The contracting parties are not bound by the determination of a third person if it is evidently
inequitable as when the third person acted in bad faith or under mistake.

71. The statement contracts shall be obligatory in whatever form they have been entered into
provided all the requisites for their validity are present refers to
a. real contract
b. consensual contract
c. formal contracts
d. solemn contracts

72. A delivered P1,000 cash to B as a contract of deposit which the latter thought to be a
contract of loan. What is the proper legal remedy on the part of the injured party?
a. Action for reformation of instrument.
b. Action for rescission of contract
c. Action for annulment of contract
d. Action for declaration of nullity of contract

73. A owes B P20,000 which became due on December 20, 2015. On that date, A offered
P10,000, the only money he then had, but B refused to accept the payment. Thereafter A met
C, Bs 23 year old daughter, to whom she gave the P10,000 with the request that she turn the
money over to her mother. The money was stolen while in Cs possession. How much may B still
recover from A?
a. 20,000
b. 10,000
c. 15,000
d. 0

74. X, the President of ZZZ Corporation, was authorized by the Board of Directors of ZZZ
Corporation to obtain a loan from YYY Bank and to sign documents in behalf of the corporation.
X personally negotiated for the loan and got tile loan at very low interest rates. Upon maturity of
the load, ZZZ Corporation was unable to pay. Which statement is most accurate?
a. YYY Bank can choose as to who it wants to hold liable for the loan.
b. Because X was personally acting in behalf of the Corporation, he can be held personally
liable.
c. X, as President, cannot be personally held liable for the obligation of the corporation even
though he signed all the loan documents, because the loan was authorized by the Board.
d. If ZZZ Corporation cannot pay, X can be held subsidiarity liable

75. The following are the rights of an unpaid seller, except:

a. A right of lien over the thing sold while he is still in possession
b. In case of insolvency on the part of the buyer, the right of stoppage in transit
c. Right to resell the things sold
d. Right to interest on the price of the sale

76. A and B wrote and signed a promissory note which states I promise to pay C, D and E
P6,000. At the maturity date of the note, how much may C collect from A?
a. 6,000
b. 2,000
c. 1,000
d. 3,000

77. An agent authorized by a special power of attorney to sell a land belonging to the principal
succeeded in selling the same to a buyer according to the instructions given the agent. The
agent executed the deed of absolute sale on behalf of his principal two days after the principal
died an event that neither the agent nor the buyer knew at the time of the sale. What is the
standing of the sale?
a. Voidable
b. Valid
c. Void
d. Unenforceable

78. Commodatum as distinguished from mutuum

a. object is money or consumable or fungible thing.
b. ownership is transferred to the borrower
c. object or thing loaned must be returned by the borrower
d. maybe gratuitous or onerous

79. A offered to sell his lot to B for P100,000. In his offer to sell it was stated that B is given 60
days to prepare the P100,000, and as soon as B is ready with the money, A will execute a deed
of sale. Before the end of 60 days, A informed B that the price of the lot was increased to
P120,000. May B compel A to accept P100,000 offered previously by A and make him execute
the deed of sale?
a. No, for B never signified his acceptance of As offer.
b. Yes, because there was actual meeting of minds of the parties
c. Yes, because A is already estopped by his signal letter
d. Answer not any of the above.

80. Who is liable for the loss of the subject matter by fortuitous event?
a. Nobody
b. Creditor upon perfection
c. Debtor
d. Both creditor and debtor proportionately

81. On February 12, 2016, A sold his only dog to B for P20,000. The parties agreed that B will
pay one day after the results of the May 2016 CPA exam are released while deliver the dog on
the day B pays. If the results were released on May 5, 2016, but the dog gave birth to a puppy
on May 24, 2016, which of the following statements is correct?
a. A is entitled to the puppy because the puppy was born before the obligation to deliver arises.
b. A is entitled to the puppy because of the principle that accessory follows the principal.
c. B is entitled to the puppy because the contract was perfected on February 12, 2016
d. B is entitled to the puppy because the puppy cannot be separated from the mother dog yet

82. This is not a negotiable instrument

a. I promise to pay to the order of bearer P10,000. Sgd. A
b. I promise to pay B or his agent P10,000. Sgd. A
c. I promise to pay B or order US$1,000. Sgd. A
d. I promise to pay to the order of B P10,000. Sgd. A

83. The veil of corporate fiction may be pierced in the following cases, except:
a. When used as cloak to cover fraud, illegality or it results in injustice
b. To defeat public convenience, justify wrong, defend crime
c. Where two factories are made to appear as one and used as a device to defeat the ends of
law or as a shield to confuse legitimate issues
d. Where two corporations have the same president

84. A has an outstanding obligation in the amount of P100,000 to C with G serving as guarantor
and P pledging his car to secure the fulfillment of As obligation. At the maturity date of the
obligation, P paid P100,000 to C without the knowledge of A. Which of the following is correct?
a. P may only recover from A but only in so far as the payment is beneficial to A.
b. P cannot recover from A because the payment is without the knowledge or consent of A
c. P may go after G if A will not be able to reimburse P because of insolvency.
d. P may recover from C in case of non-reimbursement by A based on the principle of unjust
enrichment.

85. Alma was one of the directors of Xerex Corporation. Baby obtained a judgment against
Alma and had all of the latters shares of stock in Xerex Corporation attached and sold at public
auction. Baby bought all the shares at the public auction sale. Subsequently, a meeting of the
board of Directors of Xerex Corporation was held and both Alma and Baby appeared in said
meeting, each claiming the right to participate in the deliberation of the board. Alma contended
that he had the right to continue as director until the stockholders could elect his successor.
Baby on the other hand, contended that having purchased all of Almas shares he had the right
to take the latters place in the board. Who of the two claimants is entitled to sit in the board?
a. Both Alma and Baby
b. Baby
c. Alma
d. Neither Alma or Baby

86. The following act requires meeting of stockholder whether regular or special meeting,
except?
a. extension of corporate term
b. amendment of articles of incorporation
c. decrease of capital stock
d. increase of bonded indebtedness

87. The creditor may already demand fulfillment of the obligation

a. with a suspensive condition
b. when my means permit me to do so
c. with a period in diem
d. with a period ex die

88. May rightfully question an ultra-vires act of a corporation, except

a. Stockholders
b. State
c. Competitors
d. Creditors, if fraud is charged

89. Which of the following executory contracts is not required to be in writing to be enforceable
under the Statute of Fraud?
a. Contract of sale of a condominium unit at a price of P400
b. Contract for a piece of work of a furniture at a price of P500
c. Contract of guaranty
d. Contract of lease of land for a period of two years at a monthly rental of P300

90. Which of the following constitutes a definite offer?

a. An offer made through an agent
b. Advertisement of bidders
c. Business advertisement of things for sale
d. Newspapers advertisement for employment

91. Which of the following is not protected by RA 1405, Bank Secrecy Law?
a. Investment in government bonds
b. Certificate of time deposit
c. Demand account
d. Money market placement

92. I promise to pay P or his order the sum of P 10,000.00 30 days after the death of X. This is
an instrument payable:
a. On Demand
b. Upon the fulfillment of a condition
c. At a determinable future time
d. At an indefinite time, hence, non-negotiable

93. Simulation of a contract maybe absolute or relative. It is relative when

a. the parties do not intend to be bound at all
b. the contract is void
c. the parties conceal their true agreement
d. the parties are related within the 4th degree of consanguinity

94. X borrowed money from Y. X constituted a real estate mortgage over his house to secure
the loan. It was stipulated that in case X could not pay the loan on time, the house would belong
to Y. Which is correct?
a. Y shall become owner of the house upon default by X by virtue of their written agreement.
b. Y shall become the owner of the house by virtue of the default of X
c. Y shall only enjoy the right of alienation over the land
d. Y shall be entitled to the right of appropriation of the land.

95. A sold his land to B with a right to repurchase the said land within 8 years. Then, 4 years
later, B sold the land to C. Can A still exercise the right to repurchase the land from C?
a. No, if C was not aware that there was a right to repurchase.
b. Yes, because the title of C was derived only from the title of B.
c. No, because contracts shall bind only the contracting parties.
d. Yes, if the right has been recorded in the Register of Deeds even if C has no knowledge of
the existence of the right.

96. A subscribed to 1,000 shares of stock of X Corporation and paid 25% of the said
subscription. Can he vote all his subscribed shares?
a. Yes, because shares although unpaid but not delinquent can be voted.
b. No, because the subscription has not been fully paid.
c. Yes, as regards the paid percentage of the subscription
d. No, because his shares have become delinquent shares
97. 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

98. Which of the following is a defense that is available against a holder in due course?
a. Fraud in factum
b. Acquisition of instrument by force or duress.
c. Illegality of consideration
d. Absence of delivery of complete instrument

99. 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, 2016 promising to pay the creditors
on or before April 3, 2016. 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

100. 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
101. To improve the financial condition of his principal, an agent with general powers of
administration given to him by the principal in writing, sold two parcels of land, one for less than
the price appearing in the inventory prepared by the principal and the other double the price that
appeared in the aforesaid inventory. Which is correct?
a. Both contracts cannot be enforced against the principal
b. Both contracts are binding upon the principal
c. The sale for double the price appearing in the inventory is binding upon the principal
d. The sale for less than the price appearing in the inventory is binding upon the principal

102. A, B and C owe W and Y P6,000. A, B and C share in the debt at 2:3:5 while W and Y
share in the credit at 1:2. How much can W collect from A?
a. 1,000
b. 400
c. 667
d. 1,200

103. In general , to show the existence of a partnership, three of the following characteristics
must be proved. Which is the exception?
a. There was a joint interest in the profits.
b. There was an agreement in writing.
c. There was an intention to create a partnership.
d. There was a common or joint fund obtained from contributions.

104. Which of the following is not correct about management contract?

a. Management contract shall have been approved by the board of directors and by
stockholders owning at least the majority of the outstanding capital stock, or by at least a
majority of the members in the case of a non-stock corporation, of both the managing and the
managed corporation
b. Where a majority of the members of the board of directors of the managing corporation also
constitute a majority of the members of the board of directors of the managed corporation, then
the management contract must be approved by the stockholders of the managing corporation
owning at least 2/3 of the total outstanding capital stock entitled to vote.
c. The maximum period of management contract as a rule is 5 years for any one term.
d. Where a stockholder or stockholders representing the same interest of both the managing
and the managed corporations own or control more than 1/3 of the total outstanding capital
stock entitled to vote of the managing corporation, the management contract must be approved
by the stockholders of the managed corporation owning at least 2/3 of the total outstanding
capital stock entitled to vote.

105. 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.