The University of Manila

College of Business Administration and Accountancy

Integrated CPA Review and Refresher Program
REGULATORY FRAMEWORK FOR BUSINESS TRANSACTION

1. What is the first rule in application of payment?

a. Debtor has the right to apply b. Creditor has the right to apply c. Apply to the most onerous
d. Apply in accordance with the agreement

2. This obligation takes effect at once, but terminates upon arrival of the day certain.
a. Condition precedent b. Condition Subsequent c. Ex die period d. In diem period

3. Chris borrowed P100, 000 from Tina. To secure loan, Chris mortgaged Novak’s car worth P200,
000. When the loan become due, Chris failed to pay. Can Tina proceed to the foreclosure of the
mortgage over the car?
a. Yes, because Chris failed to pay the loan
b. Yes, Provided Tina notifies Novak first
c. No, because the mortgage over the car was void
d. No, because Tina must demand payment from Novak first

4. Acceptance of an offer made by the letter or telegram shall bind the offerer:
a. From the time the offeree accepted the offer. b. From the time the offeree sent his letter or
telegram. c. From the time the acceptance came to the knowledge of the offerer. d. From the
time the offerer made the offer.

5. A condition which imposed on an obligation will be disregarded and will therefore make the
obligation immediately demandable.
a. If Popo kills Pepe b. If Tata passes the CPA board exams c. If Lele commits suicide d. If
Lala will not rise from the dead

6. One of the following is void:

a. Politician b. Pactum commissorium c. Stipulation pour atrul d. Waiver intentionada

7. General partner shall have all the rights and powers and be subject to all the restrictions and
liabilities of a partner in a partnership without limited partners. However, without the written
consent or ratification of the specific act by all the limited partners, a general partner of all the
general partner have no authority to act on the following, except:
a. Do any act in contravention of the certificate b. Do any act which would make it possible to
carry on the ordinary business of the partnership. c. Confess a judgment against the
partnership. d. Admit a person as a general partner.

8. A Natural obligation under the New Civil Code of the Philippines is one which:
a. The obligor has a moral obligation to do, otherwise entitling the oblige to damages
b. Refers to the obligation in writing to do or no to do
c. The oblige may enforce through the court if violated by the obligor
 d. Cannot be judicially enforced but authorizes the oblige to retain the obligor’s payment or
performance

9. Abbie borrowed P100, 000 from Babie 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 Abbie is prohibited from selling the
mortgaged house in case of default of Abbie at the maturity date of the loan; Babie will become
the automatic owner of the mortgaged house. Which of the following statement is correct?
a. Abbie may still sell the house to third person despite the prohibition in the contract of real
estate mortgage
b. Babie becomes the owner of the mortgaged house upon the default of Abbie
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

10. Babie sold to Cabbie a fake Rolex watch on January 3, 2001. On January 13, 2001, Cabbie
discovered that the watch she bought from Babie was imitation. The law provides that she can
annul the sale as voidable contact within four years. Prescription starts from:
a. January 3, 2001 when the sale was perfected
b. The time of delivery of the watch to Cabbie
c. The time they fist talked about the sale of the watch
d. January 13,2001 when the fraud was discovered by Caddie

11. A and B are partners in AB partnership. While A was performing his duties as a partner in the
course of business, he negligently caused damage to X, a third person. Who shall be liable to X
and up to what extent?
a. Only the partnership shall be liable it being a juridical person separate and distinct from the
partners
b. Only A shall be liable for he is the only one at fault
c. Both A and B shall be liable solidarity to X
d. A, B, and the Partnership are all liable solidarity to X

12. The members of the board of directors may be given compensation by any of the following acts,
except:
a. If approved by the vote of the stockholders representing majority of the outstanding capital
stock
b. If approved in the by-laws
c. If approved by the board of directors if the salary given is not more than ten percent (10%) of
the income before income tax during the preceding year
d. If approved by the board of directors giving them a reasonable per diem

13. In the matter of management of the corporation, this is supreme.

a. President
b. Chairman of the Board of Directors
c. Stockholders
d. Board of Directors
 14. Who is an insolvent debtor? In FRIA, an insolvent debtor shall refer to the financial condition of
a debtor who
Answer 1 - Is generally unable to pay its or his liabilities as they fall due in the ordinary course of
business
Answer 2-Had liabilities that are greater than its or his assets

a. Both answers are correct

b. Both answers are wrong
c. Only Answer 1 is correct
d. Only Answer 2 is correct

15. The petition for rehabilitation of an insolvent debtor may be filed by any creditor of group of
creditors with a claim of, or the aggregate of whose claims is
a. At least Php 1M
b. At least 25% of the subscribed capital stock or partner's contribution
c. A or B above, whichever is higher
d. A or B above, whichever is lower

16. Essential elements of pledge, except

a. Pledgor is the absolute owner of the thing pledged.
b. The person constituting the pledge has the free disposal of his property or if he is an agent
orrepresentative, that he is legally authorized
c. The thing pledged must be placed in the possession of the creditor or of a 3rd person by common
agreement
d. To bind third persons there must be an affidavit of good faith

17. Essential elements of chattel mortgage, except

a. The object is a personal or movable property
b. The thing mortgaged is not delivered to the creditor
c. The mortgagor cannot sell without the consent of the mortgagee
d. Description of the thing mortgaged must appear in a public instrument

Problem 18-20

A owes is Php 100,000 due on April 1, 2019, secured by A's race horse. A is also obliged to give
to C Php 20,000 on April 1, 2019 and is secured by A's carabao. On March 1, 2018, the race horse died
when it was hit by a stray bullet One week later, the carabao was hit 6pa bus. Fortunately, the carabao
survived but is now limping due a broken leg

18. On April 1, 2018, which of the following is correct?

a. B can require A to pay
b. A's obligation to B is extinguished
c. If A pays B, thinking that the obligation is due. A can recover the Php 100,000 with interest
d. A is entitled to the benefit of the period up to April 1, 2019.
 19. On April 1, 2018, which of the following is not correct?
a. A is deprived of the benefit of the period
b. A should give another security which is equally satisfactorily
c. C can require A to pay
d. A is entitled to the benefit of the period up to April 1, 2019

20. On April 1, 2018, which of the following is correct?

a. A should give another security equally satisfactory
b. A is deprived of the benefit of the periodto B and C
c. Neither B nor C can demand the fulfillment of A's obligation
d. A may choose between paying his obligation to B or giving another security to B to still enjoy the
benefitof the period.

21. A Promissory note reads: “B assigned the note to C. Later, Y stole the note from C”. Which of the
following statements is correct?
a. If A pays Y in good faith, A’s obligation is extinguished b. C can collect from B
c. C cannot collect from either A or B d. C can collect from A

22. Consider these two statements, is correct?

Statement 1- An instrument originally payable to order may be converted into a bearer instrument.
Statement 2- an instrument originally payable to bearer order may be converted into an order
instrument.
a.True, True b. False, False c. False, True d. True, False

23. Which contracts are void ab initio?

I. Those which are relatively stimulated
II. Those which are cause, object, purpose is contrary to law,morals, good customs, public order or
public policy
III. Those whose object is outside the commence of men
IV. Those which contemplate impossible service
V. Those whose consent of a contracting party is vitiated
VI. Those whose cause or object did not exist at the time of the transaction

a. II,III,IV, and VI only

b. I, II, III,IV, and V only
c. I,II,III,IV, and only
d. II,III,IV,V, and VI only

24. On April 1, 2019, Emann borrowed P10,000 from Fmann payable on April 30,2019 and pledged a
promissory note (“I promise to pay Emann or norder P15,000 on Aprill 15,2019”Signed Cmann) by
indorsing said note to Fmann. When the note became due on April 15, 2019, fmann demanded Cmann
to pay the note to which Billy compiled. How much of the P15, 000 can Fmann keep for himself?
a. P5000 b. P10, 000 c. P15, 000 d. Nothing

25. When the obligor binds himself to pay his obligation as soon as “he is able to” , this obligation is:
a. With a term b. Suspensive c. Conditional d. Resolutor
26. BBB Foundation Inc., a non-profit organization scheduled an election for its six-member Board of
Trustees. Ko,Ka, and Ki , who are minority members of the foundation, wish to exercise cumulated
voting in order to protect their interest, although the Foundation’s Articles and By-laws are silent on the
matter. As to each of the three, what is the maximum number of votes that he/she can cast?
a. 6 b. 9 c. 12 d. 3

27. Corpo has a corporate term of 20 years under its Articles of Incorporation of from June 1, 1980 to
June 1, 2001. On June 1, 1991 it amended its articles of Incorporations to extend its life by 15 years from
June 1, 1980 to June 1, 2015. The SEC approved this amendment. On June 1, 2011, however, T Coro
decides to shorten its term by one year or until June 1, 2014. Both the 1991 and 2011 amendments
were approved by the majority votes of its Board of Directors and ratified in a special meeting by its
stockholders representing at least 2/3 of its outstanding capital stock. The SEC however, disapproved
the 2011 amendment on the ground that it cannot be made earlier than 5 years prior to the expiration
date of the corporate term, which is June 1, 2014. Is this SEC disapproval correct?
a. No, since the 5-year rule on amendment of corporate term applies only to extension, not shortening
of term
b. Yes, any amendment affecting corporate term cannot be made earlier than 5 years prior to the
corporation’s expiration date
c. No, since a corporation can in fact have a corporate life of 50 years
d. Yes, the amendment to shorten corporate term cannot be made earlier than 5 years prior to the
corporation’s expiration date

28. An obligation which is based on equity and natural law is known as:
a. Pure b. Quasi-contract c. Civil d. Natural

29. If the cause is not stated in the contract, it presumed that it is not exist.
a. First Statement is false; second is true
b. First is true, second is false
c. Both are true
d. Both are false

30. The following are the requisites of legal compensation, except:

a. That each of the obligors is bound principally and that he be the same time a principal creditor of the
other
b. That both debts consist in a sum of money, or if the things due are consumable, they be the same
kind, and also of the same quality if the latter has been stated
c. That the two (2) debts are not yet clue
d. That they be liquidated and demandable

31. X Corporation whose business purpose is to manufacture and sell vehicles, invested its funds in Y
Corporation, an investment firm through a resolution of its Board of Directors. The investment grew
tremendously on account of Y Corporation's excellent business judgment. But a minority stockholder in
X Corporation assails the investment as ultra vires. Is he right and, if so, what is the status of the
investment?

a. Yes, it is an ultra vires act of the corporation itself but voidable only, subject to stockholder’s
ratification
b.Yes, it is an ultra vires act of its Board of Directors and thus void
c.Yes, it is an ultra vires act of its Board of Directors but voidable only, subject to stockholders
ratification
d. Yes, it is an ultra vires act of the corporation itself, and consequently void.

32. X constituted a chattel mortgage on a car (valued at Php 1M) to secure a Php 500,000 loan. For the
mortgage to be valid, X should have
a. The right to mortgage the car to the extent of half its value
b. Ownership of the car
c. Unqualified free disposal of his car
d. Registered the car in his name

33. The rule is that the valuation of the shares of a stockholder who exercises his appraisal rights is
determined as of the day prior to the date on which the vote was taken. This is true
a. Regardless of any depreciation or appreciation in the share's fair value
b. Regardless of any appreciation in the share's fair value
c. Regardless of any depreciation in the share's fair value
d. Only if there is no appreciation or depreciation in the share's fair value

34. In election for the Board of Trustees of non-stock corporations, members may cast as many votes as
there are trustees to be elected but may not cast more than one vote for one candidate. This is true
a. Unless set aside by the members in plenary session
b. In every case even if the Board of Trustees resolves otherwise b.
c. Unless otherwise provided in the Articles of Incorporation or in the By-Laws
d. In every case even if the majority of the members decide otherwise during the election

35. A holder in due course holds the instrument free from any defect or title of prior parties and free
from defenses available to prior parties among themselves. An example of such a defense is
a. Fraud in inducement
b. Duress amounting to forgery
c. Frand in essecontractus
d. Alteration

36. Which phrase best completes the statement - The affidavit of good faith in a Deed of Chattel
Mortgage is
a. An oath where the parties swear that the mortgage is made for the purpose of securing the
obligations specified and that the obligation is just and valid
b. An affidavit, the absence of which will vitiate the mortgage between the parties
c. Necessary only if the chattel being mortgaged are growing crops
d. A certification forms the mortgagor that he is the mortgagor of the chattel

37. X maintains a savings deposit in the amount of Php 1M with ABC Bank Corporation. X also has
obtained a loan from ABC Bank Corporation in the amount of Php 1M. In case of default
a. ABC Bank can set-off the loan from the savings account being maintained by X with ABC
Bank
b. Set-off is not possible because legal compensation is not allowed in banking transaction
c. Deposit accounts are usually earmarked for specific purpose hence, off-setting is not legally
possible
 d. Off-setting is not possible because the obligation of X is a "simple loan"

38. The term of one year of the Board of Directors of AAA Corporation expired last February 15, 2012.
No new election of the Board of Directors was called; hence the existing members of Board continue as
Directors in hold over capacity. Which statement is most accurate?
a. This is allowed provided there is a valid and justifiable reason for not calling for an election
of the new members of the Board
b. This is not allowed because the term of the directors must only be for one year
c. The position of the members of the Board of Directors will be automatically declared vacant
d. Acting as members of the Board of Directors in a hold over capacity must be ratified by the
stockholders.

39. AN orally placed an order for 2 pairs of Bikinis she needs for the Bb. Pilipinas beauty contest at the
garment factory of B. B does not manufacture for the general market Bikini One but B regularly
manufactures Bikini Two but was not available at the time A placed her order. An agreed to pay upon
delivery to her at the quoted price of Php 1,200 for each Bikini. Which of the following is correct?
a. Only the contract with Bikini One is enforceable
b. Only the contract with Bikini Two is enforceable
c. Both contracts are not enforceable
d. Both contracts are enforceable

40. Which of the following is not a negotiable instrument?

a. "Pay to B or order P1,000 in 4 equal monthly installments."
To: X Sgd. A
b. "Pay to B or order P1,000 and debit my account thereafter"
To: X Sgd. A
c. "Pay to the order of B within 6 months from date the sum of P1,000 at 12% per annum"
To: X Sgd. A
d. "Pay to B or bearerP1,000 one year after date. If not paid when due, I agree to pay
collection and attorney's fees"
To: X Sgd. A

41. A is maker and B is payee of a negotiable promissory note payable to order. There is no valuable
consideration for the note. B delivers the instrument to C, without indorsement, under circumstances
that otherwise would have made C a holder in due course such as, that C did not know of the absence of
consideration. May C recover from A?
a. Yes, because A's personal defense cannot be used against C
b. Yes, because the promissory note is negotiable
c. No, because A has a real defense which can be used even against a holder in due course
d. No, because C acquires only B's rights and A can set up against B the defense of absence of
consideration

42. M makes and delivers a promissory note payable to the order of P. P indorses the note to A. Later, S
steals the note and negotiates the same to B by forging A's signature. Thereafter, B negotiates the note
to C, C to D and D to E, a holder in due course. Which of the following statements is correct?
a. E can hold M and P liable because their signature is genuine.
 b. E cannot hold B, C and D liable because they have no participation in the commission of the
forgery
c. E can enforce the instrument only against S. the forger
d. E can enforce the instrument against S, B, C and D but not against M, P and A

43. When by-laws are adopted and filed after the incorporation, which of the following is correct?
a. Submitted within one (1) month after the filing of the Articles of Incorporation with the SEC
b. Approved and signed by at least a majority of the incorporators
c. Approved by the stockholders representing at least 2/3 of the outstanding capital stock
d. Approved by the stockholders representing at least a majority of the outstanding capital
stock

44. I. A corporation commences to have a juridical personality upon the execution of the Articles of
Incorporation unless a different date is set by the incorporators.
II. A partnership begins from the moment of the execution of the partnership contract unless a
different date is set by the partners.
a. True, true
b. True, false.
c. False, true
d. False, false

45. The articles of incorporation of ABC Corporation provides for 7 directors. In the monthly meeting of
the board of directors held on April 8, 2014, directors B, C, D and E were present and the following
resolutions were approved:
A. A resolution for the purchase of a delivery truck from E Trading, a sole proprietorship owned
by E. B. C, D and E voted for the resolution
B. A resolution appointing T as the new corporate secretary where B, C, D and E voted for the
resolution. Which is correct?
a. Both resolutions are valid and do not need stockholder’s approval
b. Both resolutions are valid but need stockholder’s approval
c. Resolution a need stockholders’ approval. Resolution b is valid
d. Resolution is not valid. Resolution b needs stockholders’ approval

46. Land Corporation is a non-stock, non-profit corporation whose articles of incorporation provide for 9
trustees. The trustees elected and their respective terms are: A, B and C for 3 years; D, E and F for 2
years; and G, H and I for 1 year. After one year, J, K and L were elected to replace G, H and I whose term
expired, while M and N were elected to replace B and E, respectively who resigned after one year in
office. What is the term of office of:

L M N
a. 3 years 3 years 3 years
b. 3 years 2 years 1 year
c. 1 year 2 years 1 year
d. 2 years 2 years 2 years
 47. A and B entered into a universal partnership of all present property. No stipulation was made
regarding future property. After the perfection of the contract, A inherited a parcel of land and B
acquired a car as remuneration for services rendered. The properties acquired after the perfection of
the contract belong to
Land Car
a. A B
b. A Partnership
c. Partnership B4
d. Partnership Partnership

48. In case the members of the board of directors of a corporation still constitute a quorum, and there
are vacancies, who will fill up such vacancies?
Removal Resignation Expiration of term Increase in the number of Directors
a. Stockholders Board Stockholders Board
b. Board Board Stockholders Stockholders
c. Stockholders Board Stockholders Stockholders
d. Stockholders Stockholders Board Stockholders

49. A, husband and B, wife is legally separated. By order of the court, which decreed the legal
separation, A is obliged to give a monthly support of P50,000 to B payable in advance within the first
five days of the month. Bowes A P50,000 by way of loan. On the other hand, A has not yet given B
support of P50,000 for the preceding month and another P50,000 of the present month. All the debts
are already due. Based on the foregoing, which of the following statements is incorrect?
a. If B demands her support for the preceding month, A may set up compensation as regards
the loanthat B owes him
b. If B demands her support for the current month, A may claim compensation as regards the
loan that B owes him
c. If A demands payment of the loan, B may set up compensation as regards her support for
the preceding month that A owes her
d. If A demands payment of the loan, B may set up compensation as regards her support for
the current month that A owes her

50. In payment of 10 grams of shabu, A made a promissory note which reads "I promise to pay B
P10,000. Sgd. A". B transferred the note to C, who acted in good faith. Which is correct?
a. C can collect from A
b. B can collect from A
c. C can collect from either A or B
d. C can collect from B

51. M delivers a negotiable promissory note payable to P or order. Later, P makes a special indorsement
to A and A delivers the note to B. Who is the holder?
a. B, because he is in possession of the note
b. A, because he is the indorsee
c. P, because he is the payee
d. No one can be considered as holder
52. A issued a negotiable promissory note to the order of B for P10,000 payable in 30 days after date.
Later B. endorsed the note to C. Then X stole the note from C, forged the signature of C and negotiated
it to D, and D to E, E to F, the holder. On maturity of the note, which of the following statements is not
correct?
a. F can collect from either D or E because their signatures are genuine and the note is
operative against them
b. F can collect from A because A cannot put up forgery as his defence as his signature is
genuine
c. F cannot collect from C because it was C's signature which was forged
d. F cannot collect from B because B is a party prior to the forgery

53. A owes B P10,000 as gambling debt and A issued a promissory note to B to cover the debt, as
follows: "I promise to pay B or order P10,000. Sgd. A” Which of the following statements is correct?
a. B can collect from A because the note is negotiable
b. B cannot negotiate the note because the consideration between A and B is illegal
c. If B negotiates to C, a holder in due course, C can collect from A
d. A is not liable because of illegal consideration

54. A, a minor issued a promissory note to B as follows: "I promise to pay B or order P10,000, Sgd. A"
Which of the following statements is not correct?
a. The promissory note is not negotiable because the maker is a minor
b. B cannot collect from A because A is a minor
c. If B negotiates to C, a holder in due course, C cannot collect from A
d. If B negotiates to C. a holder for value, C cannot collect from A

55. A promissory note reads "I promise to pay to the order of B. P1,000. Sgd. A. Then B made a
qualifiedindorsement to C. On maturity. A dishonor the instrument on the ground of total absence of
considerationbetween him and B. After giving notice of dishonor, which of the following is not correct?
a. C can collect from B, only if he is a holder in due course
b. C can collect from B, even if he is not a holder in due course
c. C can collect from B regardless of whether or not he is a holder in due course.
d. C can enforce the instrument against A, if he is a holder in due course

56. Which of the following is not correct?

a. Where the instrument is negotiated back to a prior party, all intervening indorsements are
not necessary to the holder's title
b. Where the instrument is originally payable to order, the holder may not strike out the
payee's indorsement
c. The endorser whose indorsement is struck out and all the endorsers are thereby relieved
from liability on the instrument
d. The holder may at any time strike out an indorsement which is not necessary to his title

57. Statement I- A majority of the number of directors or trustees as fixed in the articles of
incorporation shall constitute a quorum for the transaction of corporate business, and every decision of
at least a majority of the directors or trustees present at a meeting at which there is a quorum shall be
valid as a corporate act, except for the election of the officers which shall require the vote of a majority
of all the members of the board
 Statement II - No person convicted of final judgment of an offense punishable by imprisonment
for a period exceeding five years or a violation of the corporation code committed within six
years prior to the date of his election or appointment, shall qualify as a director, trustee or
officer of any corporation.
a. True, true
b. True, false
c. False, true
d. False, false

58. Any director of a corporation maybe removed from office by a vote of

a. Majority of the members of the board
b. Majority of the stockholder’s present
c. 2/3 of the stockholder’s present
d. 2/3 of the outstanding capital stock

59. When a promissory note is drawn payable to the order of the maker, which of the following
statements is not correct?
a. The maker must sign as such maker and must sign it again as endorser to complete the
instrument
b. If the note is delivered by the maker to another without indorsement, the transferee cannot
recover from the maker
c. The note is not complete until indorsed by the maker
d. If there is no indorsement yet by the maker, the transferee will not be able to negotiate the
note

60. A, B, C and D are partners contributing P20,000, P30,000, P50,000 and industry, respectively. The
partnership failed so the partners decided to dissolve the partnership. At the same time of liquidation,
the unpaid obligation amounted to P100,000 distributed as follows:
To partnership creditor, Y Php 50,000
To partners A 30,000
B 20,000
If the remaining cash amounting to P10,000 was given to Y as partial payment. Which of the
following is correct?
a. Y can collect P10,000 from the separate property of D
b. As an industrial partner, D is not liable to Y
c. A, B and C are liable to Y in proportion to their capital contribution
d. A, B and C are liable to Y at P13,333 each

61. Kyla is obliged to give Lyka, at Lyka’s option his IphoneX,or his laptop. If all objects were lost thru
Kyla’s fault , which is correct?
a. The value of the first thing lost plus damages must be given to Lyka
b. The value of the last thing lost plus damages must be given to Lyka
c. The value of any of the Lyka’schoice plus damages must be given to Lyka
d. The obligation is extinguished

62. Dedee, a professional singer, agreed to sing for a free of P20, 000 at the birthday party of Caddie
who was a fan of Dedee. Due to numerous commitments, Dedee could not go to the party of Caddie. So
she sent Kekee, another professional singer who was known to sing better than Dedee, to sing the at
Caddie’s birthday party, and informed Caddie that the latter needed to pay only p10, 000. Which is
correct?
a. Dedee may validly assign his obligation to sing because the reduced fee was advantageous to
Caddie
b. Dedee may validly assign his obligation to sing because Kekee could perform the obligation
better than her
c. Dedee may not validly assign his obligation to sing because it is personal in nature
d. Caddie cannot refuse the performance of the obligation by Kekee because the obligation to
sing is transmissible since it would not require much effort on the part of either Dedee or Kekee
who are both professionals’ singers.

63. It serves as the Philippines central anti-money laundering/counter-terrorism financing (AML/CTF)

authority?
a. BangkoSentralngPilipinas b. Anti-Money Laundering Council c. Department of
Finance
d. Department of National Defense

64. The quorum of the general assembly shall consist of:

a. At least five per centum (5%) of all the members entitled to vote
b. At least ten per centum (10%) of all the members entitled to vote
c. At least twenty-five centum (25%) of all the members entitled to vote
d. Majority of all the members entitled to vote

65. Jack and Ton are partners in a certain business, Jack being the managing partner. Rose owes Jack
P50, 000 (more onerous) and the partnership is P100, 000. Rose pays Jack P30, 000 and Jack issues a
receipt in her name upon Rose’s instruction. How much is Jack entitled to apply to his credit?
a. Nothing b. P30, 000 c. P20, 000 d. P10, 000

66. Star Corporation which maintain a professional basketball team, entered into a contract with Moon
Rubber Company for the latter to provide a pair of rubber shoes to the formers two imported basketball
players, Sunny and Stormy. Moon Rubber Company was instructed to a pair for either or both players in
case the company did not manufacture shoes of their size. No pair was, however, immediately available
for both the players. Sunny , who is 6’5 tall and wears size 12 rubber shoes, was given a pair day from
the 300pairs that Moon was in the process of manufacturing for its customers at the time the orders
were received. Stormy, who is 7’ tall and wears size 18 shoes, was provided three days later, with a pair
that was specially made for him since Moon does not make shoes of his size. What kinds of contracts
were entered into for the shoes provided to the two basketball players under the New York rule?
a. The contract for the pair of shoes provided to Sunny is a contract for a piece of work , while
that for Stormy is a contract of sale
b. The contract for the pair of shoes provided to Sunny is a contract of sale, while that for
Stormy is a contract for a piece of work
c. Both contracts are contracts of sale
d. Both contracts are contract for a piece of work

67. Any person, who having sufficient funds in or credit with the drawee bank when he makes or draws
and issues check, shall fail to keep sufficient funds or to maintain a credit to cover the full amount of the
check if presented within a period of____ days from the date appearing thereon,for which reason it is
dishonored by the drawee bank shall be criminally liable under BP22.
a. 60 b. 30 c. 90 d. 5

68. What is the definition of the term insured deposit?

a. It means the amount due to any bonafide depositor for legitimate deposits in insured bank as
of the date of closure but not exceed five hundred thousand pesos (P500, 000)
b. It means the amount due to any bonafide depositor for illegitimate deposits in an insured
bank as of the date of closure but not exceed five hundred thousand pesos (P500, 000)
c. It means the amount due to any bonafide depositor for illegitate deposits in an insured bank
as of the date of closure but not exceed one million thousand pesos (1, 000, 000)
d. It means the amount due to any bonafide depositor for illegitimate deposits in an insured
bank as of the date of closure but not exceed one million pesos (1, 000, 000)

69. How many years must a single- line cooperative operate before it may transform into a multi-
purpose cooperative?
a. At least 2 years b. At least 1 year c. At least 3 years d. At least 4 years

70. Dayday bought a car from Jayjay and delivered a check in payment of the same, Has Dayday paid the
obligation?
a. No, not yet, the delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents shall produce the effect of payment only when they have been cashed, or
when through the fault of the creditor they have been impaired.
b. Yes, because a check is a valid legal tender of payment
c. It depends. If the check is a manager’s check or cashier check it will produce the effect of
payment. If it’s an ordinary check, no payment
d. Yes, because a check is as good as cash

71. Using the above information, if Y succeeds in collecting the deficiency from the partners concerned,
which of the following is not correct?
a. Only C will be liable to the other partners
b. A and B will not make additional contribution C
c. D is entitled to get reimbursement from A, B and C
d. C will pay P35,000 to his partners

72. A. B, C and D are partners in Y & Co., a limited partnership contributing P10,000, P20,000, P30,000
and P40,000, respectively. A, C and D are the general partners while B is the limited partner. The
partnership failed and the partners decided to dissolve the partnership. At the time of liquidation, the
unpaid obligation amounted to P100,000 distributed as follows:
To partnership creditor Y Php 50,000
To partners A 30,000
B 20,000

if the remaining cash amounting to P20,000 was given to Y as partial payment, which of the
following is correct?
a. Y can collect P7,500 each from the separate properties of the partners
b. Y can collect P30,000 from A, or C or D but not from B
c. B is not liable to Y because I is also a creditor of the partnership
 d. Y can collect P10,000 each from A, C and D

73. A person secondarily liable on the instrument is discharged, except

a. By any act which discharged the instrument
b. By the intentional cancellation of his signature by the holder
c. By a valid tender of payment made by a prior party
d. By the discharge of a subsequent party

74. A promissory note reads "I promise to pay to the order of B P1,000 on August 22, 2011. Sgd. A".
Suppose A is only 16 years old, which of the following is correct?
a. If B negotiates the note to C, C can enforce the note against A if C is a holder in due course
b. If B negotiates the note to C, C can enforce the note against A even if C is not a holder in due
course
c. B cannot negotiate the note because the maker is a minor who is not liable to any holder of
the instrument
d. If B negotiates the note to C, C cannot enforce the note against A, regardless of whether or
not C is a holder in due course

75. A. B and C are partners in a joint venture engaged in real estate and land development. A, without
the knowledge of B and C offered to sell to D all the remaining unsold lots at a price very much higher
than the prevailing market prices. Later, A bought out B and C from the partnership and thereafter
finally sold all the lots at very big profits.
Statement 1 - When A bought out B and C from the partnership, the partnership was dissolved
so B and C have no more share in the profit of the sale
Statement 2- The sale of the lots between A and D is void because it was without the knowledge
and consent of B and C
a. True, true
b. True, false
c. False, true
d. False, false

76. Below are two promissory notes prepared by A:

A. "promise to pay B or order P100,000 if he will pass the CPA Board Examinations. Sgd. A"
B. "I promise to pay C or order P100,000 if he kills Z. Sgd. A"
Which of the following statements is correct?
a. Both promissory notes are negotiable
b. Both promissory notes are non-negotiable
c. Only the first promissory note is negotiable
d. Only the second promissory note is negotiable

77. Using the above facts, and both conditions are satisfied, which of the following statements is
correct?
a. Both B and C can collect from A
b. Neither B nor C can collect from A
c. Only B can collect from A
d. Only C can collect from A
78. Using the above facts, and B assigns the note to D, and C assigns the note to E, which of the
following statements is correct?
a. Both D and E can collect from A, if both acted in good faith
b. Neither D nor E can collect from A, even if both acted in good faith
c. Only D can collect from A even if both acted in good faith
d. Only E can collect from A even if both acted in good faith

79. A and B are partners. On June 15, 2011 when the total obligation of the partnership totals P80,000,
C was admitted as a new partner. At the time of his admission, the partnership creditors were M for
P50,000 and N for P30,000. After June 15, the partnership borrowed from O, P20,000 and P10,000 from
P. On December 15, 2011, the partnership became insolvent leaving an obligation of P110,000 and the
partnership assets amounting to P30,000. The creditors are going after the separate properties of the
partners to satisfy their remaining claims. How are the creditors' claims satisfied?
Answer 1 - M and N can go after the separate properties of A and B but C's separate properties
are not answerable to their claims
Answer 2 - 0 and P can go after the separate properties of A, B and C
a. False, false
b. False, true
c. True, false
d. True, true

80. The following statements pertain to a voting trustee, except

a. The representative acquires legal title to the shares
b. It is good only for the meeting for which it was intended
c. It is generally irrevocable and the representative may vote even in the presence of the
stockholder
d. The agreement giving the representative the power to vote must be duly notarized and a
copy thereof must be submitted to the SEC to be effective and enforceable

81. Which of the following is not a condition imposed by the Constitution for the exercise of the power
of eminent domain?
a. The consent of the owner of the private property to sell the same to the government.
b. The payment of just compensation.
c. The observance of due process in taking of private property.
d. The existence of public use for the taking of a private property.

82. The members of the board of directors may be given compensation by any of the following acts,
except
a. If approved by the vote of the stockholders representing majority of the outstanding capital
stock
b. If provided in the by-laws If approved by the board of directors
c. if the salary given is not more than ten percent (10%) of the net income before income tax
during the preceding year
d. If approved by the board of directors giving them a reasonable per diem

83. The ratification of director's or trustee's contract with the corporation requires the vote of
a. Majority of outstanding capital stock of voting shares or majority of the members entitled to
vote
 b. 2/3 of outstanding capital stock of voting shares or 2/3 of the members entitled to vote
c. Majority of outstanding capital stock of voting and non-voting shares or majority of all the
members
d. 2/3 of outstanding capital stock of voting and non-voting shares or 2/3 of all the members

84. A borrowed from B P2M and to secure its payment, A orally agreed to deliver his 8-hectare
agricultural land by way of antichresis and to pay 12% interest per annum. Which is correct?
a. The contracts of loan and antichresis are both valid
b. The contract of loan is valid but antichresis is void
c. The contract of antichresis is valid but loan is void
d. Both contracts of loan and antichresis are void

85. Which of the following statements is not correct?

a. An agreement to constitute a commodatum is binding and is perfected from the moment
there is meeting of minds
b. Fixed, savings, and current deposits of money in banks and similar institutions shall be
governed by the provisions concerning mutuum.
c. Precarium is a kind of commodatum where the bailor may demand the thing loaned at will
d. In case of extraordinary expenses, the debtor in mutuum will shoulder 50% if he is in actual
use of the thing borrowed

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

87. A and B are co-owners of a parcel of land. A donated his share to C. Can B redeem the said share
from C?
a. Yes, because the law looks with disfavor at co-ownership
b. No, because legal redemption applies only in case of onerous transfers
c. No, unless he enforces his right through court action
d. Yes, but in proportion to his interest in the land us co-owner

88. Which of the following statements pertaining to treasury shares is correct?

a. Treasury shares are not part of issued capital stock
b. Treasury shares may not be disposed of at a price lower than the par or issued price even if
it is reasonable and approved by the board of directors
c. Treasury shares are entitled to vote
d. Treasury shares, once disposed of, entitle the purchaser or transferee the right to dividends

89. A is the drawer of a check. B is the payee and X is the drawee bank. Y fraudulently gets hold of the
check and forges the signature of the payee, B. Y then deposits it in C bank. C bank indorses the check to
X, drawee bank and collects from said X drawee bank through the clearing house. Then Y, forger
withdraws from C bank the proceeds of the check and disappears. Which of the following is not correct?
a. The drawer A has the right to recover from collecting bank C
 b. The drawer's account cannot be charged by the drawee bank
c. The payee, B can recover from drawer A
d. The drawee bank can recover from the collecting bank

90. A sold his piano to B for Php200,000 payable in installment. A chattel mortgage was constituted on
the piano. B defaulted in two installment payments. A demanded payment of the unpaid obligation
amounting to Php 120,000 and a writ of attachment was issued and the piano was sold for Php 100,000.
Can A still recover the deficiency?
Statement 1-No, the foreclosure of the piano extinguishes B's obligation
Statement 2- Yes, if stipulated that in case of foreclosure the buyer will pay any deficiency
a. Both statements are true
b. Both statements are false
c. Only Statement 1 is true
d. Only Statement 2 is true

91. In a partnership, the liability of the partners shall be joint and solidary
I. Obligations in favor of partnership suppliers by virtue of sales contract
II. Obligations in favor of a partnership client for return of deposits misappropriated by one of
the partners
III. Obligations in favor of a pedestrian hit by the delivery van driven by one of the partners in
the course of partnership business
a. I and III
b. II and III
c. I and II
d. I, II and III

92. A gave B P50,000 for the purchase of a TV set in behalf of the former, with the obligation of
returning the amount if the TV set was not bought within a week. A did not buy the item but did not
return the amount. An estafa case was filed by A against B. B pleaded A to drop the case. In return, B
issued a promissory note in favor of A for the amount involved. Is the promissory note valid?
a. No, the consideration of the note is the stifling of the crime of estafa
b. No, the consideration of the note is unlawful
c. Yes, if the note is negotiable because of mutual consent
d. Yes, the note is in consideration of a pre-existing debt

93. Which of the following statements is false?

a. Treasury shares revert to the unissued shares of the corporation and being in the treasury
they don't have the status of outstanding shares
b. Shares issued without par value shall be deemed fully paid and non-assessable and the
holder of such shares shall not be liable to the corporation or its creditors in respect thereto
c. Redeemable shares may be redeemed regardless of the existence of unrestricted retained
earnings provided such redemption would not cause insolvency or inability of the
corporation to meet its debts as they mature
d. When par value shares are issued above par, the premium or excess is not to be considered
as part of the legal capital
94. In case the members of the board of directors of a corporation still constitute a quorum, and there
are vacancies, who will fill up such vacancies?
Removal Resignation Expiration of term Increase in the number of the Directors
a. Stockholders Boards Stockholders Boards
b. BoardsBoards Stockholders Stockholders
c. Stockholders Boards Stockholders Stockholders
d. Stockholders Stockholders Boards Stockholders

95. A, B and C organized ABC and Co, limited, a limited partnership with A as a general partner, B as a
limited partner, and C as an industrial partner, contributing P200,000, P200,000 and industry
respectively. The partnership failed and after disposing all its assets to pay partnership debts, there still
remains a note payable in the sum of P30,000. Against whom can the creditor demand payment?
A B C
a. P30,000 P0 P0
b. P15,000 P0 P15,000
c. P10,000 P10,000 P10,000
d. P15,000 P15,000 P0

96. Claude, the registered stockholder of 1,000 shares of ABC Corporation pledged the shares to Conrad
by endorsement in blank of the covering stock certificates and, execution of a Deed of Assignment of
Shares of Stock, intended as collateral for a loan of Php 1M that was also supported by a separate
promissory note. Under these facts, is there a valid pledge of the shares of stock to Conrad?
a. No, because shares of stock are intangible personal properties whose possession cannot be
delivered and, hence cannot be the subject of pledge
b. No, because the pledge of shares of stock requires double registration with the Register of
Deeds of the principal place of business of the corporation and of the residence of the
pledgor
c. Yes, because endorsement and delivery of the certificates of stock is equivalent to the
transfer of possession of the covered shares to the pledgee
d. Yes, because the execution of the Deed of Assignment of Shares of Stock is equivalent to a
lawful pledge of the shares of stock.

97. Dennis subscribed to 10,000 shares of XYZ Corporation with a par value of Php 100/share. However,
he paid only 2.5% of the subscription or Php 250,000 No call has been made on the unpaid subscription.
How many shares is Dennis entitled to vote at the annual meeting of stockholders of XYZ?
a. 10,000 shares
b. 2,500 shares
c. 100 shares
d. 0

98. ABC Corporation issued redeemable shares. Under the terms of the issuance, the shares shall be
redeemed at the end of 10years from date of issuance at par value plus a premium of 10%. Choose the
correct statement relating to these redeemable shares.
a. ABC Corporation would need unrestricted retained earnings to be able to redeem the shares
b. Corporations are not allowed to issue redeemable shares; thus, the issuance by ABC
Corporation is ultra vires act
c. Holders of redeemable shares enjoy a preference over creditors
 d. ABC Corporation may redeem the shares at the end of 10 years without need for
unrestricted retained earnings provided that, after the redemption, there are sufficient
assets to cover its debts

99. Arnold representing himself as an agent of Brian for the sale of Brian's car, approached Dennis who
appeared interested in buying the car. At Arnold's prodding, Dennis issued a crossed check payable to
Brian for Php 25,000 on the understanding that the check would only be shown to Brian as evidence of
Dennis good faith and interest in buying the car. Instead, Arnold used the check to pay for the medical
expenses of his wife in Brian's clinic after Brian, a doctor, treated her. Is Brian a holder in due course?
a. Yes, Brian is a holder in due course because he was the payee of the check and he received
it for services rendered
b. Yes, Brian is a holder in due course because he did not need to go behind the check that was
payable to him
c. No, Brian is not a holder in due course because Dennis issued the check only as evidence of
good faith and interest in buying the car C
d. No, Brian is not a holder in due course because Brian should have been placed on notice: the
check was crossed in his favor and Arnold was not the drawer.

100. Gawsengsit Corporation is a corporation incorporated in Singapore. It invested in Bumblebee

Corporation, a Philippine corporation by acquiring 30% of its shares. As a result, Gawsengsit Corporation
nominated 30% of the directors of Bumblebee Corporation, all of whom are Singaporeans and officers of
Gawsengsit Corporation. Choose the correct statement relating to Gawsengsit Corporation.
a. Gawsengsit Corporation is doing business in the Philippines and requires a license from the
SEC
b. Gawsengsit Corporation is not doing business in the Philippines by its mere investment in a
Philippine corporation and does not need a license from the SEC
c. Gawsengsit Corporation has to appoint a resident agent in the Philippines
d. Gawsengsit Corporation cannot elect directors in Bumblebee Corporation