Professional Documents
Culture Documents
Reviewer in Business Law
Reviewer in Business Law
CHAPTER 1
2. A contract of partnership may be made orally or in writing regardless of the value of the contributions unless
the immovable property or personal rghts are contributed, in which case there is a need for the execution of a
public instrument. TRUE
3. A partnership formed for an unlawful purpose is void ab initio, but the partners acquire certain rights and incur
obligations since they gave their consent to the partnership contract. FALSE
4. A partnership at will is one in which no time is specified and is not formed for a particular undertaking or venture,
and which may be terminated anytime by mutual agreement of the partners, or by the will of any one partner alone
provided there is just cause. FALSE
5. A partnership begins from the time the partnership is registered with the Securities and Exchange Commission
(SEC).FALSE
6. In a universal partnership of all present property, property subsequently acquired by inheritance, legacy or
donation can be included if there is a stipulation between the partners. FALSE
7. A husband and his wife cannot enter into any kind of partnership or be members thereof. FALSE
8. A partnership contract is consensual because it is perfected by the delivery of the money and property that
partners have promised to contribute to the common fund.FALSE
9. A partnership is formed when two brothers are receiving profits/ rentals from a property that they inherited from
their deceased father. FALSE
10. Articles of universal partnership entered into without specification of its nature constitutes universal partnership
of all present property.FALSE
CHAPTER 2
1. The partnership may proceed against a negligent partner who caused injury to the partnership. TRUE
2. Notice to a partner is a notice to the partnership regardless of whether the partner is a managing partner or
not. TRUE
3. Every partnership shall operate under a firm name which shall always include the partners' surnames, if not their
initials. FALSE
5. All partners are liable jointly with the partnership in case of torts.TRUE
6. A partnership is not bound by a partner's breach of trust and the erring partner alone shall be held liable for
ensuing damages. TRUE
7.An incoming partner is liable only for partnership obligations incurred after his admission. FALSE
8. Any act of a partner, which is apparently for the carrying on of the usual business of the partnership, will bind
the partnership. TRUE
9. A partner may not convey the real property in the name of the partnership because to do so amounts to disloyalty
to the partnership. FALSE
10. Upon exhaustion of its assets, all partners are liable with all their property for partnership debts, in proportion
to their capital contribution. TRUE
CHAPTER 3
1. The winding up of a dissolved partnership may be done extra-judicially by the partners or judicially by a
competent court. FALSE
2. As a general rule, if the cause of dissolution is the death of a partner, the authority of the other partners to bind
the partnership ceases upon knowledge of the dissolution. FALSE
3. The right to demand an accounting of partnership affairs must be directed against the winding-up partner, or
the surviving partners, or the partners continuing the business.TRUE
4. The individual property of a deceased partner shall answer for the latter's share of the contributions needed to
settle the partnership deaths incurred while he was a partner. FALSE
5. Dissolution of a partnership may be ordered by the court upon petition by a partner or his assignee in case he has
assigned his interest in the partnership. FALSE
6. The dissolution of a partnership may be brought about by change through: admission of a new partner, retirement
of a partner, death, withdrawal, or expulsion; or when all the partners assign their rights to a third person or a sole
remaining partner. FALSE
8. Incapacity of a general partner is a cause for judicial dissolution of a general partnership. FALSE
9. When a business can be carried only at a loss, it results in the automati dissolution of the partnership. FALSE
10. On application by or for a partner the court shall decree dissolution in case of insolvency of a partner. FALSE
CHAPTER 4
1. A limited partner can validly demand formal accounting of partnership affairs anytime at his pleasure. FALSE
3. A limited partner who takes an active part in the management of the firm becomes liable as a general partner.
TRUE
4. A general partnership may be formed informally while a limited partnership has to comply with the formalities
laid down by law. TRUE
5. The heirs of a deceased limited partner shall be liable for all his liabilities as a limited partner. FALSE
6. A limited partnership is validly organized by executing a certificate signed and sworn by the partners and filed
with the SEC. TRUE
7. A limited partner may lend money to the partnership and hold as collateral security any partnership property.
FALSE
8. The certificate shall be amended when all limited partners cease to be such. FALSE
10. A limited partner may demand the return of his contribution anytime.FALSE
CORPORATION
CHAPTER 1
1. Without necessarily piercing the veil of corporate fiction, personal liability attaches to a corporate director,
trustee, or officer when:
B. He is guilty of bad faith or gross negligence in directing the affairs of the corporation.
A. merger or consolidation
D. investment of corporate fund for a purpose outside of the main purpose of the corporation
3. An action where a stockholder brings an action in the name and on behalf of the corporation for damages
sustained by the latter and any relief obtained shall benefit the corporation and not the stockholder.
A. individual suit
B. derivative suit
C. representative suit
D. corporate suit
4. The following, except one, are the corporate acts in which a stockholder of The foration shall have the right to
dissent and demand payment of the value of his shares of stock. Which is it?
D. in case of sale, lease, mortgage, or other disposals of all or substantially a of the corporate assets
5. Contracts between a corporation and third persons must be made by or under the authority of whom?
A. board of directors
B. stockholders
D. general manager
7. Who from the following group of professionals is allowed under the law to organize among themselves a
corporation for the practice of their profession?
A. doctors
B. lawyers
C. engineers
8. Statement I - Redeemable shares may be redeemed regardless of the existence of the unrestricted retained
earnings even if such redemption would cause insolvency or inability of the corporation to meet its debts as they
mature;
Statement II Treasury shares do not revert to the unissued shares of the corporation and are still issued shares but
being the treasury, they have the status of outstanding shares.
C. only I is true
D. only II is true
9. For purposes of interlocking directors, when is the stockholdings considered substantial?
11. Under what vote, as a rule, may any provision or matter stated in the Articles of Incorporation be amended by
the Board of Directors or Trustees?
A. unanimous vote
B. majority vote
C. three-fourths vote
D. two-thirds vote
12. What is the required vote of stockholders before any director of a may be removed from office? corporation
C. majority vote of the board of directors and majority vote of the outstanding capital stock
15. Under which of the following conditions may a director, as such, receive compensation?
A. with the vote of stockholders representing at least two-thirds of the outstanding capital stock granting
compensation
CHAPTER 2
A. When the subscriber had fully paid his subscription to the corporation.
B. When the subscriber had partially paid his subscription to the corporation.
B. not less than the issued price for no-par value share
3. Which of the following may not be a consideration for the issuance of stock?
B. stocks issued for money of property less than the par value
5. Statement 1 - The highest bidder in a delinquency sale is the person offering to pay the full amount of the balance
on the subscription together with accrued interest, if any, cost of advertisement and expenses of sale for the highest
number of shares.
Statement II - Holders of subscribed shares, not fully paid shall have all the rights of stockholder.
6. Statement I - Redeemable shares may be redeemed regardless of the existenceof the unrestricted retained
earnings even if such redemption would cause insolvency or inability of the corporation to meet its debts as they
mature. Statement II - Treasury shares do not revert to the unissued shares of the corporation and are still issued
shares but being the treasury, they have the status of outstanding shares.
C. only I is true
D. only II is true
7. It is a doctrine that maintains that the corporation holds the assets of the corporation as represented by its capital
stock and being held in the trust to be used to pay corporate creditors.
C. dividend
D. delinquent stock
9. The following are the remedies to enforce payment of stock subscription, except:
A. public auction
B. judicial action
D. withholding of compensation
10. The following are the corporate acts in which a stockholder of a corporation shall have the right to dissent and
demand payment of the fair value of his shares of stock, except one:
C. in case of an amendment to the articles of incorporation which has the effect of changing or restricting the rights
of any stockholder
D. in case of sale, lease, mortgage, or other disposal of all or substantially all of the corporate asset
D. by subscription contract with an existing corporation for the acquisition of unissued shares
12. The following are the different modes by which shares may be issued, except:
B. by subscription new stocks, when all the original stocks have been issued and the amount of the capital stock
increased
D. by transfer of shares
13. The following are the limitation in the issuance of stocks, except:
A. shares of stock shall not be issued for consideration more than the par or issued price thereof
C. when the consideration is other than actual cash or consists of intangible property, the value shall be determined
by the incorporators or the board, subject to approval by the SEC
A. Only absolute transfers of shares of stock need to be registered in the books of the corporation.
B. A stock becomes delinquent upon failure of the holder to pay the unpaid subscription or balance thereof within
60 days from the date specified in the contract of subscription.
C. The board of directors may declare due and payable unpaid subscriptions.
D. In the absence of bidders, the corporation may purchase for itself the delinquent stock.
15. The following are the effects of an unregistered transfer of shares, except:
A. It is invalid insofar as the corporation is concerned except when notice is given to the corporation for purposes of
registration.
D. It is invalid as against the creditors of the transferor without notice of the transfer.
CHAPTER 3
1. A corporation sole may be dissolved, and its affairs settled voluntarily by submitting to the SEC a verified
declaration of dissolution.
2. An intra-corporate controversy is one that arises between a stockholder and the corporation or among the
stockholders involving internal affairs of the corporation.
3. Unless the bylaws provide otherwise, any action by the directors of a close corporation without a meeting shall
nevertheless be deemed valid if all the directors have express or implied knowledge of the action in question and
none of them makes prompt objection thereto in writing.
4. Unless otherwise provided in the articles of incorporation or the bylaws, the board of trustees of incorporated
schools, colleges, or other institutions of learning shall, as soon as organized, so classify themselves that the term of
office of one-third of their number shall expire every year.
5. The license of a foreign corporation to transact business in the Philippines may be revoked or suspended by the
SEC upon its failure to file its annual report or pay any fees as required by the RCC.
6. The visitorial powers of the SEC include the examination and inspection of records, regulation and supervision
of activities, enforcement of compliance, and imposition of sanctions in accordance with the RCC.
7. A provisional director shall be an impartial person who is neither a stockholder nor a creditor of the corporation
or any of its subsidiaries or affiliates, and whose further qualifications, if any, may be determined by the SEC.
8. Subject to existing laws and regulations, a foreign corporation licensed to transact business in the Philippines
may be allowed to withdraw from the Philippines by filing a petition for withdrawal of license.
9. Nonstock corporations may be formed or organized for charitable, religious, educational, professional, cultural,
fraternal, literary, scientific, social, civic service, or similar purposes.
10. The articles of incorporation of a close corporation may provide that all officers or employees or that specified
officers or employees shall be elected or appointed by the stockholders, instead of by the board of directors.
11. Upon the winding up of the corporate affairs, any asset distributable to any creditor or stockholder or member
who is unknown or cannot be found shall be escheated to the city or municipality where such assets are located.
12. The single stockholder may, at any time, change its nominee and alternate nominee by submitting to the SEC
the names of the new nominees and their corresponding written consent.
13. The trustee (of a dissolved corporation) may commence a suit that can proceed to final judgment even beyond
the three-year period of liquidation.
14. One-person corporation (OPC) is a corporation with a single stockholder, who can only be a natural person,
trust, or estate.
15. The single stockholder shall be the sole director and president of the OPC.
COOPERATIVE
1. Directors, officers, and committee members of a cooperative shall be liable pro rata with the cooperative for all
damages resulting from acts in violation of their duties.
2 . A contract entered into by the cooperative with any of its directors constitutes a conflict of interest and is
considered void.
3. A disloyal director shall be liable for damages and must account for double the profits that otherwise would
have accrued to the cooperative by refunding the same, even if he used his own funds in the venture.
4. Cooperatives enjoy certain tax exemptions only when they are in thefirst five years of operation.
6. Capital derived by cooperatives constitutes a trust fund that cannot be invested in any way and must be
reserved for the members of thecooperatives.
7. The bylaws of every cooperative may prescribe a fine on the unpaidsubscribed share capital of its members.
8. Cooperatives are prohibited from receiving grants, aids, or anyassistance from foreign institutions.
9 A cooperative may be dissolved for its failure to organize and operatr. within two years after the issuance of its
certificate of registration or has not carried on its business for two consecutive years, without justifiable cause.
10. An amendment of the articles of cooperation needs the three-fourths vote of members with voting rights
while merger, consolidation, and division of cooperatives require two-thirds of all members with voting rights
present and constituting a quorum.
1. Complaints about the removal of any elected officer of the cooperative shall be filed with the Cooperative
Development Authority.
2. The Cooperative Development Authority (CDA), as the lead agency in the development and regulation of
cooperatives, is an attached agency of the Department of Interior and Local Government.
3. The board of directors of CDA is composed of a Chairperson and eight members-one board of directors from each
of the clusters of cooperatives,
4. The Administrator of the CDA, upon his appointment, shall cease to have any pecuniary interest or dealings
with any cooperative.
5. The Registered Cooperatives Master List which contains the names of all registered cooperatives shall be updated
every three years.the ther
6. In case of election-related issues, the aggrieved party may elevate the case for adjudication to the proper regional
trial court without undergoing alternative dispute resolution.
7. In order to qualify as a cooperative, there must be at least 10 members in the proposed cooperative.
8. The SEC exercises developmental, regulatory and quasi-judicial powers, functions and responsibilities, and other
inherent powers over cooperatives.
9. Any dispute, controversy, or claim arising out of or relating to the bylaws of the cooperative, the cooperative laws
and related rules, administrative guidelines of the CDA are referred to the regional trial court for its adjudication.
10. The CDA develops and conducts training programs for officers and members of cooperatives.
NEGOTIABLE INSTRUMENTS
1. Which of the following promissory notes is not negotiable for reason that the instrument is not payable in sum
certain in money?
A. X promises to pay to the order of A P10,000 payable in dollars at the rate of exchange prevailing on October 13,
2023.
D. X promises to pay to the order of A P10,000 in two equal installments, the first installment payable on September
12, 2023, and the second installment on or before October 12, 2023.
A. "I promise to pay C or order P20,000 if he will pass the CPA examinationin October 2023." (Sgd. B).
B. "I promise to pay Cor order P20,000 in four (4) installments." (Sgd. B)
C. "I promise to pay C or order P20,000, 60 days after the death of his father." (Sgd. D).
A. "Pay to Cor order P20,000 out of my money in your possession." (Addressed to A, signed by B)
B. "Pay to C or order P20,000 and reimburse yourself out of my money in your possession." (Addressed to A,
signed by D)
C. Pay to B or order P5,000 or deliver two horses at the option of the holder. (sgd. C)
A. Pay to bearer C P10,000. Reimburse yourself out of the rental of my house in Manila. To B, signed A.
B. Pay to C P10,000 or his order out of the rental of my house in Manila. To Β, signed A.
C. Pay to C P10,000 and reimburse yourself out of the rental of my house in Manila. To B, signed A.
D. Pay to the order of C P10,000. Reimburse yourself out of the rental of my house in Manila. To B, signed A.
8. One of the requisites of a negotiable instrument is that it must contain an unconditional promise or order to pay a
sum certain in money. Which of the following denotes non-negotiability?
A. I promise to pay to the order of L the sum of $900 at the DBP Manila.
B. I promise to pay to the order of Y the sum of $600 and to deliver one- fourth of the rice harvest on my farm.
C. I promise to pay N or bearer in Manila the sum of P18,000 in the Philippine pesos or US dollars.
D. I promise to pay E or bearer in Manila the sum of P27,000 in the Philippine pesos or US dollars, at the option of
the holder.
9. M makes a note payable to the order of P who indorses it to A. F obtains possession of the note fraudulently,
forges A's signature and indorses it to B who in turn indorses it to C. In this case, C can:
10. M makes a promissory note for P2,000.00 payable to the order of P. P negotiates the note to A who, with the
consent of P, raises the amount to P20,000.00 and thereafter indorses it to B, B to C, and C to D who is not a holder
in due course. In this case:
2. A holder of an instrument payable on demand is deemed not to be a holder in due course when the instrument
was negotiated to him for an unreasonable length of time after its issue.
3. A conditional indorsement will constitute a violation of paragraph 2, Section 1 of the law on negotiable
instrument that will destroy its negotiability.
4. A holder of the instrument can strike out any indorsement appearing on the instrument.
5. A bearer instrument will always remain as a bearer instrument despite the presence of a special indorsement.
7. A holder for value is an endorsee who has both the legal title and the beneficial interest to the instrument and
is subject to both real and personal defenses available against him.
9. A holder in due course is one who possesses both the legal and beneficial interest to the instrument but is subject
to personal defenses only.
10. An endorsement where the indorser adds the phrase "without recourse" is called a restrictive indorsement.
1. The purpose of an irregular indorsement is made to add the signer's credit to the instrument.
2. The acceptor by accepting the instrument admits the existence of the indorser, genuineness of his signature, and
his capacity and authority to indorse.
3. Every person negotiating an instrument by delivery or by qualified endorsement warrants that the person
negotiating has no liability to a third person.
5. Maturity of an undated negotiable instrument issued payable 30 days after sight is computed from the date of the
first presentation for acceptance.
7. The holder may refuse to take a qualified acceptance and if he does not obtain an unqualified acceptance, he
may treat the bill as dishonored by non-payment.
8. Every person negotiating an instrument by delivery warrants that the instrument is, at the time of his
indorsement, valid and subsisting.
9. A drawer is primarily liable to the holder, or to any subsequent indorser, who may be compelled to pay the
instrument.
1. Presentment for acceptance of a bill of exchange is not necessary where it is payable at a certain number of
days after the date.
2. The distinction between acceptance for honor and ordinary acceptance is that in acceptance for honor, the consent
of the holder is required while in ordinary acceptance, such consent is not required.
4. A referee in case of need is the person named by the drawer or indorser as the one to whom the holder may
resort in case the bill is dishonored by non-payment or non-acceptance.
6 A person secondarily liable on the instrument is discharged by payment in due course by the party
accommodated, where the instrument is made or accepted for his accommodation.
7. Where the drawee to whom a bill is delivered for acceptance destroys the same, or refuses within 24 hours after
such delivery, or within such other period as the holder may allow, to return the bill accepted or not accepted to the
holdet, he will be deemed to have rejected the bill.
8. The maturity of an undated negotiable instrument issued payable 60 days after sight is computed from the date of
the first presentment for acceptance.
9.Payment by maker of a promissory note before maturity date discharges a negotiable instrument.
10. Where a bill is drawn in a set, each part of the set being numbered and containing a reference to the other
parts, the whole of the parts constitutes one bill.
1. The certification of a check, if procured by the holder discharges persons secondarily liable.
2. Even if the bank performed with utmost diligence, the drawer whose signature was forged may still recover
from the bank as long as he or she is not precluded from setting up the defense of forgery.
3. A drawee bank may not refuse to pay checks drawn against it even if the drawer's deposit is insufficient.
4. A check itself does not operate as an assignment of any part of the funds to the credit of the drawer with the
bank, and the bank is not liable to the holder unless and until it accepts or certifies the check.
5. A stale check is one which has not been presented for payment within a reasonable time after its issue and as
such became valueless although the underlying obligation still exists.
6. The bank is liable to the drawer for paying a check in violation of the stop payment order.
8. A bank, which honors a check wherein the drawer's signature was forged, must bear the loss because it has the
legal duty to ascertain that the drawer's signature is genuine before encashing a check.
9. If no presentment is made, the drawer cannot be held liable unlespresentment is otherwise excused.
10. A bank will not be liable if it pays a forged check in good faith.
1 . Violation of BP Blg. 22 is considered malum in se, while estafa is considered malum prohibitum.
3. The drawer is given only 3 days after notice of dishonor to make good the cash value of the check to avoid
liability in estafa.
4. Damage to the complainant and intent of the person issuing the check are material in BP Blg., 22 cases.
5. BP Blg. 22 applies even where the dishonored checks were issued merely in the form of a deposit or a guaranty
and not as actual payment.
6. Article 315 par. 2(d) of the RPC penalizes the issuance of a check only if it was issued concurrently with, and
reciprocally in exchange for, amaterial gain.
8. To be liable for estafa, the worthless check issued should not be for a pre-existing obligation.
9. A notice of dishonor received by the maker or drawer of the check is thus indispensable before a conviction for
violation of BP Blg., 22 can ensue.
10. BP Blg. 22 covers all kinds of checks, even foreign checks if they are drawn and issued in the Philippines, even
if they are payable outside the Philippines.