Ampongan and Abano Bus Law PDF
Ampongan and Abano Bus Law PDF
Ampongan and Abano Bus Law PDF
OBLIGATIONS
1. The duty not to recover what has been voluntarily paid although payment was no longer required:
a. Natural obligation
b. Moral obligation
c. Civil obligation
d. None of the above
2. When “A” voluntarily takes charge of the neglected business of B without the latter’s authority
where reimbursement must be made for necessary and useful expenses, there is a
a. Quasi delict
b. Quasi contract
c. Negotorium gestio
d. Solutio indebiti
3. “A” has been missing for some time leaving no one to manage his properties. B and C jointly took
charge of the management thereof. However, due to the fault of B, the properties of A were
damaged. The liability thereof to A for damages shall be
a. Only B shall be liable.
b. Both shall be jointly liable.
c. Both shall be solidarily liable.
d. They are not liable since A is at fault for having abandoned his properties.
6. On June 1 2015, Dichoso obliged himself to deliver to Concolon a specific land on July 1, 2015.
This property is being leased to Lalaso at P5,000 per month. Which is correct?
a. Dichoso has to deliver to Corcolon the land including its rental income from June 1, 2015.
b. Dichoso has to deliver to Corcolon the land including its rental income from January 1, 2015.
c. If Dichoso delivers only the land to Corcolon on August 1, 2015 he should also deliver the
rental income from July 1, 2015.
d. If Dichoso delivers only the land to Corcolon on August 1, 2015 he shall be entitled to the
fruits from August 1, 2015.
7. 1st Statement: If the thing is determinate, the debtor can be compelled to deliver the thing
promised and upon failure, the creditor has a right to ask for damages.
2nd Statement: If the object is generic and the debtor does not comply with the obligation, the
creditor can ask a third person to comply with the prestation at the expense of the debtor, plus
damages.
a. Only the 1st statement is true.
b. Only the 2nd statement is true.
c. Both statements are true.
d. Neither statement is true.
8. Which is not a requisite in order that obligation shall be extinguished by the destruction of a thing
due?
a. When the thing is lost before the debtor incurred delay.
b. When the obligation is to deliver a brand new Hyundai Getz.
c. When the thing is lost without the fault of the debtor.
d. When the obligation is to deliver the Bonnevie Bldg. at 32 Ortega St., San Roque, Iriga City.
9. The delay on the part of the creditor to accept the performance of an obligation:
a. Dolo incidente
b. Mora accipiende
c. Compensatio morae
d. Mora solvendi
10. “Dayanan binds himself to sell to Gagatlun his car for P250,000.” Which of the following
statements is false?
a. If no period has been agreed upon, the performance of the respective obligation is deemed to
be simultaneous.
b. If Dayanan delivers the car, Gagatlun will only be in delay from the time demand has been
made by Dayanan.
c. Dayanan cannot demand payment if he does not deliver the car.
d. Gagatlun cannot demand delivery if he does not pay the price.
12. Who is liable for the loss of the subject matter by fortuitous event?
a. Creditor
b. Debtor
c. Both creditor and debtor
d. None of them
13. Antigua obliged himself to deliver a specific cow to Braganza which will be butchered and served
to the latter’s guests on the occasion of his wedding on June 20. On June 20 Antigua did not
deliver the cow. The following day, it was killed due to a flood that occurred in their place.
a. Antigua is liable for the loss of the cow because he was in delay.
b. Antigua’s obligation has been extinguished.
c. Antigua is obliged to replace the cow.
d. Antigua is not liable because the cause of the loss is a fortuitous event.
14. Statement 1: The receipt of the principal obligation without reservation as to the payment of
interest shall give rise to the presumption that the interest has been paid.
Statement 2: The receipt of the latter installment of a debt without reservation as to prior
installment, shall not raise a conclusive presumption that the prior installment is also paid.
a. Both are true
b. Both are false
c. No. 1 is false, No. 2 is true
d. No. 1 is true, No. 2 is false
15. Which of the following is not an exception to the rule that “all rights acquired in virtue of an
obligation are transmissible”?
a. When the parties agreed against its transmission.
b. When the law prohibits the transmission of rights.
c. When the nature of the obligation is purely personal.
d. When the obligation is real.
17. Statement 1: When the fulfillment of the suspensive or resolutory condition depends upon the
sole will of the debtor, the conditional obligation shall be void.
Statement 2: If the original obligation is subject to a suspensive or resolutory condition and the
contract is novated the new obligation shall be under the same conditions unless otherwise
stipulated.
a. Both are true
b. Both are fals
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No. 2 is true
18. “I will give you this car provided that if I like to have it back, you will return the same to me.”
a. The obligation is valid, because the condition merely causes the loss of rights already
required.
b. Combination of C and D.
c. The obligation is void, because the fulfillment depends upon the will of the debtor.
d. The obligation is void, because the fulfillment depends upon the will of the creditor.
19. Which of the following is an obligation with a period for the benefit of the debtor?
a. An obligation payable little by little.
b. An obligation payable when the debtor’s means permit him to do so.
c. An obligation payable within 2 years on demand.
d. An obligation “payable soonest”
e. An obligation payable on or before December 25, 2015.
20. The debtor loses the benefit of the period, and his obligation becomes demandable when
a. Demand by the creditor would be useless.
b. The guarantees as promised and delivered by the debtor are not acceptable to the creditor.
c. After contracting the obligation, the creditor suspects that the debtor is becoming insolvent.
d. The debtor attempts to abscond.
23. Statement 1: The concurrence of two or more creditors or of two or more debtors in one and the
same obligation implies that the obligation is solidary.
Statement 2: When the obligation is joint, the debt shall be divided into as many shares as there
are creditors or debtors.
a. Only the first statement is true.
b. Only the second statement is true.
c. Both statements are true.
d. Neither statement is true.
24. A, B, and C secured a loan from D. The promissory note which evidenced the obligation states: “I
promise to pay D or order P10,000 payable on demand” (Sgd.) A B C. The obligation is:
a. Solidary
b. Divisible
c. Indivisible
d. Joint
26. Didith, Diana, and Dura executed a promissory note worded as follows: “We promise to pay to
Carlito, Colinares, and Colico the sum of P180,000.” (Sgd.) Didith, Diana, and Dura.
a. Didith is obliged to pay Carlito, Colinares, and Colico P180,000.
b. Didith is obliged to pay Carlito P80,000.
c. Didith is obliged to pay Carlito P20,000.
d. Didith is obliged to pay Carlito P60,000.
27. A, B, and C solidarily bound themselves to deliver to X a Honda Motorcycle. The obligation was
not fulfilled through the fault of A, thereupon, X filed an action in court against C and the court
awarded P36,000 to X. Which of the following situations is correct.
a. If C pays X the P36,000, C can collect from A P24,000 and B P12,000. Later, B can ask for
reimbursement from A P12,000.
b. X has to collect P12,000 each from A, B, and C to satisfy the court’s award of P36,000.
c. If C pays X the P36,000, C can collect from B P10,000 and from A P16,000.
d. X cannot collect the whole amount of P36,000 from C.
28. D1, D2, and D3 are solidary debtors of C for P30,000. The obligation was in writing. After the
lapse of the ten-year prescriptive period, which of the following statements is incorrect?
a. If D1 paid C not knowing that the obligation has already prescribed, his right is to proceed
against C because there was undue payment.
b. If D1 paid C knowing that the obligation has already prescribed, D1 cannot ask
reimbursement from D2 and D3.
c. If D1 paid C not knowing that the obligation has already prescribed, D1 cannot ask
reimbursement from D2 and D3.
d. None of the above
29. Atienza and Bandana are jointly and severally liable to Cantada for P50,000. Atienza is a minor.
a. Cantada can collect P25,000 from Bandana.
b. Cantada can collect P25,000 from Atienza, that is the share of Bandana.
c. Cantada can collect P50,000 from Bandana.
d. Cantada can collect P50,000 because minority is not a defense.
30. In obligations with a penal clause, the creditor as a rule may recover from the debtor in case of
non-compliance the following:
a. The principal, the penalty as agreed upon, plus damages and interest.
b. The principal, the penalty plus interest.
c. The principal and the penalty.
d. The principal, the penalty, and damages.
31. Statement 1: The nullity of the penal clause does not carry with it that of the principal obligation.
Statement 2: The nullity of the principal obligation carries with it that of the penal clause.
a. Only the 1st statement is false.
b. Only the 1st statement is true.
c. Both statements are true.
d. Both statements are false.
32. In tender of payment and consignation, if after the consignation is made and the creditor allowed
the debtor to withdraw the thing deposited in court, which of the following statements is incorrect?
a. Co-debtors, guarantors, and sureties are released from the obligation unless they consented.
b. The obligation remains to subsist.
c. The obligation is extinguished.
d. None of the above.
33. Distrito owes Cantores P20,000. Without the consent of Distrito, Ababa paid the debt which was
accepted by Cantores. If Ababa does not intend to be reimbursed –
a. The payment did not extinguish the debt of Distrito because it was made without his consent.
b. The payment is valid as to the creditor who has accepted it.
c. The payment is not considered valid because of Ababa’s intention.
d. The payment did not extinguish the debt because it was not made by the debtor.
34. Dondon owes Cena P20,000 due on April 20, 2015. When the debt matured, Dondon is paying
Cena a manager’s check worth P20,000.
Question 1: Can Cena accept the check?
Question 2: Can Cena refuse to accept the check?
Question 3: If Cena accepts the check, is the acceptance equivalent to payment?
b. Yes Yes No
c. No Yes Yes
d. No No Yes
35. This is not an essential element of an application of payment
a. There must be one debtor and one creditor.
b. Two or more debts and two or more creditors.
c. There are two or more debts of the same kind and nature.
d. The debts are all due and demandable.
Later, partial payment was made by the debtor without specifying the debts to which the payment
should be applied and on the other hand, the creditor had not specified in the receipt to be issued
the application of payment. Which of the following is the order of preference in which the payment
should be applied?
a. I, II, III
b. II, III, I
c. III, I, II
d. III, II, I
37. The abandonment of all property of the debtor for the benefit of his creditors in order that the
latter may apply the proceeds thereof to the satisfaction of their credit
a. Application of payment
b. Payment by cession
c. Dation in payment
d. Tender of payment
38. Debtor Batista is indebted to John Cena, King Booker, and Big Show a total amount of P300,000
made up of: John Cena – P100,000; King Booker – P50,000 and Big Show – P150,000. On
maturity, Batista cannot pay his obligation so he assigns or cedes to them all his property, to be
sold by the creditors and the proceeds thereof applied to their corresponding credits. The
creditors sold Batista’s properties for only a total of P180,000. Is the obligation extinguish?
Decide.
a. Yes, the obligation is extinguished.
b. John Cena, Big Show and King Booker will divide the P180,000 equally.
c. John Cena will get P60,000, King Booker – P30,000 and Big Show – P90,000.
d. None of the above
40. Consignation alone without any tender of payment is sufficient in the following cases, except:
a. When the creditor is absent or unknown or does not appear at the place of payment.
b. When without just cause, the creditor refuses to give a receipt.
c. When the creditor presents the title to the obligation for collection.
d. When two or more persons claiming the same right to collect.
43. When two persons in their own right are reciprocally creditors and debtors of each other and
extinguishes both debts to the concurrent amount, what takes place is known as
a. Compensation
b. Novation
c. Confusion or merger
d. Remission
44. Dante and Django are jointly indebted to Crystal for P10,000. Crystal endorsed the instrument to
Augusto, Augusto to Julio, Julio endorsed it back to Dante only. Whose obligation has been
extinguished?
a. Dante only.
b. Django only.
c. Both Dante and Django.
d. Neither Dante nor Django.
45. If the substitution is without knowledge of the original debtor and the new debtor is insolvent and
cannot pay the obligation:
a. The original debtor and the new one will share the value of the obligation.
b. The old debtor can still be liable to pay the obligation.
c. The old debtor is free from any liability after the substitution.
d. The old debtor, the new debtor and the creditor will share the value of the obligation.
46. When a third person assumes the payment of the obligation even without the knowledge and
consent of the debtor but with the consent of the creditor
a. There is novation.
b. There is delegacion if debtor is released.
c. There is subrogation.
d. There is expromision if debtor is released.
47. On June 2, 2015, Atanacio borrowed from Bondying P50,000, to be paid 20 days thereafter.
Atanacio proposed to Bondying that Xandra will pay Atanacio’s debt, and that Atanacio will be
free from all liabilities. Bondying and Xandra agreed to the proposal. On June 22, 2015, when
Bondying tries to collect from Xandra, Xandra was already insolvent but this was not known to
Atanacio. This insolvency is not of public knowledge. So Bondying sues Atanacio on the ground
that it was Atanacio who made the proposal and that Atanacio really guaranteed Xandra’s
insolvency. Decide.
a. Atanacio is not liable because he does not know the insolvency of Xandra at the time of
delegacion and neither was the insolvency of public knowledge.
b. Atanacio is liable because he did not exercise due diligence in determining the insolvency of
Xandra.
c. Atanacio is liable because he is presumed to have guaranteed Xandra’s insolvency.
d. Atanacio is not liable because Xandra agreed to the proposal to make himself solidarily liable
for the obligation.
48. If a third person pays without the debtor’s knowledge or against his will, the payor is entitled to:
I. Reimbursement of what he has paid.
II. Subrogation to the rights of the creditor
a. False, True
b. True, False
c. False, False
d. True, True
49. C is the creditor of D in the amount of P30,000. G is the guarantor of D. D paid C P10,000. F, a
friend of D, not knowing the partial payment made by D, paid C the P30,000 without the
knowledge of D. What is the effect of this payment on the obligation?
a. The obligation is extinguished but F can demand reimbursement from G in the amount of
P30,000.
b. The obligation is extinguished but F can demand reimbursement from D in the amount of
P30,000.
c. The obligation is not extinguished because F’s payment was made without the knowledge of
D.
d. The obligation is extinguished but F can recover P20,000 from D, but he cannot proceed
against the guarantor G.
50. If an obligation is modified by changing the object and also changing the principal condition
a. There is mixed novation.
b. The original obligation remains.
c. There is real novation.
d. There is personal novation.
CONTRACTS
3. The contracting parties may establish such stipulations, clauses, terms, and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order,
or public policy.
a. Liberty to contract
b. Mutuality of contract
c. Relativity
d. Consensuality
4. Contracts which must be in the form provided by law for their perfection
a. Consensual contracts
b. Real contracts
c. Onerous contracts
d. Solemn contract
6. Contracts are effective and binding only between the parties, their assigns and heirs. Three of the
following enumerations are exceptions as provided by law. Which does not belong to the
exception?
a. When there is stipulation in favor of a third party.
b. Where one of the parties to the contracts dies and thereafter a suit is filed on the basis of the
contract.
c. Where the obligation arising from contract are not transmissible by their nature.
d. Where the stipulation arising from contract are not transmissible by stipulation or by provision
of law.
8. These are the basic principles or characteristics of a contract. Which is the exception?
a. Freedom or liberty to stipulate
b. Obligatory force and compliance in good faith
c. Binding to third parties
d. Perfection by mere consent
9. In order that a stipulation in favor of a third person in a contract would be valid and binding upon
the parties thereto, three of the requisites are mentioned in the following enumerations. Which
among them is not a requisite?
a. There must be a stipulation in favor of a third person.
b. The contracting parties must have clearly and deliberately conferred a favor upon that third
person.
c. The third person communicate his acceptance to the obligor before its revocation.
d. That there must be an existing agency between either of the contracting parties and the third
person.
10. Dante borrowed P100,000 from Conti payable in 2 years. The contract stipulates that Dante will
pay 1% monthly interest equivalent to P1,000 per month, directly to Tisiko, Conti’s brother, on the
25th of each month for Tisiko’s support. Tisiko signifies his acceptance before it could be revoked.
a. Tisiko has no right to receive the monthly paymen on the interest not being a party to the
contract.
b. Tisiko is not entitled to the monthly interest unless the money loaned is his.
c. Tisiko is entitled to the monthly interest because the amount involved per month is very
minimal.
d. Tisiko is entitled to the monthly interest even if he is not a party to the contract because this is
a clear case of stipulation pour autrui.
11. Tindero sold to Mamimili the computer owned by Mabait without Mabait’s authority. The contract
is
a. Perfectly valid
b. Voidable
c. Void
d. Unenforceable
12. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. Which of the following constitutes the offer?
a. An offer made through an agent.
b. Business advertisement of things for sale.
c. Advertisement for bidders
d. Answer not given
14. Mr. Santos signed a letter addressed and delivered to Mr. Aguas. The terms of the letter are:
i. An offer to sell a 500 sq. m for P300,000
ii. An option time up to October 21, 2015 for Mr. Aguas to raise the P300,000
iii. Upon payment of the P300,000, Mr. Santos will execute and sign a Deed of Sale
On October 31, 2015, Mr. Santos sent a letter to Mr. Aguas asking for a new price of P350,000 for
the 500 sq. m lot. Can Mr. Aguas compel Mr. Santos to accept the P300,000 and make him sign
the and execute a Deed of Sale?
a. No. Mr. Aguas did not accept the offer of Mr. Santos.
b. Yes. Mr. Santos is already estopped by his signed letter and offer.
c. Yes. There was an actual meeting of the minds.
d. Yes. The contract has been perfected.
15. France offered to sell her cellular phone for P10,000 to her friend, Serra. Serra accepted the offer
but is willing to pay only P8,000. Is ther a perfected contract?
a. Yes, for a price of P8,000.
b. Yes, for a price of P8,000.
c. No, because the acceptance was qualified and it constituted a counter-offer.
d. No, because the offer was rejected.
16. On July 1, Abaca offered in writing to sell Batangueño his car for P300,000. Batangueño
accepted the offer and mailed the letter of acceptance on July 10 which was received by Abaca
on July 20. However on July 15, Batangueño had already mailed a letter revoking his acceptance.
Is there a perfect contract?
a. Yes, despite the revocation made by Batangueño.
b. None if the acceptance was received by Abaca ahead of the letter of revocation.
c. Yes, even if the letter of revocation was received ahead of the acceptance.
d. None, because at the time of the receipt of the letter of acceptance, there had already been a
prior revocation of said acceptance.
17. An offer made through an agent is accepted from the time acceptance is communicated to the –
a. Agent
b. Principal
c. Agent and principal
d. Agent and/or the principal
22. Esguerra, a former government employee, suffered from severe paranoia and was confined in the
mental hospital in 2010. After his release, he was placed under the guardianship of his wife to
enable him to get his retirement pay. In 2013, he became a mining prospector and sold some
mining claims. In 2015, he sued to annul the sale claiming that he was not mentally capacitated at
the time of sale. The sale in question was
a. Illegal
b. Void
c. Voidable
d. Valid
23. Reluctantly and against her good sense and judgment, Rosemarie entered into a contract for the
delivery of five (5) tables to Corazon for the price of P15,000. The contract is
a. Void
b. Valid
c. Voidable
d. Unenforceable
24. Choose the contracts which are voidable:
a. Those undertaken in fraud of creditors when the latter cannot in any manner collect the claims
due them.
b. Those here the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
c. Those whose subject is outside the commerce of man.
d. Those where both parties are incapable of giving consent to a contract.
25. Statement 1: A simple mistake of account shall give rise to its correction.
Statement 2: In order that mistake may invalidate consent, it should refer to the substance of the
thing which is the object of the contract.
a. True, False
b. True, True
c. False, True
d. False, False
26. Which of the following contracts may not be annulled on ground of mistake?
a. Eddie sold to Atty. Malaya 200 copies of Transfer and Busieness Taxes by Ampongan at P250
each. Atty. Malaya paid P50,000 for the books but the amount appeared in the receipt issued
was P45,000 only.
b. ARTS Review Center hired the services of Atty. Dipasipa as lecturer in Business Law. His
resume which was made as the basis for iring him indicates that he is a CPA-Lawyer when in
fact he is not a CPA although he graduates with a degree of Bachelor of Science in
Accountancy.
c. “A” owns a piece of untitled land which to his knowledge measures 15 hectares and sold it to
B for P300,000 and B thinking it really contains 15 hectares.
d. None of the above.
27. When a person takes improper advantage of his power over the will of another, depriving the
latter of a reasonable freedom of choice, there is
a. Violence
b. Intimidation
c. Undue Influence
d. Mistake
28. Through insidious words or machinations, Abion was able to induce Blanco to enter into a
contract which without them Blanco would not have agreed to it. There is
a. Undue influence
b. Fraud
c. Mistake
d. Misrepresentation
29. Case 1: Upon misrepresentation made by S that the liquors are genuine, B bought from S ten
(10) bottles of Fundador Brandy. Unknown to B, the contents of the bottles are mixtures of
Fundador and Matador Brandies.
Case 2: S and B agreed to deliver to B 100 kilos of iodized salt. Upon delivery, S delivered 100
kilos of sugar instead of an iodized salt.
a. Dolo causante; Dolo incidente
b. Dolo incidente, Dolo causante
c. Mistake; Dolo incidente
d. Dolo causante; Mistake
30. Statement 1: Dolo causante is annullable, while dolo incidente obliges only the person employing
it to pay damages.
Statement 2: S sold to B shoes which they honestly believed to be imported. It turned out,
however, that the shoes are locally made in Marikina. In this case, the contract can be annulled
on the ground of mistake but not fraud because the misrepresentation was made in good faith.
a. True, False
b. True, True
c. False, True
d. False, False
34. The proper remedy is annulment of contract and not reformation when:
a. Mistake, fraud, inequitable conduct or accident has prevented a meeting of the minds of the
parties.
b. A mutual mistake of the parties causes the failure of the instrument to disclose their real
agreement.
c. One party was mistaken and the other knew believed that the instrument did not state their
real agreement, but concealed the fact of the former.
d. Answer not given.
35. This contract will cause damage or injury to one of the contracting parties or to a third person –
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
36. Gorgonio, legal guardian of Niño, 13 years old, sells Niño’s property worth P100,000 for P70,000
only, without court approval. The contract is
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
37. Cecilio had Eduardo kidnapped and tortured for refusing to sell his (Eduardo) land to Cecilio.
Eduardo who could no longer bear the pans inflicted upon him signed a document of sale in favor
of Cecilio. The sale is
a. Void
b. Voidable
c. Valid
d. Answer not given
38. The contract entered into by the persons who cannot give consent is
a. Void ab initio because actually there is no consent.
b. Unenforceable only because the contract may be ratified.
c. Rescissible because of the damage caused to the person incapacitated.
d. Voidable as there is consent although vitiated or defective.
39. Datan bought a car from Bata, a minor, for P100,000. One week later, Datan discovered that Bata
was a minor at the time of sale so he filed a complaint in court to annul the sale. Will the action
prosper?
a. Yes, Bata being a minor is incapacitated to enter into a contract.
b. No, the right to annul the sale is given to Bata.
c. Yes, Bata cannot file the action to annul the sale because he is a minor.
d. No, unless there is lesion of more than ¼ of the value of the property.
40. Anay, insane, sold his land to Bengua, 21 years old for P200,000. Anay spent P120,000 in buying
another piece of land, P15,000 for his clothing and medicines, P25,000 for food, and P40,000 he
lost to gambling. After annulment of the contract, how much must Anay return to Bengua?
a. None
b. P200,000
c. P120,000
d. P160,000
41. X pointed a dagger at S and compelled S to sell his land to B at a very cheap price. Who among
the three can ask for annulment of the contract?
a. X only
b. B only
c. S only
d. Anyone of them
42. On July 15, 2014, X entered into a contract with Y. On February 10, 2015, X discovered that fraud
was committed at the time he entered into the contract, a fraud that vitiated his consent. The
action for annulment shall be brought
a. Within three years from the time of the fraud.
b. Within four years from Febrauary 10, 2015.
c. Within four years from the time X entered into the contract.
d. On February 10, 2015.
43. Today, A and B entered into a contract. Three years later, A discovered that B used fraud in the
performance of their contract.
a. A can no longer ask for annulment because his right has already prescribed.
b. A can ask for annulment within 4 years from perfection of the contract.
c. A can still ask for annulment within 4 years after the discovery of the fraud.
d. A should have annulled the contract immediately upon its execution.
44. A defective contract because it was entered into in the name of another without or in excess of
authority, or it is verbal is
a. Unenforceable
b. Voidable
c. Void
d. Rescissible
47. The following contracts, except one, are void ab initio. Which is the exception?
a. That whose object is outside the commerce of men.
b. That whose object did not exist at the time of the transaction.
c. That which contemplates an impossible service.
d. That which is undertaken in fraud of creditors.
48. Abonal sold Bartilet’s car in his (Abonal) name to Camila without any authority from Bartilet. The
contract of sale is
a. Rescissible
b. Unenforceable
c. Void
d. Valid
PARTNERSHIP
1st Answer: Yes, partnership is dissolved by marriage because there is a change in equity and
status among the partners.
2nd Answer: No, because spouses can enter into a universal partnership.
CORPORATION
1. A corporation where vacancies in the Board of Directors are filled only by the remaining member
of the Board is
a. Open corporation
b. Close corporation
c. Corporation sole
d. Quasi-public
2. How many numbers of votes of the BODs are required to change the name of a corporation?
a. 2/3 of all members of the board
b. 2/3 vote of all present
c. Majority vote of all present constituting a quorum
d. Majority vote of the board
4. A corporate doctrine which states that the stockholders are not personally liable for corporate
debts
a. Trust fund doctrine
b. Separate legal entity
c. Right of succession
d. Piercing the veil of corporate fiction
7. The voting requirements for delegating power to adopt, amend or repeal the by-laws in favor of
the board of directors is:
a 2/3 vote of the outstanding shares
b Majority of the vote of the directors plus the vote of a majority of the outstanding shares
c Majority vote of the director plus the vote of 2/3 of the outstanding shares
d 2/3 of the vote of the directors
8. Who may be removed as a director without cause during their term of service?
a. A director representing the majority stockholders.
b. A director representing the minority stockholders.
c. Either (a) or (b)
d. Neither (a) nor (b) because they can only be replaced upon the expiration of their term of
office though the election of another in their place since the removal is without cause
10. The power to invest corporate funds in another corporation or business or for any other purpose
as a corporate power is classified as a (an)
a. Express power
b. Incidental power
c. Implied power
d. Discretionary power
12. S and ABC Corporation entered into a “Deed of Sale of Shares of Stock” for the acquisition by S
of 1,000 of the unissued shares of the latter at P100.00 par value per share. S was to give a
down payment of 50% with the balance to be paid after 30 days. What kind of contract was
entered into between S and ABC Corporation?
a. Contract of sale
b. Contract of purchase
c. Contract of subscription
d. Some other contract.
13. The nationality of the corporation is determined by the place of the controlling stockholders. This
test is
a. Controlling test
b. Domicile test
c. Incorporation test
d. Management test
14. The following are acts within the implied powers of a corporation except
a. Acts is the usual course of business
b. Acts to protect debts owing to the corporation
c. Embarking in different businesses in which it is not a part of the regular business
d. Acts to increase its business
15. The Meralco, Bayantel, Cebu Pacific Air, and Victory Liner are
a. Quasi-public corporation
b. Tramp corporation
c. Quasi corporation
d. Public corporation
16. For the past three years, XYZ Corporation has been earning tremendously in excess of 100% of
the corporation’s paid in capital. All of the stockholders’ have been claiming that they share in the
profits of the corporation by way of dividends but the board of directors failed to lift its finger. Is
the corporation obliged to declare dividends?
a. No, because the corporation can retain surplus profits in excess of 100% of its paid-up
capital
b. Yes, because a corporation cannot retain surplus profits in excess of 100% of its paid-up
capital always.
c. Yes, because a corporation as a rule cannot retain surplus profits in excess of 100% of its
paid-in capital.
d. No, because it is a management prerogative of the board of directors whether or not it will
declare dividends.
17. Which of these conditions comply with the minimum requirement of law to corporate formation?
Authorized Subscribed Paid-up
Capital Capital Capital
a. 200,000 10,000 10,000
b. 64,000 16,000 5,000
c. 100,000 25,000 12,500
d. 200,000 50,000 10,000
18. For the purpose of determining the validity of the contract entered into between two corporations
with interlocking directors whose interest in one corporation is nominal and substantial in the
other, the presence of the interlocking director should not be necessary to constitute a quorum
and his vote should not be necessary for the approval of the contract in the meeting of board of
directors:
a. Of the corporation where his interest is substantial.
b. Of the corporation where his interest is merely nominal.
c. Of both corporations.
d. Of neither corporation for as long as there is no fraud and the contract is fair and
reasonable under the circumstances because he has a personality separate and distinct
from both corporations.
19. Shares that may be issued at a price higher than P5.00 per share are:
a. Par value shares.
b. No-par value shares.
c. Both (a) and (b).
d. Neither (a) nor (b).
20. Director Angela is instrumental in making a contract on behalf of Dana Corporation of whose
board she is a member, with Bea Corporation of which she has a larger interest
a. Corporate opportunity
b. Limited capacity
c. Interlocking directorate
d. Business judgment rule
21. A stock that is issued without consideration or below par value or the issued price is known as:
a Watered stock
b Delinquent stock
c Redeemable stock
d Preferred stock
a I only
b I and II
c II and III
d I, II, and III
27. Which of the following documents may be submitted before or after incorporation?
a Verification certificate as to the name of the corporation.
b By-laws
c Certificate of bank deposit as to the paid-up capital.
d Articles of incorporation
28. Which of the following conditions will allow corporation formation and SEC registration?
Authorized Subscribed Paid-up
Capital Stock Capital Stock Capital
a. 90,000 12,500 3,125
29. Samorano is the owner of 500 shares of stock of Center Sales Corporation whose articles of
incorporation provide for 5 directors. In the annual election of directors, the following ran for the
position of director: Abanes, Baricuatro, Castillo, Doromal, Elmora, and Filamor. Samorano asks
you which of the following is the incorrect way of casting his votes.
a. 500 votes each for each candidates.
b. 500 votes each for Abanes, Baricuatro, Castillo, Doromal and Elmora.
c. 2,500 votes for Abanes.
d. 1,000 votes for Abanes, 1,000 votes for Baricuatro, and 500 votes for Castillo.
30. Which of the following is not required to be included in the Articles of Incorporation?
a. Duties of the president
b. Name of the corporation
c. Period of existence
d. Location of the principal office
31. The article of incorporation of an Eastex Computer Corporation provide for 15 directors. Which
of the following is invalid concerning its by-laws?
a. That the quorum in the meetings of directors be at least 8 directors
b. That the quorum in the meetings of directors be at least 10 directors.
c. That the quorum in the meetings of directors be at least 7 directors.
d. The by-laws do not mention anything about the quorum in the meetings of directors.
32. Which of the following expresses the minimum capital formation of a corporation?
Authorized
Subscribed Paid-up
Capital Stock
a. 100,000 20,000 5,000
34. The certificate of incorporation of Parametro Corporation was issued by the Securities and
Exchange Commission despite the fact that only 3 out of its 7 incorporators were residents of
the Philippines. Such inadvertent issuance of the certificate of incorporation:
a. Means Parametro Corporation is unincorporated.
b. Means Parametro Corporation a de facto incorporation.
c. Does not affect the acquisition by Parametro Corporation of the status of a de jure
corporation because non-compliance of the residence requirement is a minor defect that
does not affect corporate existence.
d. Results in the automatic dissolution of the Parametro Corporation upon discovery by SEC
of the corporations failure to comply with the residence requirement for incorporators.
35. An officer of a corporation may hold two or more positions in the corporation but not as
a. Chairman of the Board and President
b. President and treasurer
c. Secretary and Treasurer
d. Vice-president and Secretary
41. This shares can be acquired by the corporation even without unrestricted earnings
a. Founder’s shares
b. Redeemable shares
c. Par value share
d. No par value share
42. This group of persons may not be the incorporators of a corporation in the Philippines
a. 15 Chines who are residents of Naga City
b. 5 non-resident aliens and 10 resident aliens
c. 10 Japanese residing in the Philippines and 5 Filipinos residing in Japan
d. 15 Filipinos who are resident of Korea
45. I. Pre-emptive right does not apply to shares issued in compliance with laws requiring stock
offering or minimum stock ownership by the public.
II. A corporation can deny the exercise of a stockholder of his pre-emptive right.
a. True, True
b. True, False
c. False, True
d. False, False
50. In a meeting to elect officers only 9 out of 11 members of the board attended. How many votes
will be needed to elect the President of the Corporation?
a. 8
b. 7
c. 6
d. 5