BUSINESS LAW SURECPA.

COM

1. A, B, C and D, solidary debtors, are obliged to give V, W, X,Y, and Z, joint

creditors, P20,000.

A. V may collect from C P20,000.

B. V may collect form C P4,000.
C. V may collect from C P5,000
D. V may collect from C P1,000.

2. A, B, C, and D, solidary debtors, are obliged to give V, W, X, Y, and Z, solidary

creditors, P20,000.

A. V may collect from D P20,000.

B. V may collect from D P4,000.
C. V may collect from D P5,000.
D. V may collect from D P1,000.

3. A, 25, B, 35, and C, 17, are solidary debtors of X in the amount of P9,000.

A. X may collect from A P9,000.

B. X may collect from A P6,000.
C. X may collect from A P1,000.
D. X may collect nothing because the obligation is voidable, C is being a minor.

4. The following obligations are divisible, except an obligation:

A. To give definite things.

B. Which has for its object the execution of a certain number of days of work.
C. Which has for its object the accomplishment of work by metrical units.
D. Which by its nature is susceptible of partial performance.

5. In obligations with penal clause, the creditor as a rule may recover from the
debtor in case of breach the following:

A. The penalty as agreed upon, plus damages and interest.

B. The penalty and damages.
C. The penalty and interest.
D. Only the penalty.

6. D borrowed from C P50,000. The obligation is secured by a chattel mortgage on

Ds Toyota car. Subsequently, D paid C P20,000. Unknown to D, T, a third person,
pays C P50,000 believing that D still owed C such amount.

A. T can recover P50,000 from D. if D cannot pay, T can foreclose the mortgage on
Ds Toyota car.
B. T can recover nothing from D because he paid c without the knowledge and
consent of D.
C. T can recover P30,000 from D. if D cannot pay, T can foreclose the mortgage on
Ds Toyota car.
D. T can recover P30,000 from D. if D cannot pay, T cannot foreclose the
mortgage on Ds Toyota car.

7. The following statements concerning payment by cession are true, except one.
Which is it?

A. The creditors become the owners of the properties of the debtor that were
ceded to them.
B. Payment by cession extinguished the obligations only to the extent covered by
the proceeds of the sale of the debtors properties.
C. The debtor must be insolvent.
D. Cession affects all the properties of the debtor except those exempt from
execution.

8. D obtained from ABC bank a loan of P12,000,000 payable at the end of ten
years. Before maturity, an extraordinary inflation supervened causing the value of
the debt to fall to P4,000,000 on the date of maturity. On due date, D must pay ABC
bank:

A. P12,000,000
B. P4,000,000
C. P36,000,000
D. P3,000,000

9. B borrowed from XYZ bank P2,000,000 at the end of 5 years. Before maturity,
an extraordinary deflation supervened causing the value of the debt to rise to
P5,000,000 on the date of maturity. On due date, B must pay XYZ bank:

A. P2,000,000
B. P5,000,000
C. P800,000
D. P20,000,000

10. The money or currency which the debtor may compel the creditor to accept in
payment of a debt, whether public or private, is known as:

A. Notes payable to order.

B. Legal tender.
C. Bill of exchange.
D. Mercantile document.

11. The delivery and transmission of ownership of a thing by the debtor to the
creditor as an accepted equivalent of performance is known as:

A. Payment by cession
B. Dation in payment
C. Application of payment
D. Consignation

12. D owes C the following debts: P6,000 due on June 12; P6,000 due on June 15;
P6,000 due on June 18; P6,000 due on June 20. All debts are unsecured except the
debt due on June 20 which is secured by pledge of Ds diamond ring to C. By
agreement, the benefit of the term on the 4 debts was granted to C. assuming that
D has P6,000 on June 18 and is ready to pay C, which of the following statements is
correct?

A. D may apply his payment of P6,000 to any of the debts due on June 12, June
15, and June 18 since they are all due as of June 18.
B. D may apply his payment only to the debt due on June 20 because it is the
most burdensome to him.
C. D must apply the payment proportionately to the debts due as of June 18 at
P2,000 each.
D. D may apply the payment to any of the four debts.

13. The offer made by the debtor to pay his obligation to his creditor is known as:

A. Consignation.
B. Tender of payment.
C. Application of payment.
D. Dation of payment.

14. 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 the creditor presents the title to the obligation for collection.
C. When without just cause , the creditor refuses to give a receipt.
D. When two or more persons claim the same right to collect.

15. M owes P 10,000. The obligation is evidenced by a promissory note.

Subsequently, P assigned the note to A, A to B, B to C, C back to M. The obligation
of M is extinguished by:

A. compensation
B. confusion
C. condonation
D. The obligation is not extinguish because there was no payment

16. In order that condonation may extinguish an obligation involving a movable

property whose value exceeds P5,000

A. It is sufficient that the condonation and the acceptance are in writing, even a
private one

B. It is required that the condonation and the acceptance be in public instrument

C. The delivery of the document evidencing the debt is sufficient since the
property is movable
D. The condonation and the acceptance may be made only

17. One of the following is not a requisite of legal compensation. Which is not?

A. That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other.
B. That the two debts is due
C. That both debts be liquidated and demandable
D. That the debts are payable at the same place

18. Henry, husband and Wilma, wife are legally separated. By order of the court
which decreed the legal separation, Henry is obliged to give a monthly support of
P10,000 to Wilma payable within the first days of the month. Wilma owes Henry
P10,000 by the way of business loan. On the other hand, Henry has not yet given
Wilmas support of P10,000 for this month. Both debts are already due. Which of the
following statements is correct?

A. Both debts are extinguished by legal compensation because both are already
due
B. Wilma may claim compensation but not Henry
C. Henry may claim compensation but not Wilma
D. Neither one may claim compensation because the debts are not of the same
kind.

19. D owes C P10,000 with G as guarantor. C, on the other hand, owes D, P8,000.
Both debts are already due but D is insolvent. In this case-

A. C may collect from G P10,000

B. C may collect from G P2,000 because a guarantor can set up compensation as
regards what the creditor owes the principal debtor.
C. C may collect nothing from G because D is insolvent
D. C may collect P8,000 form G.

20. D borrowed P50,000 from C. Subsequently, D proposed to C that T would

assume his (Ds) debt. C accepted the proposal of D. This substitution of debtor is
known as-

A. Expromission
B. Delegacion
C. Tradition
D. Dacion en pago

21. D obliged himself to give 5 grams of shabu to C. Later, the parties agreed
that D would instead give to C 5 sacks of rice. Which of the following statements is
correct?

A. The novation is void because the original obligation is void. Hence, C cannot
demand the delivery of 5 sacks of rice from D.
B. The original obligation although void is validated by the new obligation. Hence,
C can demand the delivery of 5 sacks of rice from D.
C. The new obligation is only voidable because D had not yet performed the
original obligation at the time of the novation. Accordingly, the new obligation is
binding and C may demand the delivery of 5 sacks of rice from D until the new
obligation is annulled by a proper action in court.
D. The novation is valid because the new obligation is valid. Hence, C can demand
the delivery of 5 sacks of rice from D.

22. On July 1, 2010, D obliged himself to give C P50,000 if C will marry X on or

before December 31, 2010. The condition of the obligation is a:

A. Positive condition
B. Negative condition
C. Joint condition
D. Impossible condition

23. Which of the following is not considered a conditional obligation?

A. D to pay C P5,000 as soon as D has the means.

B. D to pay C P5,000 if C marries Y.
C. D to pay C P5,000 if C tops the CPA Examination
D. D to pay C if X dies of malaria

24. The distinction between merger and acquisition is that in merger:

A. The two debts may be at different places.

B. Two persons are in their own right debtors and creditors of each other
C. The debtor and creditor may agree on the set-off of debts that are not yet due.
D. The debtor and creditor refer to only one person

25. Dominico and Domingo are jointly and severally liable to Crispino for
P100,000. The obligation is due on June 30,2010. On June 25, 2010, Dominico paid
the whole amount of the note to Crispino. If Domingo reimburses Dominico on July
15, 2010, Dominico is entitled to receive from Domingo:

A. P50,000 plus interest from June 25 to July 15, 2010

B. P50,000 plus interest from June 25 to June 30, 2010
C. P50,000 plus interest from June 30 to July 15, 2010
D. P50,000 with no interest because Dominico paid the note before due date

26. One of the following does not apply to payment by cession. Which is it?

A. Ownership of the debtors properties is transferred to the creditor

B. The debtor must be insolvent
C. It affects all the properties of the debtor except those exempt from execution
D. There are several creditors

27. A, B and C are solidarily liable to X for P30,000. A pays X the whole amount
due. C, however, is insolvent.

A. A alone will bear the share of C who is insolvent since he(A) made the payment
B. A can collect from B P10,000
C. A can collect from B P15,000
D. A can demand a refund of P10,000 from X pertaining to Cs share since C is
insolvent

28. The estate of X who died recently, shows, among other document/contract,
the following:
I. A certificate from Harvard University granting a scholarship to X. X was subjected
to exhaustive examination and interviews before he was granted the scholarship.
He was supposed to start studying at Harvard in 3 months time

II. Articles of partnership of XYZ enterprise showing X as a general partner.

III. A stock certificate of DEF Corp showing X as the owner of P5,000 shares of stock.
IV. A promissory note amounting to P100,000 executed by M in favor of X. The note
is due after 90 days

Which of the rights of X arising from the said documentation/contracts will be

transmitted to the heirs of X?

A. I and II
B. II and III
C. III and IV
D. I and IV

29. One of the following obligations is not demandable at once. Which is it?

A. D to give his car to C. No date was fixed by the parties for the date of delivery
B. D to give his car to C until C completes his course in BS Accountancy
C. D to give to C his car until X dies
D. D to give C his car should C enroll in BS Accountancy

30. Maila made a non-negotiable promissory note with Pia as payee. Pia assigned
the note to Aiko, Aiko assigned the note to Bea; Bea assigned the note to Carmina,
Carmina assigned the note to Helen, and Helen assigned it back to Maila.

A. Mailas obligation is extinguished by condonation

B. Mailas obligation is extinguished by confusion
C. Mailas obligation is extinguished by compensation
D. Mailas obligation is not extinguished because the note is not negotiable

31. D owes C the following debts: P6,000 due on January 1, P6,000 due on January
15, P6,000 due January 31; P6,000 due on February 15; P6,000 due on February 28;
and P6,000 due on March 15. All the debts are unsecured except the one due on
February 28. The parties stipulated that C may demand payment on or before the
due date of each debt. Assume that today is February 16. D, however, has not yet
paid any of the debts. He has in possession P6,000 which he intends to pay to C.

A. D may apply the payment to the debt due on February 28 because it is the
most burdensome to him.
B. D may apply the payment to any of the five unsecured debts.
C. D may apply the payment to any of the four debts that have become due as of
today, February 16.
D. D may apply the payment to all of the debts that have become due as of today,
February 15, proportionately at P1,500 each.

32. The delivery to the creditor of mercantile documents such as checks shall
produce the effect of payment:

A. Upon delivery
B. When they have been cashed
C. When through the fault of the debtor they have been impaired
D. When they are deposited in the bank

33. Which of the following statements concerning delay is incorrect?

A. There is no delay in obligations not to do.

B. Delay, as a rule, exists, when the debtor does not perform his obligation on the
date it is due.
C. Demand , as a rule, is required in order for delay to exist.

D. When time is of the essence of the contract, delay on the part of the debtor
exists despite the absence of demand

34. Alternative obligation and facultative obligation are similar in which of the
following respects?

A. The right of choice may be given either to the debtor or creditor

B. Several prestations are due
C. Only one prestation is due but the debtor may render another in substitution.
D. The obligation becomes a simple obligation once the choice of the prestation is
made and communicated.

35. D borrowed P5,000 from C. The obligation is payable in full after 30 days. In
which of the following cases is D justified in making a consignation of his payment
in court?

A. If C refuses to accept the payment in the form of a check which is certified by

the bank to be supported by sufficient funds.
B. If C refuses to accept the payment consisting of P5,000 pieces of P1.00 coins.
C. If C refuses to accept the first installment payment in the form of a P1,000 bill,
D promising to pay the balance of the debt in 4 equal monthly installments.
D. If C refuses to accept the payment consisting of 250 pieces of P20.00 bills

36. A contact whereby one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing and the other to pay therefore a
price certain in money or its equivalent is a contract of:

A. Barter

B. Sale
C. Dacion en Pago
D. Mortgage

37. The following are the essential elements of a contract of sale, except:

A. Consent of the parties

B. Subject matter
C. price
D. Warranty against eviction

38. The following are the characteristics of a contract of sale, except:

A. Principal, which means that a contract of sale can stand by itself

B. Real, which requires the delivery of the object contract of sale for its perfection
C. Onerous, where rights are acquired in exchange of a valuable exchange
D. Bilateral, which means that both parties are bound reciprocally to each other.

39. One of the following characteristics of dacion en pago is also a characteristic

of a contract of sale. Which is it?

A. There is a pre-existing credit.

B. Obligations are extinguished
C. There is less freedom in fixing the price.
D. Ownership of the object is transferred to the other party

40. The following are characteristics of a contract of sale except for one which
refers to payment by cession. Which characteristic refers to payment by cession?

A. There is no pre-existing credit

B. The cause or consideration is the price
C. There is more freedom in fixing the price
D. Assignee of the property acquires the right to sell the thing but not the
ownership thereof.

41. Sandy sells to Bert 500 sacks of rice at P1,000 per sack from the stock then
stored in the warehouse contains only 480 sacks of rice. What is the status of the
contract between Sandy and Bert?

A. The sale is void since the quantity available is less than the quantity sold.
B. The sale is valid up to 480 sacks of rice but void as to the deficiency of 20
sacks of rice
C. The entire sale is valid up to 500 sacks of rice. Bert becomes the owner of the
whole stock available and Sandy must deliver the deficiency of 20 sacks of rice
D. The sale is valid up to 480 sacks of rice but rescissible as to the deficiency of
20 sacks of rice by reason of damage suffered by Bert.

42. Sony sells to Ben at P50 per gallon 300 gallons of gasoline stored in his trucks
tank which, unknown to the parties, contains 500 gallons gasoline. What is the
status of the contract of sale between Sony and Ben?

A. The sale is void because the quantity available is more than the quantity sold.
B. The sale is valid up to 500 gallons of gasoline. Ben must pay for the additional
200 gallons of gasoline

C. The sale is valid up to 300 gallons of gasoline, Ben becomes the owner of 3/5 of
the whole stock, while Sony becomes the owner of 2/5 thereof.
D. The sale is rescissible because Sony will suffer lesion of more than of the
value of the whole stock.

43. The price in a contract of sale is certain, except:

A. When the parties have fixed or agreed upon a definite amount.

B. If the price is certain with reference to another thing certain
C. If the fixing of the price is left to the discretion of one of the contracting parties
and the price fixed is not accepted by the other party.
D. If the price fixed is that which the thing sold would have on a definite day or in
a particular exchange or market.

44. On January 1, S orally sold to B a specific ring for P450. The parties agreed
that S shall deliver the ring to B on January 5, while B shall pay the price on January
7.

A. The contract is perfected on January 5, when the ring is delivered by S to B.

B. The contract is perfected on January 1, when the parties had a meeting of
minds on the object and the price.
C. The contract is perfected on January 7, when the price is paid, since both
parties would by then have performed their obligations in the contract.
D. There is no perfected contract because the sale was made orally.

45. S orally offered to sell a certain diamond ring to B for P50,000. B accepted the
offer and to prove that he was in earnest, he gave S P1,000. The parties agreed that
the delivery of the ring and the payment of the price would be made 30 days later.
On due date:

A. S may collect from B because P50,000

B. S may collect from B P49,000
C. S cannot enforce payment because the contract was not reduced to writing
D. S cannot enforce payment because there was no contract of sale yet.

46. It refers to the delivery of the thing sold from hand to hand in case of
movables, or the taking of possession with respect to immovables, in the presence
and with the consent of the vendor.

A. Actual or real delivery

B. Traditio constitutum possessorium
C. Traditio longa manu
D. Traditio brevi manu

47. On May 1, 2010, S sold to B through a private instrument 20 sacks of corn

stored in the only warehouse of S. on May 10, 2010, S delivered the keys to
warehouse to B. The delivery made by S to B is known to as:

A. Constructive delivery by legal formalities

B. Symbolic delivery by traditio clavium
C. Tradition longa manu
D. Traditio brevi manu

48. Delivery of incorporeal property may be through any of the following means,
except:

A. Execution of a public document

B. Placing the titles of ownership in the possession of the vendee

C. Use by the vendee of his rights, with the debtors consent

D. Execution of private instrument

49. One of the following statements on the transfer of ownership of the thing in
sale on trial is incorrect. Which is it?

A. Ownership of the thing is transferred to the vendee when he signifies his

approval or acceptance to the vendor
B. Ownership of the thing is transferred to the vendee when he does an act
adopting the transaction
C. Ownership of the thing is transferred to the vendee if the time fixed for the
return of the thing has expired and the vendee retains the thing without giving
notice of rejection or acceptance to the vendor.
D. Ownership of the thing is transferred to the vendee upon delivery

50. On March 1, 2010, S sold and delivered to B a television set for P10,000 on
sale or return giving B up to March 16, 2010 within which to return the television
set. On March 10, 2010, the television set was burned through no fault of B. Based
on the foregoing, which of the following statements is incorrect?

A. B must pay the price of the television set.

B. B must bear the loss since the time for the return of the television set had not
yet expired.
C. The ownership of the television set was transferred to B upon delivery to him.
D. B must bear the loss of the television set.
E. None of the above

51. An unpaid seller has the following rights, except:

A. A lien on the goods or the right to retain them for the price while he is in
possession of them

B. In case of insolvency of the buyer, a right of stopping the goods in transit after
he has parted with the possession of them.
C. A right of repurchase
D. A right to rescind

52. An unpaid seller losses his lien on the goods in the following cases, except:

A. When he delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer without reserving the right of ownership in the goods.
B. When the buyer or his agent lawfully obtains possession of the goods.
C. When the seller waives his possessory lien
D. When he has obtained judgment for the price of the goods

53. Three of the following are the requisites in order that an unpaid seller may
exercise his right of stoppage of transit. Which one is not?

A. The seller is unpaid.

B. The seller has not parted with the possession of the goods.
C. The goods are in transit.
D. The buyer is or becomes insolvent.

54. Goods are still in transit:

A. if the buyer or his agent obtains delivery of the goods before their arrival at the
appointed destination.
B. When the carrier acknowledges possession of the goods as bailee for the buyer
after the arrival of the goods at the place of destination.

C. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer
or his agent.
D. If the goods are rejected by the buyer, and the carrier or other bailee continues
in possession of them, even if the seller has refused to received them back.

55. An unpaid sellers right to resell the goods is available in the following cases,
except:

A. If the goods are of a perishable nature

B. When the seller reserved the right to resell the goods
C. When the buyer has defaulted in the payment of the price for an unreasonable
time
D. When the seller has lost his lien on the goods

56. Susan sold a registered piece of land to Bea on May 1, 2010 in a public
instrument. On May 3, 2010, Susan sold in a private instrument the same piece of
land to Candy, who took physical possession of the land. Neither buyer was aware
of the sale made to the other.

A. The land belongs to Bea

B. The land belongs to Candy
C. The land still belongs to Susan, because both sales are void
D. The land should be divided equally between Bea and Candy to give effect to
both sales.

57. On June 1, 2010, Sylvia sold to Bernard in a private instrument a certain

computer. Two days later, Sylvia orally sold the same computer to Cruz who
immediately took possession of the computer. Neither party was aware of the sale
made to the other.

A. The computer belongs to Bernard

B. The computer belongs to Cruz

C. The computer will be co-owned by Bernard and Cruz to give effect to both
sales.
D. Both sales are void. Accordingly, Sylvia will still be the owner.

58. This refers to the implied warranty on the part of the seller that he has the
right to sell the thing at the time when ownership is to pass, and that the buyer
from time shall have and enjoy legal and peaceful possession of the thing.

A. Warranty against hidden defects.

B. Warranty against eviction
C. Warranty of ownership
D. Warranty of possession

59. If a movable property is sold separately to two or more different vendees,

ownership shall belong to the person:

A. Who in good faith first paid the purchase price in full

B. Who in good faith first recorded the sale in the Registry of Property
C. Who in good faith presents the oldest title
D. Who in good faith first took possession of the property

60. A contract of sale is perfected upon:

A. Compliance with the requirements of the law as to form.

B. Delivery of the object of the contract
C. The meeting of the minds on the thing which is the object of the contract and
upon the price
D. demand

61. It is a contract by virtue of the terms of which the parties thereto promise and
obligate themselves to enter into another contract at a future time, upon the
happening of certain events or the fulfillment of certain conditions.

A. Contract of adhesion
B. Contract of option
C. Contract of sale
D. Auto-contract

62. A contract of sales is not a

A. principal
B. nominate
C. consensual
D. real

63. The following may or may not be valid objects of a contract of sale. Except:

A. Objects outside the commerce of men

B. Illicit things
C. Future goods
D. Impossible goods

64. When the goods are delivered to the buyer, the ownership thereof passes to
the buyer in:

A. Sale on approval
B. Sale or return
C. Sale on trial
D. Contract to sell

65. The Recto law applies to which of the following examples of sale?

A. Sale of a car on straight term

B. Sale of house and lot on installment
C. Sale of a car on installment where the buyer constituted a mortgage on his
truck
D. Sale of a piano on installments where the buyer constituted a chattel mortgage
on the piano

66. S sold to B a lot through a deed of absolute sale duly acknowledged before a
notary public. Three days later, S sold the same lot to X, also through a deed of sale
duly acknowledged before a notary public. X had the sale registered with the
Registered of Deeds. Neither B nor X was aware of the sale made by S to the other
and neither took physical possession of the lot. Who is the present owner of the lot?

A. B, because he was the first purchaser in good faith.

B. X, because he registered the sale in good faith
C. Neither B nor X
D. S, as long as he does not surrender physical possession of the lot.

67. King Gems Company, jewelry manufacturer, shipped five dozen necklaces to
Queen Jewelry Store. The shipment was made under a written agreement allowing
Queen Jewelry Store to return the necklaces within a period of one month from
delivery. Based on the following foregoing, which of the following statements is
incorrect?

A. Title to the necklaces passed to Queen upon delivery.

B. If Queen does not return the necklaces within one month, the sale to it
becomes absolute
C. If the necklace are destroyed by fire without the fault of Queen, Queen need
not pay the price thereof.
D. If the necklace are destroyed through the fault of Queen, Queen must pay the
price thereof to King Gems Company.

68. Sheng shipped FOB Manila good worth P20,000.00 to Borge who is based in
Davao. While the carrier was on the stopover in Cebu City, Sheng was informed by
his bank that the check issued by Borge was dishonored by reason of insufficiency
of funds. He also learned from the Credit Bureau that Borge had become insolvent.
Accordingly, Sheng notified the carrier that he was taking possession of the goods.
The right availed of by Sheng in the situation is known as the right of:

A. Stoppage in transitu
B. subrogation
C. attachment
D. garnishment

69. D, owner of certain goods, deposited the goods with W, a warehouseman, who
issued to D a warehouse receipt which states that The goods are to be delivered to
the order of D. D may negotiate the warehouse receipt by any of the following
means, except by:

A. Mere delivery
B. Special indorsement completed by delivery
C. Blank indorsement completed by delivery
D. Indorsement to bearer completed by delivery.

70. One of the following acts may be delegated by a principal to his agent. Which
is it?

A. Vote during the meeting a stockholders of a corporation where the principal is a

stockholder.
B. Attend meetings of the board of directors of a corporation where the principal is
a director.
C. Purchase land in the Philippines of which the principal is an alien.
D. Represent the principal in a marriage ceremony where the principal is a party
to the marriage contract.

71. Which of the following is not a mode of extinguishing an agency?

A. Death, civil interdiction, insanity or insolvency of the principal or agent

B. Accomplishment of the purpose of the agency
C. Expiration of the period for which the agency was constituted
D. Continued lossess on the part of the principal agent

72. In the matter of management of the business affairs of the corporation , this is
supreme:

A. Majority of the stockholders

B. 2/3 of the stockholders
C. Board of Directors
D. President of the Corporation

73. This is the equitable right if stockholders to subscribe to newly issued shares
of the corporation in proportion to their present shares in order to maintain their
equity in the corporation.

A. Right of redemption
B. Concept of corporate entity
C. Right to sue and be sued
D. Pre-emptive right

74. This is a written acknowledgement of an interest of a stockholder in the

corporation

A. Proxy
B. Shares of stock
C. Certificate of stock
D. Capital stock

75. Choose the minimum requirement of the Corporation Law to corporate

formation. Authorized capital, Subscribed capital and Paid-in Capital respectively.

A. P50,000
P20,000
P5,000
B. P50,000
P20,000
P4,000
C. P50,000
P25,000
P5,000

D. P50,000
P25,000
P6,250

76. Statement No. 1: Holders of subscribed shares not fully paid which are not
delinquent shall have the right of a stockholder.

Statement No. 2: All persons who assume to act as a corporation knowing it to be

without authority to do so shall be liable as a general partners for all debts,
liabilities, and damages incurred or arising as a result thereof.

A. Both are true.

B. Both are false.
C. No. 1 is true; No. 2 is false.
D. No. 1 is false; No. 2 is true.

77. Statement No. 1: The president of a corporation may or may not be a director.

Statement No. 2: A majority of the members of the board of directors as fixed in the
Articles of Incorporation shall constitute a Quorum, and every decision of at least a
majority of the directors present at the meeting shall be valid as a corporate act.

A. Both are true.

B. Both are false.
C. No. 1 is true; No. 2 is false.
D. No. 1 is false; No. 2 is true.

78. Which of the following corporate acts need not be taken up in a meeting of the
stockholders, even without meeting is enough to bind the corporation?

A. Adoption and repeal of the by-laws.

B. Amendment of the Articles of Incorporation.
C. Increase or decrease of the capital stock.
D. Incurring, creating or increasing bonded indebtedness.

79. Which of the following may organize as a close corporation?

A. Mining companies
B. Oil companies
C. Both (a) and (b)
D. None of (a) and (b)

80. The following are similarities between a partnership and a corporation. Which
is the exception?

A. Both have juridical personalities separate and distinct from that of the
individuals composing them
B. Like a partnership, a corporation can act only through agents
C. Both are organizations composed of an aggregate of individuals
D. The individuals composing both have little voice in the conduct of business

81. Which of the following is an essential element of partnership?

A. There must be a contribution of money, property, or industry to a common fund

B. It must be an association for profit with the intention to divide the profits
among themselves
C. There must be a valid and voluntary agreement
D. All of them

82. XY is a recreational club which was organized to operate a golf course for its
members with an original authorized capital stock of P100M. The articles of
incorporation nor by-laws did not provide for distribution although there is a
provision that after its dissolution, the assets shall be given to a charitable
corporation. Which of the following statement is TRUE?

A. This is a stock corporation because the articles of Incorporation did not provide
for the distribution of dividends.
B. The stockholders or members must amend the Articles of Incorporation and
state clearly whether the corporation is a stock corporation or non-stock
corporation.
C. This is a non-stock corporation because the assets after dissolution are to be
given to a charitable institution.
D. This is a non-stock corporation because the assets after dissolution are to be
given to a charitable institution.

83. X company is a stock corporation composed of the Reyes family engaged in

the real estate business. Because of the regional crisis, the stockholders decided to
convert their stock corporation into a charitable non-stock and non-profit
association by amending the articles of incorporation.

a) Could this be legally done?

b) Would your answer be the same if at the inception, X company is a non-stock
corporation to a stock corporation? Why?

Answers:
A) Yes, by amending the Articles of Incorporation. Be it noted that the stock
corporation is not distributing assets to the stockholders.

B) No, because in a non-stock corporation the members are not entitled to share in
the profit.

A. Letter A is false; Letter B is true.

B. Both answers are false.
C. Letter A is true; Letter B is false.
D. Both answers are true.

84. In 2006, Corporation A passed a board resolution removing X from his

position as manager of said corporation. The by-laws of A corporation provides
that the officers to the president, general-manager, treasurer and secretary. Upon,
complaint filed with SEC, it held that the general-manager could be removed by
mere resolution of the board of directors.

On motion for reconsideration, X alleged that he could only be removed by the

affirmative vote of the stockholders representing 2/3 of the outstanding capital
stock. Is Xs contention legally tenable?

A. No, vote required is majority of the board and 2/3 OCS consenting.
B. Yes, voting requirements is only 2/3 OCS.
C. No, the required vote is MBD consented by MOCS.
D. No, voting requirement is only majority of BOD.

85. Suppose that X corporation has already issued the 1000 originally
authorized shares of the corporation so that its Board of Directors and stockholders
wish to increase Xs authorized capital stock. After complying with the
requirements of the law on increase of capital stock, X issued an additional 1000
shares of the same value. S presently holds 200 shares out of the original 100
shares. Which of the following statement is TRUE?

A. S must be offered equivalent 200 shares under his preemptive right if stated
in the Articles of Incorporation.

B. Such preemptive right shall only be given if it is stated in the by-laws of the
corporation.
C. The increased in the share must be offered first to the stockholders of record
under the doctrine of first refusal. If they refuse, it will be offered to the general
public.
D. If ever there is a preemptive right, the same must be exercised within a
reasonable time as fixed by the Board of Directors if the Articles and the by-laws are
silent.

86. A meeting of minds between two persons whereby one binds himself with
respect to the other to give something or to render some service is known as:

A. contract
B. obligation
C. consent
D. stipulation

87. The stages of a contract according to the order of the occurrence are:

A. birth, conception, and consummation

B. conception, consummation, and birth
C. consummation, conception, and birth
D. conception, birth, and consummation

88. The elements of a contract without which a contract would not exist are
known as:

A. accidental elements
B. essential elements

C. special elements
D. natural elements

89. A consensual contract has the following essential elements:

A. consent of the contracting parties, object certain and cause or consideration

B. consent of the contracting parties, object certain, cause or consideration and
delivery of the object
C. consent of the contracting parties, object certain, cause or consideration and
formalities required by law
D. consent of the contracting parties, object certain, delivery of the object, and
formalities required by law

90. A real contract has the following essential elements:

A. consent of the contracting parties, object certain and cause or consideration

B. consent of the contracting parties, object certain, delivery of the object, and
formalities required by law
C. consent of the contracting parties, object certain, cause or consideration and
formalities required by law
D. consent of the contracting parties, object certain, cause or consideration and
delivery of the object

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91. A solemn or formal contract has the following essential elements:

A. consent of the contracting parties, object certain, cause or consideration and

formalities required by law
B. consent of the contracting parties, object certain, cause or consideration and
delivery of the object
C. consent of the contracting parties, object certain and cause or consideration
D. consent of the contracting parties, object certain, delivery of the object, and
formalities required by law

92. Elements that accompany certain contracts unless set aside or suppressed by
the parties are known as:

A. essential elements
B. accidental elements
C. natural elements
D. original elements

93. The warranty against hidden defects in a contract of sale is an example of:

A. stipulated element

B. accidental element
C. original element
D. natural element

94. What refers to particular stipulations of the parties in a contract?

A. Essential elements
B. Natural elements
C. Inherent elements
D. Accidental elements

95. Which of the following is a natural element of a sales contract?

A. Terms of payment
B. Rate of interest
C. Place of delivery
D. Warranty against eviction

96. What refers to a contract that can stand by itself?

A. accessory contract
B. commutative contract
C. gratuitous contract
D. principal contract

97. A contract that does not have any special name under the law is known as?

A. nominate contract
B. nominal contract
C. special contract
D. innominate contract

98. A contract where both parties are required to do or give something is known
as?

A. bilateral contract
B. unilateral contract
C. gratuitous contract
D. commutative contract

99. A contract where the parties contemplate a real fulfillment, hence, equivalent
values are given is known as?

A. aleatory contract
B. gratuitous contract
C. onerous contract
D. commutative contract

100. The contradicting 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. This is known as the principle
of?

A. obligatory force of contract

B. mutuality of contract

C. relativity of contract
D. liberty of contract