Business Law Test Bank
accountancy (Saint Paul School of Professional Studies)
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Comprehensive Business Law – Test bank
1. The difference between negotiation and assignment are that negotiation refers only to
negotiable instruments while assignment refers generally to an ordinary contract. Negotiation is
governed by Negotiable Instruments Law while assignment is governed by the laws on
assignment of credits of the new Civil Code
a. Both statements are false
b. First statement is true, Second is false
c. First statement is false, Second is false
d. Bothe statements are true
Ans. D
2. Three of the following are requirements of a valid indorsement. Which one is not?
a. The indorsement must be written on the instrument itself or upon a paper attached thereto
b. It must be completed by delivery
c. The indorsement should not contain any conditions or restrictions
d. It must be an indorsement of the entire instrument
Ans. C
3. Three of the following are the legal effects of the delivery of an order instrument without
indorsement. Which one is not?
a. The transfer operates as an ordinary assignment and the transferee acquires the instrument
subject to all defenses, real or personal
b. The transferee acquires all the rights of a holder
c. The transferee can demand from the transferor that the instrument be properly indorsed to
him
d. The transferee is not a holder as defined under the Negotiable Instruments Law
Ans. B
4. In case of undelivered and incomplete instruments, a maker is still liable thereon. The
indorsement of a minor does not make him liable on the instrument, although such indorsement
passes title over the instrument
a. First statement is true, Second is false
b. First statement is false, Second is true
c. Both statements are true
d. Both statements are false
Ans. B
5. In three of the following, a person whose signature does not appear in the instrument, Is
nonetheless liable. Which is not?
a. Where a person signs in a trade or assumed name
b. The forger, in cases of forgery of instruments
c. A person who negotiates by delivery is liable to his immediate transferee
d. A person whose signature was forged
Ans. D
6. A holder has no right to sue on the instrument in his own name. However, he may receive
payment, and if the payment is in due course, the instrument is discharged
a. Both statements are true
b. Both statements are false
c. First statement is true, Second is false
d. First statement is false, Second is true
Ans. D
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7. Three of the following are personal defenses. Which one is not?
a. Want of delivery of an incomplete instrument
b. Want of delivery of a complete instrument
c. Acquisition of an instrument by unlawful means
d. Filling up of wrong date
Ans. A
8. When a signature in an instrument does not indicate in what capacity a person had intended to
sigh, the person whose signature appears on the instrument is deemed to be:
a. Drawer
b. Drawee
c. Indorser
d. Indorsee
Ans. C
9. A issued a negotiable note to B. B indorsed it to C, a minor. C indorsed to D and D to E. Who will
be liable to E, if A will dishonor the note
a. Only D being the immediate transferor
b. B, C, and D being secondary parties
c. Only B and D, C is not liable being a minor
d. Only B, being the original payee
Ans. C
10. One of the following is not a requisite for the negotiability of a promissory note:
a. The promissory note must be in writing and signed by the maker
b. The promissory note must be payable on demand or at a fixed or determinable future time
c. The promissory note must be payable to a specified person named therein
d. The payee of a promissory note payable to order must be named or otherwise indicated
therein with reasonable certainty
Ans. C
11. Which of the following instruments is non-negotiable?
a. A bill of exchange written with the use of a pencil
b. A bill of exchange written on a wall
c. A promissory note written on a piece of cloth
d. A promissory note signed with a mark
Ans. B
12. One of the following is not a negotiable instrument:
a. Treasury warrant
b. Bond
c. Certificate of deposit
d. Banker’s acceptance
Ans. A
13. Which of the following instruments is not payable with a sum certain in money and is, therefore,
non-negotiable?
a. “I promise to pay bearer ₱25,000 plus interest at the end of the current calendar year.”
b. “Pay to P or order ₱25,000 in installment.”
c. “I promise to pay P or order $500 with exchange at the current rate.”
d. “I promise to pay bearer ₱25,000 on or before December 31 of this year, with 10% attorney’s
fee and costs of collection in case of default.”
Ans. B
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14. Which of the following promissory notes payable in installment is negotiable?
a. “I promise to pay P or order ₱30,000 payable in (2) equal installments.”
b. “I promise to pay P or order ₱30,000 payable in (4) quarterly installments effective to date.”
c. “I promise to pay P or order ₱30,000 payable at ₱500 for each installment.”
d. None of the foregoing
Ans. D
15. Which of the following instruments is not unconditional and is, therefore, non-negotiable?
a. “Pay P or order ₱40,000 and reimburse yourself with the proceeds of the watch you are
selling to me.”
b. “Pay bearer ₱40,000 from my share in the profits of our partnership business.”
c. “I promise to pay P or order ₱40,000 as payment for the ring I purchased from him.”
d. “Pay bearer ₱40,000 and charge the payment to my account in your hands.”
Ans. B
16. Which of the following instruments is payable at a fixed or determinable future time?
a. “I promise to pay P or order ₱20,000 30 days before X’s demise.”
b. ‘’I promise to pay P or order ₱20,000 upon sight.”
c. ‘’I promise to pay P or order ₱20,000.”
d. None of the foregoing
Ans. A
17. Which of the following instruments is still negotiable despite the additional provision thereof:
a. “I promise to pay P or order ₱50,000 or to paint his house, at the option of the holder.”
b. “I promise to pay bearer ₱50,000 and all the taxes that may be assessed on the mortgage
securing the note.”
c. “I promise to pay P or order ₱50,000 and to insure the movable pledged to secure this note.”
d. “I promise to pay bearer ₱50,000 and to give him a gold ring.”
Ans. A
18. Which of the following omissions will render the instrument non-negotiable?
a. It is not dated
b. It does not specify the value given
c. It does not specify the place where it is payable
d. None of the foregoing
Ans. D
19. Which of the following statements relative to instruments payable on demand is false?
a. A bill of exchange which is payable “at sight” is payable as soon as it is seen by the drawer
b. An instrument which is payable “on call” is payable on demand
c. An instrument where no time for payment is expressed is payable on demand
d. An instrument which is issued, accepted or indorsed when overdue is deemed payable on
demand as regards the person so issuing, accepting or indorsing it
Ans. A
20. Which of the following is an order instrument?
a. “I promise to pay X or bearer.”
b. “I promise to pay Captain Barbell or order.”
c. Indorsements made at the back of an order instrument: Pay to A, (Sgd.) P; Pay to B, (Sgd.) A;
Pay to C, (Sgd.) B; (Sgd.) C.
d. None of the foregoing
Ans. D
21. Which of the following is a bearer instrument?
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a. “Pay P the sum of ₱10,000 on demand.”
b. “Pay to the order of P the sum of ₱10,000 on December 31 of this current year.”
c. “Pay order ₱10,000 upon sight.”
d. None of the foregoing
Ans. C
22. Which of the following statements is correct?
a. The determination of the maturity date is not necessary in an instrument which is payable at
a fixed period after date
b. The date of issue of a promissory note payable on demand is essential to make the
instrument negotiable
c. An instrument which is ante-dated is an invalid instrument
d. The holder of an instrument which is payable at a fixed period after date but is issued
undated may insert therein the true date of issue
Ans. D
23. M made a promissory note payable to P’s order and authorized P to fill up the amount of not
more than ₱50,000. P filled up the amount of ₱75,000 and indorsed the note to A. A then
indorsed it to B, present holder. Who may be held liable to B for ₱75,000?
a. P only
b. A only
c. P and A only
d. M, P and A
Ans. D
24. X stole a pre-signed promissory note from M’s ofice cabinet. He then placed the amount of
₱20,000 and P’s named as the payee, then indorsed the note to A using P’s name. A then
indorsed the same to B, and B to C, present holder in due course. Who may be held liable to C
for ₱20,000?
a. M, P, X, A and B
b. P, X, A and B only
c. X, A and B only
d. M, P and X only
Ans. C
25. X stole a promissory note that is completely made by M. X indorsed the note to A, then A to B,
present holder in due course. Who may be liable to B?
a. A only
b. X only
c. X and A only
d. M, X and A
Ans. D
26. Which of the following statements relative to the construction of ambiguous instruments is
incorrect?
a. Where there is a discrepancy between the sum payable expressed in words and that which is
expressed in figures, the former prevails
b. Where there is a conflict between the written provisions and the printed provisions of the
instrument, the former prevails
c. Where there is a doubt whether an instrument is a bill or a note, the issuer or drawer may
treat it as either at his election
d. Where the instrument which contains the words “I promise to pay” is signed by two or more
persons, they are deemed to be solidarily liable thereon
Ans. C
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27. Which of the following statements relative to forgery is false?
a. It is the intent to defraud that distinguishes forgery from spoliation
b. Forgery has the effect of making the instrument void
c. Parties subsequent to a forged indorsement cannot acquire any right as against parties prior
to the forgery
d. The party whose indorsement is forged in a note which is originally payable to bearer is
liable to a holder in due course
Ans. B
28. Parties who are precluded from seting up forgery as a defense (Principle of estoppel) may be
held liable by the holder of a negotiable instrument despite the forged or unauthorized
signature. Examples of these parties are:
a. Acceptors
b. Indorsers and persons negotiating by delivery
c. All of the foregoing
d. None of the foregoing
Ans. C
29. Which of the following statements relative to forgery in negotiable instruments is false?
a. The drawee-bank can recover the payment it made to a holder in due course where the
drawer’s signature on the check is forged
b. The drawee-bank can recover the payment it made to the encasher of the check where the
payee’s signature on the check is forged
c. The drawee-bank that paid a check with a forged indorsement cannot debit or charge the
drawer’s account in the absence of negligence on the part of the drawer
d. None of the foregoing
Ans. A
30. Which of the following statements relative to a forged indorsement of a negotiable instrument is
true?
a. If the note is payable to order, the party whose indorsement is forged is liable only to a
holder not in due course but is not liable to a holder in due course
b. If the note is payable to bearer, the party whose indorsement is forged is liable to any holder
whether or not he is a holder in due course
c. If the bill of exchange is payable to order, the party whose indorsement is forged is liable
only to a holder not in due course but is not liable to a holder in due course
d. None of the foregoing
Ans. D
31. M made a promissory note to the order of P for ₱10,000. P indorsed the note to A. X stole the
note from A, forged his (A’s) signature and indorsed it to B. B, in turn, indorsed the note to C,
holder in due course. Who among the parties can be held liable to C?
a. M, P, X, A and B
b. P, X, A and B only
c. X, A and B only
d. X and B only
Ans. D
32. M executed a promissory note in the sum of ₱100,000 to the order of P for the purchase of
jewelry which P does not own or possess. P indorsed the note to A, a holder in due course.
Which of the following statements relative to the absence of consideration in the promissory
note is correct?
a. A can collect ₱100,000 from both M and P
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b. A can collect ₱100,000 from M only
c. A can collect ₱100,000 from P only
d. A can collect ₱100,000 from M and P
Ans. A
33. M wanted to help his friend P who needed cash desperately. In exchange for P’s valuable
painting, M executed a promissory note for ₱300,000 naming P as the payee therein. P then
indorsed the note at S bank and received the proceeds out of the discounted note. Upon
maturity date, P and S bank decided to extend the maturity date by (6) months without the
knowledge and consent of M. the grace period also matured without the note being paid. Which
of the following statements is correct?
a. M is primarily liable to S bank, whereas P is only secondarily liable to S bank
b. Only P is liable to S bank because M is released from his obligation when the period was
extended without his knowledge and consent
c. Only M is liable to S bank as an accommodation party to the note
d. None of the foregoing
Ans. D
34. Which of the following exemplifies negotiation within the meaning of the Negotiable
Instruments Law?
a. A promissory note executed by M in favor of P or his order is delivered by P to A without
indorsement
b. A promissory note executed by M in favor of P is indorsed and delivered by P to A
c. A promissory note is executed by M in favor of bearer is delivered by M to P for safekeeping
d. None of the foregoing
Ans. D
35. Which of the following is an invalid indorsement?
a. An indorsement which is contained in an “allonge” where there is still suficient space at the
back of the negotiable instrument
b. A partial indorsement is made where part of the amount has already been paid
c. A note for ₱10,000 is indorsed by A for ₱7,000 and by B for ₱3,000 simultaneously
d. A note for ₱10,000 is indorsed by A and B for the full amount
Ans. C
36. Which of the following statements relative to indorsements is true?
a. A blank indorsement of an order instrument converts the instrument into a bearer
instrument
b. An order instrument which is special indorsed by P can only be further negotiated by P’s
special indorsement
c. A bearer instrument cannot be negotiated by indorsement coupled with delivery
d. A special indorsement must contain the words “or order” or “to the order of’ to make it
further negotiable
Ans. A
37. Which of the following is not a restrictive indorsement under the Negotiable Instruments Law?
a. “Pay to A or B.” (Sgd.)P
b. “Pay to A only.” (Sgd.)P
c. “Pay to A for collection.” (Sgd.)P
d. “Pay to A in trust for X.” (Sgd.)P
Ans. A
38. M made a promissory note payable to P’s order. X stole the note and forged P’s signature as
indorser to A. A indorsed the note to B as follows: “Pay to B sans recourse, (Sgd.)A.”
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Who among the partied shall be liable to B?
a. X, M and P only
b. X and A only
c. X and M only
d. X only
Ans. B
39. M made a promissory note for ₱25,000 payable to the order of P. P indorsed it to A as follows:
“Pay A upon passing the Bar Examinations next year.” (Sgd.)P. A flunked the examinations held in
the following year and the note matured. Which of the following statements is correct?
a. M may or may not pay A the sum of ₱25,000 and in case he does, he is discharged from his
obligation on the note
b. M should not pay A the sum ₱25,000 because the condition is not fulfilled
c. M and P should not pay A the sum of ₱25,000 because the note is not unconditional and,
therefore, non-negotiable
d. None of the foregoing
Ans. A
40. M made a promissory note payable to P or bearer. P specially indorsed the note to A. A also
specially indorsed it to B. X stole the note from B and delivered it to C without any indorsement.
Who may be held liable to C?
a. X only
b. M and X only
c. M, P, A and X only
d. M, P, A, B and X
Ans. B
41. A promissory note payable to P or order contains the following indorsements at the back
thereof: (Sgd.)P; Pay to B,(Sgd.)A; Pay to C, (Sgd.)B. C is the present holder. Which of the
following statements is correct?
a. C cannot strike out any of the indorsements
b. C may strike out both P’s and A’s indorsements, but he cannot strike out B’s immediate
indorsement
c. C may strike out all indorsements of P, A and B thereby converting the order instrument into
a bearer instrument
d. None of the foregoing
Ans. D
42. Which of the following is not a requisite of a holder in due course under the Negotiable
Instruments Law?
a. He took the instrument complete and regular upon its face
b. He became the holder of the instrument before it was overdue, and without notice that it
had been previously dishonored if such was the fact
c. He took the instrument in good faith and for value
d. That he has no knowledge of any fact which would impair the validity of the instrument or
render it valueless
Ans. D
43. In which of the following cases is the holder deemed to be a holder in due course?
a. The holder acquired the instrument through the indorsement of (1) of the two (2) payees
b. The holder acquired the instrument at noontime on its maturity date
c. The holder accepted the instrument from the payee under a strong and reliable warning of
the latter’s swindling activities
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d. None of the foregoing
Ans. B
44. Which of the following defenses is a real or absolute defense which can be successfully raised
against a holder in due course?
a. Want of authority of agent
b. Want of delivery of complete instrument
c. Absence or failure of consideration
d. Acquisition of instrument by force, duress fear, or by unlawful means
Ans. A
45. Which of the following is a characteristic of “fraud in factum” or “fraud in esse contractus?”
a. It is fraud in the execution of the instrument
b. The person actually knows that what he signed is a negotiable instrument but he was
induced to do so because of fraudulent representation on its consideration
c. It is a personal or equitable defense that cannot be raised against a holder in due course
d. All of the foregoing
Ans. A
46. M made a promissory note payable to P or order as payment for the purchase of what appears
to be a genuine diamond ring but what in fact was a mere piece of valueless glass. Indorsements
where as follows: P to A, A to B, B to C, and C to D. the parties A, B and D knew about the fraud
commited by P. C, however, has no knowledge thereto. Is M primarily liable to D on the note?
a. No, because M has a real defense that he can set up against any holder
b. No, because M has a personal defense that he can avail against D who is an immediate party
to him
c. Yes, because D is deemed a holder in due course who is free from and personal defense of
M.
d. None of the foregoing
Ans. C
47. M made a promissory note for ₱100,000 in favor of P or order, the latter deceiving the former
that he (P) was selling his car in A-1 condition which was in fact a piece of junk. P indorsed the
note to A who knew about the fraud. A, in turn, indorsed the note to B, a holder in due course. B
further indorsed the note to C, present holder. Which of the following statements is true?
a. M is liable to C if the latter if the latter has no knowledge of the fraud
b. M is liable to C whether or not the latter has knowledge of the fraud
c. M is not liable to C if the latter has no knowledge of the fraud
d. M is not liable to C whether or not the latter has knowledge of the fraud
Ans. D
48. Determine who among the following parties to a negotiable instrument is a party who is
secondarily liable:
a. Maker of a promissory note
b. Drawee of a bill of exchange
c. Acceptor of a bill of exchange
d. Drawer of a bill of exchange
Ans. D
49. Which of the following is not a characteristic of an irregular indorser?
a. His signature is placed on the instrument after its delivery to the payee
b. He is not a party to the instrument
c. The purpose of the indorsement is not to transfer title to the instrument
d. His warranties are the same as those of a general indorser
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Ans. A
50. Which of the following is not among the warranties of a qualified indorser or a person
negotiating an instrument by delivery?
a. That the instrument is genuine and in all respects what it purports to be
b. That he has good title to the instrument
c. That all prior parties have capacity to contract
d. That the instrument is, at the time of his indorsement, valid and subsisting
Ans. D
51. Which of the following statements relative to both qualified indorser and a person negotiating a
bearer instrument by delivery is false?
a. Both parties are not liable in case of insolvency of a prior party, unless they have knowledge
thereto
b. The liabilities of both parties extend to all subsequent holders of the instrument
c. Both parties are liable in case the signature of the maker of a promissory note is forged
d. None of the foregoing
Ans. B
52. M made a promissory note for ₱30,000 payable to P or order. The following indorsements are
found at the back of the note:
Pay to A sans recourse.
(Sgd.) P
Pay to B.
(Sgd.) A
Which of the following statements is true?
a. In case M is insolvent, P is not liable but A is liable to B
b. In case M is insolvent, P and A are not liable to B
c. In case M’s signature is forged, P is not liable but A is liable to B
d. In case M is a minor, P and A are not liable to B
Ans. A
53. Which of the following relative to presentment for payment of negotiable instruments is false?
a. The holder of the instrument may sue the maker or acceptor for nonpayment after maturity
date without need of prior demand
b. Presentment for payment is not necessary to charge the maker or acceptor even if
presentment for payment is required and stipulated in the instrument
c. Failure to make presentment for payment to the maker or acceptor will not discharge the
drawer and indorsers from their secondary liability
d. Presentment for payment may be dispensed with where the drawee is a fictitious person
Ans. C
54. In which of the following cases must presentment for payment be made?
a. To the drawer, where he made a stop payment order to the drawee-bank
b. To the drawer, where he withdrew all his deposit in the drawee-bank
c. To the indorser, where the instrument was made or accepted for his accommodation and he
has no reason to expect that it will be paid if presented
d. None of the foregoing
Ans. D
55. Notice of dishonor must be given to:
a. Maker and acceptor
b. Qualified indorser and person negotiating by delivery
c. Payee
d. All of the foregoing
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Ans. C
56. M made a promissory note payable to the order of P. indorsements were as follows: P to A, A to
B, B to C, and C to D. the note was dishonored by M. D served a notice of dishonor to C.
However, P, A, and B did not receive any notice of dishonor. C paid the note to D. who among the
secondary parties does C have a right of recourse?
a. P, A and B can be held liable to C
b. Only A and B can be held liable to C
c. Only B can be held liable to C
d. None of the foregoing
Ans. D
57. Which of the following cases constitutes material alteration of a negotiable instrument?
a. Changing the sum payable written in figures without changing the sum payable written in
words
b. Insertion of the legal rate of interest where payment of interest is stipulated but without
specifying the rate
c. Placing the name of the indorsee above the indorser’s signature to convert a blank
indorsement into a special indorsement
d. None of the foregoing
Ans. D
58. M made a promissory note for ₱100,000 payable to P or order. P altered the amount by
increasing it to ₱150,000. P then indorsed it to A, and A to B, present holder in due course.
Which of the following statements is correct?
a. M, P and A are not liable to B for the material alteration
b. M is liable to B for ₱100,000; P and A are liable to B for the balance of ₱50,000
c. M is not liable to B; P and A are liable to B for ₱150,000
d. M, P and A are liable to B for ₱150,000
Ans. B
59. The holder does not have the option to treat a bill of exchange as a promissory note in one of
the following cases:
a. The drawer and the drawee are the same person
b. The drawee is a fictitious persom
c. The payee is a fictitious person
d. The drawee is incapacitated to contract
Ans. C
60. The maker, by making the instrument, has the following liabilities, except:
a. The engagement to pay the instrument according to its tenor
b. The admission of the existence of the payee
c. The admission of the capacity of the payee to indorse the instrument
d. The admission of the right of the holder to enforce payment of the instrument
Ans. D
61. Which of the following is not a characteristic of a bill of exchange?
a. Original parties are the drawer, drawee and payee;
b. Acceptance is generally required;
c. Drawer is primarily liable;
d. Contains an unconditional order to pay;
Ans. C
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62. 1st statement: A check must be presented for payment within a reasonable time after it issued of
the drawer will be discharged from a liability thereof.
2nd statement: Where the holder of a check procures it to be accepted or certified, the drawer
and all endorsers are discharged from liability thereof.
a. Only the 1st statement is true
b. Only the 2nd statement is true
c. Both statements are not true
d. Both statements are true
Ans. B
63. Determine who among the following parties to a negotiable instrument is a party who is
secondary liable:
a. Maker of a promissory note
b. Drawee of a bill of exchange
c. Acceptor of a bill of exchange
d. Drawer of a bill of exchange
Ans. D
64. Which of the following is not among the warranties of a qualified indorser or a person
negotiating an instrument by delivery?
a. That the instrument is genuine and in all respects what it purports to be
b. That he has good title to the instrument
c. That all prior parties have capacity to contract
d. That the instrument is, at the time of his indorsement, valid and subsisting
Ans. D
65. For the purpose of lending his name without receiving the value thereof, A makes a note for
₱1M payable to the order of B who in turn negotiates it to C, the latter knowing that A is not a
party for value. May C recover from A if the latter alleges absence of consideration?
a. Yes, because an accommodation party is liable to a holder for value
b. Yes, because an accommodated party is liable to a holder for value
c. No, because a holder is not a holder in due course due to his knowledge of the absence of
consideration
d. No, because absence of consideration is a personal defense
Ans. A
66. Statement 1: A holder is a payee or indorsee of a bill or note who is in possession of it or the
bearer thereof.
Statement 2: An instrument payable to bearer cannot be negotiated by indorsement coupled
with delivery.
a. Both statements are true
b. Both statements are false
c. First statement is true, Second is false
d. First statement is false, Second is true
Ans. C
67. A negotiable instrument once issued as negotiable will always be negotiable. An indorsement
may contain restrictions, conditions and qualifications, and the negotiable character of the
instrument will not be affected.
a. Both statements are true
b. Both statements are false
c. Only the first statement is true, Second is false
d. The first statement is false, Second is true
Ans. A
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68. The payment of a check by the drawee bank is a negotiation and makes the bank the holder
thereof. There is nothing in the Negotiable Instruments Law which prevents the use of rubber
stamp in the indorsement of checks, drafts and notes.
a. Both statements are true
b. Both statements are false
c. First statement is true, Second is false
d. First statement is false, Second is true
Ans. D
69. In a note payable to the order of W, the latter merely signed his name at the back. This kind of
indorsement is called?
a. Special indorsement
b. Blank indorsement
c. Qualified indorsement
d. Restrictive indorsement
Ans. B
70. Which of the following statements relative to forgery in negotiable instruments is false?
a. The drawee-bank can recover the payment it made to a holder in due course where the
drawer’s signature on the check is forged
b. The drawee-bank can recover the payment it made to the encasher of the check where the
payee’s signature on the check is forged
c. The drawee-bank that paid a check with a forged indorsement cannot debit or charge the
drawer’s account in the absence of negligence on the part of the drawer
d. None of the foregoing
Ans. A
71. M executed a promissory note in the sum of ₱100,000 to the order of P for the purchase of
piano which P does not own or possess. P indorsed the note to A, a holder in due course. Which
of the following statements relative to the absence of consideration in the promissory note is
correct?
a. A can collect ₱100,000 from both M and P
b. A can collect ₱100,000 from M only
c. A can collect ₱100,000 from P only
d. A cannot collect ₱100,000 from M and P
Ans. A
72. Which of the following statements relative to protest is false?
a. It is normally prepared and certified by a notary public
b. It requires at least (1) witness
c. It is required only in the case of foreign bills
d. It may be dispensed with in the same manner as a notice of dishonor may be dispensed with
Ans. A
73. Which of the following statements relative to checks is false?
a. A manager’s check operates as an assignment of funds to the credit of the payee or holder
which is no longer subject to countermand
b. A check is crossed specially can only be deposited in the bank whose name is written
between the parallel lines
c. A check is crossed generally can be deposited in any bank where the holder maintains a
depousit
d. A crossed check is not a negotiable instrument
Ans. D
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74. One of the following is not a requisite for the negotiability of a promissory note:
a. The promissory note must be in writing and signed by the maker
b. The promissory note must be payable on demand or at a fixed or determinable future time
c. The promissory note must be payable to a specified person named therein
d. The payee of a promissory note payable to order must be named or otherwise indicated
therein with reasonable certainty
Ans. C
75. A check is crossed generally when:
a. Only the words “and Co.” are written between the parallel lines
b. It is certified by the drawee bank
c. The name of a particular bank is written between the parallel lines
d. None of the above
Ans. A
76. Three of the following are special types of bills of exchange. What is the exception?
a. Bank draft
b. Due bill
c. Clean bill of exchange
d. Banker’s acceptance
Ans. B
77. Three of the following are not covered by the Negotiable Instruments Law. What is the
exception?
a. Letters of credit
b. Treasury warrant
c. Bill of exchange
d. Bill of lading
Ans. C
78. A stale check is a check?
a. That cannot anymore be paid through the underlying obligation still exists
b. That cannot anymore be paid and the underlying obligation under the check is also
extinguished
c. That can still be negotiated or indorsed so that whoever is the holder can
d. Which has not been presented for payment within a period of thirty (30) days
Ans. A
79. In payment for his debt in favour of X, Y gave X a Manager’s Check in the amount of ₱100,000.
Which phrase best completes the statement- A manager’s check:
a. Is a check issued by a manager of a bank for his own account
b. Is check issued by a manager of a bank in the name of the bank against the bank itself for
the account of the bank
c. Is like any ordinary check needs to be presented for payment also
d. Is better than a cashier’s check in terms of use and effect
Ans. B
80. Negotiable instruments are used as substitutes for money, which means?
a. That they can be considered legal tender
b. That when negotiated, they can be used to pay indebtedness
c. That at all times the delivery of the instrument is equivalent to delivery of the cash
d. That at all times negotiation of the instruments requires proper indorsement
Ans. B
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81. A promissory note which does not have the words “or order” or “or bearer” will render the
promissory note non-negotiable, and therefore:
a. It will render the maker not liable
b. The note can still be assign and the maker made liable
c. The holder can become holder in due course
d. The promissory note can just be delivered and the maker will still be liable
Ans. B
82. A check is --a. A bill of exchange
b. The same as a promissory note
c. Is drawn by a maker
d. A non-negotiable instrument
Ans. A
83. In a negotiable instrument, when the sum is expressed both in numbers and in words and there
is discrepancy between the words and numbers--a. The sum expressed in words will prevail over the one expressed in numbers
b. The sum expressed in numbers will prevail over the one expressed in words
c. The instrument becomes void because of the discrepancy
d. This will render the instrument invalid
Ans. A
84. Where a negotiable note contains the words “For value received”, a presumption of
consideration arises, and the burden of proving lack of consideration, rests on the --a. Indorser
b. Maker
c. Drawer
d. Drawee
Ans. B
85. Excluding liabilities arising from warranties on the instrument, the following are liable to any
holder or subsequent party who might be compelled to pay another except:
a. General indorser
b. Conditional indorser
c. Restrictive indorser
d. Qualified indorser
Ans. A
86. Which is an element of the doctrine of “piercing the veil of corporate entity?”
a. Complete control over the business.
b. Control is used to commit fraud or wrong.
c. Control and breach of duty are the proximate cause of the injury or loss.
d. All of the foregoing.
Ans. D
87. One of the following attributes is not common to both a corporation and a partnership:
a. Succession
b. Income tax rate
c. Juridical personality
d. Can act through agents only
Ans. A
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88. One of the following entities cannot be organized as a stock corporation:
a. Bank
b. Close corporation
c. Religious corporation
d. Educational corporation
Ans. C
89. Which of the following entities are private corporations, as distinguished from public
corporations?
a. GSIS
b. National Power Corporation
c. Public utilities
d. All of the foregoing
Ans. D
90. A corporation may be a partner to another corporation where:
a. All partners are managing partners and the articles of incorporation expressly allow it.
b. The foreign corporation is a general partner in a domestic limited partnership.
c. A joint venture is entered into that is not in line with its business.
d. None of the foregoing.
Ans. A
91. Which of the following statements relative to a corporation, stock or non-stock, is true?
a. All incorporators are stockholders.
b. All corporators are incorporators.
c. All incorporators are subscribers.
d. None of the foregoing.
Ans. D
92. Which of the following statements in relation to capital stock is false?
a. There is no authorized capital stock in no-par value shares.
b. Subscribed capital stock is still unissued.
c. Treasury stock is not part of outstanding capital stock.
d. None of the foregoing.
Ans. D
93. One of the following is not a feature of “authorized capital stock:”
a. It applies only to par value stock.
b. It represents the maximum stock that may be issued by the corporation.
c. It may include subscribed capital stock.
d. It may include retained earnings.
Ans. D
94. Which of the following is not a feature of preferred stock?
a. It cannot vote, unless expressly granted in the articles of incorporation.
b. It is only preferred as to dividends in the absence of stipulation.
c. It is always a par value stock.
d. It may be redeemable stock.
Ans. A
95. Which of the following components of stockholders’ equity does not form part of legal capital?
a. Paid-in capital stock
b. Retained earnings
c. Premium on capital stock
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d. Donated capital
Ans. B
96. Which of the following statements does not characterize a no-par value share?
a. It always has an issued value.
b. It may be issued together with par value shares.
c. It may be issued even if the subscription is not yet fully paid.
d. It has no stated value appearing on the certificate of stock.
Ans. C
97. The value of a share of stock, which is increased by net profits or reduced by net losses of the
corporation, is known as:
a. Book value
b. Par value
c. Market value
d. Liquidating value
Ans. A
98. Which of the following corporation may issue no-par value stock?
a. Banks
b. Insurance companies
c. Public utilities
d. None of the foregoing
Ans. D
99. One of the following transactions does not require the adequacy of unrestricted retained
earnings:
a. Redemption of redeemable shares
b. Dividend on common stock
c. Reacquisition of treasury shares
d. Dividend on preferred stock
Ans. A
100.
A non-voting preferred stock cannot vote in:
a. Filling of vacancy in the board
b. Amendment of articles of incorporation
c. Increase or decrease in capital stock
d. Dissolution of the corporation
Ans. A
101.
The following entities may be organized as close corporations under the Corporation
code:
a. Mining or oil companies
b. Banks
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. D
102.
Which of the following acts may be done validly by an ordinary non-stock corporation?
a. Distribute any part of its income as dividends.
b. Use its incidental profit for any purpose other than the purpose to which it is organized.
c. Both (a) and (b).
d. neither (a) nor (b).
Ans. D
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103.
One of the following statements is not a characteristic of an ordinary non-stock
corporation:
a. A member may vote by proxy which cannot be denied in the articles of incorporation or bylaws.
b. Voting by mail or any other means shall only be allowed if authorized in the by-laws and
approved by the SEC.
c. Additional qualifications for voting members may be provided in the articles of incorporation
or by-laws.
d. Its membership is personal and non-transferable, unless otherwise provided in the articles of
incorporation or by-laws.
Ans. A
104.
Which of the following statements relative to an educational corporation is false?
a. It may be a stock or non-stock corporation.
b. It is similar to an ordinary non-stock corporation organized for educational purposes.
c. A family administered pre-school institution need not be incorporated.
d. The approval of the SEC is necessary to its incorporation.
Ans. B
105.
Which of the following is not a means for a corporation to voluntarily dissolve itself?
a. Majority vote of the board of directors/trustees and at least 2/3 vote outstanding capital
stock/members.
b. Bankruptcy
c. Filing of a petition for dissolution before the SEC
d. Amendment of articles of incorporation to shorten corporate term
Ans. B
106.
The terms “securities” does not include:
a. Shares of stock
b. Voting trust certificates
c. Lease contracts
d. Bonds
Ans. C
107.
Which of the following statements relative to the Commissioners of the Securities and
Exchange Commission (SEC) is false?
a. They are appointed by the President of the Philippines to serve a 7-year term each.
b. They must all be natural-born citizens of the Philippines.
c. At least three (3) of the Commissioners must be members of the Philippine Bar.
d. None of the foregoing.
Ans. D
108.
One of the following securities must be registered with the SEC:
a. Securities issued or guaranteed by the Philippines government
b. Certificates issued by a trustees in the bankruptcy duly approved by the proper adjudicatory
body
c. Bank’s own shares of stock
d. None of the foregoing
Ans. C
109.
The sale of securities requires SEC registration where the qualified buyer is a:
a. Bank
b. Investment company
c. Insurance company
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d. None of the foregoing
Ans. D
110.
Which of the following statements is false?
a. A “pre-need plan” includes life, pension, education, and interment plans.
b. All “commodity future contracts” are gambling and against public policy.
c. A “tender offer” is an offer to acquire at least 15% of any class of any equity security of a
listed corporation by filing a declaration to that effect with the SEC.
d. None of the foregoing
Ans. B
111.
An “insider trading” is unlawful where:
a. The insider communicates material nonpublic information about the issuer or the security to
any person, knowing or believing that such person will buy or sell the security of the issuer by
reason of the information.
b. The insider proves that the information was not gained from his relationship with the issuer of
the securities.
c. The insider has reason to believe that the other party who is identified is also in possession of
the information.
d. The insider shows that the information is not material non-public information.
Ans. A
112.
Which of the following persons is exempted from registration with the SEC before he
engage in the business of buying and selling of securities in the Philippines?
a. Brokers and dealers
b. Associated persons of broker and dealer
c. Salesmen of broker or dealer
d. None of the foregoing
Ans. D
113.
X borrowed the certificates of stock of Y to be used as security for a loan. Thereafter, the
market price of the shares zoomed up and X sold the said shares in the trading market. X
returned the amount equivalent to the par value of the shares to Y and pocketed the profit he
made from the sale.
This transaction is what is known as:
a. Wash sale
b. Short sale
c. Insider trading
d. None of the foregoing
Ans. D
114.
X connived with several brokers to engage among themselves in the buying and selling
of his securities in order to create a false appearance of active trading with respect to his
securities at the stock exchange.
a. Wash sale
b. Short sale
c. Insider trading
d. None of the foregoing
Ans. A
115.
An “Exchange” is an organized marketplace or facility that brings together buyers and
sellers and executes trades of securities and/or commodities.
Which of the following is uncharacteristic of an “Exchange?”
a. It may be incorporated as a stock or non-stock entity.
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b. It may be engaged solely in the business of operating an exchange, unless exempted under
the rules and regulations adopted by SEC.
c. The brokers in the board of the Exchange shall comprise of not more than 49% of such
board.
d. None of the foregoing
Ans. A
116.
Which of the following is a feature of conservatorship?
a. The conservator takes over the management of the bank whenever the bank fails or is
unwilling to maintain its liquidity.
b. The conservatorship may exceed one (1) year.
c. Conservatorship shall always precede receivership.
d. The conservator must be an oficial of the Bangko Sentral ng Pilipinas.
Ans. A
117.
Under the New Central Bank Act, which of the following cases is not a justifiable ground
for placing a bank under the receivership of the Philippine Deposit Insurance Corporation (PDIC)
summarily and without need for prior hearing?
a. Inability to meet the withdrawals of depositors during a period of financial panic in the
community.
b. Insuficient realizable assets to meet its liabilities.
c. Inability to continue without probable losses to its depositors and creditors.
d. Willful violation of cease and desist order involving fraudulent acts.
Ans. A
118.
Which of the following statements relative to a bank conservator and bank receiver
under the New Central Bank Act is false?
a. Both take charge of the assets and liabilities of the subject bank.
b. Both have the power to rehabilitate or liquidate the corporate life of the subject bank.
c. Both need not be oficers/employees of the Bangko Sentral.
d. None of the foregoing.
Ans. B
119.
Which of the following statements relative to the replacement of notes and coins under
the New Central Bank Act is true?
a. Notes and coins may be called in for replacement by the Bangko Sentral when they are more
than ten (10) years old and five (5) years old, respectively.
b. Notes and coins which are called in for replacement cease to be legal tender upon the date of
call.
c. Notes and coins become demonetized one (1) year from the date of call.
d. Notes and coins that have been called in for replacement and have ceased to be legal tender
may still be exchanged at par value for a period of one (1) year or for a longer period as may be
prescribed by the Monetary Board.
Ans. D
120.
The international reserves of the Bangko Sentral may include but shall not be limited to
the following assets:
a. Foreign notes and coins
b. Demand and time deposits in commercial banks abroad
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. C
121.
The term “deposit substitutes” under the New Central Bank Act includes:
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a. Promissory notes
b. Banker’s acceptances
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. C
122.
The Bangko Sentral ng Pilipinas exercises supervisory and regulatory powers over:
a. Finance companies
b. Pawnshops
c. Building and loan associations
d. Homeowner’s associations
Ans. B
123.
Under R.A No. 8791, otherwise known as the General Banking Act, which of the
following statements relative to banks is false?
a. Banks must be stock corporations with par value shares.
b. Banks obtain its funds from the public, which shall mean twenty (20) or more persons.
c. Bank directors and oficers can borrow money or act as guarantors in their banks if approved
in writing by the majority of all the directors and the Bangko Sentral ng Pilipinas is furnished with
the copy thereof.
d. The board of directors of banks must consist of at least one (1) independent director who is
not connected with such bank or its afiliates.
Ans. D
124.
Which of the following may be legally done by a bank?
a. Engage in insurance business.
b. Enter into contracts of deposit on its safety deposit boxes.
c. Hire casual employees in the conduct of its business involving deposits.
d. Enter into stipulations exempting it from liability for damages in case of error or delay in
transmiting telegraphic transfers.
Ans. B
125.
XYZ Corporation obtained a loan from ABC Bank secured by a real estate mortgage on its
land. XYZ Corporation defaulted payment, and so the mortgage was foreclosed and the land was
sold at public auction.
The redemption period of XYZ Corporation is:
a. Within three (3) months from the date of auction sale.
b. Within one (1) year from the date of auction sale.
c. Until the registration of the certificate of foreclosure sale with the Register of Deeds, but in
no case exceeding three (3) months.
d. Until the registration of the certificate of foreclosure sale with the Register of Deeds, but in
no case exceeding one (1) year.
Ans. C
126.
Assume the same facts in Q. 140, except that the mortgagor is X, an individual person.
The redemption period of X is:
a. Within three (3) months from the date of auction sale.
b. Within one (1) year from the date of auction sale.
c. Until the registration of the certificate of foreclosure sale with the Register of Deeds, but in
no case exceeding three (3) months.
d. Until the registration of the certificate of foreclosure sale with the Register of Deeds, but in
no case exceeding one (1) year.
Ans. B
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127.
BCD Banking Corporation was able to acquire a house and lot that was mortgaged to it in
good faith by way of security for a loan.
As a general rule, the bank is required by law to dispose the real property within a period of:
a. Six (6) months
b. One (1) year
c. Five (5) years
d. Ten (10) years
Ans. C
128.
To bind third persons, the chattel mortgage executed on a private motor vehicle must be
registered with the:
a. Chattel Mortgage Registry
b. Land Transportation Ofice
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. C
129.
B purchased a motor vehicle from S for P1,200,000 payable by a downpayment of
P600,000 and the balance in 12 equal monthly installments of P50,000 each. A chattel mortgage
on the vehicle was executed to serve as security. B defaulted on the 7 th and 8th monthly
installments. The chattel mortgage was foreclosed but the auction sale resulted into a deficiency
of P100,000.
Under R.A. No. 1508, as amended, otherwise known as the Chattel Mortgage Law, in relation to
Article 1484 of the Civil Code, more popularly known as the Recto Law, what is the remedy of S
to recover the deficiency?
a. Auction the other properties of B for P100,000.
b. Cancel the installments sale.
c. File a collection suit for P100,000 against B.
d. No other remedy on the deficiency.
Ans. D
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130.
Assume the same facts in Q. 144, except that in addition to the chattel mortgage on the
motor vehicle, a real estate mortgage was executed as additional security by G (guarantor) on his
lands.
What is the remedy of S to discover the deficiency?
a. Foreclose the real estate mortgage on the land.
b. Cancel the installment sale.
c. File a collection suit for P100,000 against B.
d. No other remedy on the deficiency.
Ans. D
131.
D borrowed P200,000 from C payable in 10 monthly installments of P20,000 each. The
credit was secured by a chattel mortgage on D’s truck. D defaulted on the 1 st and 2nd
installments. The chattel mortgage was foreclosed and the truck was sold for P150,000.
Which of these statements is correct?
a. C cannot recover the P50,000 deficiency from D because it is prohibited under the Recto
Law.
b. C cannot recover the P50,000 from D because there is no recovery of deficiency in mortgage
contracts.
c. C can recover the P50,000 deficiency from D because the Recto Law is not applicable to
loans secured by a chattel mortgage.
d. None of the foregoing.
Ans. C
132.
R.A. No. 6552 (Reality Installment Buyer Protection Act), more popularly known as the
Maceda Law, covers the installment sale or financing of:
a. Condominium dwelling units
b. Commercial buildings
c. Industrial lots
d. Agricultural lands to tenants under the Agrarian Reform Program
Ans. A
133.
Where the installment buyer was able to pay less than two (2) years of installment, the
Maceda Law grants him a grace period, without any additional interest, of:
a. Thirty (30) days
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b. Sixty (60) days
c. One (1) month
d. Two (2) months
Ans. B
134.
Where the installment buyer was able to pay two (2) years or more installment, the
Maceda Law grants him a grace period, without any additional interest, of:
a. Thirty (30) days for every year of installments paid
b. Sixty (60) days for every year of installments paid
c. One (1) month for every year of installments paid
d. Two (2) months for every year of installments paid
Ans. C
135.
X, Y and Z are partners in Ace & Co. W represented himself as a partner in the said
partnership
to A, who, on the faith of such representation, granted P1M loan to the partnership.
Assuming
only X and Y consented to such representation, who shall be liable to A?
a. since the partnership benefited from the credit extended by A, all partners X, Y and Z are liable
b. only X, Y, and W are partners by estoppel A and are liable pro rata
c. since the loan was extended to the partnership; all the partners and W are liable
d. only W who made the representation shall be liable
Ans. B
136.
Spouses A and B formed a limited partnership to engage in real estate business and A
contributed P1M only. Is the partnership between the spouses valid?
a. the partnership is not valid because spouses cannot enter into a limited partnership
b. the partnership is valid because spouses can enter into a partnership, limited or general,
universal or particular
c. the partnership is not valid because the spouses cannot enter into any kind of partnership for
business except conjugal partnership
d. the partnership is valid because spouses are prohibited to enter into a universal partnership
only
Ans. D
137.
X,Y and Z are partners who contributed equally to the capital of the partnership. A owes
the partnership P9,000.00. Z collected from A 3,000.00 before X and Y could receive anything
from A, who later became insolvent and therefore they could not collect their shares
a. Partner Z shall share the 3,000.00 with his co-partners X and Y
b. Z cannot required to share what he already received from A
c. Z and Y should first exhaust all remedies to collect from A
d. X and Y can automatically deduct from capital contribution of Z in the partnership their
respective shares in the 3,000.00
Ans. A
138.
One of the following incidents is a cause for involuntary dissolution of the partnership:
a. termination of the definite term of partnership
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b. insolvency of a partner
c. express will of a partner in a partnership at will
d. expulsion of a partner of a cause as stated in the articles of part
Ans. B
139.
A, B and C are partners in a partnership engaged in retail with each contributing P20,
000.00 each. D is admitted as a new partner with an existing contribution of P80, 000.00. At the
time of his admission the partnership has a pre-existing obligation to E in the amount of P80,
000.00:
a. D is not liable to e for this obligation when was not yet a partner
b. D is liable to E up to his assets which were not contributed
c. D is liable up to his capital contribution
d. D is liable up to his capital contribution in favor of creditors but with the right of
reimbursement from A, B and C
Ans. C
140.
A partner’s interest in the partnership is not assignable unless the other partners
consent.
An act of strict dominion may be performed by a partner without the consent of his co-partners
if it is advantageous to the partnership.
a. both statements are false
c. first is true, second is false
b. both are true
d. first is false, second is true
Ans. A
141.
A partnership contract begins form the moment of the execution of the contract unless
it is otherwise stipulated.
Even if a third person is in good faith, the partnership is not bound in contract entered into by a
partner after the dissolution of the partnership if the business of the partnership has become
unlawful.
a. first statement is false, second is true
c. both are false
b. first is true, second is false
d. both are true
Ans. D
142.
Type of partnership in which the partners enjoy practically all the profits:
a. General partnership
c. Limited partnership
b. Universal partnership
d. De facto partnership
Ans. B
143.
A partnership which compromises all that the partners may acquire by their work or
industry during the existence of the partnership is:
a. Universal partnership of present property
b. Universal partnership of profits
c. Particular partnership
d. General partnership
Ans. B
144.
May be required additional contribution in case of imminent loss:
a. Capitalist partner
c. Industrial partner
b. Limited partner
d. None of the above
Ans. A
145.
Sometimes termed dormant partner
a. Limited partner
c. Secret partner
b. Capitalist partner
d. None of the above
Ans. C
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146.
Every contract of partnership having a capital of ₱3,000 or more in money or properly
shall appear in a public instrument which must be recorded in the Securities and Exchange
Commission. Failure to comply with said requirements
a. Will not affect the liability of the partnership and the members thereof to third persons
b. Will render the partnership void
c. Will not give the partnership a legal personality
d. Will give the partnership a de facto existence
Ans. A
147.
Which of the following persons are not disqualified to form a universal partnership?
a. Those guilty of adultery or concubinage
b. Husband and wife
c. Those guilty of the same criminal offense, if the partnership is entered into a consideration
of the same
d. Brother and sister
Ans. D
148.
A partnership suffered losses in the first year of its operation. X, a capitalist partner,
refused to contribute an additional share to the capital. Can X be obliged to sell his interest to
the other partners on the grounds of such refusal?
a. Yes, X’s refusal to contribute his additional share reflects his lack of interest in the
continuance of the partnership
b. No, because there is actually no imminent loss of the business
c. Yes, provided that X is paid the value of his interest
d. None of the above
Ans. C
149.
Property rights of a partner, except
a. To use specific partnership property for partnership purpose
b. To share in the profits
c. To participate in the management
d. To exercise appraisal right
Ans. D
150.
When a par value shares issued above par, the premium or excess is to be considered as
part of the legal capital. Shares issued without par value shall be deemed fully paid and nonassessable and the holder of such shares shall not be liable to the corporation or its creditors in
respect thereto.
a. both statements are false
c. first is true, second is false
b. both are true
d. first is false, second is true
Ans. D
151.
As regards treasury shares, which is not correct?
a. they have no voting rights while in the treasury
b. they may be distributed as property dividend if there surplus profit
c. they are not entitled to dividends
d. they are considered part of the earned or surplus profits thus distributable as dividends
Ans. D
152.
Which of the following components of stockholders’ equity does not form part of legal
capital?
a. Paid in capital stock
b. Retained earnings
c. Premium on capital stock
d. Donated capital
Ans. B
153.
The value of a share of stock, which is increased by net profits or reduced by net losses
of the corporation, is known as:
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a. Book value
b. Par value
c. Market value
d. Liquidating value
Ans. A
154.
One of the following transactions does not require the adequacy of
unrestricted retained earnings:
a. Redemption of redeemable shares
b. Dividend on common stock
c. Reacquisition of treasury shares
d. Dividend on preferred stock
Ans. A
155.
What is the term of corporate existence?
a. The term as specified in the articles of incorporation which must not be less than fifty (50)
years
b. The term as specified in the articles of incorporation which must not be more than fifty (50)
years
c. Fifty (50) years
d. Indefinite number of years
Ans. B
156.
Determine which of the following “Purpose clauses” contained in the
articles of incorporation shall be accepted by the SEC?
a. To practice law in the Philippines.
b. To carry out any lawful business or purpose.
c. Both (a) or (b)
d. Neither (a) nor (b)
Ans. D
157.
Which of the following statements relative to corporate oficers is true?
a. The term of ofice of the corporate President is conterminous with his term as a board
director
b. The corporate President may simultaneously serve as the corporate Treasurer or Secretary
c. The corporate Treasurer must be a citizen of the Philippines
d. The corporate Secretary must also be a director or trustee of the corporation
Ans. A
158.
An executive committee can validly act on the:
a. Amendment of the articles of incorporation
b. Preparation of the plan for merger of the corporation with another corporation
c. Filling of vacancy in the board of directors
d. None of the foregoing
Ans. D
159.
Which of the following cases shall justify a valid restriction of retained
earnings?
a. Justifiable expansion projects approved by the board of directors.
b. Loan agreement requiring the debt to first secure the consent of the creditor before any
dividend may be declared, and such consent is not yet secured.
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. C
160.
a partnership:
a. Succession
One of the following attributes is not common to both a corporation and
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b. Income tax rate
c. Judicial personality
d. Can act through agents only
Ans. A
161.
In the three of the following instances, shares with or without voting
rights can be voted, except:
a. increase or decrease of capital stock
b. dissolution of the corporation
c. election of directors or trustee
d. merger or consolidation with other corporation
Ans. C
162.
A director of a corporation may be removed from the ofice by a vote of
the stockholders holding representing:
a. majority of the outstanding capital stock
b. 2/3 of the stockholder
c. 2/3 of the outstanding capital stock
d. majority of the stockholder
Ans. C
163.
Which of the following is a characteristic of a de facto corporation?
a. There is a bona fide attempt to comply with the requirements of the law in organizing the
corporation.
b. There is an actual exercise of corporate powers in good faith.
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. C
164.
Which of the following defects would make the corporation a de facto
corporation?
a. The corporate name which resembles the name of a pre-existing corporation is likely to
deceive the public
b. Failure to file the articles of incorporation with the SEC
c. Absence of certificate of incorporation from the SEC
d. Continuing business operations despite the discovery of the defect or defects after
incorporation without any action to correct them
Ans. D
165.
a.
b.
c.
d.
One of the following is not among the powers of a corporation?
To sued and be sued
Succession
Making donations, except those in aid of any political party
Establishment of retirement and other benefit plans for its directors, trustees, oficers and
employees
Ans. C
166.
Shareholders who shall receive the dividends are those who are
registered as such in the stock and transfer book as of the:
a. Date of declaration
b. Date of record
c. Date of payment
d. None of the foregoing
Ans. A
167.
A corporation cannot perform an act of enter into a contract unless the
act or contract is within the powers, attributes and properties expressly authorized by law or
incident to its existence
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a. Doctrine of legal entity
b. Doctrine of separate personality
c. Doctrine of piercing the veil of corporate fiction
d. Doctrine of limited capacities
Ans. D
168.
The power to examine into the affairs of a corporation in order to
supervise, direct and control its management is called
a. Visitorial power of the state
b. Visitorial power of stockholders
c. Visitorial power of directors
d. Visitorial power of employees
Ans. A
169.
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
c. Implied power
b. Incidental power
d. Discretionary power
Ans. A
170.
Which of the following is not an express power of a corporation?
a. To sue and be sued
b. To adopt and use a corporate seal
c. To aid employees
d. To amend its articles of incorporation
Ans. C
171.
The following are acts within the implied powers of a corporation
except:
a. Acts in the usual course of business
b. Acts to protect debts owing to the corporation
c. Embarking in different business in which it is not a part of the regular business
d. Acts to increase its business
Ans. C
172.
Which of the following is a disadvantage of forming corporation?
a. The subservience of minority stockholders to the wishes of the majority subject only to
equitable restraints
b. The shareholders are not liable for the debts of the business
c. The free and ready transferability of ownership
d. Because of the power of succession, the existence of the entity is not affected by the
personal vicissitudes of the individual shareholders
Ans. A
173.
Which of the following pertains to a corporation?
a. Composed of two or more persons
b. Created by law
c. No right of perpetual succession
d. Maybe created for an indefinite period
Ans. B
174.
Corporations which have capital stock divided into shares and are
authorized to distribute to the holders of such shares dividends or allotments of the surplus
profits on the basis of the shares held are
a. Stock corporations
c. De jure corporations
b. Non-stock corporations
d. Private corporations
Ans. A
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175.
a. Preferred shares
b. Escrow shares
Ans. D
Shares of stock which cannot be issued by banks, trust company, etc.
c. Treasury shares
d. No-par value shares
176.
The following are advantages of par value shares of stock, except one:
a. Greater protection to creditors
b. Liability of subscribers for unpaid subscription
c. Unlikelihood of distribution of dividends that are ostensible profits
d. Ease of sale
Ans. D
177.
This is the effect of issuance of no-par value to the stockholders
a. The holder of such shares shall continue to be liable to the corporation or to its creditors in
respect thereto
b. The holder of such shares shall not be liable to the corporation or to its creditors in respect
thereto
c. The holder of such share shall not be entitled to stock or cash dividends
d. The issuance affords greater protection to creditors
Ans. B
178.
This share can be acquired by the corporation even without unrestricted
retained earnings
a. Founder’s shares
c. Par value share
b. Redeemable shares
d. No par share
Ans. B
179.
except:
Number and qualifications of incorporators in a private corporation
a. Natural persons
b. Not less than 5 but not more than 15
c. Of legal age
d. 2/3 must be residents of the Philippines
Ans. D
180.
Which of the following is perfectly valid?
I.
Joseph won ₱80,000 in jueteng. Since L-Ray, the operator, does not have
suficient money to pay Joseph, L-Ray executed a promissory note of ₱50,000 in
favour of Joseph.
II.
Antivola is indebted to Bantayog in the amount of ₱200,000. Anticipating that on
due date of the obligation, Bantayog will sue him to recover the debt, Antivola
entered into a contract with his father whereby he sold to the latter his only
property. The truth, however, is that Antiviola did not receive anything from his
father.
a. I and II
b. I only
Ans. D
181.
a.
b.
c.
d.
Ans. C
182.
c. II only
d. Neither I nor II
Simulation of a contract may be absolute or relative. It is relative when
The parties do not intend to be bound at all
The contract is void
The parties conceal their true agreement
Answer not given
It takes place when the parties do not intend to be bound at all by their agreement
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a.
b.
c.
d.
Ans. B
Apparent contract
Absolutely simulated contract
Relatively simulated contract
Deed of assignment
183.
Mr Gamboa owes Mr Evangelista ₱100,000. Mr Gamboa knows that on maturity date,
he will not be able to pay Mr Evangelista, and in order to prevent attachment of his property by
Mr Evangelista, Mr Gamboa, before maturity of his debt, executes a contract pretending to sell
to Mr San Diego his property. Which of the following statements is not correct?
a. The contract is not valid for lack of consideration
b. The contract is binding between Mr Gamboa and Mr San Diego
c. The contract being simulated and executed to defraud Mr Evangelista is void
d. Mr Evangelista can seek rescission of the fictitious contract
Ans. B
184.
Which of the following statements is not correct?
a. The validity or compliance of a contract cannot be left to the will of one of the parties
b. In case of foreclosure and the price of the sale is less than the amount due, the pledgee
cannot recover any deficiency
c. Persons who are prohibited by law to enter into contract of donation cannot form
universal partnership
d. Actions for future fraud can be waived
Ans. D
185.
The following is considered fraud or fraudulent
a. Failure to disclose facts when there is duty to reveal them
b. The usual exaggeration in trade, when the other party had the opportunity to know the
facts
c. Misrepresentation not made in bad faith
d. “Caveat Emptor” or Let the Buyer Beware
Ans. A
186.
Through insidious words or machinations, Abion was able to induce Blanco to enter into
contract without them Blanco would not have agreed to it. There is:
a. Undue influence
b. Fraud
c. Mistake
d. Misrepresentation
Ans. B
187.
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 refined sugar instead of an iodized salt.
a. Dolo causanti; dolo incidente
b. Dolo incidente; dolo causanti
c. Mistake; dolo incidente
d. Dolo causanti; mistake
Ans. A
188.
A intimidated B to marry A’s daughter. After a year, B would like to file action for
annulment but could not be do so because A was around to intimidate him. The marriage
contract isa. Rescissible
b. Voidable
c. Void
d. Unenforceable
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Ans. B
189.
Which of the following contracts may not be annulled on ground of mistake?
a. Eddie sold to Atty. Malaya 200 copies of Transfer and Business 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 made as the basis for hiring him indicates that he is a CPA-Lawyer when in
fact he is not a CPA although he graduated 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 bought it from A.
d. None of the above.
Ans. A
190.
Esguerra, a former government employee, suffered from severe paranoia and was
confined in the mental hospital in 2003. After his release, he was placed under the guardianship
of his wife to enable him to get his retirement pay. In 2005, he became a mining prospector and
sold some mining claims. In 2008, 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
Ans. D
191.
Cartridge Corporation published an advertisement in the Manila Bulletin which reads as
follows “INVITATION TO BID:” Construction of a 3-storey building in Anda St., Davao City.” The
advertisement includes the specifications of the building to be constructed. The following
companies submitted their bids: Cris Construction Corporation with a bid price of P10.2 million;
Norhan Company, P10.4 M; and Frank Builders Corporation, P10.5 M. Cartridge Corp. considered
also financial capability, reputation and experience of the bidders, the kind and quality of
materials to be used and other factors –
a. An award to Frank Builders is valid because Cartridge Corporation is not bound to
accept the lowest bidder.
b. Cartridge Corporation is required to declare Cris Construction Corporation as the winner
having declared the lowest bid.
c. An award given to either Norhan Company or Frank Company Builders is voidable
because they were not the lowest bidder.
d. Cartridge Corporation cannot refuse to accept a winner even if none of the bidders is
qualified because the offer is definite.
A
192.
Mr. AB offered in writing to sell his home and lot for P750,000 to Mr. CD on July 1, 2007.
Mr. CD requested Mr. Ab to give him 60 days within which to raise the P750,000. On August 15,
2007, Mr. AB informed Mr.CD that the price is raised and now at P1,000,000. Can Mr. CD compel
Mr. AB to sell house and lot at P750,000 which was offered in writing by Mr. AB?
a. Yes, because Mr. AB is already estopped by his written offer.
b. Yes, because the 60 days offer has not yet expired.
c. No, because Mr. CD has not accepted the offer of Mr. AB.
d. Yes, because there was already meeting of the minds.
Ans. C
193.
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 there a perfected contract?
a. Yes, for a price of P10,000.
b. Yes, for a price of P8,000.
c. No, because the acceptance was qualified and it constituted a counter-offer.
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d. No, because the offer was rejected.
Ans. C
194.
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
Ans. D
195.
Ayubo owes Babagay P200,000 payable December 31, 2008. On December 1, 2008,
Ayubo died leaving property worth P100,000 to his only son, Cayat. Cayat should pay Babagal
a. P100,000
b. P200,000
c. P50,000
d. Nothing
Ans. A
196.
a.
b.
c.
d.
Ans. B
197.
a.
b.
c.
d.
Ans. C
It takes place when the parties do not intend to be bound at all by their agreement
Apparent contract
Absolutely simulated contract
Relatively simulated contract
Deed of assignment
Simulation of a contract may be absolute or relative. It is relative when
The parties do not intend to be bound at all.
The contract is void.
The parties conceal their true agreement.
Answer not given
198.
Three of the following contracts are void. Which one is not?
a. Oral contract of partnership of three partners and capital contribution is more than
P3,000 in cash.
b. Written contract contemplating impossible services.
c. Oral contract of partnership where real estate is contributed as capital.
d. Agent’s authority to sell land is given orally.
Ans. A
199.
When the written contract does not express the true intent of the parties as per their
meeting of the minds due to mistake, fraud, accident or inequitable conduct the remedy isa. Ratification
b. Reformation
c. Rescission
d. Annulment
Ans. B
200.
Rescission of contract can take place in this case:
a. When the thing which are the object of the contract are legally in the possession of third
person who acted in bad faith.
b. When he who demands rescission can return whatever he may be obliged to restore.
c. When the third party seeking resolution can perform only as to part and as to remainder.
d. When the seller cannot return the instalments paid to him by the buyer.
Ans. B
201.
Which of the following contracts is voidable?
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a.
b.
c.
d.
Ans. C
202.
a.
b.
c.
d.
Ans. C
203.
a.
b.
c.
d.
Ans. A
Those whose object is outside the commerce of man.
Those which are absolutely fictitious.
Those where one of the parties is incapacitated.
Those where contemplate an impossible service.
No. 1: A contract entered into by a minor is void.
No. 2: As a general rule, contracts where the amount involved exceeds P500 must be in
writing to be valid.
True, true
False, False
False, True
True, False
A contract entered into by an insane person during a temporary period of sanity is –
Valid
Rescissible
Voidable
Unenforceable
204.
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 of sake?
a. X only
b. B only
c. S only
d. Anyone of them
Ans. C
205.
Under R.A No. 1405, otherwise known as the Bank Secrecy Law, which of the following
acts of a bank oficial is covered by the Bank Secrecy Law?
a. Disclosing the amount of deposit of a judgment debtor to the court sheriff who is
executing a garnishment order against him
b. Disclosing the name of the drawer of a check to the payee
c. Disclosing the amount of deposit of a taxpayer to a duly authorized BIR oficer who is
examining his income tax liability
d. Disclosing the amount of deposit exceeding ₱500,000 in one (1) banking day to the AntiMoney Laundering Council
Ans. C
206.
X, a government employee, purchased Land Bank bonds with a total value of ₱1,000,000
and receives bi-annual interest income from his investment.
Under the Bank Secrecy Law, X’s investment may be inquired into without need of a court order by the:
a. Public prosecutor handling an estafa case against X
b. BIR oficer auditing the value-added taxes of X
c. Credit investigator of a lending institution where X applied for a loan
d. None of the foregoing
Ans. D
207.
X maintained the following deposits at CDF Bank:
₱600,000 – savings deposit in the name of “X and/or Y”
200,000 – time deposit in the name of “XYZ Partnership”
300,000 – current account in the name of “X”
ABC Bank was liquidated by the Banko Sentral ng Pilipinas due to financial reverses. How much
can X personally recover from the Philippine Deposit Insurance Corporation (PDIC)?
a. ₱900,000
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b. ₱600,000
c. ₱500,000
d. ₱300,000
Ans. C
208.
a.
b.
c.
d.
Ans. C
The term “intellectual property rights,” may consist of:
Layout-Designs (Topographies) of Integrated Circuits
Protection of Undisclosed Information
Both (a) and (b)
Neither (a) nor (b)
209.
An application for patent is filled before the Bureau of Patents of a machine pertaining
to the complex field of computer engineering.
Which of the following testimonies regarding the requisite of “non-obviousness” shall be best
appreciated by the Patent Examiner of the IPO?
a. Testimony of computer engineers teaching at the local colleges and universities
b. Testimony of an internationally acclaimed and multi-awarded computer expert
c. Testimony of the great legal minds in the country
d. Testimony of the ordinary consumer
Ans. A
210.
In determining the requisite of “non-obviousness” in an invention, the following factors,
among others, are considered:
a. Level of ordinary skill in the field of the invention
b. Commercial success
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. C
211.
X filed an application for patent before the Bureau of Patents of the IPO. He believes his
invention will not be appreciated and used at the moment by the public. However, he is very
optimistic that it will help the computer technology in the near future.
If you are the Patent Examiner, how would you act on X’s patent application?
a. Grant the patent to X
b. Deny the application for lack of “novelty”
c. Deny the application for lack of “inventive step”
d. Deny the application for lack of “industrial applicability”
Ans. D
212.
a.
b.
c.
d.
Ans. A
213.
a.
b.
c.
d.
Ans. D
Which of the following inventions will be afforded patent protection under the IPC?
A therapeutic machine that heals and eliminates scars and blemishes on any part of the
skin
Computer program
Mere combination of different strains of bacteria
Procedure in computing net profit from business endeavors
Under the IPC, which of the following statements relative to marks is false?
A registrable trademark may consist solely of a symbol with no word or words
A mark cannot be registered both as a trademark and a tradename
A service must be registered in order to sue for infringement
None of the foregoing
214.
Which of the following marks can be registered in the Philippines in accordance with our
laws on Intellectual property?
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a. A trademark application for socks that is similar to an internationally and locally wellknown trademark for handkerchiefs not registered in the Philippines
b. A trademark application for perfume that is similar to an internationally and locally wellknown trademark for cologne registered in the Philippines
c. A trademark application for milk which is well-known in Japan that is similar to a locally
well-known mark registered in the Philippines
d. None of the foregoing
Ans. D
215.
a.
b.
c.
d.
Ans. B
216.
a.
b.
c.
d.
Ans. C
217.
a.
b.
c.
d.
Ans. D
218.
a.
b.
c.
d.
Ans. C
The doctrine of piercing the veil of corporate entity shall not be applied where:
The corporation operates for the benefit of a single individual who exercises complete
control over its funds.
The corporation controls the majority stock of another corporation.
The corporation is a mere alter ego of another corporation.
The corporation is organized as a device to evade an outstanding legal obligation.
Which of the following statements relative to a corporation, stock or non-stock, is true?
All incorporators are stockholders.
All corporators are incorporators
All incorporators are subscribers.
None of the foregoing.
One of the following is not a feature of authorized capital stock.”
It applies only to par value stock.
It represents the maximum stock that may be issued by the corporation.
It may include subscribed capital stock.
It may include retained earnings.
Which of the following statements does not characterize a no-par value share?
It always has an issued value.
It may be issued together with par value shares.
It may be issued ever if the subscription is not yet fully paid.
It has no stated value appearing on the certificate of stock.
219.
An obligor is not liable for a fortuitous event whena. He is guilty of default.
b. He promised to deliver the same thing to two or more persons who do not have the
same interest.
c. The object is a determinate thing
d. The object is a generic thing
Ans. C
220.
There are five (5) incorporators (A, B, C, D, and E) of a stock corporation to be organized.
Which of the following assets shall be approved by the Securities and Exchange Commission?
a. A, B, and C are Filipinos residing in Canada; D and E are American citizens residing in the
Philippines.
b. A, B, C and D are over 21 years old; E is 16 years old.
c. A, B, C and D are natural persons; E is a registered partnership.
d. A, B, C and D are subscribers of 1 share each; all the remaining subscriptions belong to E.
Ans. D
221.
A contract of sale where the seller continues to possess the object as lessee of the
buyera. Quasi-traditio
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b. Traditio constitutum possessorium
c. Traditio longa manu
d. Traditio brevi manu
Ans. D
222.
The contract entered into by a self-dealing director, trustee or oficer is valid where:
a. The presence of the director, trustee or oficer in the board meeting in which the
contract was approve was necessary to constitute a quorum for such meeting
b. The vote of such director, trustee or oficer was necessary for the approval of the
contract.
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. D
223.
a.
b.
c.
d.
Ans. B
In the Law on Agency, which of the following constitute an act of strict dominionTo sue for the collection of debts.
To bind the principal to render service without compensation
To lease real property for a term of less than one year
To deposit a principal’s money with the bank
224.
In mortgage contracts, a stipulation whereby the mortgage becomes automatically the
owner of the thing mortgaged upon non-payment of the loan is called.
a. Consolidation of ownership
b. Redemption
c. Consignation
d. Pactum commissorium
Ans. D
225.
a.
b.
c.
d.
Which if the following is not a requisite for the negotiability of a promissory note:
The promissory note must be in writing and signed by the maker
The promissory note must be payable on demand od at a fixed or determinable future
time
The promissory note must be payable to specified person named herein
The payee of a promissory note payable to order must be named or otherwise indicated
therein with reasonable certainty
Ans. C
226.
a.
b.
c.
d.
Ans. A
Which of the following statements relative to corporate board meetings is true?
It held on a monthly basis.
It must be held within the Philippines.
It cannot be done through teleconferencing or videoconferencing.
It may be attended by means of proxy.
227.
Which of the following instruments is not unconditional and is, therefore, nonnegotiable?
a. “Pay P or order P40,000 and reimburse yourself with the proceeds of the watch you are
selling to me.”
b. “Pay bearer P40,000 from my share in the profits of our partnership business.”
c. “I promise to pay P or order P40,000 as payment for the ring I purchased from him.”
d. “Pay bearerP40,000 and charge the payment to my account in your hands.”
Ans. B
228.
Which the following statements relative to a religious corporation is false?
a. It is different from an ordinary non-stock corporation organized for educational
purposes.
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b. The Roman Catholic Church has the juridical personality of a corporation even if not
registered.
c. A religious group, sect or denomination is not required by law to incorporate as a
religious corporation.
d. The approval of the SEC is necessary for its incorporation.
Ans. A
229.
Which of the following statements relative to the sale of the personal property by
instalment under Article 1484 of the Civil Code (Recto Law) is false?
a. The remedy of exacting fulfilment of the obligation can be availed of only where one (1)
instalment is not paid.
b. Cancellation of the sale can only be made after default of at least (2) instalment
c. An agreement for the recovery of any unpaid balance of the purchase price after
electing to foreclose the chattel mortgage on the thing sold is null and void.
d. The three remedies under Article 1484 of the Civil Code are alternative and cannot be
exercised simultaneously or successively.
Ans. A
230.
X stole a pre-signed promissory note from M’s ofice cabinet. He then placed the amount
of P20,000 and P’s name as the payee, then indorsed the note to A using P’s name. A then
indorsed the same to B, and B to C, present holder in due course.
Who may be held liable to C for P20,000?
a. M, P, X, A, and B
b. P, X, A and B only
c. X, A and B only
d. M, P and X only
Ans. C
231.
Parties who are precluded from seting up forgery as a defense (principle of estoppel)
May be held liable by the holder of a negotiable instrument despite the forged or unauthorized
signature.
Examples of these parties are:
a. Acceptors
b. Indorsers and persons negotiating by delivery
c. All of the foregoing
d. None of the foregoing
Ans. C
232.
Which of the following is characteristic of “fraud in factum” or “fraud in esse
contractus?”
a. It is fraud in the execution of the instrument.
b. The person actually knows that what he signed is a negotiable instrument but he was
induced to do so because of fraudulent representation on its consideration.
c. It is a personal or equitable defense that cannot be raised against a holder in due course.
d. All of the foregoing.
Ans. A
233.
a.
b.
c.
d.
Ans. C
The following are the acts of the implied powers of a corporation except:
Acts in the usual course of businesss
Acts to protect debts owing to the corporation
Embarking in different business in which it is not a part of the regular business
Acts to increase its business
234.
S is unpaid seller who exercised his rights of stoppage in transit over the goods he sold
and shipped in favour of B, insolvent buyer. However, right thereafter B negotiated the bill of
lading to X, a purchaser in good faith and value.
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a.
b.
c.
d.
Ans. A
Under the Civil Code of the Philippines, which of the following statements relative to
negotiable documents of title is correct?
X has superior right over the goods than S.
S has a superior right over the goods than X.
X and S have equal right over the goods.
None of the foregoing.
235.
Which of the following statements relative to checks is false?
a. A manager’s check operates as an assignment of funds to the credit of the payee or
holder which is no longer subject to countermand.
b. A check which is crossed specially can only be deposited in the bank whose name is
written between parallel lines.
c. A check which is crossed generally can be deposited in any bank where the holder
maintains a deposit.
d. A crossed check is not negotiable instrument.
Ans. D
236.
In obligations with a penal clause, the creditor as a rule may recover from the debtor in
case of breach of 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
Ans. D
237.
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 to the 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.
Ans. D
238.
Francis obtained a loan from Philip in the amount of P20,000.00 unable to give cash on
due date in payment of his loan, Francis proposed to Philip that he would be giving instead his
gold ring to settle the debt. Philip agreed and accepted the ring from Francis . The new
agreement between Francis and Philip involved both
a. Novation and application of payment
b. Novation and dacion en pago
c. Compensation and payment by cession
d. Confusion and tender of payment
Ans. B
239.
a.
b.
c.
d.
Ans. B
240.
a.
b.
c.
In alternative obligations, to whom does the right of choice generally belong?
Both parties
Debtor
Creditor
Neither of the parties
Legal compensation will not take place if:
The debts have different due dates
The debts are payable at different places
There is a controversy or retention involving one of the debts commenced by third
persons and communicated in due time to the debtor
d. Both debts consist in a sum of money
Ans. C
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241.
a.
b.
c.
d.
Ans. A
242.
a.
b.
c.
d.
Ans. B
243.
a.
b.
c.
d.
Ans. A
244.
a.
b.
c.
d.
Ans. B
245.
a.
b.
c.
d.
Ans. B
The principle of negotiorum gestio does not apply :
When the property of business is not neglected or abandoned
When the oficious manager has been tacitly authorized by the owner
In both (a) and (b)
In neither (a) nor (b)
May contribute money, property or industry to the common fund:
Limited partner
General partner
Both limited and general partner
None of them
May be required additional contribution in case of imminent loss:
Capitalist partner
Limited partner
Industrial partner
None of the above
One who takes charge of the winding up of partnership affairs upon dissolution
Ostensible partner
Liquidating partner
Silent partner
None of the above
A limited partner who takes active part in the management of the firm becomes
A managing partner
Liable as a general partner
A general partner
A general and a limited partner at the same time.
246.
The following are the obligations of a partner as to his contribution, except:
a. To deliver the money or property he promised to contribute to the partnership at the
beginning of the partnership or at an agreed stipulated time.
b. Liable for the fruits of the property he promised to contribute from the time the
obligation to deliver arises up to the date of actual delivery without the necessity of a
demand.
c. To deliver the money he promised to contribute excluding the fruits but obliged to
preserve the property with extraordinary diligence pending its delivery to the
partnership.
d. To be answerable to the partnership for eviction in case the partnership is deprived of
his contribution.
Ans. C
247.
A partnership is suffered losses in the first year of its operation. X, a capitalist partner,
refused to contribute an additional share to the capital. Can X, be obliged to sell his interest to
the other partners on the grounds of such refusal?
a. Yes, X’s refusal to contribute his additional share reflects his lack of interest in the
continuance of the partnership.
b. No, because there is actually no imminent loss of the business.
c. Yes, provided that X is paid the value of his interest.
d. None of the above
Ans. A
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248.
Statement 1: An industrial partner is exempted from losses.
Statement 2: An industrial partner is exempted from liability to third persons for the
debts of the partnership.
a. Both statement are correct
b. Only the first statement is correct
c. Only the first statement is false
d. Both statements are false
Ans. B
249.
a.
b.
c.
d.
Ans. B
250.
a.
b.
c.
d.
Agency is not extinguished byWithdrawal of the agent.
Appointment of a substitute against the prohibition of the principal.
Accomplishment of the purpose.
Death of the principal.
Which of the following is not a fundamental obligation of an agent?
To borrow if he is authorized to lend
To subordinate his interest in favour of his principal if there is a conflict of interest.
To render an accounting of the transaction
Not to carry out the agency, even if that is the instruction of the principal, if he knew it
would result to a loss or damage to his principal.
Ans. A
251.
a.
b.
c.
d.
Ans. D
The rule or pactum commissorium does not apply to –
Antichresis
Pledge
Real mortgage
Commodatum
252.
It is also the essence of the contracts of pledge and mortgage that when the principal
obligation becomes due, the things in which the pledge or mortgage consist may be
a. Appropriated by the creditor
b. Disposed by the creditor
c. Alienated by the creditor
d. Deposited with the third person prior to foreclosure\
Ans. C
253.
The price of the thing is considered certain in three of the following instances. Which
one is the exception?
a. The parties have agreed upon a definite amount
b. The parties agreed to refer the price to another thing certain
c. The price was left to the sole will of one party
d. The price was left to the determination of a third person
Ans. C
254.
a.
b.
c.
d.
Ans. A
255.
Which of the following is not a document of title?
Pawn ticket
Bill of lading
Dock warrant
Warehouse receipt
Which of the following is not a characteristic of a warehouse receipt?
a. Only a warehouse man may issue warehouse receipts
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b. A negotiable warehouse receipt is a negotiable instrument within the meaning of the
Negotiable Instruments law
c. A warehousemen has a lien over the goods deposited with him as security for payment
of the charges and other expenses
d. A holder in good faith of a negotiable warehouse receipt has a superior right to the
goods than the vendor who has a vendor’s lien on the goods
Ans. B
256.
a.
b.
c.
d.
Ans. C
257.
a.
b.
c.
d.
Ans. D
258.
a.
b.
c.
d.
Ans. D
Stoppage in transitu means?
To stop the carrier while in transit
To stop the goods while in transit
To stop delivery of the goods of the buyer while in transit
To stop the bill of lading from reaching the buyer
The ownership of the thing sold shall be transferred to the buyer –
By real delivery
By legal delivery
By symbolic delivery
By any of the above
One of the following is not a feature of “authorized capital stock”
It applies only to par value stock
It represents the maximum stock that may be issued by the corporation
It may include subscribed capital stock
It may include retained earnings
259.
A corporation has five (5) seats in the board of directors. X owns (10) shares. Which of
the following ways of voting in the election of directors exemplifies the use if straight-voting
method?
a. Fifty (50) votes for a single candidate
b. Thirty (30) votes for a candidate and twenty (20) votes for another candidate
c. Either (a) or (b)
d. Neither (a) nor (b)
Ans. D
260.
One of the following is not a requisite for the negotiability of a promissory note:
a. The promissory note must be in writing and signed by the maker
b. The promissory note must be payable on demand or at a fixed or determinable future
time
c. The promissory note must be payable to a specified person named therein
d. The payee of a promissory note payable to order must be named or otherwise indicated
therein with reasonable certainty
Ans. C
261.
Dario borrowed P25,000 from Elma. On due date, Dario did not have any money to pay
the debt so he proposed to Elma that the latter accept a ring to settle the debt. Elma accepted
the proposal received the ring. Immediately after receiving the ring, Elma sold it to Ben. Dario’s
Obligation to give P25,000 to Elma as extinguished by
a. Dacion en pago
b. Payment by cession
c. Sale
d. Application of payment
Ans. A
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262.
buyer:
a.
b.
c.
d.
Ans. A
When goods are delivered to the buyer on “sale or return”, the ownership passes to the
Upon delivery of the goods
Upon the expiration of the period agreed upon
Upon acceptable of the buyer of the sellers offer
Upon perfection of the sale
263.
A and B entered into a contract of lease with option to buy the car of the former for a
term of two years. For three months B failed to pay the rentals and by reason thereof, A
repossessed the car. Hence:
a. A can collect the unpaid rentals for three months
b. A can collect the unpaid rentals for the duration of the term of the lease of two years
c. When A deprived B the possession of the leased car, he has no further action against the
latter for any paid rentals
d. A shall return the rentals without deductions to B by virtue of the rescission of the
contract of lease with option to buy
Ans. C
264.
S sold to B his car. There was no fixed date to the performance of their respective
obligations. The obligation of S as vendor is:
a. To wait for the buyer to pay the price he delivers
b. To deliver the immediately since the sale has been perfected
c. To deliver the car after the buyer demands delivery
d. Rescind the contract for the time of performance not fixed
Ans. A
265.
A seller sold to a buyer a piece of jewelry at the price of Php 1M. The contract provides
that the buyer will pay the seller cash of Php 4M and deliver the buyers car worth Php 6M. The
contract is:
a. Barter
b. Sale
c. Partly sale and partly barter
d. Commodatum
Ans. A
266.
a.
b.
c.
d.
One of the following is not a requisite for the negotiability of a promissory note:
The promissory note be in writing and signed by the maker
The promissory note must be payable on demand or a fixed or determinable future time
The promissory note must be payable to a specified person named therein
The payee of a promissory note payable to order must be named or otherwise indicated
therein with reasonable certainty
Ans. C
267.
Which of the following statements relative to indorsements is false?
a. A blank indorsement of an instruments converts the instrument into a bearer instrument
b. An order instrument which is special indorsed by P can only be further negotiated by P’s
special indorsement
c. A bearer instrument cannot be negotiated by indorsement coupled with delivery
d. A special indorsement must contain the words “or order” or “to the order of” to make it
further negotiable
Ans. D
268.
a.
b.
c.
d.
The maker, by making the instrument, has the following liabilities, except:
The engagement to pay the instrument according to its tenor
The admission of the existence of the payee
The admission of the capacity of the payee to indorse the instrument
The admission of the right of the holder to enforce payment of the instrument
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Ans. D
269.
a.
b.
c.
d.
Ans. A
270.
a.
b.
c.
d.
Ans. D
The corporation Code requires that:
At least a majority of the directors are residents of the Philippines
All the directors of trustees are residents of the Philippines
All of the directors or trustees are citizens of the Philippines
Majority of the directors are citizens of the Philippines
Which of the following contracts valid?
Oral contract of agency giving authority to an agent to sell the land of the principal
Oral partnership agreement where immovables are contributed
Oral contract of sale of an immovable entered into by an agent who was given oral
authority by the principal
Oral agreement to answer all the expenses for the wedding reception if A marries B
271.
Whenever in an obligation’s designated, it is presumed to have been established for the
benefit of
a. Both the creditor and debtor
b. The creditor
c. The debtor
d. The third party
Ans. A
272.
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 expense, there is a:
a. Quasi delict
b. Quasi Contract
c. Negotiorum Gestio
d. Solutio Indebiti
Ans. C
273.
a.
b.
c.
d.
Ans. C
When the obligation is extinguished because of the passage of time, this is:
Fulfillment of resolutory
Arrival of resolutory period
Prescription
Recission
274.
When the debtor abandons or transfers all his properties to his creditors so that the
creditors may sell the properties, and out of the net proceeds the creditors recover their claims,
this is called
a. Dacion en pago
b. Tender payment and consignation
c. Payment by cession
d. Remission
Ans. C
275.
Which is not correct? The acceptor by accepting the instrument
a. Admits the existence of the payee and his capacity to indorse
b. Admits the existence of the drawee, the genuiness of his signature and his capacity
authority to draw the instrument
c. Engages that he will pay is according to the tenor of his acceptance
d. Admits the existence of the endorser, the genuiness of his signature and his capacity and
authority to indorse instruments
Ans. D
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276.
a.
b.
c.
d.
Ans. C
Which of the following is not a characteristic of a bill of exchange?
Original parties are the drawer, drawee and payee;
Acceptance is generally required;
Drawer is primary liable;
Contains an unconditional order to pay
277.
Statement1: A check must be presented for payment within a reasonable time after it
issue of the drawer will be discharged from a liability thereof.
Statement2: Where the holder of a check procures it to be accepted or certified,
the drawer and all endorsers are discharged from liability thereof.
a. Only statement 1 is true
b. Only statement 2 is true
c. Both statements are not true
d. Both statements are true
Ans. B
278.
Which of the following defenses is a real or absolute defense which can be successfully
raised against a holder in due course?
a. Want of authority of agent
b. Want of delivery of complete instrument
c. Absence of failure of consideration
d. Acquisition of instrument by force, duress, fear, or by unlawful means.
Ans. A
279.
Determine who among the following parties to a negotiable instrument is a party who is
secondary liable:
a. Maker of a promissory note
b. Drawee of a bill of exchange
c. Acceptor of a bill of exchange
d. Drawer of a bill of exchange
Ans. D
280.
Which of the following is not among the warranties of a qualified indorser or a person
negotiating an instrument by delivery?
a. That the instrument is genuine and in all respects what it purports to be
b. That he has good title to the instrument
c. That all prior parties have capacity to contract
d. That the instrument is, at the time of his indorsement, valid and subsisting
Ans. D
281.
For the purpose of lending his name without receiving value therefore, A makes a note
for P1M payable to the order of B who in turn negotiates it to C, the latter knowing that A is not
a party for value. May C recover from A if the latter alleges absence of consideration?
a. Yes, because an accommodation party is liable to a holder for value
b. Yes, because an accommodated party is liable to a holder for value
c. No, because the holder is not a holder in due course due to his knowledge of the
absence of consideration
d. No, because absence of consideration is a personal defense
Ans. A
282.
The by-laws may provide that the holders of a majority of the outstanding capital stock
may elect all the members of the board of directors. That it may also provide that no oficer of
the corporation shall be required to be a stockholder.
a. Both statements are true
b. Both are false
c. First is false, second is true
d. First is true, second is false
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Ans. C
283.
Stockholders meeting must be in the city or municipality where the principal ofice is
located while member meeting of non-stock corporation may be outside thereof. The secretary
of the corporations must generally be a citizen and resident of the Philippines.
a. Both are false
b. Both are true
c. First is false, second is true
d. First is true, second is false
Ans. C
284.
a.
b.
c.
d.
Private corporations have the following attributes, except:
It is created by law as a juridical person
It has the right of succession
It may be formed, organized and existing under a special law or charter
It has the powers, attributes and properties expressly authorized by the law or incident
to its existence
Ans. C
285.
except:
a.
b.
c.
d.
Ans. C
286.
a.
b.
c.
d.
Ans. C
In the three of the following instances, shares with or without voting rights can be voted,
Increase or decrease of capital stock
Dissolution of the corporation
Election of directors or trustee
Merger of consolidation with other corporation
One of the following does not have voting rights:
Preffered shares
Redeemable shares
Treasury shares
Common shares
287.
A director of a corporation may be removed from the ofice by a vote of the stockholders
holding representing:
a. Majority of the outstanding capital stock
b. 2/3 of the stockholder
c. 2/3 of the outstanding capital stock
d. Majority of the stockholder
Ans. C
288.
a.
b.
c.
d.
Ans. D
A regards treasury shares which is not correct?
They have no voting rights while in the treasury
They may be distributed as property dividend if there surplus profit
They are not entitled to dividends
They are considered part of the earned or surplus profits thus distributable as dividends
289.
X, Y and Z are partners in Ace & Co. W represented himself as a partner in the said
partnership to A, who, on faith of such representation, granted P1M loan to the partnership.
Assuming only X and Y consented to such representation, who shall be liable to A?
a. Since the partnership benefited from the credit extended by A, all partners X, Y and Z are
liable
b. Only X, Y and W are partners by estoppel A and are liable pro rata
c. Since the loan was extended to the partnership; all the partners and W are liable
d. Only W who made the representation shall be liable
Ans. B
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290.
Spouses A and B formed a limited partnership to engage in real estate and A contributed
P1M only, is the partnership between the spouses valid?
a. The partnership is not valid because spouses cannot enter into a limited partnership
b. The partnership is valid because spouses can enter into a partnership. Limited or
general, universal or particular
c. The partnership is not valid because the spouses cannot enter into any kind of
partnership for business except conjugal partnership
d. The partnership is valid because spouses are prohibited to enter into a universal
partnership only
Ans. D
291.
a.
b.
c.
d.
Ans. B
One of the following incidents is a cause for involuntary dissolution of the partnership:
Termination of the definite term of partnership
Insolvency of a partner
Express will of a partner in a partnership at will
Expulsion of a partner of a cause as stated in the articles of part
292.
A partner’s interest in the partnership is not assignable unless the other partners
consent. An act of strict dominion may be performed by a partner without the consent of his copartners if it is advantageous to the partnership.
a. Both statements are false
b. Both are true
c. First is true, second is false
d. First is false, second is true
Ans. A
293.
A partnership contract begins from the moment of the execution of the contract unless
it is otherwise stipulated. Even if a third person is in good faith, the partnership is not bound in
contract entered into by a partner after the dissolution of the partnership if the business of the
partnership has become unlawful.
a. First statement is false, second is true
b. First is true, second is false
c. Both are false
d. Both are true
Ans. D
294.
Statement1: If the agent contracts in the name of the principal and the principal does
not ratify the contract, the contract shall be void if the third party with whom the agents
contracts is aware of the limits of the agents authority.
Statement2: A third person cannot set up the fact that the agent exceeds his
authority if the principal has ratified or has signified willingness to ratify the agent’s acts.
a. Both statements are true
b. Both are false
c. First is false, second is true
d. Second is true, first is false
Ans. A
295.
A pledge his wristwatch to B pawnshop for a loan of P7,000 which he failed to pay. B sold
the watch at public auction for P4,000
a. The pawnshop B can recover 4,000 deficiency from A
b. It cannot recover the deficiency from A unless there is stipulation to the contrary
c. It cannot recover the deficiency even if there is stipulation allowing it
d. It cannot recover the deficiency if there is stipulation disallowing it
Ans. C
296.
This is mode of extinguishing an agency
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a.
b.
c.
d.
Ans. D
297.
a.
b.
c.
d.
Ans. C
Death of the principal, but agency is for the interest of the principal and agent
Partial accomplishment of the agency
Upon with the withdrawal of the principal
Insanity of the principal or agent
The difference between a chattel mortgage and pledge is that in chattel mortgage:
The delivery of the personal property is necessary
The registration of the contract with the Register of Deeds needed
The excess over amount due after foreclosure sale goes to debtor
The debtor is not liable for the deficiency after foreclosure
298.
X borrowed money from Y and gave a piece of land as security by way of mortgage. It
was agreed between the parties that upon non-payment of the loan, the land would already
belong to Y. If X failed to pay the debt, would Y now become the owner of the land
a. Y would become the owner it was agreed upon by them base on the principle of
autonomy of contracts.
b. Y would not become the owner because the agreement that he would become the
owner upon default of X is against the law.
c. Y would not become owner if X annuls the voidable agreement.
d. Y would not become owner if X annuls the voidable agreement.
Ans. B
299.
a.
b.
c.
d.
Ans. D
Statement 1: A special agency requires a special power of attorney.
Statement 2: An agent may withdraw from the agency but may be liable for damages, if
the principal is prejudiced
Both statements are false
Both are true
False is true, second false
First is false, second is true
300.
If both principal and agent sold the land of the principal to two buyers, which of the
latter shall be owner
a. First registrant in good faith
b. First possessor in good faith
c. Oldest title in good faith
d. Prior date contract
Ans. A
301.
P authorized A by mere telephone call to sell the formers house. A sold the same in
public instrument. The sale is:
a. The sale is void because the agent’s authority
b. It is only unenforceable unless ratified by P
c. Valid, despite the authority being verbal
d. Voidable because the house cannot be sold without including the land
Ans. A
302.
Statement 1: When two or more principals appoint an agent for common transaction,
neither may revoke the power without the consent of the other
Statement 2: If the principal fails to pay the agent his commission, the latter may retain
pledge the things belonging to the principal.
a. First is false, second is true
b. First is true, second is false
c. Both are false
d. Both are true
Ans. A
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303.
a.
b.
c.
d.
Ans. B
Sale is distinguished from dation in payment in that in a sale:
There is a pre-existing obligation or credit
The cause is a price
It is a mode of extinguishing an obligation in the form of payment
Answer not given
304.
Which is an exception? A sale is a contract where one of the contracting parties, called
the seller (or vendor), obligates himself:
a. To transfer ownership of the object
b. To deliver a determinate thing
c. To warrant against eviction and hidden defects
d. To pay therefore a price certain in money or its equivalent
Ans. D
305.
a.
b.
c.
d.
Ans. B
306.
a.
b.
c.
d.
Ans. B
Which of the following may not be the object of a contract of sale?
Things having potential existence
The sale of a vain hope or expectancy
Future goods
Answer not given
This is not be a valid object of sale
Future wool that shall grow upon a sheep
Sale of human flesh for human pleasure
The entire rental next month in a 4-door apartment
Sale of a lotto ticket that will be drawn next week
307.
If the seller is not the owner, the sale is null and void. Which is not an exception?
a. When the owner of the goods is by his conduct precluded from denying the seller’s
authority
b. When the goods were sold in a merchant’s store, or In fairs, or markets
c. When the seller subsequently acquires title
d. When the buyer acquires the property without the knowledge of the bad faith of the
seller
Ans. D
308.
a.
b.
c.
d.
Ans. D
309.
a.
b.
c.
d.
Ans. A
310.
A case where a contract of sale must not necessarily be in writing
Sale of 100 piculs of sugar at ₱400 per picul when there is partial delivery
Sale where by its term cannot be performed within one year from the maker thereof
Sale of land
Sale at public auction
Which is not correct? In a sale by auction
The auctioneer may withdraw the goods before the hammer falls whether or not the
auction has been announced to be without recourse
The sale is perfected when the auctioneer announces its perfection by the fall of the
hammer
The seller may bid provided such right was reserved and notice was given to the other
bidders
Every bidding is merely an offer, and therefore before is it accepted, it may be withdrawn
Which of the following statements is incorrect?
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a. In a contract of sale the full payment of the price is in the nature of suspensive condition
in that the seller is obligated to transfer ownership of the things sold
b. The seller need not be the owner of the thing sold at the perfection of the sale
c. There may be a transfer of ownership over the thing even if the seller has not actually
delivered the thing sold to the buyer
d. In a contract of sale the buyer becomes the owner of the thing sold upon full payment of
the purchase price
Ans. D
311.
a.
b.
c.
d.
Ans. B
312.
a.
b.
c.
d.
Ans. D
Which of the following obligations of the vendor cannot be waived?
To allow the buyer to examine the goods sold
To transfer the ownership to the buyer
To pay the expenses of the deed of sale
To warrant the thing sold
Which of the following is considered as an actual delivery?
Execution and signing of the deed of sale
Delivery by the vendor of the key to the warehouse where the goods are stored
Placing of title of ownership in the hands of the buyer
The goods sold are placed in the control and possession of the vendee
313.
When delivery takes place by the mere consent of contracting parties as when the
vendor merely points to the thing sold which shall thereafter be at the control and disposal of
the vendee if the thing sold cannot be transferred at the time of the sale, delivery is effected:
a. By tradition symbolica
b. By traditio longa manu
c. By tradition brevi manu
d. Answer not given
Ans. B
314.
a.
b.
c.
d.
Ans. B
315.
a.
b.
c.
d.
Ans. C
Ownership of the thing sold is transferred/ acquired/ retained:
Retained by the seller in “sale or return”
Transferred to the buyer upon constructive or actual delivery of the thing sold
Acquired by the buyer upon perfection of the contract
Transferred to the buyer upon acceptance of the price
The Recto Law is applicable on:
Sale of car on a straight term
Sale of house on installment were the buyer constituted a mortgage on the house
Sale of car on installment were the buyer constituted a mortgage on his truck
None of the above
316.
One of the following is not an alternative remedy available to a seller of personal
property on installment if buyer defaults
a. To go to court and ask the court to order delivery of the property
b. To foreclose the chattel mortgage
c. To sue for specific performance
d. To take possession of the property and forfeit the amount paid by the buyer
Ans. D
317.
Statement 1: if the thing should have been sold to different buyers, the ownership
should be transferred to the person who may have been in possession thereof in good faith; if it
should be movable property.
Statement 2: the seller is responsible to the buyer for any hidden defects or fault in the
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a.
b.
c.
d.
Ans. A
thing sold only if he was aware thereof.
1st statement true; 2nd statement false
Both statements are false
1st statement false; 2nd statement true
Both statements are true
318.
S stole a fountain pen from “O” and sold it to a bazaar who pays for it in good faith, not
knowing it was stolen. The bazaar then sold it to B, a student.
a. The bazaar having bought in good faith becomes the legal owner, and as such, he can
transfer ownership to B
b. Ownership passed to B because he bought it in a merchant store
c. “O” may recover the fountain pen from B without reimbursement because he is the legal
owner
d. B cannot become the owner because S, the original seller, is not the owner
Ans. B
319.
a.
b.
c.
d.
Ans. C
Warranty against hidden defect is:
An essential element
Accidental element
Natural element
None of the above
320.
In three of the following there is no warranty against hidden defects of animals. Which is
the exception?
a. Animals sold at fairs
b. Livestock sold as condemned, declared known to the buyer
c. Animals sold at public auction
d. None of the above
Ans. D
321.
Which of the following statement is not correct?
a. Actual delivery of the thing or payment of the price is not required for the perfection of
the sale
b. A stipulation that even when the object is delivered to the buyer, ownership will not
pass until the price is fully paid is not valid
c. A sale is consummated upon delivery of the thing and the payment of the purchase price
d. Sales through letters or telegrams are deemed perfected only when the seller has
received acceptance by the buyer
Ans. B
322.
Pacto de retro sale as distinguished from mortgage:
a. There is redemption when the principal debt is paid
b. There is no transfer of possession of the thing sold
c. There is no foreclosure unless it is declared as an equitable mortgage
d. There is no transfer of ownership of the thing sold
Ans. C
323.
A stipulation exempting the vendor from the obligation to answer for eviction shall be
void eve if he acted in good faith
The vendor is not liable for dispossession due to acts imputable to the buyer himself.
a. True, False
b. True, True
c. False, True
d. False, False
Ans. C
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324.
Where it is stipulated that the repurchase of the property sold could be made at any
time, the repurchase shall be exercised
a. Within four years from the date of the contract
b. Within ten years from the date of the contract
c. After ten years from the date of the contract
d. None of them
Ans. B
325.
a.
b.
c.
d.
Ans. D
326.
If redemption is made, which of the following will not be paid by the seller to the buyer?
Price paid by the buyer
Expenses in the execution of the sales contract paid by the buyer
All necessary expenses on the thing sold and to be redeemed
Interest on the price paid by the buyer
Statement 1: A contract is needed to have an agency relationship
Statement 2: The agent owes a fiduciary duty to the principal
Statement 3: The principal owes a fiduciary duty to the agent
Which of the above statements is true?
a. Statement 1 only
b. Statement 2 only
c. Statement 3 only
d. Statements 2 and 3
Ans. B
327.
a.
b.
c.
d.
Ans. A
The following distinguishes agency from a negotiorum gestio except:
Quasi – contract
There is meeting of the minds expressly or impliedly
The legal relation is created by the parties
One party performs according to the control of the other
328.
There is no implied agency in the following:
a. The principal delivers his power of attorney to the agent and the latter receives it
without any objection
b. The offeree writes a letter acknowledging the receipt of the offer, but offers no objection
to the agency
c. The offeree begins act under the authority conferred upon him
d. The offeree receives a letter of authority but did not reply nor acted within the scope of
authority conferred upon him
Ans. D
329.
M company wrote a circular letter to its customers introducing a certain A as its duly
authorized agent. X, a customer, dealt or transacted business with A. Later, A’s authority was
revoked and was published in a newspaper of general circulation. Notwithstanding his
knowledge of such revocation, X continues to transact business with M Company thru A. Is M
Company still liable for the agent’s act even after revocation?
a. Yes, because the revocation was not given in the same way the power was granted
b. No more, because the third person (X) is in bad faith
c. No more, because the transaction that will be entered after revocation will be void
d. Answer not given
Ans. B
330.
A appoints B as his agent to sell his land. Which of the following is perfectly valid?
a. The authority of B is in writing and the sale of the land in favour of C is oral
b. The authority of B from A is by way of letter and B sells the land to C in writing
c. The authority of B is oral and B sells the land to C for ₱50,000 in a written contract of
sale
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d. The authority of B is in writing but the sale of the land in writing was made beyond the
period expressly set forth by A
Ans. B
331.
Which of these is not an act of ownership and, therefore, need not be contained in a
special power of attorney for the agent to possess the same?
a. To make payments which are in the ordinary course of the business
b. To effect novations which put an end to obligations contracted before the agency
c. To waive an obligation gratuitously
d. To obligate the principal as a guarantor
Ans. A
332.
a.
b.
c.
d.
Ans. A
333.
a.
b.
c.
d.
Ans. D
334.
a.
b.
c.
d.
Ans. B
Which of the following constitute an act of strict dominion or ownership?
To bind the principal to render some service without compensation
To sue for the collection of debts
To lease real property to another person for six months
To make customary gifts for charity
Three of the following requires a special power of attorney. Which is the exception?
Accept inheritance
To waive obligation gratuitously
To bind the principal in a contract of partnership
None of the above
The power to sell does not carry with it the power to
Find a purchaser or to sell directly
To pledge
Make usual representations and warranty
To deliver the property
335.
P appointed A as an agent to sell P’s car for ₱500,000. Thru A’s good marketing style, he
was able to sell the car for ₱600,000, 50% downpayment, 50% payable in 2 years. Hence,
a. Sale is unenforceable. A must render an account of his transaction to P up to ₱500,000
only
b. Sale is enforceable. A must render an account of his transaction to P up to ₱600,000
after collection
c. Sale is enforceable because A sold it in a manner more advantageous than that
instructed by the principal
d. Sale is unenforceable because B exceeded his authority
Ans. D
336.
A, agent of P, in excess of authority entered into a contract in the name of P with X who
knew of the lack of authority and P did not ratify the contract. The contract is:
a. Rescissible
c. Unenforceable
b. Voidable
d. Void
Ans. D
337.
An insolvent juridical debtor, such as partnerships and corporations, may be liquidated
by way of voluntary liquidation whereby the insolvent debtor shall file a verified petition for its
liquidation with the court containing:
a. Schedule of the debtor’s debts and liabilities and inventory of all its assets
b. Name of one (1) nominee to the position of liquidator
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. A
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338.
In the involuntary liquidation of a debtor under the Financial Rehabilitation and
Insolvency Act (FRIA), the initiating three (3) or more creditors must have claims against the
debtor in the aggregate amount of:
a. At least ₱500,000 or at least 50% of the subscribed capital stock or partner’s
contribution, whichever is lower
b. At least ₱500,000 or at least 50% of the subscribed capital stock or partner’s
contributions, whichever is higher
c. At least ₱1000,000 or at least 25% of the subscribed capital stock or partner’s
contributions, whichever is lower
d. At least ₱1000,000 or at least 25% of the subscribed capital stock or partner’s
contributions, whichever is higher
Ans. D
339.
To form a majority vote on any proposed agreement during the creditor’s meeting in
suspension of payments, it is necessary:
a. That three-fourths (3/4) of the creditors voting unite upon same proposition
b. That the claim represented by said majority vote amount to at least four-fifths (4/5) of
the total liabilities of the debtor
c. Both (a) and (b)
d. Neither (a) nor (b)
Ans. D
340.
X filed a petition for suspension of payments in court. During the pendency of the
proceedings, a writ of execution was issued by another court in favour of C, an unsecured
creditor, against X. M, a creditor-mortgagee, also initiated the foreclosure of the mortgaged
property of X.
Which of the following statements relative to Suspension of Payments under the FRIA is correct?
a. Both the execution in favour of C and the foreclosure on the mortgage in favour of M
shall be suspended
b. Both the execution in favour of C and the foreclosure on the mortgage in favour of M
shall proceed
c. The execution in favour of C shall proceed but the foreclosure on the mortgage in favour
of M shall suspended
d. The execution in favour of C shall be suspended but the foreclosure on the mortgage in
favour of M shall proceed
Ans. D
341.
Under the Financial Rehabilitation and Insolvency Act (FRIA), which of the following
petitions amounts to an act of insolvency?
a. Voluntary liquidation
b. Suspension of payments
c. Rehabilitation
d. None of the foregoing
Ans. A
342.
The Liquidation Order shall not affect the right of a secured creditor to enforce his lien in
accordance with the applicable contract or law. A secured creditor may:
a. Waive his right under the security or lien, prove his claim in the liquidation proceedings
and share in the distribution of the assets of the debtor
b. Maintain his rights under the security or lien
c. Either (a) or (b)
d. Neither (a) nor (b)
Ans. C
343.
The Anti-Money Laundering Act (AMLA) penalizes both money laundering and unlawful
activity. Which of the following statements relative to both offenses is false?
a. A person may be charged with and convicted of both the offense of money laundering
and the unlawful activity
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b. Where a person is charged with both the offense of money laundering and the offense
of unlawful activity, the proceeding relating to the former shall be given precedence
than the proceeding relating to the latter
c. An unlawful activity includes any act or omission or series of combination thereof
involving or having direct relation, among others, to kidnapping for ransom, drug
traficking, plunder, jueteng and masiao
d. The offense of money laundering committed by public oficers and private persons in
conspiracy of such public oficers shall be under the jurisdiction of the Sandiganbayan
Ans. B
344.
Under the Anti-Money Laundering Act (AMLA), a “covered transaction” and a
“suspicious transaction” must be reported by the “covered institutions” (those under the
supervision and regulation of the Bangko Sentral ng Pilipinas, the Insurance Commissioner, and
the Securities & Exchange Commission) within five (5) working days from the occurrence thereof.
A “covered transaction” is a transaction in cash or other equivalent monetary instrument with a
total amount of:
a. ₱250,000 or more in one (1) banking day
b. ₱500,000 or more in one (1) banking day
c. Over ₱500,000 in one (1) banking day
d. ₱1,000,000 or more in one (1) banking day
Ans. C
345.
The Court of Appeals, upon application ex parte by the Anti-Money Laundering Council
(AMLC) and after determination that probable cause exists that any monetary instrument or
property is in any way related to an unlawful activity, may issue a freeze order which shall be
effective immediately. The freeze order shall be for a period of (unless extended by the Court):
a. Ten (10) days
b. Twenty (20) days
c. Thirty (30) days
d. Sixty (60) days
Ans. B
346.
The Anti-Money Laundering Council (AMLC) may inquire into or examine bank accounts
only with an order of an competent court in cases involving:
a. Kidnapping for ransom
b. Drug traficking
c. Hijacking
d. Jueteng and masiao
Ans. D
347.
One of the following statements does not characterize a delinquent stock:
a. A stock becomes delinquent when the subscription is not paid in full within the 30-day
grace period or on the date of the “call” after due notice to the stockholders
b. A “call” is not necessary where the subscription contract has provided for a definite date
of payment
c. A delinquent stock loses its right to receive dividends up to the time of delinquency sale
d. Any cash dividend shall first be applied to the unpaid subscription before the balance
thereof will be given to the stockholder but any stock dividend shall be withheld until
full payment of the subscription
Ans. C
348.
a.
b.
c.
d.
Ans. A
A delinquent stockholder is deprived of the:
Right to vote
Right to dividend
Both (a) and (b)
Neither (a) nor (b)
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349.
a.
b.
c.
d.
Ans. D
350.
a.
b.
c.
d.
Appraisal right may not be exercised in one of the following cases:
Any amendment to the articles of incorporation that changes or restricts the rights of
any stockholder or class of shares
Merger or consolidation
Investment of funds in another corporation or business for a purpose other than its
primary purpose
Expiration of corporate term
One of the following is not an attribute of appraisal right:
A written demand for payment of the shares of the dissenting stockholder must be
made within 30 days from the date he cast his negative vote
The certificates of stock should be surrendered to the corporation within 10 days from
the date of demand for payment
The right may be exercised in cases of amendment in the articles of incorporation,
transfer of all or substantially all of the corporate assets, merger or consolidation, and
investment of funds in another corporation for a purpose other than its primary purpose
The stockholder can no longer sell or transfer the shares after the certificates of stock
have been annotated by the corporation as “dissenting shares”
Ans. D
351.
A partnership must have a lawful object or purpose, and must be established for the
common benefit or interest of the partners. Which of the following instances is lawful?
a. A partnership formed to furnish apartment houses which would be used for prostitution
b. A partnership wherein the partners contributed all of their present properties
c. A partnership for illegal gambling purposes
d. A partnership formed to create illegal monopolies or combinations in restraint of trade
Ans. B
352.
a.
b.
c.
d.
The common property of a universal partnership of all present property shall be:
All properties shall belong to each of the partners after the constitution of the
partnership
All the properties which belong to each of the partners at the time of the constitution of
the partnership
All the properties which belong to each of the partners at the time of the constitution of
the partnership as well as the profits which they may acquire therewith
All the properties which belong to each of the partners at the time of the constitution of
the partnership as well as the properties which may be acquired thereafter
Ans. C
353.
Management of a partnership is usually conferred upon the
a. Manager
b. President
Ans. A
c. Partners
d. None of the above
354.
Sometimes termed dormant partner
a. Limited partner
c. Secret partner
b. Capitalist partner
d. None of the above
Ans. C
355.
One who takes active part in the business, but is not known to be a partner by outside
parties is:
a. Silent partner
c. Nominal partner
d. Secret partner
b. Dormant partner
Ans. D
356.
Bears the risk of loss of things contributed to the partnership
a. Contributing partner
b. Limited partner
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c. Partner contributing usufructuary rights
d. All of the above
Ans. C
357.
a.
b.
c.
d.
Ans. B
358.
a.
b.
c.
d.
A limited partner who takes active part in the management of the firm becomes –
A managing partner
Liable as a general partner
A general partner
A general and a limited partner at the same time
Which of the following statements is correct?
To be valid, a partnership must be in writing
A contract of partnership having a capital of ₱5,000 must be in a public instrument,
otherwise void
When there is contribution of immovable property, the partnership contract must be
duly notarized in order to be valid
A contract of partnership having a capital of ₱3,000 which is not registered in the SEC
cannot sue but can be sued
Ans. C
359.
A limited partnership formed in 1994 by X as general partner and Y and Z as limited
partners. In 1995, X and Z got married. Did the marriage dissolve or change the form of the
partnership?
1st answer: Yes, partnership is dissolved by the marriage because there is a change in equity and
status among the partners.
2nd answer: No, because spouses can enter into a universal partnership.
a. Both answers are correct
b. 1st answers is wrong, 2nd is correct
c. Both answers is wrong
d. 1st answer is correct, 2nd is wrong
Ans. C
360.
a.
b.
c.
d.
The following are the obligations of a partner as to his contributions, except:
To deliver the money or property he promised to contribute to the partnership at the
beginning of the partnership or at an agreed stipulated time
Liable for the fruits of the property he promised to contribute from the time the
obligation to deliver arises up to the date of actual delivery without the necessity of a
demand
To deliver the money he promised to contribute excluding the fruits but obliged to
preserve the property with extraordinary diligence pending its delivery to the
partnership
To be answerable to the partnership for eviction in case the partnership is deprived of
his contribution
Ans. C
361.
A partnership suffered losses in the first year of its operation. X, a capitalist partner,
refused to contribute an additional share to the capital. Can X be obliged to sell his interest to
the other partners on the grounds of such refusal?
a. Yes, X’s refusal to contribute his additional share reflects his lack of interest in the
continuance of the partnership
b. No, because there is actually no imminent loss of the business
c. Yes, provided that X is paid the value of his interest
d. None of the above
Ans. C
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362.
A, B and C general partners in ABC Partnership. D is debtor to the partnership in the
amount of ₱15,000. A received from the debtor D the sum of ₱5,000 and issued a receipt
identifying the amount collected to be ₱10,000
a. A cannot be compelled to share the ₱5,000 with B and C
b. B and C can change the capital of A with their share of the ₱5,000
c. A can be compelled to share B and C their ₱5,000
d. B and C should automatically sue D to collect the ₱10,000
Ans. C
363.
C, P and IP are partners. IP is the industrial partner, who, in addition to his services, also
contributed capital to the partnership. There is no stipulation as to the sharing of profits and
losses. The partnership realized profits of ₱21,000. The share of IP in the profits:
a. C and P will determine IP’S share in the profits
b. IP’s share is ₱17,000
c. Pro-rata to his contributed capital
d. Nothing, because he is an industrial partner
Ans. C
364.
a.
b.
c.
d.
Which of the following is false with respect on sharing of profits and losses?
In the absence of agreement on sharing of loss, it shall be apportioned among the
partners in accordance with their profit sharing ratio;
In the absence of any profit sharing and loss sharing agreement, the profit and loss shall
be divided among the capitalist partners equally
If there is no profit or loss sharing ratio and there is an industrial partner, he is totally
exempt from sharing in the loss
If there is no loss sharing agreement but there is a profit sharing agreement in which the
industrial partner is entitled to a profit ratio, the industrial partner becomes liable for
the losses of the partnership in the same proportion as his profit sharing ratio
Ans. B
365.
a.
b.
c.
d.
Which statement is false? A partner who has been appointed as manager
In the articles of partnership, may perform all acts of administration with or without the
consent or even against the opposition of all other partners
After the formation of the partnership, his power may be revoked anytime with or
without cause
In the articles of partnership, his power is irrevocable except for a just and lawful cause
In the articles of partnership, may be revoked even without a just or lawful cause
provided a vote of the partners with controlling interest has been made
Ans. D
366.
Which option is false? When the manner of management of the partnership has not
been agreed upon –
a. All of the partners are considered mutual agents of each other and of the partnership
b. No partner may make important alteration to the immovable property of the
partnership even if such alteration may be useful to the partnership
c. The partner with the biggest contribution shall be considered as the manager of the
partnership
d. If a partner wants to make important alteration in the immovable property of the
partnership, the court’s intervention may be sought if the refusal of the partners is
manifestly prejudicial to the interest of the partnership
Ans. C
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367.
A capitalist partner is engaged for his own account in an operation which is of the kind of
business in which the partnership is engaged. Said partner can be:
a. Compelled to sell his interest in the partnership to the other capitalist partners
b. Compelled to dissolve or discontinue the operation of his business
c. Compelled to bring to the common funds of the partnership any profits accruing to him
from his transactions
d. Denied his share in the profits of the partnership
Ans. C
368.
Which of the following statements is incorrect?
a. An industrial partner who engaged in business for himself may be excluded from the
partnership
b. An industrial partner may not engage in business for himself
c. A capitalist partner may engage in the same line of business in which the partnership is
engaged
d. An offending capitalist partner may not be excluded from the partnership
Ans. C
369.
a.
b.
c.
d.
Ans. D
Property rights of a partner, except:
To use specific partnership property for partnership purpose
To share in the profits
To participate in the management
To exercise appraisal right
370.
A and B are capitalist partners with C as industrial partner. A and B contributed ₱20,000
each to the capital of the partnership. A contractual liability of ₱50,000 was incurred by the
partnership in favor of X, the assets of the partnership has been exhausted still leaving an unpaid
liability of ₱12,000. What are the rights and the obligation of the partner, if any?
a. A, B and C are liable to X, and C after giving his share may ask reimbursement from A and
B, unless otherwise stipulated
b. A and B only
c. C only
d. A, B and C has no right for reimbursement from A and B unless expressly stipulated
Ans. A
371.
a.
b.
c.
d.
Ans. B
Statement 1: An industrial partner is exempted from losses.
Statement 2: An industrial partner is exempted from liability to third persons for the
debts of the partnership.
Both statements are correct
Only the 1st statement is correct
Only the 1st statement is false
Both statements are false
372.
Act of administration: A managing partner can perform even without the knowledge and
consent of the other partners.
Act of dominion or ownership: All partners, including managing partner, must give their
consent.
a. Only the 1st statement is true
b. Only the 1st statement is false
c. Both statements are true
d. Both statements are not true
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Ans. C
373.
Refers to persons who represent themselves, or consent to another or others to
represent them to anyone that they are partners
a. General partnership
b. Limited partnership
c. Partnership by estoppel
d. None of the above
Ans. C
374.
A and B are equal partners in AB and Company. Y represented himself as a partner in AB
and Company to Z, who relying on such representation extended a ₱50,000 credit to AB and
Company. Of the two partners, only B knew and consented to the representation of Y. who
should be held liable to Z?
a. Only Y who presented himself as partner is liable
b. Since the credit was extended to AB and Company, a partnership liability was created so
the two partners and Y are liable
c. Partners A and B who benefited from the credit extended to the partnership AB and
Company shall be liable to Z
d. B and Y are partners by estoppel and, thus, are liable to Z
Ans. D
375.
A, b and C are partners engaged in the real estate business. Their contribution is ₱20,000
each. D is admitted a new partner with a contribution of ₱8,000. At the time of his admission,
the partnership has an outstanding obligation to E in the amount of ₱80,000. In this case:
a. D is not liable to E for this obligation
b. D is liable to E for this obligation so that after the assets of the partnership amounting to
₱68,000 will be exhausted leaving a balance of ₱12,000, only A, B and C shall be liable
jointly or pro rata, out of their separate property
c. D is liable to E for this obligation so that the assets of the partnership will be exhausted,
leaving a balance of ₱12,000, all the partners shall be liable jointly or pro-rata, out of
their separate property
d. Answer not given
Ans. A
376.
a.
b.
c.
d.
Ans. A
The partnership is insolvent. They are preferred as regards to the partnership property.
Partnership creditors
Partners separate creditors
Partners with respect to their capital
Partners with respect to their profits
377.
The change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on of the partnership
a. Realization
b. Winding-up
c. Dissolution
d. Termination
Ans. C
378.
–
The following act cannot be performed during the stage of dissolution of the partnership
a. To enter into new contracts or close new business that will bind the partnership
b. Realization of assets
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c. An act which is necessary for winding up purposes
d. To complete and fulfill unfinished contracts
Ans. A
379.
except:
a.
b.
c.
d.
Ans. D
380.
a.
b.
c.
d.
Ans. A
381.
a.
b.
c.
d.
Ans. A
Cause of dissolution which does not violate the agreement between the partners,
Termination of the definite term or particular undertaking
Express will of any partner who must act in good faith
Expulsion of any partner
Contravention of partnership agreement
Does not cause partnership dissolution:
Partners contribution which becomes a property of the partnership is lost
Death of one partner
Insolvency of any partner
Irrevocable withdrawal of partners from the partnership without justifiable reason
Which of the following is a characteristic of a “stay order”?
The enforcement of claims against the debtor’s guarantors and persons jointly liable
with the debtor is also stayed
The debtor cannot dispose his properties in the ordinary course of business
The suppliers may discontinue supplying goods or services to the debtor even if they are
being paid after the issuance of the stay order
None of the foregoing
382.
Which of the following claims is covered by the “stay order”?
a. Claims against letters of credit
b. Claims against trust receipts
c. Foreclosure by the creditor of property belonging to the debtor under corporate
rehabilitation
d. None of the foregoing
Ans. C
383.
Which of the following liabilities is prohibited from being paid by the debtor during its
rehabilitation?
a. Payment to suppliers for goods or services supplied after issuance of the stay order
b. Payment in full of the fees of the Rehabilitation Receiver and all persons employed by
him
c. Payment of new loans obtained for the rehabilitation of the debtor with prior court
approval
d. Payment of secured loan where security is about to be foreclosed
Ans. D
384.
The stay order may not be terminated or modified, or the creditor’s claim relieved from
its coverage where:
a. Any allegation in the petition, its attachments or verification has ceased to be true
b. A creditor does not have adequate protection over the property securing its claim
c. The debtor’s secured obligation is less than the fair market value of the property subject
of the stay order
d. The property covered by the stay order is not essential or necessary to the rehabilitation
and the creditor’s failure to enforce its claim will cause more damage to the creditor
than to the debtor
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Ans. C
385.
Which of the following circumstances will qualify a person to be appointed as a
Rehabilitation Receiver?
a. He is a creditor of the creditor
b. He is engaged in a business that competes with the debtor
c. He was employed as the debtor’s accountant until his resignation three (3) years prior to
the filling of the petition for rehabilitation
d. None of the foregoing
Ans. C
386.
One of the following is not a legal consequence of the approval of the rehabilitation plan
by the court:
a. The plan and its provisions shall be binding upon the debtor and all persons who may be
affected thereby, excluding the creditors who have not participated in the proceedings,
or opposed the plan, or their claims have not been scheduled
b. The debtor shall comply with the provisions of the plan and shall take all actions
necessary to carry out the plan
c. Contracts and other arrangements between the debtor and its creditors shall be
interpreted as continuing to apply to the extent that they do not conflict with the
provisions of the plan
d. Any compromises on amounts or rescheduling of timing of payments by the debtor shall
be binding on creditors regardless of whether or not the plan is successfully
implemented
Ans. A
387.
a.
b.
c.
d.
Ans. D
Which of the following is a characteristic of a pre-negotiated rehabilitation?
It must be filed jointly by the debtor and any of its creditors
It requires the approval of the creditors holding at least ¾ of the total liabilities of the
debtor
It requires the approval of the secured creditors and unsecured creditors holding at least
50% of the total secured claims and total unsecured claims, respectively
None of the foregoing
388.
The seller and the buyer agreed that the buyer will take recovery of the goods from S’s
warehouse. Is the agreement is—
a. Natural element
b. Essential element
c. Accidental element
d. Legal element of the contract of sale
Ans. C
389.
Three of the following illicit per accidents. What is the exception—
Prohibited drugs
Jueteng tickets
Decayed food
Lottery tickets declared illegal by the Revised Penal Code
a.
b.
c.
d.
Ans. C
390.
The price of the thing is considered certain in three of the following instances. Which
one is the exception—
a. The parties have agreed upon a definite amount
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b.
c.
d.
Ans. C
391.
a.
b.
c.
d.
Ans. A
The parties agreed to refer the price to another thing certain
The price was left to the sole
The price was left to the determination of a third person
The statue of a fraud is applicable
If there has been full performance by one party
Even if there is at least partial performance by one party
If no performance has as yet been made by both parties
If there has been full performance by both parties
392.
When goods are delivered to the buyer on “sale or or return’, the ownership passes to
the buyer:
a. Upon delivery of the goods
b. Upon the expiration of the period agreed upon
c. Upon acceptable of the buyer of the sellers offer
d. Upon perfection of the sale
Ans. A
393.
A and B entered into a contract of lease with option to buy the car of the former for a
term of two years. For three months B failed to pay the rentals and by reason thereof, A
repossessed the car: Hence:
a. A can collect the unpaid rentals for three months
b. A can collect the unpaid rentals for the duration of the term of the lease of two years
c. When A deprived B the possession of the leased car; he has no further action against the
latter for any paid rental
d. A shall return the rentals without deductions to B by virtue of the rescission of the
contract of lease with option to buy
Ans. C
394.
A offered in writing to sell his house and lot for Php1M to B on January 20, 2001. B
requested A to give him one month to raise the amount. On January 25, 2001 A informed B that
he has raised the priced to Php1.5M. Can B compel A to accept the payment to Php1M for the
sale of the house and lot?
a. Yes because A is already estopped by his written offer of Php1M
b. No because the one-month option has not yet expired
c. No because there is as yet no perfected sale
d. No because the seller has the sole discretion in fixing the price with or without the
concurrence of the buyer
Ans. C
395.
a.
b.
c.
d.
Ans. A
Which of the following is not a document of title?
Pawn ticket
Bill of lading
Dock warrant
Warehouse receipt
396.
S is an unpaid seller who exercised his right of stoppage “in transit” over the goods he
sold and shipped in favour of B, insolvent Buyer. However, right thereafter B negotiated the bill
of lading to X, a purchaser in good faith and for value. Under the Civil Code of the Philippines,
which of the following statements relative to negotiable documents of title is correct?
a. X has a superior over the goods than S
b. S has a right over the goods than X
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c. X and S equal rights over the goods
d. None of the foregoing
Ans. A
397.
D owns a negotiable document of title. The goods covered by the said document are in
the possession of the bailee. C, a creditor of D, was able to obtain a favorable judgement in court
against D. What is legal remedy available to C on the goods recovered by the negotiable
document of title?
a. Writ of execution
b. Writ of attachment
c. Injunction
d. None of the foregoing
Ans. C
398.
Which of the following is not a characteristic of a warehouse receipt?
a. Only a warehouse man may issue a warehouse receipt
b. A negotiable warehouse receipt is a negotiable instrument within the meaning of the
Negotiable Instrument law
c. A warehouse has a lien over the goods deposited with him as security for payment of
the charges and other expenses.
d. A holder in good faith of a negotiable warehouse receipt has a superior right to the
goods than the vendor who has a vendor’s lien of the goods
Ans. B
399.
a.
b.
c.
d.
Ans. A
400.
a.
b.
c.
d.
Ans. C
401.
a.
b.
c.
d.
Ans. A
402.
a.
b.
c.
d.
Ans. A
If the vendor chooses specific performance as a remedy—
He can apply the proceeds of the sale on execution and can demand additional payment
from the buyer if proceeds are not suficient
He can revert the ownership of the goods to himself
He cannot demand additional payment from the buyer if auction sale is insuficient
None of the above
Stoppage in transitu means--To stop the carrier while in transit
To stop the goods while in transit
To stop delivery of the goods to buyer while in transit
To stop the bill of lading from reaching the buyer
If the vendor has chosen the remedy of foreclosure of chattel mortgage—
He shall have no further action against the buyer for the unpaid balance of the purchase
price
He can go against the buyer for the unpaid balance of the purchase price if there is an
agreement by the parties
He can revert the ownership of the mortgage property to himself
None of the above
A lease purchase agreement is in reality a—
Contract of sale of personal property by installment
Contract of sale of real property with option to buy
A lease contract
None of the above
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403.
In three of the following, said persons are prohibited by law to buy properties. Which
one is the exception?
a. A husband who bought the property of his wife after a judicial decree of separation
b. A seller, having stopped the goods in transit, at a public resale of the goods
c. A seller, having a right of lien, at a private resale of goods
d. The wife of the sheriff who conducted the sale at public auction
Ans. A
404.
a.
b.
c.
d.
Ans. D
405.
a.
b.
c.
d.
Ans. C
406.
a.
b.
c.
d.
The ownership of the thing sold shall be transferred to the buyer --By real delivery
By legal delivery
BY symbolic delivery
By any of the above
The transfer of a non-negotiable document of title--Has the effect of the delivery of the goods to the transferee
It cannot be defeated by a levy of an attachment or execution by a creditor of the
transferor
Does not have the effect of the delivery of the goods to the transferee
None of the above
Which of the following statement is correct?
The determination of the maturity date is not necessary in an instrument which is
payable at a fixed period after date.
The date of issue of a promissory note payable on demand is essential to make the
instrument negotiable.
An instrument which is ante-dated is an invalid instrument.
The holder of an instrument which is payable at a fixed period after date but is issued
undated may inserted therein the true date of issue.
Ans. D
407.
X stole a pre-signed promissory note from M’s ofice cabinet. He then placed the amount
of P20,000 and P’s name as the payee, then indorsed the note to A using P’s name. A then
indorsed the same to B, and B to C, present holder in due course. Who may be held liable to C
for P20,000?
a. M, P, X and B
b. P, X, A and B
c. X, A and B only
d. M, P and X only
Ans. C
408.
X stole a promissory note that is completely made by M, X indorsed the note to A, then
A to B, present holder in due course. Who may be held liable to B?
a. A only
b. X only
c. X and A only
d. M, X and A
Ans. C
409.
Which of the following statements relative to the construction of ambiguous
instruments is incorrect?
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a. Where there is a discrepancy between the sum payable expressed in words and that
which is expressed in figures, the former prevails.
b. Where there is a conflict between the written provisions, and the printed provisions of
the instrument, the former prevails.
c. Where there is doubt whether an instrument is a bill or a note, the issuer or drawer may
treat it as either at his election.
d. Where the instrument which contains the words “I promise to pay” is signed by two or
more persons, they are deemed to be solidarily liable thereon.
Ans. C
410.
a.
b.
c.
d.
Ans. C
411.
a.
b.
c.
d.
Which of the following is an invalid indorsement?
An indorsement which is contained in an “allonged” where there is still suficient space
at the back of the negotiable instrument.
A partial indorsement is made where part of the amount has already been paid.
A note for P10,000 is indorsed by A for P7,000 and by B for P3,000 simultaneously.
A note for P10,000 is indorsed by A and B for the full amount.
Which of the following statements relative to indorsements is true?
A blank indorsements of an order instrument converts the instruments into a bearer
instrument.
An order instrument which is special indorsed by P can only be further negotiated by P’s
special indorsement.
A bearer instrument cannot be negotiated by indorsement coupled with delivery.
A special indorsement must contain the words “or order” or “to the order of” to make it
further negotiable.
Ans. D
412.
a.
b.
c.
d.
Ans. A
Which of the following is not a characteristic of an irregular indorser?
His signature is placed on the instrument after its delivery to the payee.
He is not a party to the instrument.
The purpose of the indorsement is not to transfer title to the instrument.
His warranties are the same as those of a general indorser.
413.
The abandonment of all property of the debtor for the benefit if 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
Ans. B
414.
All of the following, except one, are requisites of cession –
a. The debtor is in a state of insolvency, either partially or totally, at the time of cession.
b. There must be at least one debtor and two or more creditors.
c. There must be one debtor and one creditor.
d. The creditors may sell the property and apply the proceeds to their credits
proportionately.
Ans. C
415.
In payment by cession or when the debtor cedes or assigns his property to his creditor in
payment of his debt, he shall be released from the obligation
a. To the full extent of debtor’s obligations.
b. Only to the extent of the net proceeds of the thing assigned.
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c. Only to the extent allowed by the debtors.
d. Only to the extent allowed by the creditors
Ans. B
416.
a.
b.
c.
d.
Ans. D
Cession as distinguished from dation en pago
Does not require plurality of creditors
May take place during the solvency of the creditor.
Does not affect all the properties of the debtor.
Does not transfer ownership upon delivery.
417.
The act of offering the creditor what is due him together with a demand that the
creditor accept the same
a. Tender of payment
b. Consignation
c. Payment by cession
d. Dation en solutum
Ans. C
418.
It presupposes not only that the obligor is able, ready and willing, but also more so, in
the act of performing his obligation.
a. Bill of exchange
b. Promissory note
c. Tender of payment
d. Contract to sell
Ans. C
419.
except:
a.
b.
c.
d.
Ans. C
Consignation alone without any tender of payment is suficient in the following cases,
When the creditor is absent or unknown or does not appear at the place of payment.
When without just cause, the creditor refuses to give a receipt.
When the creditor presents the title to the obligation for collection.
When two or more persons claim the same right to collect.
420.
Consignation is a mode of payment which extinguishes an obligation. Which of the
following is not a requisite of consignation?
a. Actual consignation with the proper judicial authorities
b. Prior notice has not been made
c. Existence of a valid debt
d. There must be prior notice of consignation to persons interested in the fulfillment of the
obligation.
Ans. B
421.
It is a mode of extinguishing an obligation whereby the debtor alienates in favor of the
creditor, property for the satisfaction of the monetary debt
a. Adjudicacion in pago
b. Application of payment
c. Payment by cession
d. Tender of payment
Ans. A
422.
A thing is not deemed lost when it –
a. Perishes
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b. Disappears in such a way as its existence is unknown or it cannot be recovered.
c. Goes out of commerce.
d. Deteriorates
Ans. D
423.
A, B and C are solidary creditors of X for P10,000. A makes a will giving the P10,000 debt
to X as legacy. The obligation is extinguish by
a. Confusion of debt
b. Novation of debt
c. Remission of debt
d. Payment of debt
Ans. C
424.
a.
b.
c.
d.
Ans. C
A owes solidary creditors X, Y and Z P10,000. There is remission of the debts when
X borrows P10,000 from A.
X waives partially the obligation of P10,000 to A.
Z makes a will giving the P10,000 debt to A as legacy.
Y tells that instead of paying P10,000, A shall just deliver a ring to Y.
425.
If substitution is without the 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.
Ans. C
426.
Which of the following is not a legal subrogation?
a. When a creditor pays another who is preferred.
b. When a third person, not interested in obligation, pays with the approval of the debtor.
c. When third person interested in the obligation, pays even without the approval of the
debtor.
d. None of them
Ans. D
427.
a.
b.
c.
d.
Ans. D
428.
a.
b.
c.
d.
Ans. B
429.
Require consent, subject matter, cause consideration, and delivery
Formal contract
Consensual contract
Solemn contract
Real contract
Which of the following is not a real contract?
Deposit
Sale
Pledge
Commodatum
Contracts which must be in the form provided by law for their perfection
a. Consensual contracts
b. Real contracts
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c. Onerous contracts
d. Solemn contracts
Ans. D
430.
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
Ans. A
431.
Hugador won in jueteng. Since there is no enough money yet to pay his winnings,
Operador, the gambling oprator, executed a promissory note in his favor. Hugador then indorsed
the note to Cabo. Which statement is correct?
a. Only Cabo can recover from Operador because he is now in possession of the note.
b. Only Hugador can recover from Operador considering that he is the payee in the
promissory note.
c. Either of them can recover provided the note is presented to Operador.
d. None of them can recover because the note is void. Just as the payee cannot recover, so
also cannot the indorsee.
Ans. D
432.
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 exceptions?
a. When there is a stipulation in favor of a third party.
b. Where one of the parties to the contract dies and thereafter a suit is filed on the basis of
the contact.
c. Where the obligation arising from contract are note transmissible by their nature.
d. Where the stipulation arising from contract are not transmissible by stipulation or
provision of law.
Ans. B
433.
a.
b.
c.
d.
Ans. C
These are the basic principles or characteristic of a contract. Which is the exception?
Freedom or liberty to stipulate.
Obligatory force and compliance in good faith.
Binding on third parties.
Perfection by more consent.
434.
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 communicated 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.
Ans. D
435.
Not a requisite of stipulation pour autri
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a. The third person is incidentally benefited by the stipulation;
b. The stipulation in favor of a third person must be a part of the contract, and not the
contract itself;
c. The favorable stipulation should not be conditioned or compensated by any kind of
obligation;
d. Neither of the contracting parties bears the legal representation or authorization of the
third party.
Ans. A
436.
A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his power
a. Voidable
b. Unenforceable
c. Rescissible
d. Void
Ans. B
437.
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 an offer?
a. An offer made through an agent.
b. Business advertisement of things for sale.
c. Advertisement for bidders
d. Answer not given
Ans. A
438.
a.
b.
c.
d.
Ans. A
439.
a.
b.
c.
d.
Ans. D
440.
a.
b.
c.
d.
Ans. C
When there is concurrence of the offer and acceptance, there is –
Consent
Payment
Revocation
None of the above
Contracts entered into during lucid-interval
Voidable
Unenforceable
Void
None of the above
Contracts entered into in a state of drunkenness or during a hypnotic spell are
Void
Valid
Voidable
Legal
441.
When one of the parties to a contract is compelled to give his consent by a reasonable
and well-grounded fear of an imminent and grave evil upon his person or property, or upon the
person or property of his spouse, descendants or ascendants, there is:
a. Violence
b. Intimidation
c. Undue influence
d. Answer not given
Ans. B
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442.
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
Ans. C
443.
a.
b.
c.
d.
Ans. D
444.
a.
b.
c.
d.
Ans. A
445.
a.
b.
c.
d.
In order that frauds may make a contract voidable:
It may be incidental but both parties should not be in pari delicto.
It may be serious and the parties must be in pari delicto.
It may be incidental but should have been employed by both parties.
It should be serious and should have not been employed by both contracting parties.
The following is considered fraud or fraudulent.
Failure to disclose facts when there is duty to reveal them.
The usual exaggeration in trade, when the other party had the opportunity to know the
facts.
Misrepresentation not made in bad faith.
“Caveat Emptor” or Let the Buyer Beware.
A, guardian of B, sold B’s house and lot worth P480,000 for P240,000.
The contract can be rescinded because of inadequacy of price.
The contract cannot be rescinded because there is no fraud, mistake or undue influence.
The contract cannot be rescinded because all elements of contract are present.
The contract cannot be rescinded because it is expressly provided by law as one of the
contracts which cannot be rescinded.
Ans. A
446.
a.
b.
c.
d.
Ans. C
A contract where both parties are incapable of giving consent is –
Void
Voidable
Unenforceable
Rescissible
447.
A and B who are both unemancipated minors entered into a contract. The contract
entered into by and between them is:
a. Rescissible
b. Unenforceable
c. Voidable
d. Void
Ans. B
448.
a.
b.
c.
d.
Ans. A
Which of the following contracts cannot be ratified?
Those whose cause or object did not exist at the time of the time of the transaction.
Unauthorized contracts.
Those where both parties are incapable of giving consent.
Those that fail to comply with the Statute of Frauds.
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449.
Which of the following contracts is not void ab initio?
a. Those whose object is outside the commerce of man.
b. That whose object did not exist at the time of transaction.
c. That which contemplates an impossible service
Ans. D
450.
a.
b.
c.
d.
Ans. B
451.
a.
b.
c.
d.
Ans. C
452.
a.
b.
c.
d.
Agency is not extinguished by –
Withdrawal of the agent
Appointment of a substitute against the prohibition of the principal
Accomplishment of the purpose
Death of the principal
Three of the following are modes of extinguishing an agency. Which is the exception?
Expiration of the period
Insanity of the principal or the agent
Death of the principal wherein the agency is for the interest of both agent and principal
Dissolution of the firm which entrusted or accepted the agency
Which of the following is not a fundamental obligation of an agent?
To borrow if he is authorized to lend
To subordinate his interest in favor of his principal if there is a conflict of interest
To render an accounting of the transaction
Not to carry out the agency, even if that is the instruction of the principal, if he knew it
would result to a loss or damage to his principal
Ans. A
453.
One of the following is not an obligation of an agent?
a. In the execution of the agency, the agent shall act in accordance with the instructions of
the principal
b. Shall be bound to advance the necessary funds, except when the principal is insolvent
c. Shall finish the business already begun on the death of the principal, should delay entail
any danger
d. In case a person declines an agency, he is bound to observe the diligence of a good
father of a family in the custody and preservation of the goods forwarded to him by the
owner until the latter should appoint an agent
Ans. B
454.
a.
b.
c.
d.
Ans. A
455.
The principal is not liable for expenses incurred by the agent:
When it was stipulated that the agent would only be allowed a certain sum
When the agent has complied with his obligations by acting according to the principal
instructions
When the agent incurred them with the knowledge that an unfavorable result would
ensue and the principal was aware of it
When the expenses were incurred without the fault of the agent
The principal is liable for expenses incurred by the agent
a. When the agent acted in contravention of the principal’s instructions, unless the latter
should wish to avail himself of the benefits derived from the contract
b. When the expenses where due to the fault of the agent
c. Where an agent is employed by the principal and such agent incurred expenses in the
execution of the agency
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d. When the agent incurred them with knowledge that an unfavorable result would ensue,
if the principal was not aware thereof
Ans. C
456.
When two or more persons have appointed an agent for a common transaction or
undertaking, their liability to the agent for all consequences of the agency is
a. Solidary
c. Subsidiary
d. Secondary
b. Joint
Ans. A
457.
The following are the instances when an agency is not extinguished despite its
revocation. Which is the exception?
a. When the agency is coupled with interest
b. When a managing partner is dismissed as such without justifiable cause
c. When the revocation is done in good faith
d. When the agency is a means of fulfilling an obligation
Ans. C
458.
An agent with express power to sell certain property, without being aware of the death
of his principal, sold the property after the death of his principal. The purchaser, however, knew
of the death of the principal
a. The contract is valid because the agent is in good faith
b. The contract is not valid because the agent is in bad faith
c. The contract is valid because the knowledge of the death of the principal does not make
the purchaser in bad faith
d. The contract is not valid because the purchaser is in bad faith even if the agent is in good
faith
Ans. D
459.
P appointed A to be his agent to administer his farm while P was is in world tour but A
died leaving his son of legal age to take care of the farm until P arrived. This is an example of
agency created by:
a. Ratification
b. Estoppel
c. Operation of law
d. Consent of the principal
Ans. C
460.
No 1: if the agent dies, the heirs must notify the principal immediately and must
continue the objectives of the agency until it is accomplished or until the principal has appointed
a new agent.
No 2: Agency by operation of law is synonymous to “presumed agency” or “tacit agency”
a. Both statements are true
b. Statement 1 is true, statement 2 is false
c. Both statements are false
d. Statements 1 is false, statement 2 is true
Ans. D
461.
Which of the following is a common requisite for pledge, chattel mortgage and
antichresis?
a. The amount of principal and interest must be in writing.
b. The property must be in the possession of the creditor.
c. To bind third persons they must be duly recorded in the Ofice of the Register of Deeds.
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d. It is constituted to secure the fulfillment of a principal obligation.
Ans. D
462.
a.
b.
c.
d.
Ans. C
463.
a.
b.
c.
d.
Ans. B
464.
a.
b.
c.
d.
Ans. D
465.
a.
b.
c.
d.
Ans. B
466.
a.
b.
c.
d.
The following contract is not valid as against the contracting parties
Mortgage which is not registered with the Register of Deeds.
Pledge which does not describe in a public document the thing pledged and the date of
the pledge.
In a contract of pledge where there is no delivery of the movable.
Chattel mortgage which does not contain afidavit of good faith.
Real property may be the object of pledge
The thing pledged may be alienated by the pledgor.
True, False
False, True
False, False
True, True
Not a valid object of pledge
Certificates of stock
Stock dividends
Warehouse receipts
Timberland
One of the following is a right of the pledgor
Reimbursement for the preservation of the thing pledged.
Demand return of the thing pledged upon payment of the principal obligation.
Recover or defend the thing pledged against a third person.
Continue to have a lien on the thing pledged even if it is alienated.
Which of the following is not an obligation of the pledgor?
To participate in the public auction of the thing pledged.
To inform the pledgee of the flaws, of the thing if known to him.
To pay the principal obligation including the interest, and expenses in a proper case.
To reimburse the pledgee for the expenses incurred for the preservation of the thing
pledged.
Ans. A
467.
The pledgee has a right to reimbursement of the expenses for its preservation, and is
liable for its loss or deterioration.
If through the negligence of the pledgee, the thing pledged is in danger of being
impaired, the pledgor may require the pledgee that the thing be deposited with a third
person.
a. Yes, No
b. Yes, Yes
c. No, Yes
d. No, No
Ans. B
468.
A stipulation whereby the pledgee or mortgagee automatically becomes the owner of
the thing pledged or mortgaged is called
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a.
b.
c.
d.
Ans. A
Pactum commisssorium
Consolidation of ownership
Conventional redemption
Consignation
469.
Three of the following are considered elements of contract of pledge and/or mortgage.
Which is the exception?
a. Real contract
b. Pledgor or mortgagor must be the absolute owner.
c. Thing pledged may be appropriated if debtor cannot pay.
d. Pledgor or mortgagor must have a free disposal of the thing pledged.
Ans. C
470.
a.
b.
c.
d.
Ans. D
471.
a.
b.
c.
d.
The rule on pactum commissorium does not apply to –
Antichresis
Pledge
Real mortgage
Commodatum
Which of the following is not a required formality in an auction sale?
The pledgor or owner and the pledgee must bid.
It must be made with the help of a notary public.
The debt is already due but was not paid on time.
Notice to the debtor and the owner of the thing pledged before and after the public
auction.
Ans. A
472.
If the proceeds of sale is more than the obligation, the creditor is entitled to the excess
unless otherwise stipulated, while if it is less creditor cannot recover the deficiency even if there
is stipulation. This is applicable to
a. Pledge
b. Chattel mortgage
c. Real estate mortgage
d. Mutuum
Ans. A
473.
a.
b.
c.
d.
e.
Ans. C
Effect of sale on the thing pledged if it is less than the principal obligation:
Creditor cannot recover the deficiency unless there is stipulation.
Creditor can recover the deficiency.
Creditor cannot recover the deficiency even if there is stipulation.
Creditor can recover the deficiency even if there is no stipulation.
None of the above.
474.
A pledged his watch for ₱20,000. A failed to pay his obligation. B sold it at public auction
for ₱18,000. Can be recover the deficiency?
a. Yes, even without the stipulation
b. Yes, if there is stipulation
c. No, even if there is stipulation
d. No, unless there is stipulation
Ans. C
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475.
a.
b.
c.
d.
Ans. B
Using the preceding number, if the sale is for ₱22,000. Can A recover the excess?
Yes, even without stipulation
Yes, if there is stipulation
No, even if there is stipulation
No, stipulation allowing recovery is void
476.
A owes B ₱5,000 and as security, A pledged his diamond ring. Later, A borrowed again
₱2,000. As a result –
a. B has a right to retain the thing until the ₱7,000 is paid
b. B has a right to retain the thing until the ₱5,000 is paid
c. A has a right to demand that the thing be deposited with a third person
d. B has the right to use the thing pledged until the pledge effects payment of the
obligation
Ans. B
477.
a.
b.
c.
d.
Ans. D
478.
a.
b.
c.
d.
Ans. B
479.
a.
b.
c.
d.
Ans. C
480.
a.
b.
c.
d.
Ans. D
All of the following, except one, are characteristics of a real mortgage
Indivisible
Real right
Accessory
Real contract
Similarity between real estate mortgage and antichresis
The property is delivered to the creditor
The subject matter is a real property
The creditor acquires the right to receive the fruits of the property
The creditor is obliged to pay the taxes and charges upon the estate
Real mortgage as distinguished from sale a retro except:
Indivisible
No transfer of ownership
There is transfer of possession
Applies only to real property
The mortgage instrument is not valid if not recorded in the Registry of Deeds.
Third persons with knowledge of the existence of the mortgage are bound because as to
them, knowledge of a registered mortgage is equivalent to registration.
True, True
True, False
False, False
False, True
481.
X borrowed money from Y and gave a piece of land as security by way of mortgage. It
was agreed between the parties that upon nonpayment of the loan, the land would already
belong to Y. if X failed to pay the debt, would Y now become the owner of the land?
a. Y would become the owner because it was agreed upon by them based on the principle
of autonomy of contracts
b. Y would not become the owner because the agreement that he would become the
owner upon default of X is against the law
c. Y would now become the owner but with right of redemption by X
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d. Y would not become the owner if X annuls the voidable agreement
Ans. A
482.
When the mortgage is already due and remains unpaid, can the mortgage appropriate
the mortgaged property?
1. No, the only right of the mortgagee is to foreclose the mortgage
2. Yes, If there is a stipulation that the mortgagee can appropriate the property
a. Only no. 1 is True
b. Only no. 2 is true
c. Both are wrong
d. Both are right
Ans. A
483.
a.
b.
c.
d.
Ans. B
484.
a.
b.
c.
d.
Ans. B
485.
a.
b.
c.
d.
Ans. A
486.
a.
b.
c.
d.
Ans. C
The debtor-mortgagor may sell the mortgaged property to a third person –
If there is no prohibition in the contract
Even if there is a stipulation in the contract forbidding the owner from selling it
Only if he is duly authorized by the mortgagee in writing
Only if with the written consent of the mortgagee
In real estate mortgage, the mortgagor can sell the mortgaged property:
With the consent of the mortgagee in writing
Even without the consent of the mortgagee
Only with the consent of the mortgagee orally or in writing
None of the above
In a real estate mortgage, the following rules are valid, except one:
A stipulation in the mortgage contract prohibiting the owner from alienating the
immovable mortgaged is valid
The mortgagee may alienate the mortgage credit or assign to a third person in whole or
in part
Any stipulation allowing the mortgage creditor to appropriate the property mortgaged is
null and void
If alienation or mortgage credit is not registered, it is still valid between the parties
Real estate mortgage as distinguished from pledge
The debtor is entitled to the excess of the proceeds if stipulated
The debtor shall not be entitled to the excess of the proceeds
The creditor is not entitled to the excess of the proceeds
The creditor cannot recover deficiency
487.
First statement: In all excess of extrajuridicial sale, the mortgagor may redeem the
property at any time within the term of one year from and after the date of registration of the
sale.
Second statement: in judicial foreclosure of real estate mortgage, the general rule is that the
mortgagor cannot exercise his right of redemption after the confirmation of the sale by the
court.
a. Both statements are correct
b. Both statements are wrong
c. Only the first statement is correct
d. Only the second statement is correct
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Ans. A
488.
a.
b.
c.
d.
Ans. D
Known as stockholder’s class suit
Individual suit
Derivative suit
Swimsuit
Representative suit
489.
A suit brought by a stockholder against the corporation for the issuance to him of a stock
certificate, payment of his dividend or the payment to him of the book value of his stocks
a. Individual suit
b. Derivative suit
c. Representative suit
d. Executive suit
Ans. A
490.
a.
b.
c.
d.
Ans. C
As a rule, pre-incorporation subscription is irrevocable for a period of at least
30 days
60 days
6 months
1 year
491.
Watered stocks are shares of stocks issued by a corporation for a consideration less than
its par or issued value or for a consideration in any form other than cash, valued in excess of its
par value. In this regard
a. The issue itself is void.
b. The agreement that it shall be paid for less than its par value is illegal and void and
cannot be enforced.
c. The subscriber or purchaser shall not be liable for the full par value of the shares.
d. Answer not given.
Ans.
492.
A stock which has been issued by a corporation as fully paid up when in fact it is not,
because it has been issued as bonus or otherwise, without any consideration at all, or for less
than par, or for property, labor, or services at an overvaluation
a. Promotion stock
b. Treasury stock
c. Watered stock
d. Bonus stock
Ans. C
493.
a.
b.
c.
d.
Ans. A
494.
This class of shares are those issued for no consideration or inadequate consideration
Bonus shares
Deferred shares or founder shares
Over issued shares
Watered shares
Watered stock may be issued in the following ways, except
a. Gratuitously under an agreement that nothing shall be paid into the corporation.
b. Upon payment of less than its par value in money for cost at a discount.
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c. In the guise of stock dividends, representing surplus profits, or an increase in the value
of property, when there are not suficient profits or a suficient increase in values to
justify it.
d. When the par value is P100 and P110 is paid and the share is issued as fully paid.
Ans. D
495.
Statement1: A director is removed from ofice by a vote of the stockholders holding at
least 2/3 of the outstanding capital stock. The vacancy occasioned by such removal can
be filled by the vote of the majority of the remaining directors if still constituting a
quorum.
Statement2: It is illegal to issue watered stocks. However, stock issued without any
consideration at all is justified if such issues are bonus shares. Which statement is
correct?
a. Only the first statement
b. Both statements
c. Only the second statement
d. Neither statement
Ans. D
496.
The subscriptions to the capital of a corporation constitute a fund to which creditors
have a right to look for satisfaction of their claims
a. Grandfather rule
b. Trust fund doctrine
c. Reservation doctrine
d. Doctrine of corporate opportunity
Ans. B
497.
a.
b.
c.
d.
Ans. B
498.
a.
b.
c.
d.
A call on subscribers to pay their unpaid subscriptions is necessary when
A subscription is payable in installments at specified times.
The charter expressly requires notice to be given in certain newspaper for a certain
number of days.
A subscriptions is payable immediately.
A subscription is payable on or before a specified day.
Which of the following statements is not correct?
In the delinquency sale at public auction the highest bidder is one who offers to pay the
full amount of the balance of the subscription plus interest and expenses of the sale for
the highest number of shares.
The sale of delinquent stock at public auction can be stopped if the Board of Directors
stops the sale for valid reasons.
Payment of unpaid subscription may not be enforced by applying cash dividends to
delinquent stockholders.
The Board of Directors shall order, by resolution, the sale of delinquent stock specifying
the amount due plus accrued interest, the place, time and date of the sale.
Ans. A
499.
Should there be no bidder at the public auction on the unpaid subscription, the
corporation may buy the shares of stock and shall be vested in the corporation as
a. Shares in escrow
b. Convertible stock
c. Spurious stocks
d. Treasury stock
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Ans. D
500.
a.
b.
c.
d.
Ans. C
A delinquent stock
Shall be voted for or be entitled to vote.
Shall be entitled to representation at any stockholder’s meeting.
Shall be entitled to cash dividends
Shall be entitled to inspect the books of the corporation.
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