Business Law Midterms

1. First Statement: As a rule, the creditor has a right to the fruits of the thing from the time the
obligation to deliver it arises.

Second Statement: Payment made by a third person who does not intend to be reimbursed by the
debtor is deemed to be a donation, which requires the debtor’s consent. If the debtor’s consent is
not given, the obligation is not extinguished.

a. Both statements are true.

b. Both statements are false.
c. First statement is true while second statement is false.
d. First statement is false while second statement is true.

2. Which of the following does not have negligence as its basis?

a. Culpa contractual
b. Culpa aquiliana
c. Solutio indebiti
d. Culpa delictual

3. A and B are jointly and severally liable to C for P20,000. A is a minor.

a. C can collect P10,000 from B.
b. C can collect P20,000 from B.
c. C can collect P10,000 from A, that is the share of B.
d. C can collect P20,000 because minority is not a defense.

4. Mr. Debtor owes Mr. Creditor, who has two (2) legitimate emancipated children, P50,000 payable
on March 31, 2018.
a. If Mr. Debtor dies before March 31, 2018, Mr. Creditor cannot collect from the heirs of Mr.
Debtor.
b. If Mr. Debtor dies before March 31, 2018, Mr. Creditor can collect form the heirs of Mr.
Debtor.
c. If Mr. Creditor dies, his two (2) legitimate emancipated children cannot recover from Mr.
Debtor his obligation.
d. If both Mr. Debtor and Mr. Creditor die, the heirs of Mr. Creditor can collect from the heirs
of Mr. Debtor.

5. D1 and D2 are joint debtors of C1, C2, C3 and C4, solidary creditors to the amount of P1,000. How
much can C3 collect from D1?
a. P500
b. P1,000
c. P250
d. P125

6. A promissory note signed by D and dated March 15, 2018 is worded as follows: “I promise to pay C
the sum of Fifty Thousand Pesos (P50,000) provided that if she should fail in the October 2018 CPA
Examination, she shall return to me said amount”. The above note gives rise to an obligation with:
a. Suspensive condition
b. Casual condition
c. Resolutory condition
d. Suspensive period

7. Acceptance of a commercial document is equivalent to payment when:

a. The check has been cashed.
b. The check became valueless due to the creditor’s fault.
c. Creditor is in estoppel.
d. All of the above.

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8. A obtained a loan from B for P1,500 with interest at 14% per annum, the payment of which was
secured by guarantor C. After maturity of the loan, D without the knowledge of A paid B, P1,400
and thereupon B signed a receipt and gave it to D with this tenor: “Received from D in full payment
of A’s obligation in my favor”. (Sgd.) B.
a. D can recover from A P1,500 because the whole obligation of A to B has been extinguished.
b. D can recover from A P1,500 because the balance of P100 is considered extinguished by
partial remission.
c. D can recover from A P1,400because there was presumably the extent to which was
benefited.
d. D cannot recover from A because he paid without the knowledge of A.

9. First Statement: In civil obligation, the fulfilment of the obligation depends solely the conscience of
the person.

Second Statement: Civil fruits are those produced by lands of any kind through cultivation.

a. Both statements are true.

b. Both statements are false.
c. First statement is true while second statement is false.
d. First statement is false while second statement is true.

10. These are the basic principles or characteristics of a contract. Which is the exception?
a. Freedom or liberty to stipulate.
b. Obligatory force and compliance in good faith.
c. Binding on third parties.
d. Perfection by mere consent.

11. Contract with false cause is:

a. Voidable
b. Void
c. Unenforceable
d. Rescissible

12. In order that fraud may make a contract voidable:

a. It may be serious and the parties must be in pari delicto.
b. It may be incidental but both parties should not be in pari delicto.
c. It should be serious and should not have been employed by both contracting parties.
d. It may be incidental but should have been employed by both parties.

13. Reluctantly and against her good sense and judgment, Mr. X entered into a contract for the delivery
of five (5) tables to Mr. Z for the price of P15,000.00. The contract is:
a. Void
b. Valid
c. Voidable
d. Unenforceable

14. Mr. T, a supplier of computers, sent to several customers in various parts of the country a letter
offering to sell out “all his stock of 10 units of Star Apple computer” at the discounted price of
P5,000.00 each. The offer stated that the reply must be received by registered mail not later than
September 10. On September 2, B sent a registered letter accepting the offer. The letter was
received by Mr. T on September 11. On September 8, C sent a telegram accepting the offer. The
telegram was received by Mr. T on the same day. Whose acceptance is binding on Mr. T?
a. The acceptance by B because it was mailed first.
b. The acceptance by C because it was received first by Mr. T.
c. Neither acceptance is binding on Mr. T.
d. Both the acceptance will be binding on Mr. T, with B getting 5 computers, and C getting the
other 5.

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15. B offered C a specific parcel of land at a specified price. B gave C 60 days within which to accept. C
agreed.
a. Within 60 days, B cannot withdraw but may increase the price.
b. There can be no withdrawal because the period is binding.
c. B may withdraw or increase the price within the 60 day period.
d. There can be no withdrawal because there is a perfected option contract.

16. Reformation of an instrument is available in the following cases, except:

a. When a mutual mistake of the parties causes the failure of the instrument to disclose their
agreement.
b. When one party was mistaken and the other party acted fraudulently or inequitably in such
a way that the instrument does not show their true intention.
c. When a party was mistaken and the other knew or believed that the instrument did not
state their real agreement.
d. When one of the parties has brought an action to enforce the contract.

17. Which of the following contracts is valid, enforceable and would not require any further act for the
convenience of the parties other than its registration with the proper government office?
a. Oral sale of a piece of land made through an agent whose authority is in a public instrument.
b. Sale of a piece of land in a public instrument made through an agent whose authority was
given orally by the principal.
c. Sale of a piece of land in a private instrument made through an agent whose authority is in a
public instrument.
d. Sale of a piece of land in a public instrument made through an agent whose authority is in a
public instrument.

18. A donation of gold ring worth P4,000.00 made by D to C. The donation of the gold ring by D and its
acceptance by C were made orally with D simultaneously delivering the ring to C.
a. Valid and enforceable.
b. Voidable.
c. Unenforceable.
d. Void.

19. S, an employee of a private company, sold his car for P100,000.00 to B, whom he knew was only 17
years old. S delivered the car to B who immediately paid the amount of P100,000.00. Later, S was
transferred to another branch of his employer which was quite a distance from his residence. He
wanted to get back the car from B so that he will have something to use in going to and from his
new office. Neither B nor his guardian has registered the sale with the Land Transportation Office.
a. S can file an action to annul the sale he made to B because he was mistaken in selling the car
which he realized he badly needed.
b. S can ask the court to annul the sale because B was a minor when the contract of sale was
entered into and it has not yet been recorded with the Land Transportation Office.
c. Only B, when he attains the age of majority, or his guardian, while B is still a minor, can bring
an action to annul the contract.
d. The minority of B has no effect on the validity of the contract since the parties entered into
the contract of sale freely.

20. AAA Corporation published an advertisement in the Philippine Daily Star which reads as follows:
“INVITATION TO BID”. Construction of a 3-storey building in Imus St., Cebu City.” The
advertisement includes the specifications of the building to be constructed. The following
companies submitted their bids: XYZ Corporation with a bid price of P20 million; KJM Corporation,
P20.2 million; and JES Corporation, P20.5 million. AAA Corporation considered also the financial
capability, reputation and experience of the bidders, the kind and quality of materials to be used
and other factors –
a. An award to JES Corporation is valid because AAA Corporation is not bound to accept the
lowest bidder.
b. AAA Corporation is required to declare XYZ Corporation as the winner having declared the
lowest bid.

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 c. An award given to either KJM Corporation or JES Corporation is voidable because they were
not the lowest bidder.
d. AAA Corporation cannot refuse to accept a winner even if none of the bidders is qualified
because the offer is definite.

21. Mr. A wrote a letter to Mr. B wherein he offered to sell a piece of land. In Mr. A’s letter he gives Mr.
B a period of two months within which to pay the price of P500,000.00. After 50 days, Mr. A told
Mr. B that he is increasing the price of the land to P700,000.00. Can Mr. B compel Mr. A to accept
the P500,000.00 first offered by Mr. A and execute the deed of sale?
a. No, for Mr. B did not signify his acceptance of the offer.
b. Yes, because the period of 2 months has not yet expired.
c. Yes, because Mr. A is already estopped by his signed letter.
d. Yes, because there was actual meeting of minds of the parties.

22. A characteristic of a Contract of Sale which involves exchange of value.

a. Commutative
b. Nominate
c. Bilateral
d. Principal

23. A and B entered into a “contract to sell” in private writing involving a specific parcel of land worth
P2M. B paid 50% of the purchase price, balance payable in 3 years. A delivered the land to B. What
is the effect of the delivery of the land to B?
a. B is the owner because there was delivery already.
b. B can compel A to execute a deed of sale in a public instrument.
c. The partial payment made B the owner of the land.
d. A is still the owner because the price is not yet totally paid.

24. Which is an exception? A sale is a contract where one of the contracting parties, called the seller,
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 therefor a price certain in money or its equivalent.

25. This is not a valid object of sale.

a. Future wool that shall grow upon a sheep.
b. Sale of human kidney by a prisoner.
c. The entire rental next month in a 4-door apartment.
d. Sale of a lotto ticket that will be drawn next week.

26. A transferred to B a parcel of land for a price of P1,000,000.00. P300,000.00 is to be paid in cash
and for the difference, he will convey his car worth P700,000.00. What kind of contract is this?
a. Lease contract
b. Contract of sale
c. Obligation of sale
d. Barter

27. S sold a residential land to B. B paid the consideration. When B wanted to register the sale at the
Register of Deeds, the latter refused to register it and required the presentation of the certificate of
capital gains tax payment. What can B do?
a. B may sue S to refund the consideration paid by B under the maxim “no one shall enrich
himself at the expense of another.”
b. B may possess the residential land as a buyer in good faith.
c. B may compel S to pay the capital gains tax and secure the Certificate of Capital Gains Tax
Payment.
d. B cannot compel S to return the selling price because the contract is not enforceable.

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28. First Statement: The vendor is responsible to the vendee for any hidden faults or defects in the thing
sold, even though he was not aware thereof.

Second Statement: If the thing sold had any hidden fault at the time of the sale, and should
thereafter be lost by a fortuitous event, the latter may demand of the vendor the price which he
paid, less the value which the thing had when it was lost.
a. Both statements are true.
b. Both statements are false.
c. First statement is true while the second statement is false.
d. First statement is false while the second statement is true.

29. S sold to B, per unit of measure, a parcel of riceland measuring 2,000 square meters at a price of
P500 per square meter. Subsequently, it was ascertained that the area is not measuring 2,000
square meters. Which of the following remedies is available to B?
a. Ask for rescission if the area is lacking by 1/10 th or more of that stated.
b. Ask for rescission if the area is 1,900 square meters only.
c. Be required to pay an amount corresponding to 2,000 square meters even if the area is
1,900 square meters only.
d. Require S to accept an amount corresponding to 2,000 square meters if the area is 2,100
square meters.

30. When two persons contract with regard to the same immovable thing, one of them with the agent,
and the other with the principal, and the contracts are incompatible with each other, ownership
shall belong to the:
a. First purchaser in good faith.
b. One who first completed the payment of the price in good faith.
c. One who first registered in good faith the transaction.
d. One who presents the oldest title who must be in good faith.

31. Which of the following is not a remedy granted to an unpaid seller:

a. Right to demand a security for the payment of the price.
b. Right of stoppage of goods in transit.
c. Right of lien over the goods.
d. Right to resale.

32. A sale with right to repurchase differs from real mortgage in that in sale with right to repurchase:
a. There is no transfer of ownership of the property.
b. A security is constituted on the property.
c. The contract is indivisible.
d. There is generally a transfer of possession of property.

33. Can future inheritance be the subject of a contract of sale?

a. No, since it will put the predecessor at the risk of harm from a tempted buyer, contrary to
public policy.
b. Yes, since the death of the decedent is certain to occur.
c. No, since the seller owns no inheritance while his predecessor lives.
d. Yes, but on the condition that the amount of the inheritance can only be ascertained after
the obligations of the estate have been paid.

34. X sold to Y 100 sacks of rice that Y was to pick up from X’s rice mill on a particular date. Y did not,
however, appear on the agreed date to take delivery of the rice. After one week, X automatically
rescinded the sale without notarial notice to Y. Is the rescission valid?
a. Yes, automatic rescission is allowed since, having the character of movables and
consumables, rice can easily deteriorate.
b. No, the buyer is entitled to a customary 30-day extension of his obligation to take delivery of
the goods.
c. No, since there was no express agreement regarding automatic rescission.
d. No, the seller should first determine that Y was not justified in failing to appear.

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35. A buyer ordered 5,000 apples from the seller at P20 per apple. The seller delivered 6,000 apples.
What are the rights and obligations of the buyer?
a. He can accept all 6,000 apples and pay the seller at P20 per apple.
b. He can accept all 6,000 apples and pay a lesser price for the 1,000 excess apples.
c. He can keep the 6,000 apples without paying for the 1,000 excess since the seller delivered
them anyway.
d. He can cancel the whole transaction since the seller violated the terms of their agreement.

36. X, who was abroad, phoned his brother, Y, authorizing him to sell X’s parcel of land in Pasay. X sent
the title to Y by courier service. Acting for his brother, Y executed a notarized deed of absolute sale
of the land to Z after receiving payment. What is the status of the sale?
a. Valid, since a notarized deed of absolute sale covered the transaction and full payment was
made.
b. Void, since X should have authorized agent Y in writing to sell the land.
c. Valid, since Y was truly his brother X’s agent and entrusted with the title needed to effect
the sale.
d. Valid, since the buyer could file an action to compel X to execute a deed of sale.

37. In sale of a land with a non-apparent servitude, a hidden defect, the buyer can rescind the sale
within what period of time?
a. 6 months from the date of delivery
b. 40 days from the date of delivery
c. 3 days from the discovery of the hidden defect
d. 1 year from the execution of the contract of sale

38. S sold his Toyota car with plate number ABC 123 to B for P50,000.00. When the car was delivered to
B, he found out that the stereo and air-conditioning unit of the care were no longer there. Did S
have the right to remove the car’s stereo and air-conditioning unit?
a. Yes, because those things are not included in the sale.
b. No, because when the thing to be delivered is a generic thing, accessions and accessories
are included even though not mentioned.
c. Yes, because S is the seller.
d. No, because when what is to be delivered is a specific thing, accessions and accessories are
deemed included even though not mentioned.

39. Three of the following are conditional sales. Which is the exception?
a. Sale of expectancy
b. Sale with a right to repurchase
c. Sale of a vain hope
d. Sale subject to a contingency

40. Which of the following obligations of the vendor cannot be waived?

a. To allow the buyer to examine the goods sold.
b. To transfer ownership to the buyer.
c. To pay the expenses of the deed of sale.
d. To warrant the thing sold.

41. Real estate mortgage:

a. Has for its object movables as well as immovable.
b. Is perfected the moment the contract is registered with the registry of Property.
c. Is inseparable because the mortgage directly and immediately subjects the property upon
which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for
whose security is was constituted.
d. Entitles the mortgagee to the fruits of the thing mortgaged.

42. The mortgage instrument is not valid if not recorded in the Registry of Deeds.

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 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.

a. Both statements are true.

b. Both statements are false.
c. First statement is true while second statement is false.
d. First statement is false while second statement is true.

43. A and B borrowed P50,000.00 from C and mortgaged their co-owned land. While the mortgage debt
is pending, A and B partitioned the property between them, and B paid the share of the debt.
a. The mortgage on the land is extinguished.
b. The mortgage on B’s share of the land is extinguished.
c. The mortgage on B’s share of the land is not extinguished.
d. The mortgage on C’s share of the land is extinguished.

44. Mr. B bought from Mr. S a mortgaged property. If the property is foreclosed because of Mr. S’
failure to pay, who will be responsible for the deficiency judgment?
a. Mr. B
b. Mr. B even if he does not want to assume the obligation.
c. Mr. S if Mr. B does not want to assume the mortgage obligation.
d. Mr. A because the buyer does not generally assume the mortgaged obligation.

45. In the real estate mortgage, the following rules are valid, except one:
a. A stipulation in the mortgage contract prohibiting the owner from alienating the immovable
mortgaged is valid.
b. The mortgagee may alienate the mortgage credit or assign to a third person in whole or in
part.
c. Any stipulation allowing the mortgage creditor to appropriate the property mortgaged is
null and void.
d. If alienation or mortgage credit is not registered, it is still valid between the parties.

46. D mortgaged his land to C as security for a loan. Fearing foreclosure of the mortgage due to his
inability to pay the loan, D sold the land B without the consent of C. Which is correct?
a. The sale is void unless C can give another security.
b. B cannot acquire ownership over the land even if D delivers the land to him.
c. D cannot sell the land if there is an agreement prohibiting the mortgagor from alienating the
land.
d. D can sell the land even without the consent of C.

47. D borrowed P200,000.00 from C, and as a security, he mortgaged his parcel of land. Unable to pay,
C foreclosed the mortgage and sold it at a public auction.

Question 1: Assuming that the land was sold for P150,000.00 only, can C collect the deficiency
from D?

Question 2: Assuming that the land was sold for P220,000.00. Is C entitled to the excess?

a. Yes, Yes
b. Yes, No
c. No, No
d. No, Yes

48. Which of the following stipulations is void?

First: A stipulation in a contract which fixes a tipo or upset price, at which the property will be
sold at a foreclosure proceeding.

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 Second: A stipulation forbidding the owner from alienating the immovable mortgaged.

a. First only.
b. First and second.
c. Second only.
d. Neither first nor second.

49. Personal properties that can be mortgaged under the Chattel Mortgage Law:
a. Shares of stock
b. Ungathered fruits or products
c. Interest in business
d. All of the above

50. Chattel mortgage as distinguished from pledge:

a. The excess over the amount due after foreclosure goes to the debtor.
b. The sale of the object in an auction extinguishes the obligation.
c. The delivery of the personal property is necessary.
d. The registration of the in the Registry of Property is necessary.

51. Statement No. 1: If the thing pledged is alienated by the pledgor, and consented by the pledgee, the
ownership and possession is transmitted to the vendee after alienation.

Statement No. 2: In sales at public auction, the pledgor or owner may bid and shall have a better
right if he should offer the same terms as the highest bidder.

a. Both statements are true.

b. Both statements are false.
c. Statement No. 1 is true while Statement No. 2 is false.
d. Statement No. 1 is false while Statement No. 2 is true.

52. Statement No. 1: The mortgagor of a real property can sell the land despite the agreement with the
mortgagee not to sell the same until the principal obligation is completely and fully satisfied.

Statement No. 2: In pledge, if the sale of the pledged property resulted into an excess, the pledgee
may not keep the excess unless there is a stipulation to the contrary.

a. Both statements are true.

b. Both statements are false.
c. Statement No. 1 is true while Statement No. 2 is false.
d. Statement No. 1 is false while Statement No. 2 is true.

53. Statement No. 1: D borrowed P100,000 from C, and as a security, he pledged his diamond ring. In
the public instrument executed, there is no description of the ring and no date of pledge appearing
but the ring is delivered to C. If D will sell the ring to X, will X have a better title than C? Answer:
Yes, because to him (X) the pledge is not valid and effective.

Statement No. 2: Any stipulation in a contract of pledge, that if the debt is not paid at maturity, the
thing pledge will be acquired by the creditor at the current market price is valid.

a. Both statements are true.

b. Both statements are false.
c. Statement No. 1 is true while Statement No. 2 is false.
d. Statement No. 1 is false while Statement No. 2 is true.

54. M and A obtained a loan of P100,000.00 for P. The debtors executed a promissory note which reads
as follows: We promise to pay P or order P100,000.00 on April 30, 2019. (Sgd) M and (Sgd) A.
To secure the loan, M pledged her diamond ring, while A executed a mortgage on her lot.

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 a. M may demand the return of her diamond ring if she pays her share of the debt, while A’s
share remains outstanding.
b. A may demand the cancellation of the mortgage on her lot if she pays her share of the debt,
while M share remains outstanding.
c. Both M and A must pay the total amount of the debt before M could demand the return of
her diamond ring, and A the cancellation of the mortgage on her lot.
d. P may demand the payment of the amount of P100,000.00 from either M or A.

55. D obtained a loan of P50,000.00 from C with T pledging his Nikon camera to secure the debt. D
failed to pay the debt on due date. Accordingly, C caused the sale of the Nikon camera at public
auction. However, the net proceeds of the sale amounted to P44,00.00 only or a deficiency of
P6,000.00. From whom may C recover the deficiency?
a. D and T if there was a stipulation on the recovery of the deficiency.
b. D and T, even if there was no stipulation on the recovery of the deficiency.
c. D, even if there was no stipulation to recover the deficiency from him, and T, if there was a
stipulation to recover the deficiency from him.
d. From neither D and T.

56. 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.

57. A partner in a partnership who is not really a partner, not being a party to the partnership
agreement, but is made liable as a partner for the protection of innocent third person, is known as:
a. Secret partner
b. Dormant partner
c. Nominal partner
d. Silent partner

58. Bears the risk of loss of things contributed to the partnership:

a. Contributing partner
b. Limited partner
c. Partner contributing usufructuary rights
d. All of the above

59. A limited partnership formed in 2017 by X as general partner and Y and Z as limited partners. In
2018, X and Z got married. Did the marriage dissolve or change the form of the partnership?

First Answer: Yes, partnership is dissolved by the marriage because there is a change in equity and
status among the partners.

Second Answer: No, because spouses can enter into a universal partnership.

a. Both answers are correct.

b. Both answers are wrong.
c. First answer is correct, second answer is wrong.
d. First answer is wrong, second answer is correct.

60. A and B agreed on May 30, 2018 that they will contribute P20,000.00 each to form a partnership for
the purpose of engaging in the business of buying and selling palay for a period of three years. They
agreed to organize it on July 1, 2018 and start with the operation on July 15, 2018. They registered
it with the SEC and the certificate of registration was issued July 30, 2018. When is the partnership
formed?
a. May 30, 2018

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 b. July 1, 2018
c. July 15, 2018
d. July 30, 2018

61. In the preceding question, if the partnership continues to operate beyond July 1, 2021 without
express agreement among the partners –
a. The partnership is operating illegally.
b. The three-year period has not yet lapsed because the partnership can operate until July 30,
2021 which is 3 years after issuance of the certificate by the SEC.
c. The partnership can still continue to operate until July 15, 2021 only.
d. The partnership becomes a partnership at will which can continue operating unless
dissolved at any future time upon mutual agreement of the partners.

62. A, B and C each own a 6-wheeler truck. They agreed to form a partnership for the operation of a
trucking business. They agreed that the three trucks will be their contribution but retaining
ownership of their respective trucks. They will be the drivers of their own trucks and whatever
profits they may realize from the operation will be divided among themselves equally. What kind of
a business organization has been formed?
a. Co-ownership
b. Universal partnership of all present property
c. Universal partnership of profits
d. Partnership at will

63. In the preceding question, suppose D joined the partnership by contributing 50 drums of diesel fuel.
Thus, we have now a partnership with partners who made the following contributions. A, B and C
contributed the use of their own truck and D who contributed 50 drums of diesel fuel.

Suppose A was ill and could not drive the truck so he parked it inside the partnership garage
together with the drums of fuel stored there. The garage was hit by a fire and everything inside the
garage was burned. Who suffers the loss of the truck? How about the diesel fuel?

Loss of Truck Loss of Fuel

a. A Partnership
b. Partnership Partnership
c. A Partners equally
d. Partners equally D

64. Which of the following is false with respect on sharing of profits and losses?
a. In the absence of agreement on sharing of loss, it shall be apportioned among the partners
in accordance with their profit sharing ratio.
b. In the absence of any profit sharing and loss sharing agreement, the profit and loss shall be
divided among the capitalist partners equally.
c. If there is no profit or loss sharing ratio and there is an industrial partner, he is totally
exempt from sharing in the loss.
d. 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.

65. A, B and C are capitalist partners and D, an industrial partner. They have an agreement that in case
of profit they will share 40%; 30%; 20% and 10%, respectively. Suppose the partnership suffered a
loss of P90,000.00 and there is no loss sharing agreement. How much will each partner share?
A B C D
a. P40,000.00 P30,000.00 P20,000.00 None
b. P30,000.00 P30,000.00 P30,000.00 None
c. P22,500.00 P22,500.00 P22,500.00 P22,500.00
d. P36,000.00 P27,000.00 P18,000.00 P9,000.00

66. Which of the following is false? When the manner of the partnership has not been agreed upon:
a. All the partners are considered mutual agents of each other and of the partnership.

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 b. No partner may make important alteration in 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 other partners is
manifestly prejudicial to the interest of the partnership.

67. B, I, G, A and S are partners in BIGAS Company which is engaged in the buying and selling of rice. B is
the manager. I was also given a special power of attorney by the partnership to buy a van for the
company. No other power was given to all the partners. Assuming that no fraud is committed by or
consented to by the partner concerned, which of the following statements is false?
a. Notice to any partner relating to partnership affairs while already a partner is notice to the
partnership.
b. Knowledge of a partner acting on the particular matter acquired by him while already a
partner is knowledge of the partnership.
c. Knowledge of a partner acting of the particular matter obtained by him before he became a
partner is knowledge of the partnership provided he still remembers the same.
d. Knowledge of partner not acting on the particular matter obtained by him before he became
a partner is knowledge of the partnership.

68. Which of the following will not cause the automatic dissolution of a general partnership?
a. Death of a capitalist partner.
b. Insolvency of a capitalist partner.
c. Insanity of an industrial partner.
d. Civil interdiction of an industrial partner.

69. A decree by the court is necessary to dissolve a general partnership based on three of the following
grounds. Which one will not require such decree but will cause the automatic dissolution of the
partnership?
a. The business of the partnership can only be carried on at a loss.
b. A partner is shown to be of unsound mind.
c. A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of
the business.
d. A partner is civilly interdicted.

70. A, B and C are partners in ABC Partnership. The lot is registered in the name of the partnership. B
sells the land to D. Which of the following statements is false?
a. If the sale is in the name of and with authority of the partnership, D gets valid title.
b. If the sale is in the name of B, in the usual way of business and with the authority of the
partnership, title passes to D.
c. If the sale is in the name of but without authority of the partnership, title passes to D but
the partnership may recover it from him.
d. If the sale is in the name of but without authority of the partnership, title passes to D and
will not be recovered from him by the partnership if the act of selling is in the usual business
and D did not know of the partner’s lack of authority.

71. 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.
c. An act which is necessary for winding up purposes.
d. To complete and fulfill unfinished contracts.

72. Statement No. 1: The arrival of the term of a partnership with a fixed term or period shall not
dissolve the partnership if the partners continue with the business of the partnership but such
partnership may be terminated anytime dependent on the will of the continuing partners.

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 Statement No. 2: The general rule is that the loss of the specific thing contributed to the
partnership dissolves the partnership when only the use of the thing is contributed by the partner
and such thing after its transfer to the partnership which used the same for sometime was
subsequently lost, the partnership is not dissolved.

Which statement is correct?

a. Both statements are correct.
b. Both statements are correct.
c. Only the first statement is correct.
d. Only the second statement is correct.

73. Cause of dissolution which does not violate the agreement between the partners, except:
a. Termination of the definite term of particular undertaking.
b. Express will of any partner who must act in good faith.
c. Expulsion of any partner.
d. Contravention of partnership agreement.

74. First Statement: Pre-emptive right does not apply to shares issued in compliance with laws
requiring stock offering or minimum stock ownership by the public.

Second Statement: A corporation can deny the exercise of a stockholder of his pre-emptive right.
a. Both statements are true.
b. Both statements are false.
c. First statement is true while the second statement is false.
d. First statement is false while the second statement is true.

75. One of the characteristics of treasury shares is that:

a. They have the status of outstanding shares.
b. They may not be reissued or sold again.
c. They may participate neither in the dividends nor in the meetings of the corporation as
voting stocks.
d. Answer not given.

76. The following is not within the implied powers of a corporation:

a. Acts to protect debts owing to the corporation.
b. Acts to increase its business.
c. Embarking in different business which is not a part of the regular business.
d. Acts in the usual course of business.

77. The subscriber of unpaid shares which Are not delinquent shall be entitled to the following rights
except the right to:
a. Vote.
b. Inspect corporate books.
c. A stock certificate.
d. Dividends.

78. The following statements pertain to the express powers of a corporation.

I. A corporation may establish pension, retirement, and other plans for the benefit of its
directors, trustees, officers, and employees.
II. A corporation may make donations for the benefit of a political party or candidate or for
purposes of partisan political activity provided the donation are reasonable.

a. Both statements are true.

b. Both statements are false.
c. Statement I is true, Statement II is false.
d. Statement I is false, Statement II is true.

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79. Winner Corporation, a dealer-manufacturer of garments and with principal office in Caloocan City,
held the meeting of its stockholders in Nasugbu, Batangas, in conjunction with its annual company
outing. Stockholders owning 75% of the capital stock were present, while 25% were duly
represented by proxies. In the said meeting, the corporation by a vote of the stockholders
representing 80% of the capital stock, approved the purchase of sewing machines worth
P5,000,000.00. The by-laws of the corporation provide that the contracts in excess of P3,000,000.00
must be ratified by the stockholders. The contract for the purchase of the sewing machines was
unanimously approved by the board of directors before it was presented to the stockholders for
ratification. S, a stockholder who did not vote for the approval of the resolution, now questions its
validity on the ground that the meeting was held outside the place where the principal OFFICE OF
THE CORPORATION IS LOCATED. What is the status of the contract for the purchase of the sewing
machines?
a. Void.
b. Valid.
c. Unenforceable.
d. Voidable.

80. The following are transactions pertaining to shares of stock of a certain corporation:
I. Subscription to 100 shares of stock at P100.00 par value per share by Mr. AA.
II. Purchase of 30 share of stock from the corporation’s treasury shares by Mr. BB at a total
price of P300.00.
III. Purchase of 100 shares of stock by Mr. CC at a total price of P1,200.00 from DD, another
stockholder.

Which of the above transaction are enforceable although they are not in writing?

a. I and II.
b. II and III.
c. I and III.
d. I only.

81. A stock corporation is similar to a non-stock corporation in what respect?

a. Transferability of shares or of membership.
b. Method of voting directors or trustees.
c. Voting by stockholders or members in person or by proxy.
d. Term of directors or trustees.

82. A, B, C, D, and E are all Certified Public Accountants. They want to practice their profession under
one company. What kind of business organization may they establish for such purpose?
a. Partnership only.
b. Corporation only.
c. Either a partnership or a corporation at their option.
d. Neither a partnership nor a corporation.

83. These statements are presented to you:

I. The members of board of directors of a corporation may provide for themselves
compensation other than per diems.
II. Director who receives compensation as such may also be given separate compensation if
the serves the corporation in another capacity like the president who is required to be a
director.

In your evaluation of the foregoing statements:

a. Both statements are true.

b. Both statements are false.
c. Only statement I is true.
d. Only statement II is true.

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84. These statements are presented to you:
I. The sale, lease, exchange, mortgage, pledge, or other disposition of all or substantially all of
corporate property requires the vote of a majority of the board of directors or trustees, and
2/3 of the outstanding capital stock or 2/3 of the members.
II. The board of directors or trustees may abandon the sale or other disposition of all or
substantially all of the corporate property without further approval from the stockholders or
members.

In your evaluation of the foregoing statements:

a. Both statements are true.

b. Both statements are false.
c. Only statement I is true.
d. Only statement II is true.

85. A stockholder is entitled to the payment of the fair value of his shares when he dissents from certain
corporate acts. Such fair value shall be the fair value of the shares as of the day:
a. On which the vote was taken, excluding any appreciation or depreciation in anticipation of
such corporate acts.
b. Prior to the date on which the vote was taken, excluding any appreciation or depreciation in
anticipation of such corporate action was taken.
c. On which the vote was taken, including any appreciation or depreciation in anticipation of
such corporate action.
d. Prior to the date on which the vote was taken, including any appreciation or depreciation in
anticipation of such corporate action was taken.

86. An incorporator of a stock corporation at the time of incorporation must be:

a. The owner of at least one share of stock of the corporation.
b. A member of first board of directors.
c. A duly elected officer of the corporation.
d. All of the foregoing.

87. Which of the following causes of vacancy in the board of directors may be filled by the remaining
directors if they still constitute a quorum?
a. Increase in the number of directors.
b. Removal of a director.
c. Expiration of the term of a director.
d. Disqualification of a director.

88. A stock corporation, in general, is taxed in the same manner as a:

a. General professional partnership.
b. Non-general professional partnership.
c. Sole-proprietorship.
d. Cooperative.

89. Which of the following provisions in the articles of incorporation cannot be amended?
a. Name of the corporation.
b. Number and name of incorporators.
c. Term of existence.
d. Primary purpose.

90. The following vote on per head basis, except:

a. Directors of stock corporation.
b. Stockholders.
c. Trustees of non-stock corporation.
d. Members of a non-stock corporation.

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91. First Statement: A corporation commences to exist upon the execution of the articles of
incorporation by the incorporators.

Second Statement: A subscriber’s name may appear in the articles of incorporation but he may not
be an incorporator of the corporation.

a. Both statements are true.

b. Both statements are false.
c. First statement is true while second statement is false.
d. First statement is false while second statement is true.

92. First Statement: A voting trust agreement enables a stockholder to retain control of the corporation
of which he is a stockholder during the time that the voting trust agreement is in effect although he
may have disposed of all his shares.

Second Statement: A trustee in a voting trust agreement acquires legal title to the shares entrusted
to him.

a. Both statements are true.

b. Both statements are false.
c. First statement is true while second statement is false.
d. First statement is false while second statement is true.

93. First Statement: If a stockholder has pledged his shares to secure a debt, the right to vote the shares
is transmitted automatically to the pledge.

Second Statement: The officers of a non-stock corporation maybe elected directly by the members
instead of the board of trustees.

a. Both statements are true.

b. Both statements are false.
c. First statement is true while second statement is false.
d. First statement is false while second statement is true.

94. First Statement: An increase in capital stock requires that at least 25% of the increase in capital stock
must be subscribed and at least 25% of such subscription must be paid.

Second Statement: When a vacancy in the board arises from the death of a director, such vacancy
may be filled by the remaining directors provided they still constitute a quorum.

a. Both statements are true.

b. Both statements are false.
c. First statement is true while second statement is false.
d. First statement is false while second statement is true.

95. One of the distinctions between a partnership and a corporation is that partnership:
a. Is managed by a board of directors.
b. Is characterized by the principle of delectus personae.
c. Has the right of succession.
d. May be dissolved only with the consent of the State.

96. One of the distinction between a proxy and a voting trust agreement is that in a voting trust
agreement:
a. The representative acquires legal title to the shares, to be voted.
b. The exercise of the right to vote is limited to a particular meeting.
c. The representative cannot vote if the stockholder is present during the meeting.

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 d. The agreement need not be recorded with the Securities of Exchange Commission.

97. Which of the following statements is false concerning treasury shares?

a. They are entitled to dividends.
b. They have no voting right.
c. They may be disposed for a price lower than the par value provided such price is reasonable.
d. They are not outstanding shares.

98. In which of the following corporations will those composing the corporation be liable a general
partners?
a. Corporation by prescription.
b. De facto corporation.
c. Corporation by estoppel.
d. De jure corporation.

99. The pledge in order that it may bind third persons requires the following:
a. The deed of pledge must be accompanied by an affidavit of good faith and recorded in the
Register of Deeds of Pasig.
b. It must be in a public instrument showing a description of the ting pledged and the date of
the pledge and registered in the Register of Deeds of Pasig.
c. The pledge must be in a public instrument showing a description of the thing pledge and the
date of the pledge. Registration in the Register of Deeds is not required.
d. The deed of pledge must be accompanied by an affidavit of good faith and recorded in the
Register of Deeds of Pasig and the province of Bulacan.

100. Alpine Corporation obtained a loan amounting to P1,000,000.00 from Eastern Bank. To secure
the obligation, P, the president of Alpine, mortgaged his own building in favor of the bank. The
contract of loan and deed of mortgage have been signed by the parties but have not been
acknowledged before a notary public.
a. Alpine Corporation and P are one and the same person.
b. P may validly mortgage his own property to secure the obligation of Alpine to the bank.
c. The mortgage is not yet binding between the parties since it has not been notarized.
d. The mortgage contract can stand independently from the contract of loan.

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