Regulatory Framework for Business Transactions Flashcards by Fair Anthonie Chaclag

It refers to a type of novation which involves transfer of all the rights of the creditor to a third person, who substitute him in all his rights.
A. Delegacion
B. Expromission
C. Subrogation
D. Dacion en Pago

C. Subrogation

How well did you know this?

Not at all

Perfectly

It is a mode of extinguishing to the concurrent amount, the obligations of those persons who in their own right are reciprocally debtors and
creditors of each other.
A. Compensation
B. Novation
C. Merger
D. Remission

A. Compensation

How well did you know this?

Not at all

Perfectly

What is the period of extinctive prescription of the right to file a civil action arising from negotiorum gestio or solutio indebiti?
A. 4 years
B. 6 years
C. 5 years
D. 10 years

B. 6 years

How well did you know this?

Not at all

Perfectly

It is a special form of payment governed by Financial Rehabilitation and Insolvency Act of 2010 whereby the debts of insolvent debtor to
different creditors are extinguished only up to the extent of the net proceeds from the liquidation sale of insolvent debtor’s remaining
property.
A. Application of payment
B. Dacion en pago
C. Cession
D. Tender of payment and consignation

C. Cession

How well did you know this?

Not at all

Perfectly

In the absence of agreement as to the place of payment, where shall payment of an obligation to deliver a determinate thing be made?
A. Wherever the thing might be at the moment the obligation was constituted or perfected.
B. Wherever the thing might be at the moment the obligation was to be consummated.
C. Domicile of the debtor.
D. Domicile of the creditor.

A. Wherever the thing might be at the moment the obligation was constituted or perfected.

How well did you know this?

Not at all

Perfectly

What law shall govern dation en pago as a mode of extinguishing obligation?
A. Law on Sales
B. Law on Obligation
C. Law on Contract
D. Law on Pledge

A. Law on Sales

How well did you know this?

Not at all

Perfectly

It is a type of obligation which has an accessory undertaking to assume greater liability in case of breach.
A. Obligation with a condition
B. Obligation with a penal clause
C. Obligation with a period
D. Obligation with a term

B. Obligation with a penal clause

How well did you know this?

Not at all

Perfectly

It refers to the right of the unpaid creditor to exercise all rights and actions of his non-paying debtor, except those rights which are
inherently personal to him.
A. Accion subrogatoria
B. Accion pauliana
C. Accion directa
D. Accion reindivicatoria

A. Accion subrogatoria

How well did you know this?

Not at all

Perfectly

In a facultative obligation, to whom shall the right of choice belong?
A. Always creditor
B. Always debtor
C. Generally debtor unless granted to the creditor
D. Generally creditor unless granted to the debtor

B. Always debtor

How well did you know this?

Not at all

Perfectly

Which of the following obligations is not immediately due and demandable?
A. Obligation payable when debtor’s means permit him to do so
B. Obligation with a resolutory period
C. Obligation in diem
D. Obligation with a resolutory condition

A. Obligation payable when debtor’s means permit him to do so

How well did you know this?

Not at all

Perfectly

This principle of contract means that the contracting parties may provide contractual terms, conditions and stipulations they may deem convenient provided they are not contrary to law, morals, good customs, public policy or public order.
A. Obligatory force of contract
B. Mutuality of contract
C. Autonomy of contract
D. Relativity of contract

C. Autonomy of contract

How well did you know this?

Not at all

Perfectly

Which of the following is a proper combination of contract as to perfection?
A. Contract of Sales - Real contract
B. Contract of Real Estate Mortgage - Consensual contract
C. Contract of Guaranty - Solemn or Formal Contract
D. Contract of Deposit - Formal Contract

B. Contract of Real Estate Mortgage - Consensual contract

How well did you know this?

Not at all

Perfectly

In the absence of applicable law or valid stipulation of contracting parties, what degree of diligence shall be observed by the contracting parties in the performance of contract?
A. Utmost diligence
B. High standards of integrity and performance
C. Diligence of a reasonably incautious person
D. Ordinary diligence

D. Ordinary diligence

How well did you know this?

Not at all

Perfectly

In case of conflict between the spirit of the contract and the letters as stated in the deed or document evidencing the contract, how shall the court resolve the ambiguity or doubt in the said contract?
A. The words of the contract shall prevail over the intention of the contracting parties.
B. The intention of the contracting parties shall prevail over the words of the contract.
C. The contract shall be deemed void.
D. The contract shall be deemed voidable.

B. The intention of the contracting parties shall prevail over the words of the contract.

How well did you know this?

Not at all

Perfectly

What is the legal remedy available to the injured party in case of absolutely simulated contract?
A. Action for annulment of contract
B. Action for declaration of nullity of contract
C. Action for rescission of contract
D. Action for specific performance of contract

B. Action for declaration of nullity of contract

How well did you know this?

Not at all

Perfectly

What is the legal remedy available to injured party in case of contract he entered into whereby his consent is vitiated by fraud, undue influence, intimidation or violence by the guilty party?
A. Action for annulment of contract
B. Action for declaration of nullity of contract
C. Action for rescission of contract
D. Action for specific performance of contract

A. Action for annulment of contract

How well did you know this?

Not at all

Perfectly

Which of the following contracts is valid and binding?
A. Contract of administration entered by the guardian in behalf of the ward whereby the latter suffered lesion by more than
one-fourth of the value of the things which are the object thereof.
B. Contract of sale of a piece of land entered by the agent in behalf of the principal whereby the authority of the agent to sell the
land of the principal is oral
C. Oral contract of partnership involving immovable or real property contributions by the partners
D. Oral executory contract of sale of movable or personal property at a price of at least P500

A. Contract of administration entered by the guardian in behalf of the ward whereby the latter suffered lesion by more than
one-fourth of the value of the things which are the object thereof.

How well did you know this?

Not at all

Perfectly

Which of the following executory contracts must be in writing to be enforceable?
A. Contract of subscription of shares of stocks at a price of P500 or more.
B. Contract of loan with principal amount of P500 or more.
C. Contract of partnership with cash contribution exceeding P3,000.
D. Contract of guaranty wherein the principal amount of loan exceeds P500.

D. Contract of guaranty wherein the principal amount of loan exceeds P500.

How well did you know this?

Not at all

Perfectly

Which of the following contracts is subject to action for rescission within a period of four years?
A. Contract intended to defraud creditor
B. Contract entered into by an incapacitated person
C. Contract entered into by an agent in behalf of the principal when the agent exceeded his authority
D. Contract wherein the consent is wanting

A. Contract intended to defraud creditor

How well did you know this?

Not at all

Perfectly

It is a contract whose fulfillment depends upon chance.
A. Aleatory contract
B. Contract of adhesion
C. Auto contract
D. Preparatory contract

A. Aleatory contract

How well did you know this?

Not at all

Perfectly

It is a stipulation whereby the thing pledged or mortgaged shall automatically become the property of the creditor in the event of non-payment of the debt within the term fixed.

A. Pactum creditarium
B. Pactum commissorium
C. Pactum debitarium
D. Pactum crematorium

B. Pactum commissorium

How well did you know this?

Not at all

Perfectly

Which of the following obligations may not be validly secured by accessory contract of pledge or mortgage?
A. Void obligations
B. Natural obligations
C. Voidable obligations
D. Unenforceable obligations

A. Void obligations

How well did you know this?

Not at all

Perfectly

Which of the following modes of extinguishment of contract of pledge also extinguishes the contract of loan?
A. Voluntary return by the pledgee of the thing pledged to the pledgor.
B. Renunciation in writing by the pledgee of the contract of pledge.
C. Automatic appropriation of the thing pledged by the pledgee at the first default of the debtor.
D. Sale of the thing pledged at public auction at net proceeds less than the amount of the loan.

D. Sale of the thing pledged at public auction at net proceeds less than the amount of the loan.

How well did you know this?

Not at all

Perfectly

Who shall be entitled to the excess of the proceeds from the sale at public auction of the thing conventionally pledged after application to the secured loan?
A. Always pledgee
B. Always pledgor
C. Generally pledgee unless granted to the pledgor
D. Generally pledgor unless granted to the pledgee

C. Generally pledgee unless granted to the pledgor

How well did you know this?

Not at all

Perfectly

25. It is a type of foreclosure of real estate mortgage which is available to the mortgagee only if the deed of real estate mortgage contains a special power of attorney (SPA) authorizing the public auction of the mortgaged real property despite the absence of prior civil action. A. Legal foreclosure B. Judicial foreclosure C. Extrajudicial foreclosure D. Conventional foreclosure

C. Extrajudicial foreclosure

26. What is the period for the exercise of right of redemption in case the mortgagee is a bank while the mortgagor is a juridical person? A. Within three months from the foreclosure sale B. Within 1 year from the foreclosure sale C. Within a period not less than 90 days but not more than 120 days from the foreclosure sale D. Within 30 days from the foreclosure sale

A. Within three months from the foreclosure sale

27. Where shall the contract of chattel mortgage involving shares of stock be registered in order for such contract to be valid? A. Domicile of mortgagor and domicile of registered stockholder B. Domicile of mortgagee and principal office of the corporation C. Domicile of mortgagor and principal office of the corporation D. Domicile of mortgagee and domicile of registered stockholder

C. Domicile of mortgagor and principal office of the corporation

28. What is the nature of contract of antichresis as to the perfection? A. Real contract B. Solemn contract C. Consensual contract D. Legal contract

B. Solemn contract

29. In case of contract of real estate mortgage or contract of chattel mortgage, may the mortgagee recover the deficiency in case the net proceeds from the foreclosure sale is less than the amount of the secured loan? A. No despite any stipulation for recovery. B. No unless there is stipulation for recovery. C. Yes in the absence of any stipulation to the contrary. D. Yes despite prohibition allowing recovery.

C. Yes in the absence of any stipulation to the contrary.

30. In which accessory contract is the creditor allowed to appropriate the collateral in case it is not sold in at least two public auctions? A. Contract of pledge B. Contract of real estate mortgage C. Contract of chattel mortgage D. All of the above

A. Contract of pledge

31. What is the prescriptive period available to buyer to file either action redhibitoria (rescission) or action quanti minoris (proportionate reduction of price) in case the he discovered the determinate thing he bought contains hidden defect? A. 40 days from the date of delivery B. 3 days from the date of delivery C. 6 months from the date of delivery D. 1 year from the date of delivery

C. 6 months from the date of delivery

32. In a contract of sale, what act transfers ownership of the thing sold from the seller to the buyer? A. Actual or constructive delivery B. Full payment of the price C. Perfection of contract of sale D. Execution of the deed of sale

A. Actual or constructive delivery

33. Under Maceda Law, what is the cash surrender earned by a buyer of residential property in installments who has paid at least 15 years of installments in case the seller decided to cancel the installment sale of residential property due to the default by the buyer? A. 50% of total amount he paid B. 75% of total amount he paid C. 90% of total amount he paid D. 100% of total amount he paid

C. 90% of total amount he paid

34. Which of the following rights of unpaid seller shall he exercise in case the goods sold are perishable? A. Right of stoppage in transitu B. Right to retain or possessory lien C. Right of rescission or to cancel the sale D. Right of resale

D. Right of resale

35. Under Maceda Law, what is the earned grace period to pay the defaulted installment by a buyer of residential property in installments who has paid one year of installments in case he defaulted in installment payment? A. Right to grace period equal to not less than 60 days to pay without additional interest. B. Right to grace period equal to not less than 30 days to pay without additional interest. C. Right to grace period equal to not less than one month to pay without additional interest. D. Right to grace period equal to not less than 15 days to pay without additional interest.

A. Right to grace period equal to not less than 60 days to pay without additional interest.

36. Under PD 957, who shall be liable to pay the real property tax and assessment on a subdivision lot or condominium unit before the passage of title or ownership to the buyer? A. Developer but subject to right of reimbursement from the buyer B. Developer without right of recourse from the buyer C. Buyer of the unit D. Developer and buyer proportionately to the period of possession

B. Developer without right of recourse from the buyer

37. As a general rule, what is the status of contract of sale entered into between husband and wife whose community or conjugal property are already legally separated by virtue of legal separation as ordered by the Family Court? A. Valid B. Voidable C. Rescissible D. Null and void

A. Valid

38. It is a type of constructive delivery that takes effect by delivering the keys of the place where the movable is stored. A. Traditio clavium B. Traditio longa manu C. Traditio brevi manu D. Traditio constitutum possessorium

A. Traditio clavium

39. What is the prescriptive period for action redhibitoria (rescission) in case of sale of animal with redhibitory defect? A. 40 days from the date of delivery B. 3 days from the date of delivery C. 6 months from the date of delivery D. 1 year from the date of delivery

A. 40 days from the date of delivery

40. Which of the following instances will not result to presumption of pacto de retro sale as equitable mortgage? A. When the seller retains possession of the property. B. When the vendor binds himself to pay the real property taxes on the thing sold. C. When the period for the exercise of right of repurchase is extended. D. When the price of pacto de retro sale is inadequate.

D. When the price of pacto de retro sale is inadequate.

41. If the universal partnership is entered into without specification, what shall be its contruction? A. Particular partnership B. General professional partnership C. Universal partnership of all present property D. Universal partnership of profits

D. Universal partnership of profits

42. In the absence of stipulation to the contrary, when shall the juridical personality of the partnership begin? A. From the moment the partners have completed their contributions. B. From the moment of the execution of the contract of partnership. C. From the moment of submission with the SEC of the Articles of Co-Partnership. D. From the moment the SEC issues the Certificate of Registration of Partnership.

B. From the moment of the execution of the contract of partnership.

43. Which partner is not liable up to the extent of his separate assets for unpaid liabilities of the partnership? A. Limited partner B. Industrial partner C. General partner exempted by agreement for unpaid liabilities of the partnership D. All of the above

A. Limited partner

44. Which of the following is prohibited from inspecting the partnership's books? A. Dormant partner B. Nominal partner C. Secret partner D. Silent partner

B. Nominal partner

45. Which partnership acts may be validly done by the managing partner alone? A. Disposition of goodwill of the business B. Renunciation of claim of the partnership C. Assignment of partnership property in trust for creditors D. Entering into a major contract with suppliers

D. Entering into a major contract with suppliers

46. In the absence of stipulation in the Articles of Co-Partnership, which of the following partners may be excluded from the partnership? A. Industrial partner who engages in any business for himself without express permission from the partnership. B. Capitalist partner who engaged in a similar business of the partnership without express permission from the partnership. C. Managing partner who engages in any business for himself without express permission from the partnership. D. Dormant partner who engaged in a similar business of the partnership without express permission from the partnership.

A. Industrial partner who engages in any business for himself without express permission from the partnership.

47. Which of the following modes will not automatically dissolve a general partnership? A. Death of a partner B. Civil interdiction of a partner C. Insanity of a partner D. Insolvency of a partner

C. Insanity of a partner

48. In the liquidation of a limited partnership, which of the following claims shall be settled last? A. Claims for profits of general partner B. Claims for profit of limited partner C. Claims for capital contribution of general partner D. Claims for capital contribution of limited partner

C. Claims for capital contribution of general partner

49. In the absence of agreement, how shall industrial partner share in the partnership profit? A. He shall receive a share equivalent to the share of the least capitalist partner. B. He shall receive equally with all the partners. C. He shall not receive any share. D. He shall receive a just and equitable share.

D. He shall receive a just and equitable share.

50. Which managing partner may be validly removed without just cause by the controlling partner? A. Managing partner appointed in the articles of co-partnership B. Managing partner appointed in a document other than the articles of co-partnership C. Managing partner appointed at the time of execution of articles of co-partnership D. All of the above

B. Managing partner appointed in a document other than the articles of co-partnership

51. Which of the following is a characteristic of a private corporation? A. It may be created by mere consent of the founders or incorporators of the proposed corporation. B. It enjoys the right of succession. C. It has all the rights, powers and attributes of a person unless denied by law. D. It may be dissolved even without the consent of the state.

B. It enjoys the right of succession.

52. Which of the following is an incidental or inherent power of a private corporation? A. Power to appropriate retained earnings for legitimate purposes B. Power to enter into merger or consolidation C. Power to select a corporate name D. Power to increase its authorized capital stock

C. Power to select a corporate name

53. In which of the following cases may the court exceptionally pierce the veil of corporate fiction in order to make parent corporation liable to the unpaid liabilities of its bankrupt subsidiary corporation? A. When there are interlocking directors in the parent corporation and subsidiary corporation. B. When the parent corporation owns the controlling interest or 100% of voting common stocks of subsidiary corporation. C. When the parent corporation and subsidiary corporation have the same business address and parent corporation provides management services to subsidiary corporation. D. When the subsidiary corporation is a mere alter ego or mere instrumentality of parent corporation and the corporate fiction is used by the parent corporation to commit fraud against the creditors of subsidiary corporation.

D. When the subsidiary corporation is a mere alter ego or mere instrumentality of parent corporation and the corporate fiction is used by the parent corporation to commit fraud against the creditors of subsidiary corporation.

54. It refers to a corporation that is created for religious purposes and classified into either corporation sole or religious society. A. Ecclesiastical corporation B. Eleemosynary corporation C. Lay corporation D. Civil corporation

A. Ecclesiastical corporation

55. In which of the following corporate acts may preferred stocks classified as non-voting in the Articles of Incorporation be allowed to vote? A. Approval of management contract B. Distribution of stock dividends C. Ratification of disloyalty of a director D. Amendment of articles of incorporation

D. Amendment of articles of incorporation

56. When no-par value common share is issued, what is the minimum issue price? A. P1 B. P5 C. P10 D. P5,000

B. P5

57. Which of the following corporations may issue no-par value common shares? A. Buildings and loan association B. Oil company C. Banks D. Public utilities

B. Oil company

58. What is the maximum ownership of foreigners in educational institution? A. 40% B. 60% C. 30% D. None

A. 40%

59. It refers to any transaction or contract entered by a corporation outside its express, implied and incidental powers. A. Illegal act B. Ultra vires act C. Unlawful act D. Unenforceable act

B. Ultra vires act

60. Which of the following is an automatic ground for dissolution of a private corporation? A. When the name of the newly formed corporation resembles the name of another registered corporation B. When the corporation fails to formally organize within the period required by law from its incorporation C. When the corporation declares dividends despite the presence of deficit D. When the required minimum Filipino ownership in an existing corporation is not met

B. When the corporation fails to formally organize within the period required by law from its incorporation

61. Which of the following is a qualification of a member of board of directors? A. He must be a resident of the Philippines. B. He must be a Filipino citizen. C. He must be an incorporator of the corporation. D. He must be a stockholder or subscriber of the corporation.

D. He must be a stockholder or subscriber of the corporation.

62. There are 15 directors in a private corporation. 11 directors attended the meeting of the board called for the approval of collective bargaining agreement with the labor union. What is the required vote for the approval of this corporate act? A. At least 8 directors B. At least 5 directors C. At least 6 directors D. At least 7 directors

C. At least 6 directors

63. Which of the following reasons of vacancy in the board of directors may allow the remaining members of the board constituting a quorum to fill up the vacancy? A. Death of a director B. Removal of a director by stockholders C. Expiration of term of a director D. Increase in the sits in the board of directors

A. Death of a director

64. Which corporate act may be validly performed by the executive committee of the corporation? A. Selection of independent external auditor B. Distribution of cash dividends C. Amendment of by-laws D. Incurring or increasing bond indebtedness

A. Selection of independent external auditor

65. It refers to the contractual right of a stockholder in a close corporation to be given the first opportunity to acquire the shares of stocks to be sold by other stockholders at a reasonable price before it is offered to outsiders. A. Appraisal right B. Preemptive right C. Right of first refusal D. Redeemable right

C. Right of first refusal

66. This doctrine means that the stockholders or members of a corporation are liable to the debts of the corporation but only up to the extent of their capital contribution. A. Business judgment or management prerogative rule B. Limited liability rule C. Doctrine of separate personality D. Trust fund doctrine

B. Limited liability rule

67. What type of dividend is still required to be ratified by the stockholders for its validity? A. Property dividend B. Stock dividend C. Cash dividend D. Scrip dividend

B. Stock dividend

68. As a general rule, what is the maximum surplus profits that can be retained by a stock corporation? A. 100% of legal capital B. 100% of paid up capital C. 100% of subscribed capital stock D. 100% of authorized capital stock

B. 100% of paid up capital

69. Where shall the regular meeting of stockholders be located? A. In the city/municipality as specified in the articles of incorporation. B. In the city/municipality as specified in the by-laws of the corporation. C. In the city/municipality as specified in both articles of incorporation and by-laws of the corporation. D. In the city/municipality where the principal office is located preferably at the principal office of the corporation.

D. In the city/municipality where the principal office is located preferably at the principal office of the corporation.

70. In which meeting is proxy voting allowed? A. Election of board of directors B. Election of corporate officers C. Meeting of executive committee D. Meeting of board of directors

A. Election of board of directors

71. Which right is still available to delinquent subscribers? A. Right to dividends B. Right to become a director C. Right to vote D. Right to preemption

A. Right to dividends

72. Which right is not available to subscribers who are not yet declared delinquent? A. Right to inspect corporate books B. Right to certificate of stock C. Right to vote D. Right to become a director

B. Right to certificate of stock

73. Which of the following is not valid consideration for the issuance of shares of stocks? A. Unrestricted retained earnings B. Future services C. Previously incurred corporate indebtedness D. Intangible property

B. Future services

74. It refers to a suit brought by one or more stockholders or members in the name and on behalf of the corporation to redress wrongs committed against it or to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue or are the ones to be sued or hold control of the corporation. The corporation is a necessary party to the suit. A. Individual suit B. Nuisance suit C. Derivate suit D. Representative suit

C. Derivate suit

75. When shall public sale of delinquent stocks be held counted from the date of delinquency of stocks? A. Within a period of 60 days B. Within a period of 30 days C. Within a period 10 days D. Within a period of not less than 30 days but not more than 60 days

D. Within a period of not less than 30 days but not more than 60 days

76. Which of the following is not an essential requisite of merger or consolidation of two or more corporations? A. It must be approved by at least majority vote of the boards of directors of the merging or consolidating corporations. B. It must be ratified by at least 2/3 vote of the outstanding capital stocks of the merging or consolidating corporations. C. It must be approved by Securities and Exchange Commission and Philippine Competition Commission. D. It must be approved by the creditors of the merging or consolidating corporations.

D. It must be approved by the creditors of the merging or consolidating corporations.

77. Which type of corporation may be incorporated as a close corporation? A. Insurance company B. Mining company C. Stock exchange D. Review center

D. Review center

78. What is the required vote for the delegation to the board of directors of the power to amend the by-laws? A. At least majority of the board of directors with ratification of at least 2/3 of the stockholders. B. At least majority of board of directors with ratification of at least majority of the stockholders. C. At least 2/3 of the stockholders. D. At least majority of the stockholders.

C. At least 2/3 of the stockholders.

79. What is the required vote for the approval of management contract in the absence of interlocking directors between the managing and managed corporation? A. At least majority of the board of directors with ratification of at least 2/3 of the stockholders for both managing corporation and managed corporation. B. At least majority of the board of directors with ratification of at least majority of the stockholders for both managing corporation and managed corporation. C. At least majority of the board of directors with ratification of at least 2/3 of the stockholders for managing corporation and at least majority of the board of directors with ratification of at least majority of the stockholders for managed corporation. D. At least majority of the board of directors with ratification of at least 2/3 of the stockholders for managed corporation and at least majority of the board of directors with ratification of at least majority of the stockholders for managing corporation.

B. At least majority of the board of directors with ratification of at least majority of the stockholders for both managing corporation and managed corporation.

80. What is the requirement for the simple amendment of the articles of incorporation of stock corporation? A. By at least majority vote of the board of directors and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock. B. By at least majority vote of the board of directors and ratification of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock. C. By at least majority vote of the board of directors and the approval of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock. D. By at least majority vote of the board of directors and the oral agreement of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock.

A. By at least majority vote of the board of directors and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock.

81. J and E entered into a universal partnership of all present property. At the time their agreement J had a four-door apartment which he inherited from his father 3 years earlier. E, on the other hand, had a fishpond which he acquired by dacion en pago from R. During the first year of the partnership, rentals collected on the four-door apartment amounted to P480,000; while fish harvested from the fishpond were sold for P300,000. During the same period, E received by way of donation a vacant lot from an uncle. The partners had a stipulation that future property shall belong to the partnership. Which of the following does not belong to the common fund of the partnership? A. Fishpond B. Rental of P480,000 C. Apartment D. Vacant land

D. Vacant land

82. V and J entered into a universal partnership of profits. At the time of the execution of the articles of partnership, V had a two-door apartment which he inherited from his father 3 years earlier. J, on the other hand, had a fleet of taxis which he purchased 2 years before. In the first year of the partnership, V earned P500,000 as a radio talent, while James won P1,000,000 in the lotto. During the same period, rentals of P120,000 were collected from the apartment, while fare revenues of P200,000 were realized from the operation of the fleet of taxis. Which of the following belongs to the partnership? A. Two-door apartment B. Lotto winnings of P1,000,000 C. Salary of P500,000 D. Fleet of taxis.

C. Salary of P500,000

83. What is the classification of partnership formed for the exercise of a profession which is duly registered with SEC? A. Universal partnership of profits. B. Universal partnership of all present property. C. Particular partnership. D. Partnership by estoppel.

C. Particular partnership.

84. Which partnership contract is valid? A. A universal partnership of all present property between husband and wife. B. A universal partnership of profits between a man and a woman living together as husband and wife without the benefit of marriage. C. A particular partnership between husband and wife. D. A universal partnership of profits between a private individual and a public offer.

C. A particular partnership between husband and wife.

85. J, A and W are partners in JAW Enterprises. Not having established yet their credit standings, the three partners requested S, a well-know businessman, to help them negotiate a loan from C, a money lender. With the consent of J, A and W, Simon represented himself as a partner of JAW Enterprises. Thereafter, C granted a loan of P150,000.00 to JAW Enterprises. What kind of partner is S? A. Managing partner. B. Liquidating partner. C. Ostensible partner. D. Partner by estoppel.

D. Partner by estoppel.

86. Which of the following stipulations is valid? A. A stipulation excluding a capitalist partner from profits. B. A stipulation exempting a capitalist partner from losses. C. A stipulation exempting an industrial partner from losses. D. A stipulation excluding an industrial partner from profits.

C. A stipulation exempting an industrial partner from losses.

87. A partner can engage in business for himself without the consent of his co-partners if he is: A. A capitalist partner whether or not the business he will engage in is of the same kind as or different from the partnership business. B. An industrial partner whether or the business he will engage in is of the same kind as or different from the partnership business C. A capitalist partner and the business he will engage in is of a kind different from the partnership business. D. An industrial partner and the business he will engage in is of a kind different from the partnership

C. A capitalist partner and the business he will engage in is of a kind different from the partnership business.

88. Which of the following statements is false when no one among the partners was appointed as manager? A. Each partner will be considered as agent of the partnership. B. Any one may make an important alteration in the immovable property of the partnership without the consent of the others provided it is useful to the partnership. C. In case the act of one partner is opposed by another , the decision of the majority of the partnership will prevail. D. In case of a tie in the voting the tie shall be resolved by the vote of the partner owning the controlling interest.

B. Any one may make an important alteration in the immovable property of the partnership without the consent of the others provided it is useful to the partnership.

89. The partnership will bear the risk of the loss of three of the following things, except A. Things contributed to be sold. B. Fungible things or those that cannot be kept without deteriorating. C. Things contributed so that only their use and fruits will be for the common benefit. D. Things brought and appraised in the inventory.

C. Things contributed so that only their use and fruits will be for the common benefit.

90. In three of the following wrongful acts of partners, the partnership is solidarily liable with all the partners to third persons. Which one is the exception? A. For loss or injury caused to a third person by reason of the wrongful act or omission of a partner acting in the ordinary course of business. B. Where a partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it. C. Where the partnership receives money or property of a third person in the ordinary course of business and such money or property is misapplied by a partner while it is in the custody of the partnership. D. For loss or injury caused to a third person by reason of the use of partnership property by a partner for personal purpose.

D. For loss or injury caused to a third person by reason of the use of partnership property by a partner for personal purpose.

91. Which of the following statements is false? A. Partnership creditors are preferred as to partnership assets. B. Partnership creditors as preferred as to each partner's separate assets. C. A partner's separate creditors are preferred as to the partner's separate assets. D. A partner's separate creditors may attach a partner's share in the partnership assets.

B. Partnership creditors as preferred as to each partner's separate assets.

92. A partner is a co-owner with his partners of specific partnership property. Such co-ownership: A. allows a partner to assign his right in such property B. allows a partner to use such property for partnership business C. entitles the spouse, children and other relatives of the partner to claim support from such property D. gives the private creditors of a partner to attach his right in such property

B. allows a partner to use such property for partnership business

93. A limited partners is prohibited on account of his claim against the partnership from performing the following acts, except A. To receive or hold as collateral security any partnership property. B. To receive from a general partner or the partnership any payment, conveyance, or release from liability, if partnership assets are not sufficient to discharge partnership liabilities to outside creditors. C. Transact business with the partnership. D. None of the foregoing.

C. Transact business with the partnership.

94. A limited partner shall be liable as general partner in three of the following cases. Which one is the exception? A. When he is a general-limited partner as stated in the certificate. B. When he takes part in the control of the business. C. When he participates in the management of the business. D. When his surname which appears in the partnership name is also the surname of a general partner.

D. When his surname which appears in the partnership name is also the surname of a general partner.

95. The following partnerships are required to be registered with Securities and Exchange Commission for convenience and to prejudice third persons, except a. Partnership when the partners’ total contribution is at least P3,000 in cash, personal property or real property b. Partnership wherein the partners’ contribution includes immovable or real property c. Limited partnership d. General partnership involving an industrial partner

d. General partnership involving an industrial partner

96. A delinquent stockholder is not entitled to the following rights, except the right: A. to be voted. B. to vote or be represented in the meetings of the stockholders. C. to dividends. D. He is not entitled to all the rights of the stockholder.

C. to dividends.

97. A, B, C, D, E, F and G are the duly elected directors for 2014 of Excellent Corporation whose articles of incorporation provide for 7 directors. On August 1, 2014, Directors A, B, C, D an E met to fill two vacancies in the board brought about by the valid removal of F for disloyalty to the corporation and the death of G. In the said meeting, the remaining directors voted for X to replace F and Y, a son of G, to replace his father. Both X and Y are owners of at least one share of stock of the remaining corporations. The election of X and Y by the remaining director is: A. Valid for both X and Y. B. Not valid for both X and Y. C. Valid with respect to X; not valid with respect tp Y. D. Not valid with respect to X; valid with respect to Y.

D. Not valid with respect to X; valid with respect to Y.

98. In the meeting of the board of directors of the Grand Corporation, a construction company, held on August 31, 2014, directors A, B,C, D and E were presented among the 9 directors. The meeting had for its agenda the following: I. The appointment of new treasurer. II. The approval of the contract for the purchase of cement worth P50,000.00 from Construction Supplies Co. When the voting took place, directors A, B, C and D voted for the election of Y as the new treasurer; and directors A, B and C voted for the approval of the contract with X Construction Supplies. A. Both corporate acts are valid. B. Both corporate acts are not valid. C. The election of Y as the new treasurer is valid; the approval of the contract with X Construction Supplies is not valid. D. The election of Y as the new treasurer is invalid; the approval of the contract with X Construction Supplies is valid.

D. The election of Y as the new treasurer is invalid; the approval of the contract with X Construction Supplies is valid.

99. Under this theory, the nationality of a corporation is that of the country under whose laws it was formed. A. Control test. B. Incorporation test. C. Domiciliary test. D. Grandfather rule.

B. Incorporation test.

100. 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.

C. A stock certificate

101. Under this doctrine, the separate personality of a corporation may be disregarded if it is used for fraudulent or illegal purpose or to escape the faithful compliance of an obligation, A. Trust fund doctrine. B. Doctrine of piercing the veil of corporate entity. C. Doctrine of corporate opportunity. D. Doctrine of limited company.

B. Doctrine of piercing the veil of corporate entity.

102. A stock that is issued without consideration or below par value of the issued price is known as: A. watered stock. B. delinquent stock. C. redeemable stock. D. preferred stock.

A. watered stock.

103. A non-voting stock may vote in the following corporate acts, except in case of: A. approval of the compensation of directors. B. merger or consolidation. C. increase or decrease in capital stock. D. sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of corporate property.

A. approval of the compensation of directors.

104. A is a director and owns 50% of the outstanding capital stock of Ace Corporation which is engaged in the trading of computers. Ace Corporation purchased computer table from Top Corporation of which A is also a director and own 15% of its outstanding capital stocks. The articles incorporation of both corporations provide for 5 directors. In the approval of the contract for the said purchase, A did not attend the meeting of the board of directors of Ace Corporation, while in the meeting of the board of directors of Top Corporation which was called for the same purpose, directors A, B, C and D were present with all of them voting for the approval of the contract. Assuming that there is no fraud and that the contract is fair and reasonable under the circumstances, the contract between Ace Corporation and Top Corporation is: A. valid. B. voidable at the option of Top Corporation. C. unenforceable against Top Corporation. D. void because corporations with interlocking directorate should not enter into a contract with each other.

A. valid.

105. Which of the following acts may be performed by the executive committee of a corporation? A. Declaration of stock dividends B. Filling of vacancies in the board or directors. C. Amendment or repeal of the by-laws or adoption of new by-laws. D. Approval of contracts in the ordinary course of business.

D. Approval of contracts in the ordinary course of business.

106. S is the registered owner of 500 shares of stocks of XYZ Corporation whose articles of incorporation provide for 11 directors. In the annual election of directors for 2014, 12 stockholders filed their certificate of candidacy for the position, namely, A, B, C, D, E, F,G,H,I,J,K and L. K and L are minority stockholders whom S wishes to elect to represent him and the other minority stockholders in the board. In the said election of directors, S may cast a maximum of: A. 500 votes. B. 6,000 votes. C. 5,500 votes. D. 1,000 votes.

C. 5,500 votes.

107. One of the distinctions between a partnership and a corporation is that a 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.

B. is characterized by the principle of delectus personae.

108. One of the distinctions 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. D. the agreement need not to be recorded with the Securities and Exchange Commission.

A. the representative acquires legal title to the shares to be voted.

109. Which of the following statements is false concerning treasury shares? A. They are not part of subscribed shares but they are entitled to dividends. B. They have no voting right because they are not outstanding shares. C. They may be disposed of or issued for a price lower that the par value or issued provided such price is reasonable and approved by Board of Directors. D. Once treasury shares are disposed of by the corporation will entitle the purchaser or acquiree the right to vote.

A. They are not part of subscribed shares but they are entitled to dividends.

110. Under Old Corporation Code, which of the following will cause the automatic dissolution of corporation? A. Continuous inoperation for a period of at least 5 years. B. Failure to formally organized and commence the transaction of its business or the constructions of its works within 2 years from its incorporation. C. Failure to adopt by-laws and submit the same to the Securities and Exchange Commission within 30 days from the receipt of the official notice of the issuance of its certificate of incorporation. D. Commissions by the corporation of an ultra-vires act.

B. Failure to formally organized and commence the transaction of its business or the constructions of its works within 2 years from its incorporation.

111. A, B,C,D, E,F,G,H and I are directors of Strong Cement Corporation whose articles of incorporation provide for 9 directors. In the meeting of September 2014, directors A, B, C, D and E were present to approve a contract for the purchase of cement bags from E who deals in the said product. The contract was deliberated upon exhaustively by the said directors in the meeting including E. When the voting took place, however, only A, B, C and D who found the contract fair and reasonable under the circumstances, voted for its approval. The contract between the corporation and E is: A. Valid and enforceable. B. Voidable at the option of the corporation. C. Unenforceable against the corporation. D. Void because a corporation must not enter into a contract with any of its directors since a director occupies a position of trust.

B. Voidable at the option of the corporation.

112. A, B, C, D, and E distributed calling cards identifying themselves as directors of Summit Corporation, to several individuals during a business conference. In reality, however, no such corporation is registered with the Securities and Exchange Commission . X, who received a calling card granted credit amounting to P50,000.00 to “Summit Corporation” believing that such corporation really existed. When the supposed corporation was unable to pay, X brought a court action against it. At that time, “Summit Corporation” had assets of P30,000.00. Which is correct? A. “Summit Corporation” is liable only up to P30,000.00, its remaining assets, since it is different from A, B,C,D and E who are not liable in their individual capacities. B. X can go after the separate assets of “Summit Corporation.” C. A,B,C,D, and E can move for the dismissal of the court action because “Summit Corporation”has no personality of its own. D. X cannot allege the lack of juridical personality on the part of “Summit Corporation”because he is estopped from doing so.

B. X can go after the separate assets of “Summit Corporation.”

113. An auditing firm composed of Certified Public Accountants may validly form: A. a corporation B. a partnership C. Either A or B D. Neither A nor B

B. a partnership

114. A, B, C, D, E, F and G are directors of Commonwealth Appliance Corporation, a trader of appliances, whose articles of incorporation provide for 7 directors. On September 1,2014, the board of directors met to approve a contract for the purchase of appliances from A who is an importer of appliances. Present during the meeting were A, B, C,D and E with A, B, C, and D voting for the approval of the contract. Assuming that the contract is fair and reasonable under the circumstances, what is the status of the contract between the corporation and A? A. Valid. B. Voidable. C. C. Unenforceable. D. Void.

A. Valid.

115. Alpha Corporation’s articles of incorporation provide for 7 directors and an unauthorized capital stock of P1,000,000.00 divided into 10,000 shares with a par value of P100.00 per share. In the election of directors for 2010, the following ran for the position: A, B, C, D, E, F ,G and H. On that date, the corporation had 7,000 outstanding shares of which 5,000 shares had been paid in full, while 2,000 shares were paid to the extent of 50% of the subscription price. All the shares were subscribed at par value and covered by a binding subscription agreement. If you were a stockholder who owns a 500 shares, how many votes are you entitled to cast in the election of directors? A. 500 votes. B. 3,500 votes. C. 4,000 votes D. 7 votes.

B. 3,500 votes.

116. Aphine Corporation obtained a loan amounting to P1,000,000.00 from Eastern Bank. To secure the obligation, P, the president of Alphine, mortgaged his own building in favour of the bank. The contract of loan and deed have been signed by the parties but have not been acknowledged before a notary public. Which is correct? A. Alphine Corporation and P are one and the same person. B. P may validly mortgage his own property to secure the obligation of Alphine 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.

B. P may validly mortgage his own property to secure the obligation of Alphine to the bank.

117. On May 1, 2015,S subscribed to 1,000 shares of stock of Sigma Corporation at the par value of P10.00 per share. Pursuant to the policy of corporation which requires a down payment of 60% of the subscription price, S paid P6,000.00 upon the execution of the subscription contract. The balance of the subscription must be paid after 30 days, which in the case of the subscription of S, is May 31,2015. Which is correct? A. Upon the execution of the subscription contract , S may demand the issuance to him of a stock certificate covering 600 shares. B. S is already qualified to vote although he has not yet paid his subscription in full. C. If S fails to pay the balance of his subscription on May 31, 2015, his shares will become delinquent on June 1, 2015. D. In case of delinquency , only 400 shares will be considered delinquent.

B. S is already qualified to vote although he has not yet paid his subscription in full.

118. Which is the operative act that will give juridical personality upon a corporation? A. The filing of the articles of incorporation. B. The filing of the by-laws. C. The issuance of the certificate of incorporation. D. The execution by the incorporators of the articles of incorporation which is the

C. The issuance of the certificate of incorporation.

119. How many shares are needed to elect 3 directors and assure each of them a seat in the board of director assuming that the articles of incorporation provide for 11 directors and the corporation has 5,000 shares outstanding and entitled to vote? A. 1,251 shares. B. 5,000 shares. C. 1,667 shares. D. 1,364 shares.

A. 1,251 shares.

120. Sevilla owned a 5 storey building where he operated at the ground floor Café de Seville, a restaurant which was frequented by the tenants of the building and the employees of the neighboring establishments. He also owned an adjoining vacant lot which Benitez had been offering to buy for some time. Eventually, Sevilla told the vacant lot to Benitez under an agreement that Benitez should not put up any restaurant, catering or similar business on the lot within 5 years from the time of sale. Benitez completed the construction of a building on the lot in 6 months and admitted lessees including Peggie’s Place, an eatery managed by Peggie , Benitez's sister, and owned by Golden Spoon Corporation which was incorporated just three months earlier at the instance of Benitez as principal stockholder owning 95% of the subscribed capital and Peggie and the other investors as minority stockholders. Sevilla now complains that Benitez violated his agreement with him but Benitez contends that Golden Spoon is a different company. Which is correct? A. Benitez did not violate the agreement because Golden Spoon has a personality separate and distinct from that of Benitez. B. Benitez violated the agreement because under the circumstances, he and the Golden Spoon Corporation should be considered as one. C. Benitez did not violate the agreement because the eatery is being managed by another person. D. Sevilla has no course of action against Golden Spoon under the Principle of Relativity of Contract because Golden Spoon was not a party to the agreement between him (Sevilla) and Benitez.

B. Benitez violated the agreement because under the circumstances, he and the Golden Spoon Corporation should be considered as one.

121. The article incorporation of Alco Corporation, a construction company, classify its shares into voting common stock and non-voting preferred stock, and provide for 11 directors. Its by-laws, on the other hand, give the board of directors the authority to approve transactions not exceeding P2,000,000.00 . Any transaction in excess of the said amount has to be ratified by the stockholders. In which of the following cases may the non-voting preferred stock still vote? A. Approval of a loan amounting to P3,000,000.00 from Banco de Loro. B. Declaration of stock dividends from the unissued common stock. C. Increase in the number of directors from 11 to 15. D. Purchase of cement worth P 2,500,000.00 from Davao Cement Corporation.

C. Increase in the number of directors from 11 to 15.

122. In which of the following corporations will those composing the corporation be liable as general partners? A. Corporation by prescription. B. De Facto corporation C. Corporation by estoppel. D. De jure corporation.

C. Corporation by estoppel.

123. The articles of incorporation of Alpha Corporation, a construction company, provide for 7 directors. In the monthly meeting of the board of directors held on June 15, 2014, directors A, B,C D and E were present and the following resolutions were approved: I. A resolution for the purchase of 500 pieces of hallow blocks from Excellent Concrete Enterprises, a sole proprietorship owned by E. B, C ,D, and E voted for the resolution. II. A resolution appointing T as the new treasurer of the corporation. A, B, C, and D voted for the resolution. Which resolutions are valid? A. Both resolution are valid. B. Both resolution are not valid. C. Only resolution I is valid. D. Only resolution II is valid.

A. Both resolution are valid.

124. Which cause of vacancy in the board of directors may be filled by the board of directors if the remaining directors still constitute a quorum and by the stockholders if such quorum does not exist? A. Removal of a director. B. Resignation of a director. C. Increase in the number of directors. D. Expiration of the term of some directors.

B. Resignation of a director.

125. The following statements are presented to you: I. All Ultra-vires acts are illegal acts. II. All illegal acts are Ultra-vires acts. A. Both statements are true. B. Both statements are false. C. I is true; II is false. D. I is false; II is true.

D. I is false; II is true.

126. The following are transactions pertaining to shares of stock of a certain corporation: 1. Subscriptions to 100 shares of stocks at P100 per value per share by Mr. AA. 2. Purchase of 30 shares of stocks from the corporation’s treasury shares by Mr.BB at a total price of P300. 3. Purchase of 100 shares of stocks by Mr. CC at a total price of P1,200.00, fro Mr. DD ,another stockholder. Which of the above transactions are enforceable although they are not in writing? a. I and II. b. II and III. c. I and III. d. I only.

a. I and II.

127. In which of the following corporate acts is the appraisal right not available? A. Merger or consolidation. B. Extension or shortening of corporate term or existence. C. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of its corporate stock, D. Investment of funds for the accomplishment of the primary purpose of the corporation.

D. Investment of funds for the accomplishment of the primary purpose of the corporation.

128. Under Old Corporation Code, which of the following is not a qualification of incorporators of a stock corporation? A. They must be natural persons. B. They must be of legal age. C. Majority of them must be citizen of the Philippines. D. They must be subscribers to at least 1 share of stock of the corporation.

C. Majority of them must be citizen of the Philippines.

129. The certificate of incorporation of Seven Star Corporation, a trading corporation, was issued although only 2 of its 5 incorporators are residents of the Philippines. Three, however, are citizens of the Philippines. The corporation created in such a situation is a: A. de jure corporation. B. corporation by estoppel. C. de facto corporation. D. No corporation was created at all.

C. de facto corporation.

130. The following statements pertaining to the power of a corporation to ssue non-voting shares are presented to you for evaluation: I. Those classified as “redeemable” or “preferred” may be deprived of the voting right. II. All shares of the corporation may be deprived of the voting right. III. Non-voting shares may vote in certain corporate acts such as in the amendment of the articles of incorporation. a. I and II are true. b. II and II are true. c. I and III are true. d. All statements are true.

c. I and III are true.

131. Under Old Corporation Code, which of the following is not a qualification of directors of a stock corporation? A. Each director must be the owner of at least 1 share of stock. B. Such shares of stock must stand in their names in the book of the corporation during their term as directors. C. Majority of the directors must be citizen of the Philippines D. The number of directors should not be less than 5 nor more than 15.

C. Majority of the directors must be citizen of the Philippines

132. Which of the following special corporations is required by the Corporation Code to have its number of directors in multiples of 5, i.e., 5, 10 or 15? A. A stock educational corporation. B. A non stock educational corporation C. A corporation sole. D. A religious society.