BL -CPAR

Lanzuela, Hanzel Lapiz,Sharlene May Lee, Mei Yin Lopez, Benhur Macarembang, Hanan CPAR Obligations 1. 1st Statement: In alternative obligations, it is the communication of which prestation to perform made by the debtor shall convert the alternative obligation into a pure or simple one. 2nd Statement: In case of a joint obligation, the co-debtors may be held liable for the share of an insolvent codebtor A. B. C. D. 1st Statement True False True False 2nd Statement True False False True 2. A mango tree in the land of O is reclining towards the road. All of a sudden, without a storm or an earthquake or even strong wind, the tree falls hitting a car belonging to X causing a P200,000 damage. The liability of O to X arises from A. Contract C. Delict B. Quasi-contract D. Quasi-delict 3. S agreed to sell B his land and B agreed to pay P10,000 if X will pass CPA Exams of 2002. Meantime, interest earned is P1,200, while the fruits harvested is P2,000. A. S will deliver the land to B B. B will pay S the price of the sale C. Combination of A and B D. Combination of A and B, together with the fruits and interest

X passed.

4. The buyer has the right to the fruits of the thing from: A. Time of delivery C. Time contract of sale is perfected B. Time of obligation to deliver it arises D. Time fruits are delivered 5. The delay of the part of the creditor to accept the performance of an obligation A. Dolo incidente C. Dolo causante B. Mora accipiendi D. Mora solvendi 6. Rose obliges herself to give Jack 1 dozen of eggs on January 15, 2003. When the date arrived, Rose failed to deliver despite repeated demands from Jack. Jack’s remedy is: A. Compel Rose to deliver the eggs plus damages. B. Compel Rose to pay the amount of the eggs. C. Rescind the contract. D. Ask a 3rd person to deliver the eggs to him but chargeable to Rose. 7. Debtor obliged himself to deliver to creditor 100 cavans of rice on June 1, 2001. On said date, D failed to make delivery despite repeated demands by C. In this case: A. C has no remedy under the law B. C can compel D to deliver 100 cavans of rice plus damages

C. C may ask a third person to deliver 100 cavans of rice to him, the value recoverable from D plus damages D. None of the above. 8. D obliges himself to pay C P100,000 in 30 days plus a penalty of P20,000 if A fails to pay the obligation in due time. D failed to pay his obligation in 30 days. C can demand from D A. The principal amount of P100,000 plus the penalty of P20,000 plus interest. B. The principal amount of P100,000 plus legal interest. C. The principal amount of P100,000 plus the penalty of P20,000, plus interest, plus damages. D. The principal amount of P100,000 plus the penalty of P20,000. 9. Paula obliged herself to give to Cathy her BMW car on October 10, 2004 but she failed to deliver on that date. On the following day, a lighting completely destroyed the car. A. Paula is still liable for she is in default already. B. Paula is no longer liable there being no demand, there is no delay and the thing is lost due to fortuitous event C. Cathy can demand for a substitute. D. Paula is not liable even if she is in default. 10. Statement 1: Just before the obligation became due and demandable, the debtor proposed to the creditor that he would give him a specific car instead of paying P150, 000.00, and which proposal was accepted by the creditor. Here, there is extinguishment of an obligation by way of dacion en pago. Statement 2: After substitution in facultative obligations, the loss of the principal through the fault or negligence of the debtor shall render him liable for damages in favor of the creditor. A. B. C. D. Statement 1 True False True False Statement 2 True False False True 11. The buyer has the right to the fruits of the thing from: A. Time of delivery C. Time contract of sale is perfected B. Time of obligation to deliver it arises D. Time fruits are delivered 12. Which of the following is not a ground for damages? A. Promising to deliver the same thing to two different persons not having the same interest therein. B. Performance of an act which impairs the strict and faithful fulfillment of the obligation. C. Non-performance of an obligation with respect to time. D. None of the above. 13. The standard of care that a person obliged to give something must observe in the preservation of the specific thing subject matter of an obligation. A. That diligence of a good father of a family B. That diligence which the parties have stipulated on C. That diligence which the law provides D. All of the above 14. The initial standard of care that a person is obliged to give something must observe in the preservation of the specific thing subject matter of an obligation. A. That diligence of a good father of a family. B.

That diligence which the parties have stipulated on.

C. That diligence which the law provides. D. None of the above. 15. 1st Statement: Mr. X waived in advance his right to sue Mr. A, if A will cause him injury due to A’s negligence. The waiver is void. 2nd Statement: Dolo incidente or fraud in the celebration of contacts is a ground to annul the obligation. A. B. C. D. 1st Statement True False True False 2nd Statement True False False True 8. A promissory note signed by D and dated March 15, 2002 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, 2002 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. None of the above

16. DR promised to give DE, his grandson, a car if the latter will pass the bar examinations. When his grandson passed the said examinations, which of the following statements is true? A. DR may refuse to deliver because the condition is purely a potestative one. B. The obligation is valid because the condition depends upon the sole will of the donor. C. Both the obligation and the condition are ineffective because they depend upon the sole will of the donor. D. The obligation is valid although potestative because they depend upon the sole will of the donee. 17. “Conrado will continue giving Pedro the latter’s meal allowance until the end of this year”, is an obligation subject to: A. a resolutory period C. a resolutory condition B. a suspensive condition D. a suspensive period 18. Which of the following is not an obligation with a period? A. Obligation payable within 2 years B. Obligation payable within a reasonable time C. Obligation payable on or before a given date in the future D. None of the above 19. 1st Statement: “To Maria, my true love, I obliged myself to give you my one and only horse when I feel like it. 2nd Statement: “To Perla my true sweetheart, I obliged myself to pay you the P500.00 I owe you when I feel like it. A. B. C. D. st 1 Statement Void Valid Void Valid 2nd Statement Void Valid Valid Void 20. 1st Statement: “To Maria, my true love, I obliged myself to give you my one and only horse when I feel like it. 2nd Statement: “To Perla my true sweetheart, I obliged myself to pay you the P500.00 I owe you when I feel like it. A. B. C. D. 1st Statement Enforceable Not Enforceable Enforceable Not Enforceable 2nd Statement Enforceable Not Enforceable Not Enforceable Enforceable

21. On July 1, 1997, A signs a promissory note and binds himself to pay X P100,000 plus 15% per annum interest on June 30, 1999 A. Before June 30, 1999. X can demand payment B. If on June 30, 1998 A is paying X, X cannot refuse the payment C. Because the period is for the benefit of the debtor A can compel creditor X to accept payment any date before June 30, 1999 D. Because the period is for the benefit of the debtor and creditor, X can refuse any tendered payment before June 30, 1999. 22. D obliged to give C, either object No.1 valued P15,000 or object No. 2 valued P10,000; or object No. 3 valued P5,000. All the objects were lost due to D’s fault in the following order stated. A. D’s obligation is extinguished B. D’s obligation is to pay the value of object No.1 plus damages C. C’s right id to demand the value of any of the object plus damages D. None of the above 23. A obliged himself to deliver to B his dog, his cow, his carabao, his elephant or his crocodile and gave B the right of choice. The first two were lost due to fortuitous event and the last three were lost due to A’s fault. A. Creditor, B may convert to cash any of them plus damages. B. Debtor A may convert to cash the value of the last one lost plus damages. C. A may rescind the contract plus damages. D. Creditor, B may convert to cash any of the last three plus damages. 24. Effect of the loss of the thing in a facultative obligation. Which is incorrect? A. Before substitution: if the principal thing is lost due to fortuitous event, there is no more obligation. B. Before substitution: if the substitute thing is lost due to debtor's fault, there is no more obligation. C. After substitution, if the principal thing is lost, the debtor is no longer liable even if it was lost due to his fault. D. None of the above 25. Debtor’s A, B, C and D are liable to creditors E, F, G and H in the amount of P200,000. Assuming passive solidarity exists among A, B, C and D, how much can E and F collect from A? A. P 50,000 C. P150,000 B. P100,000 D. P200,000 26. Debtor’s A, B, C and D are liable to creditors E, F, G and H in the amount of P400,000. Assuming passive solidarity exists among A, B, C and D, how much can E and F collect from A? A. P100,000 C. P350,000 B. P200,000 D. P400,000 27. A, B and C are solidary debtors of X for 9,000. Later, C paid X the whole obligation. Which of the following is considered a false statement as to the effects of C paying X the whole obligation A. C becomes a creditor for reimbursement B. After C paid X the whole obligation, the same is converted into a joint obligation of reimbursement C. If the debtor A becomes insolvent C can collect from B P6,000 D. None of the above 28. Which of the following is not a valid stipulation? A. A stipulation that the mortgagor cannot enter into a second mortgage without the consent of the first mortgagee and such violation will make the obligation due and demandable B. A stipulation in chattel mortgage on installment sale where the object sold is mortgaged back to the seller to answer for the unpaid installments or upon failure to pay any installment due, all installment shall become

due and payable, the mortgagee is given the right to foreclose and sell the property at public auction to recover the unpaid balance. C. A stipulation in a mortgage or real property authorizing the mortgagee to have the mortgaged property sold without the necessity of an action in court. D. None of the above. 29. Which of the following obligation is void? A. Obligation payable within a reasonable time B. Obligation payable if the debtor cannot make a circle at the same time a square C. Obligation payable of the debtor cannot make a dead man alive D. None of the above 30. “ I will give you this book provided that if I like to have it back, you will return the same to me” A. The obligation is void, because the fulfillment depends upon the will of the debtor B. The obligation is void, because the fulfillment depends upon the will of the creditor C. The obligation is valid because the condition merely causes the loss of rights already acquired D. Combination of A and B 31. Statement 1: In alternative obligations, it is the communication of which pre-station to perform made by the debtor shall convert the alternative obligation into a pure or simple one. Statement 2: In case of a joint obligation, the co-debtors may be held liable for the share of an insolvent codebtor. A. B. C. D. Statement 1 True False True False Statement 2 True False False True 32. Which of the following is not a ground for the extinguishment of an obligation? A. Remission D. Death of either debtor or creditor B. Merger E. None of the above C. Compensation 33. Which of the following is not a ground for the extinguishment of an obligation? A. Remission D. Death of either debtor or creditor B. Merger E. None of the above C. Compensation 34. This is a classification of obligations where there are several prestations due and the complete performance of all shall extinguish the obligation. Identify this. A. Facultative obligation. C. Alternative obligation. B. Conjoint/conjunctive obligation. D. Obligation with a penal clause. 35. A owes B P5,000. C is the guarantor of A. A was able to pay B P3,000, thus leaving P2,000 unpaid. X, against the will of A and without the knowledge of the partial payment made by A, paid B the sum of P5,000. How does this payment affect the obligation? A. The obligation is extinguished. X, however, cannot recover any amount from A since the payment was made against will of A. Instead, A can demand payment from C, the guarantor to the amount of P5,000. B. The obligation is extinguished. X however, can demand only P2,000 from A as this is the amount which benefited A. Instead, A can demand payment from C, the guarantor, to the amount of P5,000. C. The obligation is extinguished. X can demand P2,000 from A, but if A cannot pay, X cannot ordinarily

proceed against guarantor C because having paid against the will of A, X is not entitled to subrogation D. X’s payment, having been made against the will of A does not extinguish the obligation. 36. After many of years of shopping in the Metro Manila area, housewife HW has developed the sound habit of making cash purchases only, none on credit. In one shopping trip to Mega Mall, she got the shock of her shopping life for the first time, a store’s smart salesgirl refused to accept her coins in payment for a purchase worth not more than one hundred pesos. HW was paying seventy pesos in 25-centavo coins and twenty fives pesos in 10-centavo coins. Strange as it may seem, the salesgirl told HW that her coins were not “legal tender”. Do you agree with the salesgirl in respect for the 10-centavo coins and 25-centavo coins the legal tender is up to P50.00 only. 1st Statement: No, because for the 10-centavo coins and 25-centavo coins the legal tender is up to P50.00 only 2nd Statement: All coins issued by the Central Bank in any amount are considered legal tender. A. B. C. D. 1ST Statement True False True False 2nd Statement True False False True 37. Requisites of application of payment, except A. Debts are all due B. Debts are of different kinds

C. Two or more debts D. One debtor and one creditor

38. When the debtor abandons and assigns all his properties in favor of his creditors for the latter to sell and satisfy their credits, this is: A. Application of payment C. Dacion en pago B. Assignment in favor of creditors D. Expromission 10. When the debtor abandons and assigns all his properties in favor of his creditors for the latter to sell and satisfy their credits, this is: A. Payment by cession B. Application of payment

C. Dacio en pago D. Expromission

39. When the debtor’s property are not enough at the moment to pay all his debt in full. This conditions is called: A. Antichresis C. insolvency B. Pactu commissorio D. suspension of payment 40. Insolvency of the debtor is required in: A. Dation in payment B. Payment by cession

C. Tender of payment and consignation D. Application of payment

41. A obliged himself to deliver to B his 7650 Nokia cellphone or as a substitute he may deliver his cute kitten. After substitution was made, the former was lost due to A’s fault. A. A is liable and must pay damages. B. A will simply deliver his cute kitten plus damages for the loss of the cellphone. C. The loss has no effect to the obligation. D. Obligation was extinguished. 42. D owes C P10,000 payable on December 25, while C owes D P10,000 payable on December 30. In here, C can set up compensation (or cum pondere) on December 25, and this is called: A. Legal C. Judicial or “set-off” B. Partial D. Facultative

43. 1st Statement: D owes C P10,000 due on December 25, C owes D P6,000 on December 25. D’s obligation is guaranteed by G. On the due date if D is insolvent G is liable to C for P10,000, the latter (G) cannot set up compensation because he is not a principal debtor. 2nd Statement: D owes C P10,000 payable on December 25. Later, D through intimidation, was able to make C sign a promissory note stating that C is indebted to D for the same amount. In here, D cannot be required to pay C P10,000 because he (D) can set up compensation against C. A. B. C. D. st 1 Statement True False True False 2nd Statement True False False True 44. When the third person assumes the payment of the obligation without the knowledge or against the will of the debtor but with the consent of the creditor, there is A. Delegacion C. Subrogation B. Expromission D. Novation Effect of New Debtor’s Insolvency or Nonfullment of the Obligation in Expromision 45. A owes B – P10,000. Without the consent of A, B agreed with C’s proposal (C is suitor of A) to answer for A’s obligation for which A vehemently objected to but could not do anything. The following week all of C’s properties were destroyed by fire, hence he could no longer pay the P10,000 obligation. A. A’s obligation is revived. C. A must answer for ½ of the obligation. B. A’s obligation is not revived. D. B cannot collect at all. 46. Which of the following is not a special mode of payment? A. Tender of payment C. Dacion en pago B. Cession D. None of the above 47. Which does not result in the extinguishment of obligations? A. Rescission. C. Arrival of resolutory period. B. Happening of suspensive condition. D. Compromise. 48. Which statement is correct about extinguishment of obligation? A. Condonation is generally gratuitous. B. Prescription is a primary mode of extinguishing an obligation. C. Agency wherein novation is effected must be in writing and thru a Special Power of Attorney. D. Confusion or merger rights may occur in the person of a guarantor. 49. Statement 1: "I promise to pay within 2 years" is an obligation with a period, the creditor having a right to demand payment within 2 years from the date of the instrument. Statement 2: Ten sacks of corn cannot be compensated (legal compensation) by ten sacks of rice. A. B. C. D. Statement 1 True False True False Statement 2 True False False True 50. 1st Statement: The creditor may be compelled to accept payment in checks as long as the check is negotiable 2nd Statement: An obligation payable “should the client die of diabetes” is an obligation subject to a period A. B. C. D. 1st Statement True False True False 2nd Statement True False False True

Contracts 1. Which of the following is not a valid stipulation? A. A stipulation that the mortgagor cannot enter into a second mortgage without the consent of the first mortgagee and such violation will make the obligation due and demandable B. A stipulation in chattel mortgage on installment sale where the object sold is mortgaged back to the seller to answer for the unpaid installments or upon failure to pay any installment due, all installment shall become due and payable, the mortgagee is given the right to foreclose and sell the property at public auction to recover the unpaid balance. C. A stipulation in a mortgage or real property authorizing the mortgagee to have the mortgaged property sold without the necessity of an action in court. D. None of the above. 2. Neither an essential nor accidental element of a contract A. Cause or consideration C. Warranty against eviction B. Consent D. Penal cause in a contract 3. Neither an essential nor natural element of a contract A. Cause or consideration C. Warranty against eviction B. Consent D. Penal cause in a contract 4. “Contracts must bind both parties and their efficacy or validity cannot be left to the sole will of any one of them.” A. Freedom or liberty of contracts C. Relativity of Contracts B. Consensual nature of contracts D. Mutuality of Contracts 5. 1st Statement: A threat to enforce one’s claim through competent authority, if the claim is just or legal, does not vitiate consent 2nd Statement: Contracts entered into during a lucid interval are valid. Contracts agree to in a state of drunkenness or during a hypnotic spell are binding 1st Statement 2nd Statement

A. True True

B. False False

C. True False

D. False True

6. Which of the following contracts is enforceable even if not reduced in writing. A. Representation as to the credit of a third person B. Agreement for the sale of immovable property C. Contract executed by one of the parties in a contract D. Lease of immovable for a period longer than one year 7. In a contract, as written, D promises to pay C P10,000 on September 15, 1997. The consideration received by D is not stated in the contract. A. The contract is valid because the cause is always presumed to exist B. The contract is valid so long as it is in writing C. The contract is valid because cause is not essential to a contract D. The contract is void because cause is not stated 8. D is indebted to C in the sum of P10,000. For the purpose of avoiding the claims of C, D donated all his properties worth the same amount to X. A. The contract is absolutely simulated C. The contract is merely voidable

B. The contract is rescissible

D. The contract is void

9. In which case is the right of rescission not available? A. The ability to restore what he has received by virtue of the contract. B. The property must have passed to the hands of a third person who bought the same in good faith and for value. C. Bought within the proper prescriptive period. D. None of the above. 10. In three of the following defective contracts, ratification cleanses the defects. Which is not susceptible of ratification? A. Both parties are incapable of giving consent B. Sale of land thru an agent where the authority is orally given C. Sale of immovable or any interest therein orally entered into D. Contracts entered into by a person who has been given no authority 11. One is a void and inexistent contract. A. Those which are absolutely simulated or fictitious. B. Those which are outside the commerce of man. C. Those contrary to law. D. Those which contemplate an impossible service. 14. The following, except one, are void or inexistent contracts. A. B. C. D.

Those which are absolutely simulated for fictitious. Those which are outside the commerce of man. Those whose cause or object did not exist at the time of transaction. Those which contemplate a very difficult service.

12. The following, except one, are void or inexistent contracts. Which is it? A. Those which are absolutely simulated or fictitious. B. Those which are outside the commerce of man. C. Those whose cause or object did not exist at the time of transaction. D. Those which contemplate a possible service. 13. A, a person of legal age and an agent of X, sold 10 grams of shabu to B who is a minor of 16 years. The shabu was sold for P600 which is actually less than its actual market value of P1,000 thereby incurring a loss of P400 on the part of X. Worse, the contract of sale was not reduced into writing. What is the status of the contract? A. The contract of sale is voidable because one party is a minor. B. The contract is rescissible because of lesion. C. The contract is unenforceable considering it was orally done. D. The contract is void. 14. “Mutual promise to marry” between would-be husband and wife, orally entered into is A. A validable contract C. Unenforceable contract B. A void contract D. None of the above 15. Which of the following is the most defective contract among the following? A. A and B both minor entered into a contract of sale involving chocolate worth P400. B. Contract of sale wherein a car worth P1M is contributed but not reduced in a public instrument. C. A contract of sale wherein one party sold to the other his hereditary rights under the pain of being raped.

D. A compromised agreement between two government officials to settle an ANTI-GRAFT CASE 16. Which is the most defective contract among the following? a. A & B, both minors entered into a contract of sale involving chocolate worth P400. b. Contract of partnership wherein a car worth P1M is contributed but not reduced in a public instrument. c. A contract of sale wherein one party sold to the other his hereditary rights under the pain of being raped. d. A compromise between Senator Lacson and Pre. GMA to hide the evidence against Jose Pidal, to achieve peace and reconciliation for the country. 17. S agreed to sell B 100 cases of napkins with the name of B’s restaurant on the napkins. In the enforceable contract, it was specified that delivery will take place on April 15, 2000 which is one (1) month after S and B signed the contract. B wanted the napkins by April 15 because the grand opening of the restaurant was scheduled for April 17. On April 11, S tells B that the has too many orders and will not be able to deliver the napkins. What options does B have? I. Treat it as a present breach of contract and cancel the contract II. Wait for a reasonable time to see if S will deliver III. Ask a third person to perform the obligation at the expense of S but no damages A. I only C. Either I or II B. II only D. Either I or II or III 18. 1st Example: The husband by intimidation, was able to obtain the consent of his wife, with regards to the sale of a piece of land belonging to the wife for P1M. The contract is voidable because there was intimidation 2nd Example: In the above example, the right of the wife is to go to court and file a motion for annulment within four (4) years from the time intimidation ceased A. B. C. D. 1st Example True False True False 2nd Example True False False True 19. 1st Statement: The defense that a contract is unenforceable is subject to prescription. 2nd Statement: In solution indebiti the contract violated is the premature payment of the obligation. A. B. C. D. st 1 Statement True False True False 2nd Statement True False False True 20. 1st Statement: The guardian sold to a minor his car for P200,000 although its FMV is P400,000 or ½ lesion. 2nd Statement: A lawyer purchased the property of his friend’s client pending litigation in the court where both lawyers are practicing for P700,000 but with a FMV of P1,000,000. The contracts are: A. B. C. D. 1st Statement Valid Rescissible Void Voidable 2nd Statement Valid Void Void Valid 4. 1st Statement: A contract whose cause or object did not exist at the time of the transaction is a detective contract which cannot be remedied by providing a cause or object as the case may be in the contract. 2nd Statement: The nullity of the accessory obligation of the penal clause does not carry with it the nullity of the principal obligation which remains in force and demandable. Determine whether A. B. C. D. st 1 Statement True True False False 2nd Statement True False True False

Partnership 1. Which of the following is not a particular partnership A. A partnership formed by two lawyer for the practice of law profession B. A partnership formed for the purpose of constructing a building C. A partnership formed for the acquisition of immovable property and reselling it for profit D. None of the above. 2. The following are effects of unlawful partnership, except: A. The profits shall be confiscated in favor of the government B. The instruments or tools and proceeds of the crime shall be forfeited in favor of the government C. The contribution of the partners shall be confiscated in favor of the government D.

The contract is void ab initio and the partnership never existed in the eyes of the law.

3. A partner who does not participate in the management of the affairs of the partnership and whose connection with it is not made known to the public is called: A. Silent-secret partner C. Dormant partner B. Nominal partner D. Silent-ostensible partner 4. A, B, and C wish to go into the business together to bottle mineral water. Each contributed P50,000, but C wanted to limit his liability to the extent of his contribution, and his name to appear in the partnership name. Which form of partnership as business organization should they choose? A. General partnership B. Limited partnership C. No partnership organization is available D. Limited partnership, but C must be a general and limited partners at the same time 5. Every contract of partnership having a capital of P3,000 or more in money or property shall appear in a public instrument which must be recorded in the Securities and Exchange Commission. Failure to comply with said requirements A. Will not affect the liability of a partnership and the members thereof to third persons B. Will render the partnership void C. Will not give the partnership a legal personality D. Will give the partnership a de facto existence 6. A, B, and C formed a Limited Partnership, each contributing P10,000. However, the articles of partnership was not recorded or registered with the SEC. Which of the following is an incorrect statement. A. Not valid as a limited partnership B. It is considered as a general partnership C. The partnership still possessed of juridical personality distinct and separate from the partner D. None of the above 7. Statement 1: For failure to register the Certificate of Limited Partnership with the Securities and Exchange Commission (SEC), any and all contracts entered into by such partnership with third persons shall be considered void. There was, absolutely, no partnership at all to speak of. Statement 2: When an unlawful partnership is dissolved by a judicial decree, all the contribution as well as the profits shall be confiscated by the State A. B. C. D. Statement 1 True False True False Statement 2 True False False True

8. A, B and C are partners where C as a capitalist partner is engaged in the same business in which the partnership is engaged in. In this situation, A. the partnership may oust C from the partnership and at the same time avail of C’s profit in her separate business B. the partnership may oust C from the partnership C. the partnership may avail of C’s profits in her separate business D. the partnership has nothing to do with C since it is her right to engage in any business 9. K is an industrial partner. Besides his services, he also contributed capital to the partnership. There is no agreement or stipulation as to the profits or losses. The share of K in the profit is A. the remaining partners will determine his share in profits B. combination of C and D below C. such share as may be just and equitable under circumstances D. Pro-rata to his contributions 10. A, B and C formed a partnership, with A and B as general partners and C as limited partner. The firm’s name is A & B Partnership. After one (1) year of operation, the partnership incurred a loss of P12,000. X is the creditor. X can collect: A. P6,000 from A C. Nothing from C B. P12,000 from A or B D. P12,000 from A, B, and C 11. A, B and C partners. Their contributions are as follows: A, P60,000; B, P40,000; C, services. The partners did not agree on how to divide profits and losses. If there is a loss of P10,000, how should the said loss of P10,000, how should the said loss of P10,000 be shared by the partners? A. A, P6,000; B, P4,000 C, nothing C. A, 3,500; B, 3,500 C, 3,000 B. A, 3,000; B, 2,000 C, P5,000 D. A, 3,500; B, 2,500 C, 4,000 12. K is an industrial partner. Besides his services, he also contributed capital to the partnership. There is no agreement or stipulation as to the profits or losses. The share of K in the profit is A. The remaining partners will determine his share in profits B. Combination of C and D below. C. Such share as may be just and equitable under circumstances D. Pro-rata to his contributions. 13. A, B, and C formed a general partnership. Later, C shared his interest with X in the partnership. In here, X is considered: A. An associate of a partner C. Sub-partner B. Stranger to the partnership D. all of the above 14. One or more but less than all the partners have no authority to perform the following, EXCEPT: A. Renounce a partnership claim B. Submit a partnership claim or liability to arbitration C. Convey partnership property in the ordinary course of partnership business D.

Do any act, which would make it impossible to carry on the ordinary business of the partnership

15. Which of the following statements is (are) usually correct regarding general partner’s liability I. All general partners are jointly and severally liable for partnership torts. II. All general partners are liable only for those partnership obligations they actually authorized. A. I only C. Both I and II B. II only D. Neither I or II

16. Which of the following statements is correct concerning liability when a partner in a general partnership commits a tort while engaged in partnership business? A. The partner committing the tort is the only party liable. B. The partnership is the only party liable. C. The partnership and each partner are jointly and severally liable. D. Each partner is liable to pay an equal of any judgment. 17. A, B and C are partners in ABC Company. D introduced himself as a partner in ABC Company to X, who in the belief of such introduction extended a P60,000 credit to ABC Company. These facts are known by A who did not oppose. Who shall be held liable to X? A. Since X extended the credit to ABC Company, a partnership liability exists, thus, partner A, B and C and D are liable B. Only A, who knows the transaction and D are partners by estoppel are liable pro-rata to X. C. D who represented himself as partner in ABC Company is liable D. A, and C who benefited in the P60,000 credit shall be liable to X 18. A and B are the general partners and C the limited partner of X & Co. partnership. After one year, D was admitted as a new limited partner. If the partnership suffered a loss of P12,000, who are liable? A. A and B C. A, B and D B. A, B and C D. All of them 19. A, B, and C, capitalist partners, contributing P30,000, P20,000 and P10,000 respectively, and D, the industrial partner contributed his services. Suppose X, a customer, is the creditor of the firm to the amount of P180,000. How can X recover the P180,000? A. X must sue the firm and get P60,000. X can still recover the balance of P120,000 from the four partners jointly, that is, P40,000 each. B. X can recover from the firm P60,000. X can still recover the balance of P120,000 from the capitalist partners only C. X can recover from the firm P60,000. X can still recover the balance of P120,000 from any of the partners solidarily

D. X can recover from the firm P60,000 and can no longer recover the balance of P120,000.

20. A, B and C capitalist partners, contributed P10,000 each and D, the industrial partner contributed his services. Suppose X, is the creditor of the firm to the amount of P90,000 after getting the P30,000 assets of the partnership A. X can recover P20,000 each from A, B and C only B. X can recover P60,000 from either A, B and C only C. X can recover P15,000 each from A, B, C and D D. X can recover P15,000 each from A, B and C but D is exempt because he is an industrial partner 21. A, B and C formed a limited partnership with A, as general partner, B as limited partner and C as industrial partner. A and B contributed P50,000 each. The partnership failed and after disposing all its assets to pay partnership debts there still remains a note payable in the sum of P30,000. Against whom can the creditor demand payment of the note of P30,000? A. Only A is liable to pay the P30,000 indebtedness B. A and C are liable to pay P15,000 each C. A and B are liable to pay P15,000 each D. A, B and C are liable to pay P10,000 each

22. A, B and C are partners of A and Company. They agreed that in case of loss, the share of A is 50%, B 30% and C 20%. After three years total assets of A and Company is P100,000 as against total liability of P112,000. If D is the only creditor, D can collect from A A. P6,000 D. P4,000 B. P12,000 E. P8,000 C. None of the above 23. A, B and C are partners of A and Company. They agreed that in case of loss, the share of A is 50%, B 30% and C is 20%. After three years, total assets of A and Company is P100,000 as against total liability of P112,000. If D is the only creditor, D can collect from A A. P6,000 D. P4,000 B. P12,000 E. P8,000 C. None of the above 24. Emong, Jack and Bova are partners with Bova as managing partner. Carla is indebted to Bova in the amount of P50,000 and P150,000 to the partnership. Both debts are due and demandable. Carla paid Bova P20,000 and he issued his own receipt. a. The whole P20,000 should be applied to indebtedness of Carla to Bova as he issue his receipt. b. Equal sharing, 50% shall go to Bova and 50% to the partnership. c. P5,000 should go to Bova and P15,000 should be for the partnership. d. P6,666,666 should go to Bova and the balance to the partnership. 25. 1st Statement: A person admitted as a partner into an existing partnership is liable for all the obligations of the partnership before his admission as though he had been a partner when incurred and that such liability will extend to his own individual property. 2nd Statement: In the absence of stipulation, the share of each partner in the profits and losses shall be equal to each other. A. B. C. D. 1st Statement True False True False 2nd Statement True False False True 26. 1st Statement: A person admitted as a partner into an existing partnership is not liable for obligations of the partnership contracted before his admission. 2nd Statement: On dissolution the partnership is not terminated, but continues until winding up of partnership affairs is completed. A. B. C. D. 1st Statement True False True False 2nd Statement True False False True

Corporation 1. Which of the following is a disadvantage of forming a corporation? A. The existence of the entity is not affected by the personal vicissitudes or of the individual stockholder B. Free and ready transferability or ownership of shares C. Subservience of minority stockholders to the wishes of the majority subject only to equitable restraints D. The shareholders are not liable for the debts of the business 2. Which of the following is the disadvantage of forming a corporation?

A. The free and ready transferability of ownership B. The shareholders are not liable for the debts of the business. C. Because of the power of succession, the existence of the entity is not affected by the personal vicissitudes of the individual stockholders. D. The subservience of minority stockholders to the wishes of the majority subject only to equitable restraints. 3. Plaintiffs filed a collection action against “X” Corporation. Upon execution of the court’s decision, “X” Corporation was found to be without assets. Thereafter plaintiffs filed an action against its present and past stockholder including “Y” Corporation which owned substantially all of the stock of “X” Corporation. The two corporation have the same board of directors and “Y” Corporation financed the operations of “X” Corporation. May “Y” Corporation be held liable because there was delay. A. Yes, under the principle of “Corporate Opportunity” of Interlocking Director B. Yes, under the principle of “Trust Fund Doctrine” C. No, under the doctrine of “Separate Entity” D. Yes, under the principle of “Piercing the veil of corporate entity” 4. This group of persons may not form a corporation and be incorporators in a corporation in the Philippines A. Fifteen Spanish citizens who are residents of Manila B. Ten resident aliens and four aliens in Singapore C. Eleven Filipinos who are residents of San Francisco, California D. Seven American residing in the Philippines and two Filipinos residents of Hawaii 5. A corporation cannot be an incorporator, because only natural persons may become incorporators, except A. Cooperative as incorporator of Rural Bank B. Eleemosynary corporations C. Charitable organizations incorporated under the Philippines Laws D. Corporation sole 6. A, B and C are Filipinos who are residents of the Philippines. D, E and F are Filipinos who are on-residents, G and H are Japanese nationals residing in the Philippines. I and J are Japanese who are nonresidents. A. A, B, D, E and F may form a corporation in the Philippines B. D, J, I, A and H may form a corporation in the Philippines C. A, G, H, E and J may form a corporation in the Philippines D. none of the above 7. Shares deposited by the seller or his agent with a bank or third party to be delivered to the buyer or subscriber only upon the fulfillment of the stipulated suspensive condition A. Promotion shares C. Redeemable shares B. Founders shares D. Escrow shares 8. What need not be submitted outrightly to the SEC during incorporation stage. A. Articles of incorporation B. By-laws

C. Treasurer’s Affidavit D. Bank Certification

9. The required minimum authorized capital stock for stock corporation is a. Not less than P5,000 b. 25% must be subscribed and 25% must be paid c. At least 25% must be subscribed and at least 25% must be paid but not less than P5,000 d. None as a rule provided the paid up capital is not below P5,000.

10. The required minimum authorized capital stock for stock corporation is: A. Not less than P5,000 B. 25% must be subscribed and 25% must be paid C. At least 25% must be subscribed and at least 25% must be paid but not less than P5,000 D. Correct answer not given 11. Suppose SPAGHETTI Corporation has an authorized capital stock of P100,000 divided into 1000 shares of stock with par value of P100 each. Subscibers A – 100 shares and paid P8,000 D – 50 shares and paid P5,000 B – 160 shares and paid P 100 E – 200 shares and paid P 600 C – 250 shares and paid P4,000 Which will qualify the pre-incorporation subscription requirement? A. Combination of A and E C. Combination A and B B. Combination of C and D D. All of the above 12. Suppose SPAGHETTI Corporation has an authorized capital stock of P100, 000 divided into 1,000 shares of stocks with a par value of P100 each. A – 100 shares and paid P8,000 D – 50 shares and paid P5,000 B – 160 shares and paid P 100 E – 200 shares and paid P600 C – 250 shares and paid P4,000 Which will not qualify as pre-incorporation subscription requirement? a. Combination of A and E c. Combination of A and B b. Combination of C and D d. Combination of B and D 13. Which of the following conditions will allow corporate formation and allow Securities and Exchange Registration? A. B. C. D.

Authorized capital P200,000 50,000 100,000 60,000

Subscribed capital P50,000 12,500 25,000 15,000

Paid-in capital P12,500 3125 6,250 6,250

14. Which of the following situations complies with the requirement of the law for corporate formation and registration? Authorized Capital Subscribed Capital Paid-up Capital A. P 50,000.00 P12,000.00 P 5,000.00 B. P 60,000.00 P15,000.00 P 10,000.00 C. P100,000.00 P25,000.00 P 7,000.00 D. All of the above 15. Is a by-law provision of “X” Corporation “rendering ineligible or if elected, subject of removal, a director if he is also a director in a corporation whose business is in competition with or is antagonist to said corporation” valid and legal A. Yes, under the principle of “corporate opportunity” B. No, under the principle of “separate entity” C. Yes, provided it is approved by 2/3 of the outstanding capital stock D. Yes, under the principle, “of vested interest”

16. Which of the following must be obtained in a Corporation’s Articles of Incorporation? A. Names of stockholders B. Name of the temporary treasurer C. Provisions for issuance of par and no par value shares D. Quorum voting requirement 17. One of the following is a ground for the suspension or revocation of the Article of Incorporation by the SEC. A. Failure to organize and commence business operation with in 2 years from incorporation. B. Continuous inoperation or inactivity for 5 years after it has organized and commenced business transactions for one year. C. Corporation has commenced its operation and subsequently become continuously inoperative for 2 years. D. Corporation has failed to commence and start to operate due to causes beyond its control. 18. One of the following is a ground for the suspension or revocation of the certificate of Incorporation by the SEC. a. Failure to organize and commence business operation with in 2 years from incorporation. b. Continuous in-operation or inactivity for 5 years after it has organized and commenced business transactions for one year. c. Corporation has commenced its operation and subsequently become continuously inoperative for 2 years. d. Corporation has failed to commence and start to operate due to causes beyond its control. 19. A, B, C, D and E organized a corporation. An article of incorporation was prepared, signed and acknowledge before a notary public and filet with the SEC. The corresponding certificate of incorporation was issued. It turned out, however, that A, B, and C are not residing in the Philippines. What is the status of the corporation? A. De jure corporation D. Corporation by prescription B. De facto corporation E. None of the above C. Corporation by estoppel 20. Which is correct about a B.O.D. member? a. He is entitled to compensation as a matter of right. b. He must be a citizen of the Philippines c. He is disqualified to be one if convicted of the crime of murder before d. He can be removed by votes representing 2/3 of the outstanding capital stocks in all cases 21. “ A” was one of the directors of “X” Corporation. “B” obtained a judgment against “A” and had all of “A’s “ shares of stock in “X” Corporation. A meeting was held and both “A” and “B” appeared in said meeting, each claiming the right to participate in the deliberation of the board. “A” contended that he had the right to continue as director until the stockholders could elect his successor. “B” on the other hand, contended that having purchased all of “A’s” share he had the right to take the latter’s place in the board. Under the rule of directorship, which of the following is false?

A. Both A and B are disqualified to sit as directors in the Board of Directors B. A cannot qualify as he disposed all his shares. The requirement is that a director must continuously have at least one share in the corporation C. B can qualify because a corporation as well as the heirs of stockholders of same corporation has got a right of succession D. B cannot also qualify if he claims succession to A. He must have to be elected by the stockholders. The position is personal and does not allow substitution. 22. In no case shall the total yearly compensation of directors, exceed A. 5% of the net income before income tax during the preceding year B. 10% of the net income before income tax during the preceding year C. 10% of the net income after income during the preceding year

D. 10% of the net income before income tax during the current year 23. Which of the following statement is correct regarding corporate officers of a stock corporation? A. An officer may not simultaneously may or not be a stockholder of the same corporation B. Corporate Secretary may or not be a stockholder of the same corporation C. Stockholders always have the right to elect a corporation officers D. An officer of a corporation is required to own at least one share of the corporation’s stock 24. Qualification of trustee of non-stock corporation: A. Trustees must be member of the corporation B. Majority of the trustees must be resident of the Philippines C. Trustees of non-stock corporation may be more than 15 members

D. All of the above.

25. A corporation officer or director cannot take advantage for their personal benefit a business opportunity which the corporation is financially able to undertake A. Doctrine of corporate fiction C. Doctrine of corporate opportunity B. Trust fund doctrine D. Doctrine of limited capacity