PROFESSIONAL REVIEW and TRAINING CENTER, Inc. *fotle R470 Ce Cy 03225777 .OC 122 * Dea Cy OB 250089 Capra de Oe Cy 52 sts sation CPA REVIEW BUSINESS Law BL.504-DRILL NEGOTIABLE INSTRUMENT. MALVAR/J.ONG/T.LOPEZ OCTOBER 200 ‘D1 Which oF the following is net negotiable for {he (7. Which one of the fattowing instrument is negotiable? Cetrmee ATUMEN ook pats” 3°” SED great towing rsramen is neaten Getermingbie future re ®-8E BB pasa te CEM ohominnen on Senet tell ‘70M the death of X, 1 promise to pay to the order (itened D) oF 950.500 ee b. "Tanvmise to pay C or order 240.00 in our +». Sonor betas Ota 30,2001 1 prom to vay intaente Slyss'o) Por arder 850608 ga a c._"Tpramise to pay € 67 order 940.000 60 days © cael GAS er aah Lam to oy one andere oa ao onde, oF Pace eon een promise to pay CB40.000" Wanner hy “endays ‘before the Sesto X, 1 promise v0 Pe Sor nas ee sae DB Which ofthe folowing aaDinéluded as worranty of . 2 Derson Pep oting an Vaunent Sy sen ot % TRE flowing documents low ore negovabis > Sean negating an instrument 20 iat te watument s genuine ad inl respects 2) Powel ney order wat purport ee 3 trae a re ©} guesse ._That prio paties hag pot to contact S) a ing That the ndtument 6 aoe Gee 2. “Only tetter B © Letter A, 8 and end -sementt valid and subsisting b. Letter 8 and C (L8- A negotiable note for 20.000 is payable to A or © 3. [ promise to pay to the order of x 100,000 in two ©” a9! sians his name et the back and delivers the S00a, armen ME 2 payment is on January 5,, nore ec aeng eae, tthe rote to C by mere 2008. (Syd: ¥) delivery 8 Maymneartment (8 n6n negotiable because the 9 NHK te not transferred to € ause 8 did not payment of 1% installment was not fived ana indorse to C therefore indeterminate b._Cis the mere agent of a Ore een tGeeuae eee “EE caonotnegoeae sy Saree oe < Teensttument is non negotiable because ane 10. A promissory note as distinguished from 2 bill of or pment is Bayable cn instalment and the date | axtnonee noc atsrea OF PO" Land 2 instalment wes 8. Te edntaia an unconditional order fot stated, ‘The one who issues i is primarily liable Proponent Onna be dternea wnétner it 2" The gre whe ese ie may tele 's negotiable or aan negotiable (| There are three (3) parties, the drawer, the payee anid the drawee P24 The valtty and-—aggotisble character of sesame areas Paecied bythe tong 421 No unconditional nse to pay omissions, Gees Gz a. To pay out 9» porleiar fund 8 ies nobcare b,_‘Tepay ang charge ageinst a particular account > Does not specify the value given, or that any Both of a) and b) velue hes been given therefose d. None er )and b) tater eee we place 2 wn bof the felowing instruments negotiable? (9 nares aya 2 “Good to Jose Far or order, PSE DOSE Togne Pers Cruz) &.'S. -An instruments rendeeed non-pegoiabie b. “Thereby authorize you to pay Jose Paz or order 2 There is an indication oF Partai Tom out of 7 peka® (signed Pedro Cruz) which reimbursemene iene art © "I promise to pay Jose Paz or order 50.000 D. There is an indication of @ particular account to oth in sugar” (signed Pedro Cruz) 140 be debited with the srasean Promise to pay Jose Paz or arter P50.000 on We The Instrument is payable out-of a pavticutar a October 25 (signed Pedro Cruz) tuna. Laue A 13. Payable to a specitied person: %. Ansvier not given A Pay to 8 or his agent P 1,000 5 : ay t0B oF his sesigns 1 Gb0 S- The sum payable isa sum certain, although isi : Powe’ paid. bee's fl 4. Nanette apsrsrze® ? 000 Ant nicest 3: By stoted inscatments © “With excnange sh costs of collection or an attomey's fee, an c28e payment shall not be made se mene 14. an instrument is rendered non-negotiable i 2 There is on indication BF a Darticstor fund out of whieh reimbursement is to be made bo There is an indication of @ particular account to 2 debited with the amount 4 The hnstruinent is payable out of a porticuler fund 9. Answer not given Page tof 2 ~ www.prte.com.phERUFESSIONAL REVIEW and TRAINING 15. An endorsement is restrictive, which eithef Fo a Frnibn tg eteee Mee ag instcument Ge. a TER, INC. zcVroveler’s check 2. Certified ‘check 5 4. Anstwer nat gi m pamrgen ME rdorsee the agent of the f! 21. Presentment for acceatance of a bil of exchange! Is endorser Vests the title in the endorsee in trust for oF to the use of some other person J Aiottne abave 016, Payabie to bearer 2. Pay to bearer 8 P 2,00 b. Pay to B, the bearer. P1,000 © Pay to possessor P1000) _B= Allofthe above A.17. Which ofthe folowing instrument is nan-naaotiale> “Pay to or order P20.000 out THT Sek is possesion” (addressed ta % signed O} b. "Pay to on onder p20 600 She reimburse Yourselt cut of my eash in your paseo Caressa to, Sonad by OS & loromise fo gay Pst ree 220.000 >) d Pay P or order 20.000". (adaress Signed by b) ‘De. wnich of tne tolioning rot recess rake an instrument negstaOe? 2+ Ie must bein writing and signed ay the maker , IE must contain an uneonditianal promise or efcer {0 pay 2 sum certain in money © It must be payable on demand or at @ fixed future tne P% Trmyst be payable only to a specific pe DAS. the promise or order Is negatiatie? 2-°"T promise to pay 8 or order P40.000" ai (Signeo 2 b. "Pay 8 or order Pa0,000" by) © "Pay B or order P40.000 and ceimburse yourself out lof my money in your possession dressed to 2 ogre oy ¥) ay 8 oF order Pa8.000 ot of my money n you possession" (Adaressed to aged oy) (1 20'A creck wponentich the holders signature. mutt appear twice one fo be anes hy hermes issued and the second or countenra ee s bited by Wim bere Sag incomplete, cote (Addressed ta Z signed Page 2 of 2 023. the not necessary: eae 2. Where the bill is payable aftér sight: b. Where the bill i drawn payable elzewhere than at the residence or place af business of the © Where it is payabie at 2 certain numer of days after date; ‘Answer nat given © has 8 deposit of 640,90 with the PNB against Which he drew check fer PLOU.OD} in favor af P. For no reason at all, PNG refuses ta pay P100,000. P can legally hoid PNB liable for 100.000 plus damages 2%. An instrument that conteins an arder or promise {0 do any act in addition to the payment of money is apt negotiable, % Both are true 1b. Both are falee € No. Lis true; No, 2is false 4 No. Lis false; No. 21s true valivity and negotiable ch aracter of en ‘Dot affected by the following Instrument omissions: Geant: 2. It's notated b. Doss nat specify the value given, value has-been given therefore Does not specify where itis crann or the place were itis psyable 2 Mane.of the above ae that any hence_noi- D24, 14 An order instrument will always remain 2% order Instrumente 20: An instrument is considered payable ta bearer Where itis payable to the order of & fetitious 0, “none ‘existing person and such Fact is known to the pe “Son ‘making itso payable 3. Beth are tee 8. Both are false © No. Lis true; No, 2 is false BHo. Lis false; No. 2 iz tue Which of the following items would rendered the instrument non negotiable 3. With interest bL_-With stated instaliment ‘ith order oF promise to do any actin adbition to payment oF mon 4G. With cost of collection if the instruments not paid at maturity BL.504DRILL 01* Mans 3383447347203 * Cebu iy 932 ‘Since 1977 BUSINESS LAW BL.PREWEEK the.loss of the subject matter HCPA, 85-2; 88-1; 89-2) This person is table for by fertultous event: (Ph 2. Creditor "Both @ and b b. Debtor 4. Nane of them 2 When A voluntarily takes charge of the: neglected business of 8 without the latter's authority where feimbursement must 8¢ mace for nevessery. sad Useful expenses, there is a: (Phil CPA, 97-2) 3, Quasi delict «. Negetiarum gestio 8. Quasi contract @, Solutio ingest D3. Which oF the following isnot » generic obligaticin? 2. Obligation to Day P50,000 >. Obligation to deliver 2002 Nissan Sentra Series m & Obligation to deliver 100 sacks of sugar % Obligation to give a delimited generic object Pha ene. Seepage 84 Which obtigation is not valid? aie 8. “I promise to give you Pi00,000 on December 25, 2008" AL Promise to give you P100,000 if 1 99 to Mactan, Cebu this weekend” ®. “1 promise to give you P100;000 it your patient dies" 4. "1 promise to give you P100,000 if you pass the October 2008CPA Board Examination Y sold his horse to Z for P50,000. No payment has yet been made and the sales document Uses noe Provide the date of delivery. Before delivery acy Beyment, the horse gave birth to a baby Rosas) (pi CPA, 88-1) 5. Z'is entitled to the baby after the perfection of As y horse which was been the contract >. Y is enttied to the frit (baby horse) as Z has not aid the price yet. © Y is entitied to the fruit (baby horse) becuse was born before his obligation to deliver the horse & 2 should pay addtional amount for the baby horse t6 be entitled to i Mr. Montecilo entered” into 2 contract with Mr Villarojo by which Mr. Montecito promised Lo detings 4,000 cases of glassware of the clase an at the sree Stipulated in the contract. Sucn delivery ‘wee te Ce ing the months of February ‘and Maven ther demand or notice by Milarojo, en ‘Mr. Montecilla was” necessery Decause: (Phi! CPa, 91-2) Time is the essence of the contract The obligation expressly so provides, The demand would be useless, Answer not given, ‘BahS,omes Mr. CD 150,000 eve on August 31, 1987. AB executea a mortgage a fa s PROFESSIONAL REVIEW and Ti 777. 12 Daven hy 42 2250048» Cagayan de Oro Cy 08622725150 CPA REVIEW us As Aus. RAINING CENTER, Inc. MALWAR/J.ONG/T.LOPEZ OCTOBER 20 3. "No. The obligation is one-with 3 definite periog, thus the creditor cannot cemand fulfillment of che obligation as such would the prejudicial to the fights of the debtor. ©. No. The obligation is extinguished because the obligation is last through a fortuitous event. © Yes. The debt becomes cue at once becsuse the Quaranty was lost .even through 2. fortuitous Event Unless the debtor can mortgage another property that is equally satisfactory Yes. The debt becomes cue at once because, from the tenor benefit is given solely to. the ereditor thereby giving the creditors the right to {demand performance even belore the date, The creditor shall have a right to indemnity for Gamages when, through the fault of the debtor, a the things which are alternatively the object of the obligation have been lost or compliance of. the bligation has become impessibie. The Indemnity shall be fixed as a basis: (Phi CPA, 87-1) 2. The value of the least expensive thing b. The value of the’ mast expensive thing The value of the last thing which disappeared: ©. The valve ‘ofthe fist thing which siseppesred This isthe promissory note: We promise to pey A, 8 and C the sum of ONE HUNDRED EIGHTY THOUSAND (F180,000) PESOS within 60 days. Signed X, ¥ and ZElPhil CPA, 88-2; 90-1, 87-2-M, BBI-M; 8B-2-m, -M; 89-1-M; So-i-m, 90-2-M, 92m, 82 82-2-61,95-1-M,95-1-M; 96-1-m;-96-1-M, 96- a." Xs obliged to pay A 'P20,000 1b. X's obliges ta pay A 260,000, © X's obliged to pay 4 P180,000 4. X's obliged to pay A, B and C P280,000. 4,8, and C soliderily bound themselves to deliver to X a Honde Motorcycle: The obligation was nce fulfiles though the fault of A. Thereupon, X fied on action in court against C and the court awerdes 36,000 to X. Which of the following situations is valid? (Phil CPA, 96-2) 2. IFC pays x’ the -P36,000, A and 8 P12,000 each proportionate share Sn Brestation, X has to collect P12,000 each from &, 8, and C to satisfy the court's amard af P36,000 It € pays x the 36,000, C can collect from 8 10,000 and trom & P16,000. X cannot collect the whole. amount of P36,000 trom ¢. © can collect from representing their the value of the Faathple No. 4: D obliged himself to glve.C 20,000. However, the day before the obligation falls Gus, oe apartment wos completely gutted by acciesta’ ting There is no question that the money wos cise a) Py fire. The obligation of D is totally extisgucney pecause of fortultous event. f “vb. cy ageeke wre Example No. 2: D obliged himseitleo pay’ C pi0,ooe With 69% interest. On the date, D tendered Pi0'0o0 gith 4, promise to pay the 800 interest the aon afer. If refused to accept, he-can he compenea se Pre ed sacar se pet ais Pt ref be Se snip fr Ps BL PREWEE Ge PapenPROFESSIONAL REVIEW and TRAINING CENTER, INC. is civisible. a. Both are true B. ath are false No, Lis true; No. 2s faise S.No. 1s false; No. 2is true oe B12. carto, afredo and Francis ewed in solidum 15,000 (19 ¢ A v {to Ricarda as evidenced by a promissory note Gue on September 30, 1961. The. note prescribed on September 30, 1991. On October 10, 1991, Carito aid Ricardo. In this case; Carlito is: (Phil CPA, 91-2) Entitied to collect PS,000 each from alfredo end Francis Not entitled to {ebtors far the shares of the latter. Entitled to recover from Ricardo. ‘Answer not given. 13,A, 8 ahd C solldarlly owe X and Y. P30,000 remitted the ‘entire obligation In favor of A. eFfeck er (Phil CPA, 57-2) x The from 8 and C. “The obligation is not yet’ extinguished until Y Is paid by X of Y's share of the credit. [A cannot recover from B and C because remission in his fevor extend to the benefit of 8 anc C. d.. A con recover from 8 and C their share of the debt: b. XYZ are soliderly liable to A for. P30,000 whic mature on July 11993. On May 1, 1993, X paid A for the whole amount of the debt. If on December 1, 41993, X wil be reimbursed by Y, the latter will be liable for: (Phil CPA, 98-1) 2. 710,000 with ‘interest’ from July 2, 1993 to December 1; 1993 , b,P10,000 without interest €P10,000 with interest from May’ A, 1993 to July-1, 3993 6. P10,000 with Interest from.May 11993 to December 1, 1983 15. In an obligation where only one (2) prestetion has been agreed upon, but to extinguish the obligation the “debtor is. allowed and does render another substitute, the obligation is: (Phil CPA, 98-1) fa. Facultative Obligation b. Simple Obligation ©, Alternative Obligation 6, Conjoint Obligation 16. The follwing, except one, are reaulsitas of payment as 2 mode of extinguishing an ordinary obligation, Which Js the exception? relnipursemént from his co~ f)20. Bas. The obligation is net extinguished until A collects" Bas. 24 2 Complete orl payment 2 Complete ta eure whe the obligation is due te dernndoble “Aol po Payment ing negotiele instrument 7 Er Trae tenders gxcort DAVID. foreiga currency. when two (2) persons are reciprocally dabtors and Creditors, there ist (Phil CPA, 86-2-M; 88-2, 89-1; So-1-M, O1-4-M; 9i-1-M; 94-1-M; 94-2-M;98-1-0% ) 3. Consignation , Compensation BL Merger Confusion \e kind of compensation which arises by way.of Degued counterclarn in a case is called 2. Legal compens oe toa) 7 sr Ge coment aoe 4. Facltatve Compensation «Tl ear we eae When the characters of creditors and debtor are merged on the same person, the mode of ‘extinguishing an obligation is called: (Phil CPA, 86-2; S1-1-M; 96-2-M) 2, Confusion of merger b. Compensation «, Novation . None of the three |A anc @ are jointly indebted to C for P10,000. assigns the credit to D and D assigns it back to A, 2. The. debt is partialy extinguished compensation Fhe debt Is partially extingulshed by merger “The debt is fatally extinguished by merger The debt is not extinguished either totally or partially by If the creditor to whom tender of payment has Deen made refuses without just cause to eccept it, the debtor shail be released from responsiolity by: (Phil CPA, 91-1) 2. Assignment of property 5. Consignation of the thing or sum due. E) Agjucieation or dacion en pago. Answer nat given. when the debtor abandons and assigns all his properties in favor of his creditors for the latter £0 Eel to satisfy his credits, this is: (Phil CPA, 90-1; 99- 2M; 94-2-4) fa, Remission €. Dation in payment BL Payment by cession 4. Expromission FIs obliged to give OR his 1982 Mitsubishi, 4 door Sedan Lancer with plate number NBA 123 on September 30, 1989, On October 10,, 1969, OF id not Yel Geliver the car which was totaly destroyed by an Eerthayake on such date. 1s O=-sil lable? (Ph! CPA, 89-2) Coes (not a. Nov" The obligation is extidedisned. The specific thing was lost due to forwitous event and no Gemnond or deliver was made by OR. b. Yes. OF is in legal delay. OR can claim damages, @. No. Even OE is alreddy In default end.can plead impossibility of performance. 4, Yes. OR can Instead ‘demand for another car of equivalent value from OE. In novation, which of the following is incorrect? 2. If the new obligation IS void, ofiginal obligation shall subsist. This specie! form of payment is the conveyance of 8. ‘In exaromlssion, the “insolvency of the new the ownership of a thing as accepted equivalent of ebtor shall not revive the action of the creditor performance, (Phil CPA, 65-2) feainst the original destor. 5. _Datlon In payment or dacion en page c. Tf the original ebligation is subject to 2 Bi. _Rssignment of property or cession en pego Suspensive condition, the new obligation is not ©, Application of payment Subject to the'same condition unless states. 4. Tender of payment and consignation 6. While if the condition is resolutory, the naw is iso. resolutory condition, unless otherwise stoted. Page 2 of 13 www.prtc.com.ph BL.PREWEEKEAL REVIEW and TRAINING CENTER, INC, ” p% p30 Ae Page 3 of 13 Cs the creitor of Din ene amount of P50,000. 61s the guarantor of D pala C partially th 20,000) & 10 Knawing the partial payment of gland agent the wil ef O.paidC the ariount of P5000, What fs the effect of this payment In the: obligation: (Phil Com, 83.3) a. The.obigation is extinguished. A cannot recover any amount’ from "Bbut” A. con denond reimbursement from Clin the amount of PS0,080, The ‘blgetion is extinguished. A can. demand ° 30,000 from D because this amount beset ar A having subrogated into rights of C can proceed against guerantor 6 © The obligation is not extinguished. A’s payment against being the will of D does not extinguish the obligation, %. The obligation is extinguished. A can demand 30,000 "from D, but If D cannot pay, A cannot ordinarily proceed ageinst guarantor & because A |s not entitled to subragation X sold his car to ¥ for P50,000. No date was fixed for the performance of the obligations of the seller and thé buyer. The obligation of X is: (Phil CPA, 86-2) @. To deliver the car immediately because the sele 's 2 perfected contract, 5. Te deliver. the. car only after. Y writes to x demanding the delivery of the car & To Geliver the car after ¥ pays X the 50,000, 4. To resting the contract because there Ino time fixed for the delivery ‘Simulation of a contract may be absolute or It s relative when: (Phil CPA, 91-1; 96-1) 2 "The parties do not intend to be bound at all b: The contract is void © “The parties conceal thelr true agreement,» 3. Answer not given relative The proper remedy is annulment of contract and not reformation when: (Phil CPA, 51-1) 2 Mistake, fraud, inequitable eonduet, or accident hes prevented a meeting of the minds of the parties b. A mutual mistake of the parties causes the favre of the instrument to disclose their reat agreement. “| © One party was mistaken and the other knew or Delieved that the instrument did nat state chore agreement, but. concealed the fact from the former. 4. Answer not given Centered into a contract of lease with X. T, the clerk Of L, typed the document, Due to T's negligence, soe Gocument made wos that of sale instead of ieose 2. The remedy is annulment . Parties may go to court for interpretation © Parties may enforce thelr night becouse it Is enforceable 8. None of the above Mr. A. Santos signed a fetter addressed and delivered to Mr. S. Aguas, ‘The terms of the letter are 1. An aff to sell 3 $00 sq. mi, lat for 200,000.00. 2. An option time up to October 31,1991 for Mrs ‘Aguas to raise the P300,000.00, 3. Upon payment of the P300,000.00, Mr.’A, Santos will execute and sign @ Deed of Sale. On October 31, 1992, Mr. A. Santos sent a letter to fer. 8."Aguas asking for a new price of P30,000.05 for the $00 sa, m. lot. ‘Can Mr. 5. Aguas conic! ing AL Santos to aceapt the www. prtc.com.ph > Fas. Das. 36, 360,000.00 ana make him D 37 sign and execute a Deed of sale? (Phil CPA, 92-2; 96- oH) No. Wr. S. Aguas did not accept the offer of mr. 'S. ‘Santos b. Yes. Mr.” A. Santos is already estopped by his signed letter and offer & Yes. There was actual meeting of the minds Yes. The contract is perfected There shall be no reformation of contract in the follawing cases, except: (Phil CPA, 96-2) 2. In testamentary wills b. Simple donation intervivos with ng condition being imposed When the real agreement is void 4d. A-contract of sale fraudulently made as a contract of lease Which of the following contracts iphabescissibie? 2. Those which are entered by guardian whenever the wards whom they represent suffer 2 lesion of more than Ya-oF the value of the abject of the contract. b. “Those executed in representation of an absentee, ifthe latter surfer a lesion of more than We of she Value of the abject of the contract © Those where one of the parties is Incapable of siving consent te @ contrack, 4. ‘Those undertaken in fraud of the creditors when the latter cannot in-sny other manner collect the laims gue them. ©. Those which refer te things under litigation it they: have been entered into by the defendant Without the knowledge and approval of the Tigarts oF of competent judicla! authority. Which of the: following contréets is required to be In writing to be enforceable? An agreement that by its terms is not to be Performed within years from the making thereor. b. A special promise to answer for the debt, default fr miscarriage of another © An agreement made in consideration of marriage, ‘other than e mutual promise to marry. ds Seles Of goods, chattels or things in action ato price not less thin P500.00 ®. Alot the above. In order that fraud (Phit CPa, 94-2) ® R’may be incidental but.bath parties shauld not be in pari delicta HE may be serious and the parties must Getic, ©] may be incidental but should have. been empioyed by both parties. Ik should be serious and should have not have been employed by both contracting parties. * may make a contract voidable 3 In park On luly 35, 1986, x entered into a contract with ¥, On February 10, 1987, X discovered that fraud wos committed at the time he entered into the contract 3 fraud that vitioted his “consent. ‘The action: for annuiment shall be.brought. (Phil CPA, 87-2), Within three years from the time ofthe fraud, b. Within four years from February 10,1587 Within four years from the tine A entered into the contract On February 10, 1987 Esquerra, 2 former government - employee, suffered from ‘severe parancls. and was confined She mental hospital in 981. After his'release he war Es 4 BL.PREWEEKPROFESSIONAL REVIEW and TRAINING CEI Dp» peo Bet Ga Aa Page 4 of 13 placed uncler the guardianship of his wife to enable him to get retirement pay. In 1984 he became a mining prospector and sold’ some mining claims. Jn 1987 he sued to annul the sale claiming that he was not mentally capacitated at che time of sala. The sale In question was: (Phil CPA, 93-2; 97-1) 2. Tegal , Veidable b. void 6. Valle ues Contracts entered inta a state of drunkenness or uring a hypnotic spell are: (Phil-CPA, 93-1; 97-1) 2. vols € Voidable a b. Valid o. Legal As Reluctantly and against her goad sense and judgment, Rosemarie entered for the delivery ol 5 tables to Corazon for 2 price of P1S,000. Contract is (Phit CPA, 93-3; 97-1) 2. Void «. Unentorceable 5. “Voidable 6. Valle Three of the following are void contracts the exception? ‘2. Contracts where the causa is immoral b. Contracts to prevent a knosin supporter of @ palitical rival form voting for his cancicate for 3 Ysluabie consideration €. Contracts with valig consideration Uniawful motives, 4, Absolutely simulated contracts but with Rescssion of contract can take place in this case (Phi CPA, 93-1; 97-1) ‘When the things which are the object of the Contracted are legaly in the possession of tire bersons who acted In'b3d faith. When Re demands rescission can eeturn whatever the may be obliges to restore. =m tuto, When the porty seeking resolution ear perform only a to part and rescine as to remainaer 4, When the seller cannot return the instliments pala to him by the Duyer ‘p «a B froudulentiy induces S to sell ta him (8) 3 masterpiece painting for P10,000. Subsequently, B Sold It to X for P12,000, 2 good faith purchaser.'S Is, entitled to: 3. Rescind the contract with B plus damege’s b. Recaver the painting from x but na camages Recover damages from B Rescind the contract between 8 and X, ‘Three (3) of the following are similarities between a partnership. and 2 corgoration. Which is not? (Phil (CPA, 88-2; 90-1; 90-2-M) a. The individual composing both have litle voice In the conduct of the business Bath have juridical personality separate and f 49. distinct from, that of the individuals composing © them, © Like & partnership 3 corporation can act enly through agents. 4. Both are organizations composed of an aggregate of indiviguals. b. ‘A and B orally agreed to form a partnership two ‘years from today. Eacn one ta contribute P10,000. Hat the arcival of the period, one refuses to go ahead with the agreement, can the other enforce tneq_ 50. ‘agreement? (Phil CPA, 97-2) a since the agreement is to be enfarce after fone y2ar from the making therecf, the same should be in writing to be enforceable. b. Yes, because the prior agreement was voluntarily made. com.ph ER. INC. fc. Yes, because the: partnership contract is not governed by the statute of frauds. 6. No, because the agreement was merely ora ‘May cantribute money, property or industry to the commen fund: (Phil CPA, 86-2; 88-1) 2 Both general and limited partners. D. Limited partners General partners 4. Capitalist partners The following persons are disdualified to form a Universal partnership. Who are: the exception? (Phil (CPA, 88-2) 2. Brother and sister BL Husband and wife Those guilty of adultery and concubinage @. Those guilty of the same criminal offense in the partnership is entered into consideration of the B and C.formed a limited partnership, with A as & general partner, while 8 and C as limited partners, with the following contributions: 1 A contribute a specific parcel of land 2B to contribute P10,000, the first PS,000 upon formation, and the last 5,000, 10 days after formation 3. C contributed a specific car as was stated in. the article of partnership, when in fact it was not contribute, If the partnership was dispossessed of the lend contributed by A after delivery to the partnership by the real owner, the etfect sil Be a. Ais considered 9 debtor of the partnership B.A is considered a trustee of the lanc-for and in behalf of the partnership The partnership will dissolved 4. fis to answer for warranty against eviction Uniess otherwise provided in @ general partnershio agreement which of the following statements is correct when a partner cies? The The deceased decreased partner's partner's The executor would estate would partnership automatically. be free from would be became @ any aissolve Partner partnership automatically Tiabilties, a ves Yes yes 6 Yes No No © No Yes No a No No Yes A, B and C wish to go into the business together to battle mineral water. Each contributed 50,000, ut C wanted ta limit his lability 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? 2. General partnershia i Limitea partnership No partnership organization is available 6. Limites partner in *C* partnership, assigns his interest in “y" partaership to x, who isnot made a partner. After assignment X asserts the'right to 1, Participate in the management of *¥" partnership. 2. Cis share in the surplus profit 3. May compel the other partners that he (x) becomes a partner. ~~ BL.PREWEEK“ps2. Ds. Xils correst.as to which of these rights? 3 tends ©. 2 only b. 3 only 22nd 3 A and 8 entered into 8 universal partnership of all Present property. The common property oF the Partnership shall be: (Phu Ca, 87-1; 96-2) All the properties which belonged to each af the Partners at the time of the constitution of the partnership. All the properties which shall belong to each of the partners after the constitution of the partnership. All the properties which belonged to each of the Bartners at the time of the constitution of the Dartnershia as well as the profits which they may acquire therewith, all the properties wich belonged to each of the ortners at the time of the constitution oF the Partnership es well as properties which each may ‘acquire thereafter M and O are partners of M & O partnership. #15 the ‘managing partner. N owes M P10,000 and M&O Partnership P30,000. The obligations of N are both ue. M coliected from N the deat of N to Min the ‘mount of P20,000 and issued a receipt In the name of M. To which obligation will he P10,000 be applisa> (Phil CPA, $8-2-M;-95-1-¥; 92-1) 2. The iehofe of the P10,000 will be applied ta devt of N tom, >. The Pi0,000 will-be applied to debt of N to the parenership, © P5,000 each to debt of W to Mand to the partnership, ©. P2,500 to debt of N to M and 7,500 to debt of N to the partnership, — 3-8, B, and C are general partae’s in ABC Partnership! 2 15a debtor to the partnership in the amount of 15,000. A recéived fram debtor 0 the sum of #000 ind Issued a receipt identifying the amount af hie Share. Then © become insolvent, B end C conrot eollect the P10,000. (Phil CPA, 88-3-0; 92.1; Sect My 2 A cannot be Band, 8 and C can charge the capital of share of the P5,000. compelled to share the P5,000 with 8 ‘A with their © A can be compelied. to share B and C with the 5,000. 4. B and C should automatically sue 0 te collect the 10,009, A is the capitalist partner: and 8 the industrial partner. A engaged personally in business. the partnership is erigaged in 87-1-M; 88-2; 89-1-M) 2. If there are losses, the pertnership will bear the losses. If there are profts, the profits will shared by A ‘and the partnership, © IF there are profits, A will give the profits ¢o the partnership 4. A will be excluded from the partnership and pay damages, ‘Aguas ond Bautista are_partners in a real estate artnershia. The partnership owns @ piece of tang which Castro desired to buy. Castro comtacted Apacs and ‘inform him: of his desire to buy, the lone na ‘Aguas did not tel Bautista about tt Aguas bovehe Bautista out of the partnership and aiterwards sana Page 5 of 13 SS MIEW and TRAINING CENTER, Be as. 58 Eee. the same kind of f 63, (Pn cea,A Www.pric.com.ph the land to" Castro with @ big pref. (Phil CPA, 88-2-M; 90-1-¥4) 2. The partnership is dissolved when Aguas became the sole owner, The sale of the land to Castro js void because ie was without the knowledge of Bautista Aguas is not liable to. Bautista for the latter's sinare in the profits: ‘Aguas is liable to Bautista for the latte’s share'in the profs, 83-1; b. °. A, @ and C are: partners in ABC Company. © epresented himself as a partner in ABC Company to £, who, on the belie? of such representation, extended 2 150,000 crevit to ABC Comaany, Assuming only Band C consented: to such Tepresentetion, who will be held liable to €? : (Phil CPA, 88-1; 88:2-M; 89-1-M; 90-1-M, 87.2-M) a. E extended the credit to ABC Compery so 2 partnership liablity exists. Thus all the portners 4, Band C and D are liable. b. 8, C ang D are partners by estoppel and, thus, are liable prorate ta E, © Partners, 8 and C who.benefited from’ the credit extended by € are lable. &. Dwho made the representation is Habe to € 4 partnership is not’ dissolved upon the death of a (Phil cen, 29-2) 2. General pariner D. Industrial partner ©. Limited partner: 1. General limited partner A porrnership is dissolved on the death of a 2. General partner 0. Limited partner b. Industrial partner. ga, bore © General-Limited partner serine above ‘ a fot, A limited partner shall not become liable as a general partner unless: 4. He takes part in the control of the business &. He contributes his services to the capital of the firm His surname appears in the partnership G._ hls surname appears in the partnership name: 9: The word “limited” is not added to the name ‘of the partnership fe. Allofthe above A, & and C capitalist partners, 30,000, P20,000 and 10,000 respectively and ©, the industrial partner contributed his ” service Suppose x @ customer, is the erecitor of the firm to the amount ‘of °180,000. How can X recover the 180,000? (Phil CPA, 87-2; 90-2-M; 91-2/m, 39. 1-m, 95-1:M) each contributes 2X must sue the firm and get P60,000 from all the partners inclucing ®, the industrial partner. X cos SUI recover the balance ‘af £120,000 from the four partners jaintly b. X can recover from the fem 60,000. x can still retover the bolance of 'P120,000' from the eapitalist partner only © X san recover from the fem 60,000. x can stil Fecover the balance of 120,000 from any of the partners saugary. 8X ‘can recover from the firm 60,000 and onsider the balance of P120,000 as less, BL.PREWEEK8 A 53. Cee fees PROFESSIONAL REVIEW ani TRAINING 62. Can the partners. stipulate’ that the newly admitted Partner shall not be held liable for the obligations of the partnership arsing before hls admission? sich Of the following answers 's nat correct? (Phil CPA, 94- 1; 94-2) a No, because thirs persons are always pr by law. b. No, Because thie newly admitted partner should be 'deermad to have assumed all the debts of the “ed Partnership upon is voluntary participation in ) 68. the partnership. No, because the subject of the stipulation +s that the Mability of the new pertner should not be Satisfied out of the partnership property 4. No, Decause @ newly admitted partner is lable with respect to Nis. capital contribution whieh forms part af the partnership ‘A. 5 partner contributed P30,000; 8 as partner, P35,000; and C, as industrial partner, his services in the ‘partnership. ARier payment of ait abilities and expenses, only P18,000 remain as partnership assets. The dissolution of the PL8,000 cash shall be: )) 68. (Phil CPx, 86-2-M, BE-1-M; 90-1: 2m) ‘8, P12,000; B, P6,000; C, None 28, P6,000; 8, 65,000; C, P,000, ‘8, 9,000; 8, P5,000: C; None 28, P8,000; B, Pe, 000; C, F6,000 90-2; 93-2-M; 96- Which of the following isnot correct? In a simited Partnership composed af A, 8 and C, the contribution may be as follows: (Phil CPA, 98-1) a. Acproperty (limited partner); B-services (general partner); C-cash (general partner) b. Accash (limited partner); G-property (general partner): C'services (general partner) © Arsecvices (limited partner); B-cash (general partner); C-services (general partner) 2. Aecash (limited partner); | B-cash partner); C-services (general partner) (general This Is the order of preference in the liquidation of 2 partnership: (Phil CPa, 90-1; 92-1; 96-1) a. 1.) Outsider; 2.) Partners with respect to their capltal; 3.) Partners with respect to their pratt; 4.) Partnees aside from capital and profi bo 4.) Partners with respect to their capital; 2.) Parkners with respect to their profi; 3.) Partners: aside from caaital and. profit; 4.) Outsice creditors & 1) Outsiaer; 2.) Partners aside from capital and profit 3.) Parin 4.) Parthers with respect to their profit. 4. LY Partners aside from capital and profit; 2.) Outsider, 3.) Partners with respect to. thei ceolal; 4.) Pariners with espect to their pre © 65.4 and 8 are, equal partners in AB Partnership by Contrbuting ®50,000.00 each an Iuty 1, 1501.” On Duly 2 1991, the partnership contracted bn obligation to pay 2 the amount of P180,000.00 on August 15, 1981. On August 1, 1951, C was acmitted as a new partner, C contabuted P50,000.00.” How wal the Sbligation Se pag? (ni CPA 92:2) 3°", 260,000.00; 8, 50,000.00, , #60,000.00 B.A, P50,000.00; 8, P30,000.00; €, none & 8, P6s,000.00% 8, 68,000.00; €, P59,000.00 4, 8, 180,000.00; or 8, 160,000 60, and C, none E 67. without the written conéent or ratifeatin of the specific act by all the limited partners, # generat partner or all of the. general’ partners have, no. Sutharty to Page 6 of 13 = with respect to ther capital: www.prtc.com.ph a 20 any act in contravention of the certificate. Do any act which would make jt impossible to carry an the ardinery business of the partnership. Confess a judgment against the partnership, Possess partnership property, or assign’ their Fights in specific partnership property, for other than 2 partnership purpose fe. Aller the above. Which of the following is the disadvantage of forming paratian? (Phil CPA, 93-2; S4-2; 96-1) 2. The Free and ready transferability of éwnership 1. The shareholders are nat lable for the debts of the business, Because af the power of succession, the existence of the entity is not affected by the personal ssitudes of | the individual Shareholders, 4. “The subservience of minority stockholders to the Wishes of the majorty subject only to equitable Plaintiffs filed a collection action . against Corporation. Upon execution of the court's decision, "x"" Corporation was found to be without assets ‘Thereafter plaintiffs fled an action against its present and past stockholder including "Y" Corporation which owned substantially. all of the stocks of "x" Corporation, The two- corporations financed the ‘operations of "X" Corporation, May "Y" Corporation be held liable for the debts of "x" Corporation? 2. Yes, under the principle of "Corporate Opportun terlocking Director. b. Yes, under the principle of "Trust Fund Docrine” No, under the docrine of "Separate Entity ve’, nse the princiale of "Piercing the veil of entity" Compras alte, iy ‘There of the following corporations are not authorizes to issue no-par value sheres of stock. Which one is the exception? (Phil CPA, 97-2) 3. Industrial companies c, Trust companies b. Insurance companies d_ Public utlitjes ‘Any director,of @ corporation may be remaved trom foffite by @ vote of the stockholders holding er ‘epresenting: (Phil CPa, 98-1) 2. majority of the stackholaers present b. 3/4 of the outstanding capital stock 2/3 ofthe outstanding capital stock 4. majority of the outstanding capital stock In 2008, Corporation “ARARO" passed 2 board resolution removing "Xerex” from his: position as ‘manager of said corporstion..Tne by-laws oF “ARARO™ corporation provides that’ the officers are the president, general-maneger, treasurer and secretary, Upon complaint fled with the SEC, it held that the general manager could be removed by mere resolution of the board of director On mation for reconsideration, "Xerex" alleged that he could only be removed by the affirmative vate of the stockholders representing 2/3 of the outstanging capital stock. Is "Xerex’s" contention legally. tenable. 2 No, the vote required is majority of the board and 2/2 Outstanding Capital stocx consenting b. Yes, the voting requirements {s only 2/3 of the autstanding capital stock. No, the required vote is Majority af the Board of Directors consented by Majority “of the Outsatnaing Capital Stocks 1d. No, the voting requirement Is anly majority af the Board of Directors: " BL.PREWEEK73. A stock corporation shall have the power to purchase Dd OF acquire its own shares whether or nat there is an. Unrestricted reteined earnings 2. To eliminate fractional shares aising out of stock dividends b. To collect ar compromise an indebtedness to the corporation.arising out of unpaie subscription in 3 Gelinquency. sale ane to purchase delinquent share sald during said sale © To pay dissenting or withdrawing stackh entitled to pay for their shares, To purchase redeemable shares all of the above (A 74. The nationality of the corporation is determined by the place of the controling stockholders. This test le (Phil cPa, 92:2) 2. Control Test B. Dome Test «. Incorporation Test d. Management Test D 75. Shares deposited by the seller-or his agent with a Denk or third party to be delivered to the buyer or subseriber only. upon the fuifliment of the stipulater Suspensive conition 3. Promotion shares b. Founders shares ©. Redeemable shares 76.4 corporation cannot be an incorporator in the Philippines because only natural” persons. may bbecome incorporatars, except a. Cooperative as incorporator of sural bank b. Eleemosynary corporations © Charitable organizations incorparated under the Philippine tas ©. Corperation sole D)77: Suppose “%" Corporetion has on authorises capita stock of 10,000 eivided into 1000 shaves of stack With par valve oF #100 each Subscrbere A= 100 shares and poid 65,000 8 ~ 160 shares and pola p200 250 shares and paid P4000 5 ~ 50 shares and pais 5/000 £200 shores and paid 9600 Which of the folowing subscriptions will quality the Pres subscription requirement of Incorsoration 2. Combination of hana E 8: Comainstion of Cand © © Combination of & end & & alter the above 78. Choose the’ minimum requirement of the Corsoration Law to Corporate forrpation: (Phil CPA, 87-1... 87 2eM; 88-1; 88-2-M; 89-1-M; 89-2-M1, 90-1-F) 40-2 Mi; 92-1-Mi 94-1-m) ‘Authoriaed Subscribes Paid in Capital Capital ®. P100,000° 20,000 5,000, >. Pi00,000 = 20/000 4/000 ©. P100,000 25,000, 5/000 6 100,000 28,000 6,250, 473. & private corporstion organized under the corporation law commences, to have corporate existence and Juridical personality and its deemed Incorporated from: (Phil CPA, 86-2; 93-1-M; 85-2-M, 96-1-M, } % The date when the articles of incorparation is signed by the ineorporators, >. When the articlés ef incorporation and by laws are presented and received by the Security ana Exchange Commission and the fling fee's poi. Page 7 of 13 AL REVIEW and TRAINING CENTER, INC. Asso. oe 92 83, Bea, Pes, Des ter, © From the date the SEC issues 2 certificate of incorporation under Is official seat When the articles of incorperation Is notarized by a Notary Public ‘ ‘The board of directors of a cerporation consists of nine (3) members, wheré two (2) have died during their term of office and one (1) Is abroad, the quorum would be 2. Five (5) members bi Six (6) members . Four (4) members 6. Seven (7) members Which of the following will not quality as incarporator of @ corporation? (Phil CPA, 86-2-M, 60-2, 91-2, 92-2-m) ®% A minor who is emancipated by voluntary, ‘concession ar marriage. b. A married woman without the consent of her husband where the property involved in the act of Incorporation is paraphernal ©. A corporation.~ 3 Answer net given A corporste officer or director cannot take advantage their personal benefit in business opportunity. which the sorperetion inca able fo upeertke 7, Doctrine of corporate feion=jt gmet “Trust fund doctrine Doctrine of corporate opportunity Doctrine of limited capacity 5 6 Which of the following corporate acts need not be token up ina meeting, of the stockholders? Mere written assent of the member or stockholders, even without meeting Is enough to bind the coraaration, Adoption and repeal of the by-laws Amendment of the Articles af incorporation Increase or decrease of the capital stock Incurring, creating or increasing indebtedness None of the above os 3 bonced fn officer of @ corporation may hald two or more Positions in the corporation but nat as: (Phil CPA, 30. et; 92-1; 92-2-M; 94-2-M; 97-2-M, } 3. Chairman of the Board and President b. “President and Treasurer © Secretary and Treasurer ©. Vice President and Secretary The following, except one are qualifications of corporate directors: (Phil CPA, 49-1-M; 94-2; 86-2) 3, “Must continuously own at least one share during their term as diectors ‘5, Must own at least one share of stock © Ownership of shares must be recorded in the books oF corporation. 4: Majority are citizens of the Prilippines. The following are some of the requisites of @ de facto corporation, Choose the exception: (Phil CPA, 86-2, 57-2.) 2. Valid law under whieh itis incorporated, b. Attempt to incorporate © Assumption of carporate power None of the above The secretary of 2 stock corporation shall be: (Phil CPA, 86-2), A airector of the corporation ‘n Incorporator of the corporation # resident and citizen af the Philippines, OF fega age and citizen of tne Philippines, ‘BL. PREWEEKDes. 620 pa OF ESS) (One of the following ig not required and does not form part of the three-fold duty of directors of 8 corporation. Which ane? (Phil Pa, 92-2; 96-1) B. Duty ofDlligence ¢, Duly of Ooedie b. Duty of Loy d. Duty of Efficien Suppose that °" Corporation has already issued the 1000 oripinelly authorized shares of the corporation so that Its Board of Directors and stockholders sh to increase X's" authorized capital stock, Alte complying wit cepital stock, issued an addition ‘shares of the seme value. "S" presently holds 200 shares out of the original 1000 shares. whieh of the. fllawing stotements is true? a, 'S" must be offered equivalent 200 sheres unde? his pre-empuve vight stated in the Articles of Incorporation. Such preemptive right snail only be given iF it Is stated in the by-laws of the corporation ©. The increased in. share must be offered fist’ to the stockholders of record under the "doctrine af first refusal". (F they-refuse it will he offered to the general pubic ©. I ever there is a preei right, the same must be exercised within a reasonable time 25 fixes by the Board of Directors if the Articles and the by-laws are silent. ‘Those regulate different internal. matter of the carporation such as calling and defining the conduct of the meeting of stockholders and directors. (Phil (CPA, 88-1-M; 88-2; 89-1-m1) 3. Board of directors B. By-laws © Attcle of incorpor J5 a by-law provision of "x" Corporation “rendering ineligibe if elected, subject to removal, @ director he is also a director in a corporation whosa business is in competition with antagonistic to said corparation” valid and legal? a. Yes, under the principle of “corporate opportunity b. No, under the principle of “separate entity, © Yes, provides it is approved by 2/3 ef the outstanding capital stock 4d. Yes, under the principle “of vested interest® Contracts between 3 corporation and third persons, must be mage by oF under the authority oF its: (Pni CPA, B8-1-M ;, 93-1; 96-1) 3. Board of Directors BL Stockholders President and Chiet Operating Officer 8. General Manager In the amendment of the Articles of incorporation of a stock corporation, the fallowing vs necessary. (Phil CPA, 86-2; 96-2-M) 2. Amendment by the majority vote of the Board of Directors pls a vote or written assent of t stockholders representing at least 2/3 of outstanding capital stock b. Amendment by a vote of 2/3 of the st ©. .Amendmer Directors. 0. None oF the three. holders. A corporation msy invest its finds in any other corporation or business or for eny purpase other than Brimacy for which it was organizes. (Phi CPA, 30-1 92-1-M} 86-1-M; ) ¥ 8 majority vote of tne Board of D’ SIONAL REVIEW and TRAINING CENTER. IN ne requirements law on increase of D9S 96. Asz. 99 a. There’is a majority vote.the Board of Directors ‘and rotified by the stockholders representing 2/3 fof the outstanding capital stock b. It i reasonably necessary to accomplish its secondary purpose, the approval of the Stockholders not necessary. ere Is majority vote of the Board of Directors. ‘There is majority vote of the outstanding capital stock Cash dividends as distinguished from stock dividens: (Phil CPA, 93-2) 2. It does not invalve any disbursement, 1. Its still part of the corporate asset. ©. It increases legal capital 1G, 1Lis Geciared only by the Board of Directors \which statement is correct? 2. The Board of Directors thay hold its meeting outside the municipality or city where its principal Of business is located end the directors may attend by proxy, while the stockholders’ meeting FORE by Tele ine cy or municpalty where the principal place of business of the corporation Is located ‘and the stockholders may. attend personally oF by proxy: X ®. The Board of Directors ‘may hold its meeting outside the municipality or city where its prineipal place of ousiness is located and the directors ‘must attend personally-and not by proxy; while the stockholders meeting must by held in the city for municipality where the principal place of business of the corporation is located and the Stockholders may attend personally or by proxy. 6 The Board of Directors must held its meeting only. veithia the municipalty_ar eity where its principal place of business is ingated and the directors rst attena personally and not by proxy; while the stockholders’ meeting may be eld within or feven. outside the eity or municipality where the Principal place of bysiness of the corporation is locates and the stockholders may attend personally or by proxy J. The Board of Directors may hole its meeting outside the municipality or city where its principal place of business is located and the girectors may attend by proxy; while the stockholders meeting must-rim the city or municipality where the principal place of business of the coraaration is located. and the stockholders must be in attendance personally This isan authority to vote in @ corporation stockholders meeting: (Phil CPA, 88-1; 86-2-M) 2. Proxy ©. Cereificate of stock D. By-ians 4. Shares of stock vinich of the following is (are). valid consideration far the purchase of stocks af 2 corporation? 1. Real estate IL, Arnegotiable promissory note in money IIL, Monetary consideration for services to, be performed a. only Both I and 111 a. only d. Both Tf and nr Cash dividends as distinguished from stock dividend: (Pnii cP, 93-2) 12. [edaes net invalve any disbursement b. itis still part of the corporate asset. [increases lagal capita 0. Tkis declared only by the Board of Directors. ~BL.PREWEEKp00. Dro. A 02 F 103, stockholders or Right which srporation cannot be deprived without the consent the existing Of their right to subscribe or to purchase new stock issued by the corporation or unissued. original stock, In proportion to their holcings before it can be offered to others: (Phil CPA, 85-2; 83-1.m) 2. Right of redemption c. Right to purchase b. Pre-emptive right’ ¢. Nane of them P 106. Any stoctholéer of @ corporation shat! have the ahs te dissent ane demand payment of te Gabe sof his shes in thee tte hea Same Sa ee scent Co 8771; 35-sem; 96-28) pepemsen Hane! @ th case of ony ametment ta the ares of D107 incorporation neich es the effet of cca Or restricting the debts of say stocehts floss of shares bln case ot merger or consoidetion In ase of sale, Tenge excnonge_transe morgage, pleege or atnererspooten Gra ee Sutstontly i of the corporae sects ny property at tne corsoraon, 4. fntase of curing ‘eating. ar icreasing bonded inacbtecnons, This is a document of a corporation acknowledging: 108, the interest of a stocknolder in the corporations assets: (Phil CPA, 88-1-M; 89-2) 2. Certificate of stack c. Capitol stock b. Shares ofstock “a. Stockholders equity Stockholders of the close corporation 3 Are given right-of pre-emption in the issuance Of all kinds of shares including treasury shares >. May enter into a. written agreement malsng them partners. among themselves © May, for any reason, withdeaw from the corporation. and compel it to purchase. the shore et their fair value, which shall not be less than their or issued’ value, provided. the corporation has sufficient assets to cover ite debts and liablities exclusive of capital stock, Any of them may, by written aetition to the SEC, compel ie dissolution of the corporation whenever any act of the sctors or officers of this corporetion .is legal or frauduler Sishonesty or’ oppressive or whee corporate assets are being misapolieg ©. Allof the above Atos. The following are: methods of corporation: (Phil CPA, 86-2, 91-2-m) 2. “Expiration of the term Fallure to organize and commence business within two (2) years from date of issuance ot Certificate of incorporation, © Shortening oF the corporate term 4d. Allof the above dissolving a e110. Page 9 oF 13 2. Are organized under thaa the Philippines. 5. Are not permitted to transact business in the Pailppines until after they have obtained = license for the purpose from Sec © If found to be engaged in business without any license, they are permitted to sure in ony waar OF administrative agency af the Philipaines sot may be use! 9 Are bound by all tas, rules and regulations applicable to domestic Corporation of the same G2S8 ut governed by the tows of the connie Of “Incorporation as."to creation, formance the laws of countries other wwww.prte.com ph VIEW and TRAINING CENTER, INC. “8, "Pay C or order °20,000.00," Organization, desoution or such as tk the Feintions, bites, or lls af etseuders ‘embers or ater of corposstion to cach othe, era the corporetion e. Alot ine sbove The following are functions of a negotiable \nstrument. Choose the exception: (Phil CPA, 93- 2194-2) a. it increases purchasing power in circulation . -itincreases eresit circietion: ©. as substicute for money, 8. 38 legal tender, & corporate certificate of stock Is not negotiable lstrument because it lacks the following requisite ‘of 8 negotiable instrument. (Phil CPA, BB-I-M; 89- 4, 96-2M; ) Tt must be in writing and signes by maker or orawer. b. It must’be payable on demand or at a fixed eterminable future time © It must be payable to erder or bearer, 4. It must contain an unconditional promise or order to pay a sum certain in money, Which of the Totlowing ' instruments is not ‘negotiable for the reason that the instrument is rot Bayable at 9 determinable future time: (Phil Cea, 8751) 3 "On the death of x, 1 promise to pay to the order of 8 P1,000, (Sod).4" b, "On oF before October 30, 2986, ay B or his order 81,000. (Sed) a © "Sixty days after sight, T promise to pay to the order of B P1,090, 1 promise to iy 4. “Ten cove nett he goat or x 1 promice to pov or ns ser ie (Spay ar Which of the following instruments is egotlable? (Phil CPA, 89-1-m; 92-2. 90-2-M) 2 "Pay to C or order 20,000.00 gut of” my cash in your possessign”™ (addrSssed tot eeeese ate "Pay to C oF order 20,000.00 and reimburse yourself out of my cash in your possession (Addressed to 7, signed by D) © 71 promise to pay C or arder, °20,000.00." (Signed D}, (Addressed to T, signed by B). One of the requisites of a negotiable instrument is that i must contain an unconditional promo. oy Order to pay a sum certain in money, Which oF the following cenotes non-negotiabiity? (Phil CPA, 9 yD 2. 1 promise to pay to the order of | the sum of 900 at the DBP Manila >. Upromise to pay to the order of ¥ the sum of 600 end to deliver one-foulth of the vice harvest in my farm; =: ‘ © I promise to pay N or bearer‘in Wena the sum LP18,000 in Phtippine pesos or US Dollar 4. T promise to pay £ or bearer in Manila the sum of P27,000 in Philippine pesos or US dollars, st ‘he option of the holder. <_< BL.PREWEEKgue. D 113. Aus. gus Vane. Page 10 of 13 Which of the following is not negatiable? (Phil CPA, 981) 2. Pay to D or order P10,000 en or before Dec. 31, 1997, (sg €) b. Pay to A or order P10,000 notice of dishonor waives. (sad 8) c. Pay to B oF oFcer P5,000 oF deliver two horses at the option of the Nolger. (59d. C) 4. Pay to C oF order P10,000 and to deliver 10 sacks of rice (sed. D) pus, Which of the following promissory note i not egetiaole for reason that the instrument is not payable in surn certain in money: (Phil CPA, 96-1) 3. X promises fo pay to the order of & 10,000 in two equal installments, the first installment payable on September 12, 1995 and the Second installment on or before October 12, 1595, bX promises to pay to the order af A Pio, with 125e interest thereon, paza. 09. &. X promises to pay ta the order of A p10,a00 in (L122 instalments, 6. X promises to pay ta the order of A P10,000 payable in dollars at the rate of exchange Prevailing on October 13, 2995 promise to pay the bearer, Juan Dela Crus, the sum of P20,000", (Signed) Jose Paz. The ramissory nate Is: (Pail CPA, 92-1) 3. Negotiable promissory’ note payable on semand 1, Negotiable promissory note payable ta order, Negotiable promissory note payabie ta bearer 4d. Non negotiable. 122 An instrument is considered payable on demand: (Phil CPA, 88-1; 89-1; 89-2) 3: Whar no time of payment is expressed b. When peyable to order When the last endorsement is in blank: 1. When the last endorsement is restricted. An endorsement whefe the indorser adds the Phrase “without cecaurse” is called: (Phil CPA, 20: 2) 3. Blank indorsement bi Restrictive indorsemeat © Qualified ingorsement 4. Conditional ingorsement Which of the following is not a secondary party? (Phil CPA, 95-2) 2, Acceptor for honor ¢. Payor for honor Be 3. Drawer 6. Indorser [A check upon’ which the holder's signature must appear twice, one to be affixed by him at the time Its issued and he second or counter signature, ta be affixed by nim before itis paid. Otherwise it is Incomplete, is called: (Phil CPA, 91-1; 96-1} 2. Certified Check ¢. Traveler's Check b. Stale Checke d. Manager's Check 3. The distinction between the acceptance far honor f4124 ‘and ordinary acceptance is that: (Phil CPA, 91-1) 2. In acceptance for honor, protest Is not requires While in ordinary acceptance, there must be previous protest. b. In acceptance for honor, the acceptor is drawee while in ordinary acceptance, ‘acceptor must be 9 stranger to the bl the the www. pric.com.ph In acceptance for honor, consent of the holder i required while in ordinary acceptance, such consent ie not required a. Answer net given X obtains the signature of ¥ for autograph purpose. X writes a negotiable promissory note above Y's Signature. The nate was validly negotiated to Z wha is @ halder in due course, What king of defense an ¥ avail against 2? (Pail CPA, 95-1) 2: Personal defense" c. Equitable defense b. Real defense 4. Qualified defense Which of the following iS an example of real nse. (Phil CPA, 94-1) 2, Acquisition ofthe instrument by force D. Acquisition” of the instrument by illegal Fraud in indarsement. Fraud in Facto. A makes a note payable to 8 or order. The Following are the ingorsers of the note ia ‘the order of their indorsements: 8, C, D, E, F (holder), and G (subsequent holder). The note is dishonored in the, hands of F, who notifies 8, C, D, and E Which Is Not correct? (Phil CPA, 96-2-H; 97-2) a. The notice given by. F to B operates to the benefit of C, 0, € and G. . The notice to Cinures to the benefit of D, € and s. c. The notice to C inures to the benefic of 8. &. The notice ¢o D inures to the benefit of € and Antonie issues a bill to the order of Juan, and Juan Indorses it to Pedro. Pedro indorses the bill to Mario, Mario to Rodolfo and Rodolfo indorses the bill to Jose, the holder. Which of the following is not true, if Jose’ decides «to strike out any indorsemient not mecessary to his title? (Pail CPR, 93-2; 96-1-™) 2. Tose cancels the indorsement of Pedro, Pedro Is relieved from liability b. If Jose cancels the indorsement of Juan; Juan, Pedro, Mario, and Rodolfa are relieved trom liabity. & Tf Jose cancels the indorsement of Pedro; Pedro, Mario, and Rodolfo are relieved from Nabi 4, F Jose cancels the indorsement of Mario; Mario ‘and Rodalto are refiaved from hilt. M makes a promissory note for 2,000 payable to the order of P. ? nagotiates the nats to A who with the consent of P raiges the amount to P20,000 and. thereafter indorses:it to 8,' to C, and C to D who is not 2 holder in cue course. [i this case: (Pil CPA, 91-2; 95-1-H) a. D can recover P2,000 as against M, bP and & are liable to 0 for P20,000 © Band Care not liable to D. 4. Answer not given Which of the following instances does nat discharge a negotiable instrument? (Phil CPA, 93-2; 96-1) 3. Payment by maker of @ promissory note before maturity cate, bTIntentional cancellation of the instrument by the holder. Payment by party primarily lable to holder or his authorized representative ©. Voluntary surrender of the instrument by the holder to the maker without collecting, s ~ BLPREWEEKPe naan eee eG TRAINING CEN. 125, ‘ 2 (828 B12 . Contract ofsale 4. Barter If redemption is made, which, of the féllouing will Dot be paid by the seller to the buyer: (Phi CoA, 92-2; 9641; 98-1.) 2. Price made by the buyer. b.. Experises in the execution of the sales contract Paid by the bu © All necessary expenses on the thing sold and to be redeemed. @. Interest on the price paid by the-buyer. The foliowing are the alternative remedies, except fone available to the buyer in case of breach ot Warranty by the seller 2. Keep the goods and ask for damages b. Refuse to accept the goods and ask for emages © Rescind the sale and retain the goods 0. Keep the goods and set up.against the seller by Way of recoupment in price Z BL PREWEERPROFESSIONAL REVIEW D139, Aue race ae 143, o* Page 12 of 13 M,N, and O are co-owners of @ parcel of land art indliviso, M sold Nis 1/3 share ia the land to N in an ‘absolute deed of sale. Which is correct? (Phil CPA, 97-2) 2. The deed.of sale between M and N is void because it was not made in favor of a thira BMS: iar. b.. © may exercise his right of redemption on t interest sold by M 10 W. © © miay redeem only 1/2 of the interest sold by Mion. 6. © cannot exercise the right of redemption because the sale was.made in favor or a co. 145. When goods aré delivered to'the buyer on “sale oF return” for period of seven days, awnership of the ‘goods passes to the buyer: (Phil CPA, 88-1) 3. Upor-deiivery of the goods 'b. Upon expiration of seven days Upon acceptance by the buyer of the offe- of the seller 4d. Upen perfection of the contract Aa7. 1 sold to 8 a parcel of iand for-P30,000. The sal is. evidenced by a memorandum of agreement of sale written in Cebuano dialect, One wees later, A Sold the same parcel of land to C for P40,000, which was evidenced by a formal deed of sale Upon buying the property, C, wha was aware of tne First sale, immediately took possession af the land and registered the deéd of sale in her favor with the Register of Deeds. When informed of the second sale, 8 subsequently registered an adverse claim to the property. The parce! of lend shall belong to: (Phil CPA, 98-1) 2B, because she has got aa older title D.C, because the sale was made on @ formal deed vs of sale c. C, because she is the first to cegister the deed of sale dC, because she is the first to take possession of the jana ‘A appoints B to sell his iand Example 1 = If the authority of 6 is oral and B sells. the land in writing, the sale is valid. Example 2 - If the authority of B is in writing end B sells the lang orally, the sale is valid. (Phil CPA, 2,962.) 2. First example is false bat second example is true. b. Bath examples are true Both examales are false 6. First example is true but the secone example is False, Aus Mr. Principe constituted Me, Ajente as his authorized agent to sell the former's Lancer car For 300,000.00 and to pay him. 5% commission on the ‘Selling price. Mr. Ajente sold the car for { 150. 320,000.00. Mr. Ajente shall remit to Mr. Principe (Phil CPA, 802-14; 91-2-m4; 92-23) 3. 300,000.00 ©. P265,000.00 3. 320,000.00 4. 393,000.00 A commission agent: 3.” Has the option to act in his own name. bb. Generally, cannot sell on credit pis © May be an agente del eredere i he receives ‘guaranty commission, 4. Allof the above, \@ TRAINING CENTER, INC, ‘scars risk of callecting from the buyer the price of the sale, 2. Commission agent b. * Belegacion ©. Quasi-tradition 1. Agente del credere appointed A to sell the former's car for 200,000. Asold the car to X for P200,000 but A acted in her foun name. After delivery X inspected the car and she found hidden defects in the ear. Can X file an action against P even when A acted in her own, 2. No, under “caveat emptor” let the buyer beware b. Yes, because this is-2 contract involving property belonging to the principal c. Noy Because A acted in her own name not of the principal 4. No, Decause the contract of sale is already Derfected, hen the mortgage is due and remains unpaid, can the Mortgage appropriate the morgaged property? i answer: No, the only right of the mortgages- creditor is to forediose the mortgage. 2" answer: Yes, if there is 2 stipulation in the ‘mortgage contract allowing the martgagee-creditor to appropriate the property: mortgaged. (Phil CPA, 96-2) 2. Ist answer correct; 2nd answer wrong D. Ist answer wrong, 2nd answer correct. © Both answers are wrong, 4d. Both answers are corcect, Ben pledges his watch to V.Y. Domingo Agencia for P5,000. On due date, Ben failed to redeem his. watch. The pawnshop sold the watch at a public auction to the highest bidder at P4,000. (Phil CPA, 189-2-M; 90-2-M; 98-4; 98-1; ) 2. The pawashop can recover the deficiency of 1,000 from Ben b. The pawnshap cannot recover the deficiency of 2,000 unless there isa stipulation. & The pawnshop cannot recover the deficiency of 71,000 even if there is @ stipulation. 4. The pawnshop can recover the deficiency of 1,090 even without a stipulation Cesar pledged his Toyota cat to Dan for 100,000. Cesar Was unadle t9 pay the obligation two (2) months after the obligation became due and demandable. Wherefore, Dan sold.the car at public auction for PB0,000. | Can Dan recover the deficiency of 20,000 from Cesar? 1" answer: No, he cannot recover the deficienty Jen is there is @ stigulation the he can, 2° answer: Yes, he can recover the deficiency even without stipulation. (Phil CPA, 97-2; 98-1-M) 2, Ist answer correct, 2nd answer wong b. Both answers are, wrong € Istanswer wrong, 2nd answer correct d._ Both answers are correct B stipulation whereby the pledgeé or mortgagee automaticaly becomes the oviner, of the thing pledged or mortgaged: (Phil CPA, 93:2) 3. Pactum commissorium. b. Consoligation of ownership. Conventional redemption, 4. Consignation. ©1, 02, 03 obliged themselves jointly to pay C 18,000. To secure the obligation D1 pledged his fing, D2 tis T.V., D3, his refrigerator. On the date 4 “BL.PREWEEKTT Sea cemameecran ON TRAINING CENTER, INC. of maturity DI paid © P10,000. When of the Following statements is tue? 3. Di Can redeem object 1 because the obligation cs is joins b. Di can redeem object 1 and object 2 because a they are proportionate to tne amount pai b. € Oi'can redeem any of the abject pleaged/ 4 BA cannot redeem any ofthe thing pledged g 154. because the incivisbilty of the contrast of Dledge is not affected by the fect thet the a obligation is not soldary. b. Real morgage 2. May guarantee future debts b. Objects is immovable property Is an accessory contract 4. Aller the above 0 152 358. B asa, 1%. If the immovable morgaged is sold, and the 6 ‘amount realized is less than the mortgage debe, © ‘ Page 13 oF 13 www.prtc.com.ph, {in Feal estate martgage, the mi mortgaged property F of the mortgages property is liable to leficiency, If any. ‘A stipulation forbidding the owner from alienating the immovable mortgage is vali Both are True Both are False ©. 1% is True; 2"'is False 0. a is False; 2% is True tgagor can sell the With the consent of the mortgagee in writing Even without the consent of the mortgagee. Only with the consent of the mortgagee ia weiting er orally All of the above. Persone! properties that can be mortgaged under the Chattel Mortgage Law: Share of stock Ungathered fruits or products Interest in business: All of the above BL.PREWEEK cad‘since 1977 BUSINESS LAW BL. rs p10, Desides the proxy: Page 1 of 3 ORATION PROFESSIONAL REVIEW and TRAINING CENTER, Inc. “Mania 7359348/73790 * Cebu Cy 0322557777 0C 122 * Daan Cy 082 2250019“ Cagayan de Oo Cy 65822725150 CPA REVIEW MALVAR/J.ONG/T.LOPEZ __- OCTOBER 2008 MULTIPLE CHOICE The contract between corporations with interlocking directorates is generally considered as 2. valle 5. Unenforceabie b. rescissibie fe. Void © Veidabie P, the President of X Corporation, by virtue of @ Fesolution of the stockholders. empowering him to enter into @ contract with T Corporation for the Durchase of certain machineries, actually did 50. Such contract is: 2 valid d-unenforceabie b. rescissibie fe. Void © voiaabie The sight of appreisal on the part of stockholders ‘plies in this corporete act, except 2. sale of all assets and properties b. merger or consolication © amendment of Articles of incorporation deseriminating against certain shares, 4d. increase or decrease in authorised capitel stock The voting requirement in this corporate act is a ‘majority of the outstanding shares. 2. adoption of by-laws . “delegation of power to the Board of Cirectors to amend or repeat the by-laws © appointment of another corporation to manage Its business de> all of the above hone of the above dn. er Which of the directors of @ corporation hove a tenurep 1 of three (3) years? ‘membership corporations Stace educational religious Rone of the above ‘This corporetion can declare dividends out of capital a. banks <. mining companies b. trust companies _e. none of the save The business of this corporation can be managed by the stockhoigers 2. close b. open © eleemosynary 4. none of the above all of the above This share con be acquired by the corporation which issued it even without Unrestricted retained eernings, 8. founder's shares, par value shores bi redeemabie shares, no-per shares. pis Record of all stocks in the names of stockholders are 25. contained in 3. lecger Bb. stock ang transter books ©. journal 1. “Articias of ineornoretion enone of the above Other persons wha can vote in corporate mestings www.prtc.comph 2. guardian ©. administrator @. allof the above Which of these is corporation? Development Bank af the Philippines The National Development Corporation ‘The Philippine Parts Authority Nane oF a, b, and c Allof a,b, and « an example of @ public 5 Is 8 stockholder in X Corporation vino haapens to be incebted to C in the amount of 5,000,000, which became due and payable on December 15, 1999. S sold mis: shares of stack in X Corporation for P20,000,000 in favor of T on August 19,1998 who was not able to record the transaction in the: stock” and. transfer “Book of Corporation, ‘Sometime in August 2000, C sued 5 in court where the latter was adjudged ‘ilaole to the former for 5,000,000 whereupon the shares of S were gornished by C. Who between C and T is better entitled to the shares of 5? 2. T because he legally bought the shares from C way back in August 19,2998, o, T because sale is preferred in the transfer ‘ownership rather than garnishment, © C has the beiter right because T aig not Tegister his sale in the corporate stock and transfer book whereas the garnishment by © 1s 3 matter of corporate record d. Both of aang e In this case, vacancy in board of directors is to be Filled up by the stacicnolders: 2. If the vacancy arose out of che ouster of 3 director ar directors, b. If the vacancy arose out of an increase in the number of directors through an amendment of the Artcies of Incorporation, «If because of the many vacancies, there is no longer any quarum. 4, All ofthe above. ‘The rule Is that the corporation can only be bound by acts of the board of directors acting as a body ‘and not Individually. Which ts the exception? 2. IF the directors are themselves the only stockholders of the corporation, b. If the act. of an individual director for the Corporation is ratiied by the board of directors, © Tf the corporation isin estoppel because’ it ‘misrepresented to the third person that = particular director can bind the company. a. Alor tne stove This is an element of a de facto corporation: 2, There must be 2 law under whien corporations. many Incorporate b, There must be a colorable attempt to comply with uch tow, ©. There must be belief in good faith that it is @ corporation, 4, There must be use or exercise of corporete powers fe. Allof the above ~~ BL.502BPROFESSIONAL REVIEW and TRAIN Ais E 20, A 22 C23. ‘Page 2 of 3 ich of ese groups, of person can_vataly 24 fganie 2 corporation under Philiapine lowe? % Fiteen Chinese, ten of wham are resicing in the Philippines : D. Ten Filipinos, five oF whorn areimmnigrants in the U.S.A, © Five Germans, two of whom are residents of the Philipaines, 4. None oF them: eas A contract entered into by a director with the Sorporation in which he is 9 director Is generate Considered es voidable. Which is the element cine, will make the contract valig? 2 That the contract Is fair and reasonabi the circumstance. b. That his presence in the meeting of the board 182s not counted as part of the quorum © Tat Sve, at all "he ved for nis) antract, is not necessary for its opproval 26. 4. Allofthe above under The Catholic. Church of the Philippines may be Fegarded 35 an example of: 2.” Stock corporation“. Both of b and c 5. Corparation sole €, None of the above © Corporation by prescription sept ing, feauirement for delegating power to ) 27 adopt, amend’ or repeal the by-laws in favor of the board of directors le 3. 2/3 vote of the outstanding share b. Majority oF the vote of the directors plus the ote of a majority of the autstending shares & Majority vote of the directors plus the 2/3 of the outstanding shores 4. 2/3 of the vote af the directors Bw. The ‘voting requirement in this corporate act is. majority vote of the. directors plus the vate: eo 2pproval of 2/3 of the outstanding shares 8. Amend the Articles of incorporation . Invest corporate funds in snather cor oF for purpose other than the main purpose © Enter into contracts of merger or consolidation E 28. with another corparations (. Tncur, create or increase bonded indebtedness © Allorthe above ion ‘he following are similarities between a corporetion ‘and partnership, except: 8. Both are complicated to orgenice. D. Both nossess juridical personalities separate and distinct from its memoers Both are an aggregate of persons, % Both can act only through agents, in the Partnership through ‘the partners and in ine Corporation through the board of cirectors, All oF the above Statement 1; De jure corporations are not subject {@ attack, not even by the government, C30. Statement 2: De facto corporations are subject to direct attack by the government, although nee Subject to collateral attack by private individcols a. Both statements are true 5. Both stotemente are false, & Statement 1 is true, but statement 2 Is false 4. Statement 1 is false, but statement 2 is rac 3 These corporation are prohibited from issuing no ar shares, except 2 Banks 5. Trust corporations © Stock exchanges 4. Insurance companies e-Pubite utility corporations ww. prtc.com.ph ING CENTER. INC. On dissolution, the liquidation of the business of he corporetion may be undertaken by a. Board of directors or trustees b. Assignee or assignees appointed by the board of directors, © Receiver appointed by the courts, ©. Allo the above. The time or duration for the winding-up or Uiguldation s for @ period of three (3) yearn, except When the fiquidation is to be made by the board of directors ©. When the winding-up is to be cartied out by the assignee or assignees, © When the liquidetion is ordered ta be done by the receiver appointed by the courts, ©. None of the above Which of these tests for determining the nationality af @ cornoratisn is applicable under our Corporatiot Coser 2. Incorporation test only b. Controt test only © Business domicile test only 9. Both incorporation test as the general cule ane Control test as the exception Corporate personality begins - a From the signing by the incorporators of the articles of incorporation ». From the notarizatin of the articles of incorporation § from the fling ofthe articles of incorporation 4. From the issuance by SEC of the eartiiste of incorporation Which of these corporations Is mainly organized for Charity or charitable works? 2.” Religious corporation b. Eleemosynary corporation © Private corporation 4. Public corporation In which of these cases may the right preemption of stockholders be denied? 2. IF the right is denied incorporation b. TF the inerease in authorized capital stock is for the purpose of complying with 2 law requiring Subscription by the public © By 2 vote of 2/3°of the outstanding shares where the increase in authorized capital stock shell be exchanged for a property needed foro corporate purnote. 0. By vote of 2/3 of the outstanding shares where the increase in authorized capital seock shall be used to pay the corporate. debe Previously contracted e. All ofthe above in the articies of Which of these dividends does not reduce or Gecrease the capital in the hands of the corporation? 8. Cash dividend b. Property dividend ©. Stock dividend 4. Liquidating divicena There is said to be an unreasonable accumulation of unrestricted retained earnings when they are iy ex Both are False 2. iis False; 2"is True Warranty against hidden defect is: 2. An essential element c. Natural element b, Accidental element 4. Structural element De. Sid sold to Bid 2 specifi car for P300,000 payabie in 4 quel installments. First and second installments, Bid failed to pay. The right of Sid Is, 2. Exact fulflment of the obligation BL Cancel the sale Demand payment from Bis ‘ 23 All oF the above www.prte.com.o! Which of the following canniat be the object of @ contract of sale? 2, Hereditary right b. Sale of creait Lotta winaings 1. Land hich the seller exnects.to buy Ht movable property shoule -have been sold to siferent vendees, the ownership shall be transferred to the person 2. Who have pald in good faith the purchase price in tut b. Who ‘in good faith fist recorded it Registry of Property, © Who present the oldest title in good faith. 4. Who had first taken possession in good faith in the Three of the following are implies warranties in 2 contract of sale. which Is the exceation? . Reasonably fit for the aurpose they are acquired. Right to sell the thing at the time the contract 5, perfected, Merchandise in quality d._ Free from charges or encumbrances aot declared or kaown to the buyer Adem, 8 sugar miller, and Gen, 3 manufacturer an Sealer in whiskey, ‘entered into an agreement whereby Adam was to deliver Sugar wart P30,000 to Ben who was to give Adam 300 ootties of whiskey ‘worth P30.000. At the date of delivery, Ben hag no Whiskey and he paid Adam P30,000, The contract is, 3.” An agency to sell B.A contract of barter exchange. © Acantract of sale ©. contract for services Abel, Ben, and Cain are co-owners of an undivided areal of land. Ben sold his 1/3 Interest to Cain absolutely. Which is correct? 2. Abel may exercise his right of redemption on the interest sold by Ben to Cain 8. Abel cannot exercise his right of redemption becouse the sale was made in favor of 8 ci ©. The sale made by Ben to Cain is void because it vas not made in favor of a stranger. 4d. Able’ may redeem only 7/4 of the interest sold by Bento Cain, In a contract of sale executes by Sin to Bin, it appears Sin solé his motor vehicle to 8in and Bin bought it for P100,000. it turned however, Sin has three motor vehicles: Nissan valued at P160.000, Mir Ace van valued at P140,000; anc a Jeep valued at 120.000. Which ef the following ts correct? a The contract shell be reformed because there was mistake. ‘The parties can ask for interpretation because the word motor venicle is ambiguous, © The parties can ask for annulment of the contract. 4. There is no contract If redemption is made, which of the fallowing will not be paid by the sellar to the buyer? 3. "Price paid by the buyer. b. “Expenses in the execution ef the sales contract, paid by the buyer All necessary expenses on be redeemed 1. Interest of the price paid by the buyer. thing solo and to Reluctantly and against her .good sense and judgment, Sheila entered into a contract for delivery a Z ~~ BL.S05DRILL 1B 30. NING Of 5 tables to Bete for contract is s Vos ©. Unentoreeable D Voidable 4. valid Sale is distinguished from dation in peyment in that in sale 2. There isa pre-existing obligation or credit, The cause is the price 518 @ made of extinguishing an obligation in the ‘of payment. 0. All of the above ‘Ann offered for sale to'Bella 10 sacks of wagwag rice. Bela asks Ann the price per sack. Ann told Belly that the price per sack is P50 aver the price in Dice ‘market. The price is Certain Because-it has got reference to another thing whieh is certain Not certain, parties wil go to © Not certain'decause the price 's not stated 4. All ofthe above, court 3 Divisoria market Ifthe price is uncertain 3. The transection is void b. The price isto be fixed by the court 432 The sale is unenforceable 4. The buyer must pay'a reesonable price Pave sold to Babe rally a parce! of tend for 500,000, of the lend cH fuse to pay claiming in his defense the Stetute of Freud, b. Babe may return the parce! of land to Dove © Dave can collect from Babe because the contract Was already executed partially, Babe may refuse to pay on the ground that there 's no written contract t@ support the sale ENTER, INC, ® price of 20,000. Thee-38, xenon, p>». 40. q dar | U.34. The Recto Low s applicable 2." Sale of car on aight term b. Sale of house on instance & Sale of car on instalment where the buyer consttuted @ mortgage on is une 4. In the foreclosure sale, should ‘the. vences's four ony Cover bro ar more neaimen A gp D3. Present in ‘every contract of sale a. Implied worranty of teneee B.Implieg warranty af merchantability © Implied warranty sgoinst eernnon 4. Aorthe above 0°36. Thvee of the folowing are: elements of the vendors Hoht of stoppage in trensitu, whieh Is the since au The buyer must be insolvent 8: the goods must be in oaeet Gi The seller must be unpana Gi Te seller must Be in possession ot the goods G37, Sera sold to Brea a specite plano. It wes agreed thatB 42. SE3, WOuld fix the price a week later at ine appointed time, Sera name the price PEO.O00, Bes agreed. Is the sale perfected? 2 No, because the price was left to the discretion of fone of the contracting persics >. No Because at the time of sale the price was not fixes, © Yes, because the price fixed by one of was accepted by the other 4.” Allo the above the parvies Page 3 of anter the death of his father, sold his inheritence though its amount has nol. yet beer determined to Bart, for a consideration af 160,008 a The contract is valid only ifthe inheritance values ot least equal to or more than P100,000. b. The contract is rescissibte. © The [contract is valid even though nothing emalis of the inheritance to be turned over to Bart, 4. Contract is void, future inheritance cannot be the object of sale, Ben went to a store and offered to buy @ certain Water f0"-°2,000. Dave said that he is ling to sive It for P2.500. Ben turned to go away because herd ast want to pay the price, Dave called him sna co, he was willing to sell the watch for P2000, te ne contract perfected? 2 Yes, becouse there was 2 meeting’ of minds between Dave ang Ben >. No, Dave made anather offer not accepted by Ben, S Yes, because the consent was ” already ‘manifested at the time of the offer, 9. Yes, because Ben's acceptance is not qualified Rene owns a mango trée bearing fruits, ready for harvest. He seils all the fruits of that tree to Mar once we the sum of P10,000. Rene tells mar thet he ‘can Just harvest the. fruits anytime ne inet Pointing @ the particular tree. For legal purposes: Rene has fulfilled ris ebligation to celver the ‘ors fruits to mar by. 2. Traditio brevi manu 5. Tracitis simbotica ©. Traditio long manu 4. Al of the above Ado, a eimployee, suffered from severe arancia. and was confined in the mental hospital 1894, ‘after his release he was placed. unece the auardianship of his wife to ‘enable him to get me retirement’ pay, In 1997" he. became ® Sninng Brospector and ‘sold some mining claims. tn yeot 2000 he sued to annul the sale claiming that he wc Not mentally capacitated at the time of sale. The eats in question was 2. Wlegal ©. Voidable B. void ¢. valia Sodom offers to Barden 100 radio sets for P100,000 to advise that he accepts Provided the interest is reduced to Sth. If Sodom wea Borden are both merchants and there is ne torte, Communication between them relating to the terms omen 2 Borden has made » counter offer >. The contract is formed incorporating only the terms of Sodoim & The contract is perfected with Borden's reduced lntecest rate becoming part of the agreement 4. All ofthe above Sony sells to Billy his 1998 Honda car, and leaves to Billy to determine the price. Billy refises toe The rice but took the car for his use. Whice of ie following statements is correct? #, No sale, because. the price Is not fixed by the parti > There is & sale; ally must pay a reasonable rier & No sale until third person fixes the price. % Sony may go to court and ask for demages, BL.SOSDRILL iPROFESSIONAL REVIEW and TRAINING D 44. Cory transferred to Viola a parcel of land far the price 9f P200.000; 60,000 to be paid in cash and for the Sifferenee, she wil convey her cer woren 149,000, What kind of contract is this? 2. Lease contract ‘Obligation to sel &. Contract ofsale —d. Barter As. NTER, INC. 2. September , 2007 b. September 21, 2007 ©. September 12, 2007 . September 13, 2007 In distinguishing earnest money fram option money, earnest money i= 2. Given only when th sale Is 8 perfected contract of D4S..what mode of extinguishing 2 contract of sale ‘sb, Given when there is no contract of sale effected when a persan is subrogated upon the same _¢._Given to bind the offerer in 2 unilateral promise term and condition stipulated In the contrect in the to sell or buy. place of one who acquires a thing by onerous title? 4. Given as a, separate consideration from the 2. Compensation purchase price 1b. Conventional redemption Novation D49. the seller must give three of the following to the Legal redemption buyée if redemption is to be made, Which is the exception? G46. Three oF the tollowing. are conditional sate. Which is "Expenses of the contract the exception? D. Price of the sale 3. Sale of expectancy © Necessary expenses of thing sold b. Sele ore vain hope 6. Interest on the price of the sale ©. Sale with aright to repurchase 4. Sale subject to 2 contingency A 80. 1% Sale of future inheritance is void; while the sale of herecitary right is valid, the seller'is liable for his A 27.0 September. 10, 2007, Errol sold a piece of iand to character ae an rele Felix in a public instrument. On September 11, 2007, _2°*- In contract to sell, delivery to the buyer will not Felix paid for the price. On September 12, 2007, Felit. make him the owner ‘until tne ores ot the wale took ‘possession of the land. On September 13, lly aid 2007,, Felix registered the public instrument. Under 3. Both sve True ©. is True; 2's False the cireumstsnces given, Felix became the owner on b. Both are False 1 is False; 2™ is True Page 4 of 4 wwiw.prte.com.ph BL.SOSDRILL 10. Since 1977 BUSINESS LAW BL.502B.PARTNERSHIP _ PROFESSIONAL REVIEW and TRAINING CENTER, Inc. * Mania 73383447347803”Cobu iy G52 2557777 LOC 122 * Dave iy O82 250089 Cagayan de Or Cy 08522 725150 CPA REVIEW MALVAR/J.ONG/T.LOPEZ _OCTOBER 2008 MULTIPLE CHOICE DA, Strictly speaking, the Following are all essentia! elements of a partnership, except. 2: contract or voluntary agreement '. contribution te 2 common Fund intention te divige prot & mutuat agency © lawful object 2. These persons cannot partnership contract 3. husband and wife b. persons guilty of adultery and concubinage . persons who commit adultery in consideration enter into a universal thereof 4. public officials by reason of their off fe allotthem The following are all grounds for a Judicial decree of dissolution except: 3. where 9 partner is guilty of such conduct as tends to prejuctelaly affect the partnesship . “when the business can only be carried at 3 loss © by any event which maxes it unlavéful for the partnership to carry on the business, Where a partner is rendered incapable Performing his part of the agreernent ‘where @ partner is judicially Shown to be insane ‘ of This partner themselves: 9. industrial partner 6 limited partner b. capitaise partner 6. none of them Is not liable. for tosses among This is 2 ground for aut partnership: 2: Death . Civil interdiction matically dissaWving 3 Insolvency 3. All of them In capital ratio, partners share in the profits and losses according to beginning capital cantribution tending capital contribution average capital contribution ‘agreed capital contribution none of the above In A, 8, C and D partnership, only B did not deliver his agreed capital contribution inthe form of specific house and lot, The remedy against him is 2. annulment of the partnership contract b. for A, C and D to get beck their contributions ©. for specine perfarmance . dissolution of the partnership This incicates prima partnership contract 2. share in the net profits 5. co-awnership where the fruts are diviced equally share in the gross returns G. allortne above none of them facie the existence of a Page 1 of 4 Eo Pio, aun Be AB. This partner becomes liable to. third persons for partnership obligations up to the extent of their dersonal properties 2. capitalist partner bi industrial parener © general part 6 ‘managing partner allot them This is not really a partner, but is only so in regard to third persons - 2. silent partner b. secret partner © dominant parsner 4 ominal partner all of them &, 8, C and D verbally agreed ta form a partnership where A, B, C each contributed P1,000,000 and 0 his services. A, B, C and D gartnership became incebted to T in the emount of P5,000,000. If A, 8, C and D cannot pay T then a T cannot hold A, 8, C and D liable because the partnership. contribution being 3,000 or more the contract of partnership becomes void since it was entered into verbally The partnership contract is nevertheless valid but, T cannot hold 0 liable up to the extent of his personal property The partnership contract is nevertheless valid and T after exhausting all assets of the partnership an hold A, 8, C and D jointly liable for the Payment ‘of the’ remaining partnership obligations, O after paying T for his share in the partnership obligation cannot collect reimbursement. from capitalist partners a, B, C. X, ¥ and Z entered into a contract of partnership. In the agreement it was stipulates that X shall be excluded from his share in the profits 2 The contract of partnership becomes null and void Oniy the stipulatinn on how profits and losses will be distributed is void, but che contract of partnership remains valid and, therefore, profits and losses shail be vistributed equally ‘The stipulation excluding X is valid together with the partnership contract and, therefore, only ‘nd Z shall share in the profits and losses, Correct answer not indicated. b. 3 Ais oviner of 3 department store in Manila valued at 10,009,000 ‘and’ Bis the owner of another epartment stare in Makati valued at P20,000,000. A and B agreed that they will share theie profits in both business. Due to nusiness reverses, B is now indebted to Bank of P.1 50,000,000 and cannot pay because of insolvency: 2 Only 8 is liable to Bank of P.1 because there is no partnership between him and A b, The fact tnat A and B are sharing in the profits of {heir business shaw that there is 8 partnership. © Bank of P.I shall first exhaust all the ossets of A and 8, if not enough, hold them liable for the balance of P50,000,000 cebt. . Bank of P.1 can hold A and & solidarly lable for the payment af P50,000,000 BL.502BPROFESSIONAL REVIEW and Th 44 Page 2 of 4 A, 8, C and D are partners where A, 8, and C Bnteibuted P1,000,000 each anc © his services. The Partnership is engaged i the manufacture and export of garments, Due to a very strofig tyshoon, the entire roofing of the factory was Dlown by the strong winds and if not repaired Immeciately woule ‘aggravate the damage. &, 8, C and 0 agreed on an daitional contribution of 200,000 each in order to Save the business from imminent loss. Which of these isthe correct statement? 2.0 Is duty Bound to contribute 20% more of his, time fo the business of the partnershia, D. If Arno longer nas money, he can be complies to sell Nis interest in the partnership to the other partners, B can question the decision because he did not vote for the additional contribution, If C stil has money, but refuses to make the Contrbution, he can’ be compelied to sell his Interest in the partnership to the other partners, X, Y, and Z are partners where X wes appointed rmlanager with authority to collect. D is ingebteo to XYZ partnership in the amount of P400,000 which Is already due ané demandable anc is also indebted to X personally and likewise due ang demandable in the amount of P50,000. X collectes rom O PAS,000 ‘Which ofthese is not a correct statement? 3, IF X gave a receipt in his own name, he is bound to give XYZ partnership proportionate which is 30,000. 0, IF X'gave a receipt in the name of partnership he has to give the P45,000 to XY2 partnershia, ©. IPX's credit to D carries an interest of 18% and XYZ partnership's credit {0 O has an interest of 14% only, when X collects from © P15,000 and gives a receipt in his awn name he also nas to share the collection with the partnership’ in proportion. 4. None of the above. 4, 8, C partnership has @ partnership credit against X fn the amount of 300,000. In the course of conducting the business of the partnership. A, 8, and C agreed equally to divide the credit of P300,000, among themselves. A and B ware able to collect irom X P100,000 each, but C wes nat able to collect beceuse X hes already become insolvent. In this 3. Aand 8 should share their collection with €. B.A and B should return to the partnership expital what they have collected © A ond B cannot be compelled to share Collection with C rior raturn it to the partnership capital because the agreement to divide was made after the partnership was dissolved and therefore, there is. no more element of mutuality fF reciprocity existing among the partners, Correct enswer net indicated a /. Suppose in the above problem, the agreement to ivide the partnership credit was made after the aissolution of the partnership, then in tnat case. a. Aand B should share their collection with © b. A and B should raturn to the partnership capital \anat they have collectes © A and & cannot be compelled to share their collection with © er return it to the partnershis eapltal since they exercised die diligence in Collecting early on what was due them from while ne was stil solvent. ce @ 18. 20, pz © Since the agreement to: dluide was entered into twhen the pertaership was already dissolved, the element oF mutuality no. longer exists end, therefore, according to Manresa, A and B can keep their collection to themselves. P misrepresented himself to T as a gartner in XYZ partnership which is testified to by X and ¥ where in uth and In fect he is net. T gave to P a loan of 500,000, 2. Only Pig fable to T for P500,000, &. P and XYZ partnership become liable to T for 500,000 c. Pand X and ¥ Become liable to T for PS00,000 when T gave the money to P, no partnership Tiabiity was incurred Irvegardless of whether oF not a partnership liabilty arose, P and X and Y become liable to T jar PS00,000 for the purpose of protecting the rights of an snnocent third person, ‘ ‘Suppesing in the above problem, T gave the money fF cresit to XYZ partnership then: Only Ps liable ta T fer ®500,000 BL Pano XYZ partnerstip become liable to T for 500,000 because they committed the misrepresentation as against 7 © Pand x and ¥ shoula be the only ones liable because they committed. the misrepresentation 2s against T P and XYZ partnership become liable to T for $00,000 because when T gave the money or credit to XYZ partnership liability was incurred fiid P should be included because he has become 2 partner by estoppel . A,B, C and © are partners where A contributed 400,000 8 and C P200,000 each 0 is an industrial partner. ABCD partnership became indebted to T in the amount of P1,600,000, 2 T can hold A, 8 and C liable fér P1,800,000 for being the capitalist partners. Y must first exhaust the partnership assets amounting to PBDG,000 and then hold A, B and C a6 the capitalist partners liable jointly for the payment of P2,000,000, T ‘must first’ exhaust the partnership assets amounting to P800,000 and then hold A, 6, C 2nd 0 jointly liable for the balance of Pt,000,000. T must first exhaust the partnership assets amounting to 800,000 and then hold A, B,C and D jointiy liable for the balance of 1,000,000. 4 after-paying 7 P2S0,000 can hold liable A, B and € for reimbursement so. that in the end as industrial partner he does nat became Hable for josses among themselves, o. If in the above partnership, there is an agreement that A, B and ¢ shall share, 30% each and D as Industrial partner 10% i the profits, but then ABCD partnership suffered a loss of P1,000,000 3. A shall snare P45,000, 8 and C P225,000 each and D P100,000 A, B and C shall share in the losses P300,000 ‘each and P100,000, © A, 8 and C snall share In the losses in this Proportion; P500,000 for A and B and 250,000; none for D 6. A,B and C shall share in the losses P393,333 & 33/x eae and none for D the industrial partner. ». In a partnership, the partners share in the profits 2. Equally : ring to capital contribu! BL.5028D2 PROFESSIONAL REVIE) ‘ According to the contract or agreement None of the above B 23-4, B ano C are partners in an import and export business where customers desiring to place an order are required to make a deposit of 30% to the Partnership. T, a regular customer ceposited 300,000 to partner A who, instead of turning over the money to ABC partnership, misappropriated it for his own use. In this ease 2. T should sue alone A the misappropristing partner for the amount of P300,000, b. Tcan sue Aor B or C the partnershig of ABC solidarity for the amaunt of 300,000 © T can only sue partners A, 8 and C Jointly for 300,000, 6. Correct remedy not indicated X, ¥ and Z are partners in @ business with & total capital contribution af P3,000,000, in the course af operating the business, the partnership became indebted to C in the amaunt of P4,S00,000. subsequently, W ias somitteg ax a new periner with Contribution ' of P:,000,000.. Much later, the partnership became indebted io T in the amount of 4,000,000. The partnership Is ingalvent and the only asset is the original capital af P3,000,000 plus the newly contributed “capital of P1,000,000 af 1,000,000 by W. 2." W Is not liable for the obligation of P4,500,000 in favor of C since ne was not yet a partner when it was incurred W is lable for the obligation of P4,5000,000 although contracted before he became’ partner but only up to tne extent af his contribution W ig liable for the obligation of 2,500,000 although contracted before he became & par Up to the extent of his personal property, W's liable for the obligation of 4,500,000 although contracted before he became 3 partner but not only up to the extent of his contribution \with respect to the P4,000,000 debt in fovor of 7 W will be liable for’ its’ payment jointly end subsidiarily up. to the extent of his personal Property because it was incurred when he was elready 8 partner in x¥2 partnership. 25. A, B, C und D are partners where D is an industrial Partner. Without the consent of A, B and CD engaged in enother business for’ his personal interests where he mage a profit of P2,000,000 TER, INC. 028. sg 8 30. D3 2. The partnership cen only avail itself of O's in his separate business with damages, b. The partnership can only oust D trom they 32 Bartnership with damages, ©. The partnership can avail itself of D's arofit plus out him from the partnership, 4, The partnership can either avail itsef of O's prof in the separates business or oust him from the partnership with damages 26. x, ¥, and 2 are partners in 2 partnership where x engaged for himself in a business which is the same 2 that of the partnership. In this case a. X can be ousted from the partnership. b. The partnership can only avail of X's profits in his separate business, ‘The partnership can avai Seperate usiness plus partnership. Because X is = capitalist partner, there is no Senetion that his co-partners can legally impose a him, . of X's profits in the oust him fram. the Page 3 of4 www.orte.com.ph & 27. this partner is really a partner in the partnership but is not known as such to the publ: 3., Silent partner Nominal partner Secret partner 3. Partner by estoppel In a limited partnership, 2 limited partner may demand for the return of his capital contribution. 2. When 2 define period far such return has been egreed upon, and the pariog has arrived, b. When na periog is agreed upon, on a written Gemand within six months Upon dissalution of zhe partnership Allof the above A, B and C are partners in a bakery business where A attends to the store, Bis the baker, Cis the driver of the delivery van which cistributes the products to various areas in Metro Manila. due to the negligence of C in driving the delivery van he ran over 7 who, was injured physically and suffered damages ‘amounting to P120,000. In this case: 3. Tan only sue C for he is the only one involved b. T can hold liable C ang the partnership ABC for 120,000 jointly &. T can hold solidarity llable & or 8 or C or ABC partnersiip for the Full amount of 120,009, 4. Correct answer not indicated Which of these partners is nat entitled to direct access to books and records of the partnership or to 288k for formal accounting or for dissolution, ete, 3. General part Assigned limited partner Substituted limited partner All of the above ° a Jn ABC and D partnership, A contributed P400,000; 8 200,000; € P190,000 and D is an industrial gartner The share of D, the industrial partner, in the profits should be - 2. Equal to the share of C as the partner with the least contribution . That which 1s in accordance with what Is Just and equitable under the circumstances as determined by capitalist partners A, B and C only, That which is in accordance with what is Just and equitable under the circumstances as determined by all of A, 8, Cand 0. That which is in accordance with what is just and equitable under the circumstances as determined by all of 8, 8 C and D but if no agreement is reached by the decision of the courts, ABC are partners for a three year period where A and 8 are capitalist partners and C ie an industrial one. Ih the agreement, the partners are to share 1/3 1 the profits. In the’ first year, the partnership made s Drofit made a profit of P300,000, but in the second Year suffered a loss of 150,000; In the third year, it was breok even. The share of Cis - 2 P100,000 as share in the profits of the frst year but none in the secand year in so far as the loss is concerned, P50,000 as his share in the profits for the entice 100,000 there is an express agreement to share in the profits on a year to year basis, 50,000 i there Is an’ express agreement to sihare in the profits based on the entire operation. Bath Cand oO88. 024 © 38. Page FoF 4 In A, B and c partnership, A was sppuinted sole ‘manager of its talloring business, & az such manager ean execute all_acts of administration despite. tne ‘operation of band C. Which of the following acts cannot be done by A aione? To buy textile materials for use of the tallaring on crecit. b. To buy much needed Singer sewing machines for cash, To pay for the salaries of the employees, . To transfer the location of the tailoring form the University belt to Maket! Avenue fe. None of the above. 4 limited partnership wes orally agreed upon by A , B ‘and C25 general partners and ©, € and F 9s hmiked Portners. Which of these is a carract statement? 4A Valid “limited partnership. is nevertheless formed, 5, The oral agreement is vold under the [aw and no Partnership whether limited or general wil exist. & No valid limited partnership is created and there will exist a general partnership where oniy A,B and € will be regarded as general partners, 1. No valid limited partnership is created but there will exist a general partnershin where all oF & 5, FESSIONAL REVIEW and TRAINING CENTER, INC. G37. ©, B, E and F will be regarded as. eneralt) 36 portners. In which 0 these cases are the partners solidarity liable for the payment of partnership obligations? 9. Where the partnership obligation arose out of contract b. Where the partnership obligation erase out of equal contract. ©. Where the partnership obligation arose out etic, 4. Where the partnership obligation arose out of quast gett fe. Both Cane D ‘The rule is that the designation of the share of the partners in the prafits and losses cannot be entrusted {0 only one of the partners Out to all. However, the Tule allows the designation of the share af the partners to be entrusted to @ third which can be questioned or impugned by the partners if such designation is manifestly inequitable. Within what time should the action or question be brought? ‘w.prie.com.oh of 39 2 Within one (1) month from the time he had knowiedge bb. Within twe (2) months from the time he had knowledge © Within three (2) months from the time he had knowledge, 6. Within six (8) months fram the time he had knowiedge ©. Within one (1) year from the time ne had knowleage Tn winding-up or liquidation of the partnership after issaiution, which is the correct arder of payment? 2. Pay the creditors who are pertners, then creditors who are third persons; then return of eapital Contribution and then distribution of profits 8. Poy to crecitors wna are not partners, then the creditors who are partners; then distribution oF profits and retura of capital contribution Pay to creditors who are net partners; then the Creditors wno are partners; then return of capital Cantribution and then distribution of profits, 0. Return of capital contribution; then payment of creditors who are not partners; nen crecitors who are partners and distribution of profits, The following are all similarities between a Partnership and a corporation ~ choose the exception. 2, Both possess 3 jurigical person separate and ‘istinct from the members Both are composed of an aggregate of persons © Both can act only thraugh agents 1. Both are easy to organize since’ the contracts creating them are consensual in character, Which of the following statements about a contract of Partnership having 8 capital of P3,000 er more in ‘sh or personal property is true? 8. R must be in wiiting even @ private one to be vali b. It should appear in a public instrument wich must be recorded with the 5.€.C It need not be in writing to be vali J. It should appear in a public instrument even if not recorded with the S.E.C, BL.5028* Mania 75383¢47347003, Sines 1577 BUSINESS Law. PROFESSIONAL REVIEW and TRAINING CENTER, Inc. bu Oty 4522557777 19C 122° Davao Cy 082 CPA REVIEW AND CORPORATION _ 9 * Cagayan de Ora hy 08622 735150 MALVAR/J.ONG/T.LOPEZ _OCTOBER 2008 PARTNERSHIP PARTNERSHIP Distinction between partnership and Co- ewnership 3. Creation 2. Juriieal personality 5 Purpose 4: Duration 5. Disposal of interest §. Power to act with third person 2. Effect of death 2 Distinction between Partnership and conjugal partnershin of pein 1. Parties 2. Laws which govern 3 3. Quridical personality 3. Commencement 5. Purpose S. Distribution of profits 7) Management 8. Disposition of shares Distinction vetween partnership and voluntary association 1. Juridical personality 2. Purpose 3. Contribution of members 4! “Uabilty of member PARTNERSHIP 1 BY the contract of partnershia two or mare persons bind themselves to contribute money, property er Inéustry t a common fund, with the intention OF viding the profits among themselves. Two or move ersans may also form @ partnership for the exernce of a profession, (1767) Tote: Since 8 partnership is a contract, all agreement Petween the parties has the force of law between the Contracting parties (1159) provided itis not canton te (aFoRerth geod custom, public arver and puatc poich, (130s) + A partnership may be constituted in any form, except where immovable property or res! rights aon fapttibuted thereto, In which case # pubic lostrument shail be necessary. (1771) SOA contract of partnership “is. void; whenever immovable property is contributed thereto’, Vol said property is nol mage, signed by the nd anche ta fat asic (0773) *. Every ‘contract of partnership [having 2 capital of shies thousand pesos or more, in money ot Property, shall appear in a public instrument, anion must be recorded in the Ofek of the Securties sot Exchange Commission, * Failure ‘to comply with ‘the requirements of the preceding paragraph shail not alfect the habit ee the wartnership and the members therecl to whine persons. (2772) Requisites 1 Valid Contract The. Partnership has-a judicial personality seperate and distinct from that of each of the portneea eoerete §25¢ of failure to comply with the veaarenevee article 1772, first paragraph (1768), Hone www pre. Page 1 of a1 com.ph | nt Assotioons and societies, whose artles are kept Secret among the members, and nheres ay one oh the members may canteen hs ean sayone the! persons, "shal nave no ore pamenet rsh A patiershp eins trom the moment “oF the xcetion ofthe contac unless he hae Spulates, (178%) ul sbiect or purpose (1770), aay event whien makes ® untawit for the Dusncas oF Ne neice 12 be carried on or forthe members oer ene bortnerahip caused for automate dusaionen OP ie Pertnersnp, (1830) Ennenbution oF money, comrnvn fone Unless tee is » suaulston tothe conta, the Darners shal catelbute equal saree eeetonted atthe panneshn (ar 1980) tee He agieerent 0 the controry, m case of an ames los othe business ofthe partnership an eet iho refotes to contribute an addkiong eee eet C2pial, excet ‘on Ingustal gattnee tee the Ventre, shal he obiged to seins interes ne Diner partners. (rt) Property or industry to a Riskof loss { Contributes araperey [isis ta be arne artnershin_T partner | Saeeine “snd determinate v | ony Tings ~ | wancterred Fungible zm Connat be epe without | deteriorating | Contributed to be said, Brought and appreised Ta the inventory (limited to ‘value appraised) ee UW one of the farinersrahiaed fou Conérbution, the other partner mey comeal ore to deliver (Spectic pertormance) whet he hoe promised. + The partnership is dissolved when a specific thing which a partner had promised to contrtoke Wd the partnership, perishes before the darter (1830.4) used is. Intent to divide the profit among the partners. (276) Distribution of profit ang losses: (1797) Profit’ or ‘losses shallbe’ distibuted in conformity with the agreeme: 5. only the share of each partner in the ocpfits hhes been aoreed upon, the shave af eat the-losses_shall_be in the seme proportion Note that industria! partner is not lose iee the loss unless there is express stipulation the contrary © Tm the absence of stipuletion, the’ share of each partner in the profits ang losses shal Se to (Br@gortian to what” he may nave sontributed, But the industrial parirer chet ‘ot be liable for the losses 4. As for the profits, the industrial partner shall receive such share as may be eet neyPROFESSIONAL REVIEW and TRAINING CENTER, INC. equitable under the circumstances. If besides His services he has contributed capital, he shall also receive a share in the profits in Proportion to his capital Designation of profit and losses 1. The designation of losses and profits cannot be intrusted to one of the partners 2. IF the partners have agreed to intrist to a third person the designation of the share of each one in the profits and losses, such esignation may be impugnes only when itis manifestly inequitable. in no case may = partner who has begun to execute the decision of the third person, or who has not impugned the same within a period of three months from the time he had knowledge thereof, complain of such decision. (1798) Nota Bene: All partners, including industrial ones, shall be liable wro-rata with all their proper fer all the: partnership aegats have been exhousted, for the cantracts which may be entered into in the name and for the account of the partnership, under its signature and by @ person authorized £0 2ct for the partnership. However, any partner may enter into 3 Separate obligation to perform a partnership contract. (3816) Any stipulation exempting any partner against the liabilty shall be void as far as 3% person is, ‘cerned. ut the stipulation’ is valid among the partners. (1817) 5. Established for the comman benefit or interest of the partners. (1770) Hence, A stipulation which excludes, tone or mare partners from any share in the profits or losses is void. (1799). Note: Only the agreement as to profit and loss is vaid not the partnership. In such case, a5 if there is no agreement 95 to profit and loss and the profit and loss are distributed in accordence ‘with capt contribution Test to datermine whether partnership exists: 1. Persons who are not partners as to each other are not partners as to third persons; except estoppels (1825), 2. Co-ownership or co-possession does not of itself estoblish a partnership, whether such-co-wners or ‘co-possessors do or do not share any profits made by the use of the property: 3. The sharing of gross returns does not of itself establish 2 partnership, whether or not the persons sharing them have 2 joint er common right oF interest in any property from which the returns are derveds 4. The receipt by a person of a share af the profits of 2 business is prima facie evidence thet he is @ partner in the business, but n@ Such inference shall be drew” if such profits were received in payment: (ORAWInG) 3.” Debt by installments or otherwise: i. As Rent to e landlord or ©. As an Annuity to @ widow or representative of @ deceased partner; 4. wanes of an employee fe. As Interest ona loan, though the amount of payment vary with the profits of the business, f. As the consideration far # joa @ business or other property by installments otherwise Reason: It s not merely the sharing of protits, but rather the sharing of them as a co-owner of the busines thet makes one @ partner. Hence, the test is “Does the Fecipient of profit received it as co-awner/araprictor of the business", if the answer is. in affivmative 3 Page 2oF2i www.prtc.com.ph- partnership exists Kinds of Partnership 1. General Partnership — partners. 2. Limited ‘Partnership - Compased of at least one general partner end at least one limited part 3. Universat partnership is either 2 Universal partnership ofall present property - the property which belongs to each of the partners at the time of the constitution of the partnership, ecomes the common _progerty of. partners, 8s well as all the-prafits wich they may ‘equire therewith.(1773) A stipulation for the ‘common enjoyment of any ather grafts may also ust be 2 stioulation. e.g. salary Lmay be_earn by thepactner); but the property whien the partners may acquire Subsequently by inheritance, legacy, or denation cannet be included in such stipulation, except the fruits thereof, Articles of universal partnership, entered into without specification of its nature, only constitute a universal partnership of profits, (3781) . Universal partnership of all profits - all that the partners may acquire by thelr industry or wore uring the existence of the partnership. Movable or immovable property. which each of the Partners may possess at the time of the telebration of ‘the contract shall continue to pertain exclusively to each, only the usufruct passing to the partnership. (1780) Composed of al general Note: Persons who are prohibited frem giving each fther any donation or advantage cannot enter into Universal partnership following cannot enter in a universal partnership: 3. Between those who were quity of adultery or sconcubinags: b. Between those persons found guilty of the same criminal offense (adultery or coneubinage),. in consideration thereof, Between a person ané Public officer or his wife, descedants and ascendants, by reason of his office. (739) 4. Particular partnership ~ object determinate things, their use or. fruits, or specific undertaking, or the exercise of a profession or vocation (1783) 5. Partnership by —estoppels.- result. by misrepresentation of two ar more persons. 6. De jure partnership. ~ comply all requirement of the law 7. De facto partnership ~ do not comply ali requirement fof tne law. kinds of partner 1. Capitalist partner ~ One who Property 2, Industrial partner ~ One. contribute Industry. He Is not liable for loss as between the partners but liable ro rata a5 to 3” person, 3. Copitalisindustrial partner ~ One who contribute money, property or industry. 4. General partner ~ lable to the extent of his separate Property, 5. Umited partner ~ liable only to the extent of his contribute money or tapital Contribution. Not allowed to contribute 1 Industry. 8." Silent partner ~ donot participate’ in the management 2. Secret parener ~ not known by third person 8. Dormant partner silent and secret 9. Ostensibie partner ~ participate In the menagement and known by thied person, 10, Partners by estoppels or naminal partriet ~ not really e a BL.502 BicePROFESSIONAL REVIEW and TRAINING CENTER, INC. partners but only as a result of misepresentation to 3° person 12. Managing partner - one manage the partnership 12, Liquidating partner ~ one who wind-up the affair of the partnership. 13, Retiring partner ~ one who retire in the partnership 14. Incoming partner ~ One who is admitted to tl partnership OBLIGATIONS OF PARTNERS >A partnership beaing_from_the_moment_of the ‘eierution of the conlmact, unless it is otherwise stipulated” (1784) > When a partnershia for a fixed term or particular Undertaking ‘§ continued after the termination of Such term of particular undertaking without any exaress agreement, the rights and duties of the partners remain the same as they were at such ermination, so far as is consistent with a partnership atl ‘A continuation of the business by the partners or ‘such of them as habitually acted therein during the term, without any settlement or liquidation ef the partnership affairs, is prima evidence of 2 Continuation of the partnership. (1785) > Every partner is @ debtor of the oprtnershia_for Whatever he may have promisee neceta, He shell also. be bound fer warranty. in_case of eviction with regard to specific and determinate thinas_which_he.may.have ied._to_the patnerahig, iA the same cases anc in the same manner ae the vendor is bound with respect to the vendee, He shell also be liable for the fruits thereot from the time they should have been cclivered, without the need of any demand. (1786) > Rogartner who has undertaken to contribute @ sum of money and fails to da so becomes 2 debtor for the interest and damages from the time he should have complied with his obligation. (1788) The Same rule applies to any amount he may have taken from the partnership coffers, and hs habilty shall begin from the time he converted the amount £0 his own use. % Unless there is @ stipulation to the contrary, the actners shal contribute eoval shares to the capital ff the partnership, (1790), + Tf there Is no agreement to the conteary, in case of 1 imminent loss of the business of the partnership, ‘any partner who refuses te contribute an_adsitional share to the copltal, except an industrial partner, to save the venture, shall he obliges to sell nis Interest to the other partners. (1791) » Ifa partner authorized to manage c demendable sum which was owed to him in, his ¢ fname, from a person who awed the partnershia anotrier sum. also cemandable, the sum thus collected shall be applied “to the two credits in Proportion to thelr amounts, even though he may have given a receipt for nis c dit_only;, but should he have given if for the’ account af the partnership credit, the emount shall be fully appliee tothe latter. ‘The provisions of this article are understood to be Without prejudice to the right granted to the other debtor by article 1252 (Apalication for payment), but bly if the personal cresit of the partner snould be fmofe oneraus ta him. (3792) Lhe partner Is euthanized oy the aartnershin « 2. The person awed him and the parcnershio 3. The partner Issues @ receipt in his own name oni. 4. ‘The claim of the partnership and the partner are Hlects a Page 3 of 21 www prtc.com.ph both due and demandable. A partner who has received, in whole or in part, his share of & partnership credit, when the other partners have nat collected theies, shall be obliged, if the debtor should thereafter become insolvent, to bring to the partnership capital what he received feven thouai he cay have olven receiat for his share fenly. (1793) Every partner is responsible to the partnership for, damages suffeee by It through his fault, and he ‘cannot compensate them with the profits and benefits which ne may ‘have earned for the Partnership by his industry. However, the courts may equitably lessen this responsibilty if through the partner's extraordinary efforts in ather activities of the partnership, unusual profits have been realized, (0734) ‘The risk of specific and determinate things, which are nat fungible, contributed to the partnership so that only their use and fruits may be for the common benefit, shall be borne by the partner who owns them. If the things contribute are fungible, or cannot be kept without deteriorating, or if they were contributed to be sole, the risk shall be borne by the partnership. In the absence of stipulation, the risk of the things brought and appraised in the inventory, shall also be borne by the partnership, and in such ose the claim shall be limited to the value at which they were appraised. (1795) ‘The partnershia shal! be responsible to every partner far the amounts he may Nave disbursed on benalt of the partnership and for the corresponding interest, from the time the expense are made; it shall also answer to each partner for the obligations he may have contracted in: good faith in the interest of the partnership business, and for risks In consequence of ts Management. (1796) Every partner may associate another person with him in is share, but the associate shell not be admitted Into the partnership without the consent of all the other pertners, even if the partner having an astoclate should be a manager. (1804) ‘The partnership books shall be kept, subject to any agreement between the partners, at the principal place of business of the partnership, and every partner shall at any reasonable hour have access tO ‘ane may Inspect and copy any of them. (1605) Partners shall render on demand true and full Information of all things affecting the partnership to any partner or the legal representative of any Geceased partner or of any partner under legal cisabilty. (1806) Every gartner must account to the partnershia for any benefit, and hold as trustee for it any profits erived by" him without the consent of the other partners from any transaction connected with the Formation, conduct, of liquidation of the partnership for from any use by nim ofits property. (1807) ny partner shall have the right to a formal account 25 to partnership affairs: (1809) 2. Ihe is wrongfully excluded from the partnership business or possession af its property by his co: partners; b. TF the fight exists under the terms of any agreement; © When any partner must accaunt "to the partnership fra prafit derived by him without the Eonsert of other partners (1807); 6. whenever other eircumstances render It just and resonablePROFESSIONAL REVIEW and TRAINI MANAGEMENT OF THE PARTNERSHIP > The partner who has been appointed manager in the articles of partnership may execute all acts of administration Gespite the oppasitian of nis, partners, Unless he snould act la: bad faith; and his power 1s Irrevocable without Just oF lawful cause. The vote oF the partners representing the contraliing interest ‘shall be necessary for such revocation of power, jer granted after the partnership nas been od may be revoked at any time. (1800) + Iftwo or more partners have been intrusted with the management of the partnership without specication Of their respective duties, or without a stipuiation {hat one of them shall nat act without the consent of ail the others, each one may separately execute all ‘acts of administration, but if any of them should ‘oppose the acts of the others, the decision of the ‘majority shall prevall, In case’ of a tie, the matter shall be decided vy the partners owning the controling interest. (1802) In case it should have been stipulated that none of the managing partners shail act without the consent (of the others, the concurrence of all shall be necessary forthe validity of the acts, and the absence or disability of any one of them cannot be silleged, unless there is Imminent danger of grave oF Irreparable injury to the partnership. (1802) = When the manner of management has not been agreed upon, the following rules shall be observed (i803) 2. All the partners shall be considered agents and whatever any ane of them mey do alone shall bind the partnership, without prejudice to the provisions of article 1801. None of the partners may, without the consent of the others, make any important alteration in the immovable property of the partnership, even ifit may be useful tothe partnership. Sut if the refusal of consent by the other partners is manifestly prejudicial tothe interest. of the partnership, the court's Intervention may be sought. General Rule: When the manner of management has not heen aareed upon, all the partners shall_be considered agents and whatever any one at them may do elone Shall bind the partnership, without prejuaice to the Drovisions of article 1801. However, none of the partners may, without the consent of the others, make any | importent alteration in the immovable property of tne partnership, even if it may be useful to the partnership But if the refusal of consent by the other partners is manifestly prejudiciat to the interest of the partnershia, the court's intervention may be sought. (1803), ‘An act of @ partner which is not apparently for the carrying on of business of the partnership in the usual way coes not bind the partnership uniess authorized by the other partners. Except when authorized by the other partners or unless they hove abandoned the business, ane or mare but less than all the partners have no autharity to 1 Assign the partnership property in trust for Sreditors or on the assignee's promise te pay the ‘ebts of the partnership: 2. Dispose of the goodwill of the business; 3. Do any other act which would make it impossible to carry on the ordinary Business of 2 partnership; 4. Confess 2 judgment, 5. Enter inta @ compromise ‘concerning partnership claim oF ability: IG CENTER, INC._ [Without thei respective dutia L | [Without 9 stipulation that | There is stpulated that the others [Cannot engage Ia”-sarme | Yndustril- partner cannot Reason: To avoid conflict of | No act of a partner in contravention ofa restriction on authority shall bind the partnership to persons having knowledge of the cestriction. (1818) Appointment of mariaging partner 1. “Appointment in the article of incarporation (1600) 3. Execute all act of administration despite ‘apposition of his partners except he acted In bed faith, b. His power is irrevocable without just or lawful Partners representing controling interest shall be necessary for revocation of power. 2. Other appointment 2. Revotable at any time, with ar without just or lawful cause, ‘Two or more partners have been intrusted with the specification fone of them shall net act | none of the without the consent of al managing partners shall act without | the consent of the ethers Rule | one may | a. The concurrence of ail | seperately execute "all |” shall be necessary for ‘acts of administration, the validity of the b. But if any of them| acts, should oppose the acts |b. The absence or of the others, the| disability of any one of decision of | the| them cannot be majority shall prevail. | alleged, unless thers © Ih case che tie, the| is imminent danger | ‘matter shall be decided by che partners owning the ‘controlling | interest" Brohibition to enter into ‘apitalist partner (1808) of __grave or irreparable injury to the partnership. © Industrial partner 3789) ' kind: of business in which | engage in business for the partnership is engaged | himselt (any business) except if there is stipulation | except” if there is stra Interest partners must devote his Jentire- industry to the Soetiaeeete | partnershin Violation Violation: 1. Bring, t0 the common | 1. Exclude him from the funds any prares | "firm + damages fccruing to him trom | 2. Avail themselves of the Fis transactions, and| "benefits which he may shall personally Sear ali| have obtained + damages J! Property Rights of a Partner (1810) The property rights of a partner are 1. His nights in specine partnership property A partner is co-owner, with his partners of specific partnership property. (1811) + Equal right with his partners to possess specific Bartnership property for partnership purposes but not for any ether purpose without the consent oF his partners + Nat assignable except in connection with the 6. Submit a partnership claim or liebilty to arbitration; assignment of rights of all the partners in the 7 Renosnce » claim of the nersaereh Same property a Page 4 of 21 " whww.prte.com.oh BL.502| PROFESSIONAL REVIEW and TRAINING CENTER, | INC. + Not subject to attachment or execution, except ed a7] or eal ogarat the “permarsh. Et | | Gases ao ah, | partnership property can be attached for [Any | Passes the equitable partnership det joetner RB LeU iterest ot tne «,_ inbsublect esa spoon | "| partnership provides the 2. hs inerestin te parnersin® A partners ierest in | i || Ganvevance wns nthe {he partnership is his share of the profits and surplus, |! wi_____| usual way of business, O88) By" ee act One| Fe posse ee Saye? * A conveyance by s partner of his whole interest | pariners | more but | or. | but the Partnership may in the partnership does not of itself dissolve the | whose | net all | more | recover portnerahon of a5 agaiat the ether barnes nj nemes | lane | RQ? | SEEM | the absence of agreement | ste (n0 right | not ail|-1. Conveyance was in} Right of the assignee: nies the assignee to | MOMS /6L [parine | the usual way of Teese fh acres wih ne cana the pate | ls ee which the signing partner ‘would otvensse’ be | pea iit td poem ner eae | | poner ack | Assignee has no right ! | Jf Sotho i 2. Telntererein the management o°adminstration | i [fa Res Grpery wag oF te portnerahp buns or as | | tronstered to “39| To ramure: any information “or account of | | person n gd th portrerthip transacting, ear | Rane Passes the Saou Telnpect te patna books: more or amor | ncrete of In lense of roud inthe monegement of te air ane | pare | partners, rowaes fertnerahp, the atignee may oval Rinse OF | [ote Car | eete ee ale the usual media, Brin a name” | authority of the pore + Invcase of 8 lesion ofthe porinereip, the. | Shia {eauot may of buses assignee a" entived ta recewe hs eegnors | person in interest and toy require am account row the | \i"er) | date oly ofthe ost secount agreed to by athe [thes | boriner (1833) banners j His Aah to porta inthe management (n) SR ogee : cae oe Pat "aT ras a RT ight f partner's ereitor (181 [banner |parier | porne | Such oper Without prejucice to the preferred rights of oartnership | i S bree J All outside’ liabilities) (1856) Where there are several limited partners the members may agree that one or more of the limited partners shall have a priorty over other limited partners as to the return of their contributions, as to their compsasation by way of iaceme, or as to aly ‘other matter. If such an agreement is made it shall be stated in the certificate, and in the absence of such 3 statement all the limited partners shall stand Upon equal footing, (1855) Reguisites for return. of contr partner. (3857) 2. All liabiltes of the partnership, except liabilities to general partners and to limites partners on ‘2ccount of their contributions, have been paid or there remains praperty of the partnership sufficient to pay them: ‘The consent of all members is had, unless the return of the contribution may be rightfully demanded under the provisions of the second aragraph; and ‘The certificate is cancelled or so amended as to set forth the withdrewal or reduction - ‘bution of limited BL.502* Mania 72393467387903» since 1877 BUSINESS Law (LR bho among the foiowing are liable for waceams as well as secondary lability? "TE Drawer ©, Qualified inderser baker 8. Unqualites inaerser Monsliza makes a promissory note aayable to hearer ‘nd delivers the same to Pokwang, mite negotistes {0 Andok by indorsing it withoue racourse. Ir the note. Az. is dishonored inthe hands, of Andok due’ co insolvency of Monaiiza. w= P A, 1, Andok cannot recover from Pokwang because the latter does not warrant Manaliza's solvency. be Andok can recover from Pokwang becouse the latter is secondary liable on the instrument a5 indorser, © AnGok can recover from. Pokwang because of breach of warranty 2. Andok cannot recover from Pokwang because the letter indorsement is conditional. 9 vs a t od instrument under the following conditions a, That it is complete and regular upon its face be That he became the holder of it before i wes overdue, and without notice that’ it has been Sreviously dishonored if such was the fact ©. That he took it in goed faith and for value All ofthe above X represented himself as'the agent of Pin the sale of 8 car allegedly owned by P. R, 2 prospective buyer 'ssued a crossed check upon request of % for P60,000 payable to P on the understanding that the check was to be shown only to Pas evidence of A's good faith ts purchase the ear. x instead palo the check to P for the hospital bill of X's wife in P's clinic and was given 1,860.25 as change. In this case, Is > deemed 4 hoider in cue course? 8 Yes, because. there law presumed that every holder are deemed a holder in cue course : 1B. No, because under the fact of the cose P was. Guilty of gross neglect amounting to legal absence of Sood faith, Yes, because P has no actual knowledge of the ere in cases of inland bills and promissory notes Answer not given Bo Bs Statement 1: A person cannot be.convicted of 8 crime of BP 22 when the check is presgnied more then 80 doys from tne date of the checks F Statement’ 2: Prejudice or damage to the. Complainant is not a requisite for the conviction of = Grime under @P 22 (Bouncing check lew). a. First statement is true; second statement is fae, D. First stotement Is false; second statement ic tree, {Both stotements are true Both statements are false Page I of 2” www.prtc.com.ph A lier in due course wholes who Rais ‘Axo. PROFESSIONAL REVIEW and TRAINING CENTER, Inc. (Cetu Ciy 052 2887777 40¢ 122“ Davao Chy 082225008 Cagayan de Cr Cy 0862 725150 CPA REVIEW BL.504.DRILL 2.NEGOTIABLE INSTRUMENT MALVAR/J.ONG/T. LOPEZ __OCTOBER 2008 _ To accommodate 4, dfawer of promissory note, A signes an indorser thereon, and the instrument was negotiated to H, 2 holder for value. At the time H toole the instrument, he knew A to be only an accommodation party. When the pramissory note was ot paid, and H diseavered Hf to be without funds, he sued A. & pleads in derense the fact that he had indorsed the instrument without receiving value therefore, and the further fact that H knew at the time he took the instrument that A hed not received any value or consideration af any kind for his indorsement. Is A liable? 2 No A is not liable Decause he may raise a defense of lack of cansiceration (Do No Ris “not liable because he” merely 2ecammodate M and based on the fact stated, ot the time H took ‘the instrument, he hos knowlege that A is only an accommodation party. Hence his knowledge amounted to such notice oF infirmity oF defect oF title Yes, A is liable to H. Under the Negotiable Instrument Law, an accomodation party shall be ligble to a holder for value although the latter may have known that he was’ merely an accommodation party © Yes. A is liable to H. Under the Negotiable Instrument Law, lack of consideration 1s 2 real defense and it s not a valid defense against @ older in due course lice H 1%: Where it cannot be determined in what capacity Gf person signed a promissory note, he is to be deemed a maker 27%: Ifa note for P 10,000 payable to the order of is indorsed by B in favor of Car D, such endorsement 's not valid Because itis an endorsement in favor of ‘wo or more endorsees severally 2. Both are true. No. 1 Is true; No. 2is false b. Bothare false deo. 1 is false; No, 2 is true When negotiaale dnstruméntihad been dishonored by Ron-acceptance or nonpayment, notice of dishonor must b@ given to the following, atherwise they are discharged, 3. Maker Drawee brewer 3. Acceptor 4 generol endorser is distinguished from the imegular endorser in that a general endorser: 2. Makes either a blank or special endorsement. d. _Indorses after its delivery to the payee. -L-I8 liable to the payee and subsequent part Unless he signs for the accommodstion of Poyee, in which case he is liable only to al Parties subsequent to him, 9. Answer not given (1-4 Dill of exchange may be treated as 2 promissory 8. When the drawee and the payee are the same person b. When the drawer and the payee are the same person W&Ainen the dranze and the drawer'are the some person 3. All oF them BL.504DRILL 02ING CENTER, INC. (12 Statement 1: an ingane is not bousd by his dishonor must be given to the folloming, otherwise indorsement for lack of capacity. they are discharges. Statement 2: A minar may be bound by his signature a, Maker Drewee in an instrument where ne is guilty of actual fraud. Drawer 2. Acceptor committed by specifically stating that he is of age when, in fact, he is not. D 20. m delivers @ negotiable promissory note payable to 2. Only the 12 statement is true Peter of order; Peter inderses to Abe but celivers it b._Only the 2 statement i to Ben ~ Both statement are not tue ‘Wipe isthe holder? Both statement are true Ben fc. Abe (3-nien iShaweoireet? the acceptor by accepting & negatiasle instrument: [Ae Admits: the ‘Admits the existence .of the payee and his ‘capacity to endorse Admits” the existence of the dramer, the genuiness Of fis signature and his authority £0 draw the instrument existence of the endorser, the genuineness of his signature and hie authariy to ‘raw the instrument ‘Admits that ne will pay # accordig to the tenor (of his acceptance, 2) Which ofthe folowing inet inuced as waranty of 2 person negotiating an 3 qualified encorsement? . 4 _& lesyument by delivery or by That the instrument is genuine and in all respects what it purports to be That he has good title ¢o i That al prior parties nad capacity to contract That the instrument. is atthe time. of endorsement valid and subsisting his Lb n Fe is presentment for accontend? Da bibar exchonoeds ot necessary: 6. ‘where the bill is payable after sight Where the bill is drawn payable elsewhere than at the residence or place of business of the drawee LST Where itis payable at a certein number ef days 4 after gate Answer not given “4 B23-A:is maker of a promissory note for P100,000 Peter 4 None of ttiem B 21. which of the following sgl personal defense? 2. Absence of consideration b. Forgery of a signature &_Nondelivery of a complete instrument J Failure of considerabon tee 22, Which ofthe following are wrong construction and ineerpeetation of negotiable inseuments? 23. Words prevail over figure 1. Witten words prevail over printed provisions Ifthe instrument is undated, the instrument is deemed cated at is issue Interest stipulated rung fTpm the date its issue. 5 payable to the order of B who negotiates the same in favor of C. C loses the note and is found by X waa forges the signature of C and pretending to be. C negotiates the note to 0, 0 to E, & to F and F to G who iS @ older in ‘due course, Under the Circumstances which of these is_not.an incorrect statement? 7 3. Being a holder in cue course, G can recover from maker A, b. The signature of C being forged, it becomes inoperative ang payment cannot be enforced as against him, © E15 not lable to F precisely because he was not the one who forged tne signature of C. @. is not liable to any party to the instrument since hs name does nat eppear thereon {D 28: Fav to Maria In Trust For Jesus" (s9d) Jose is the€l 24, The cistinction between acceptance fer honor and ‘ ‘example of: b. Cancitional indorsement Qualified incorsement Facultative indorsement Pe Restrietea indorsement Do17. when there are three (3) parties, the drawer, the a 5 nat yee and the drawee, the instrument is a Promissory nate Cerificate of indebtedness Bank check Bill of exchange instrament, which is @ restrictive indorsement Pay to the order of A (59d 8) AP Bay to A in trust for C (Sod 8) ‘ ‘B19, when a negotibie instrument hos been dishono by Page Pay to A (Sad 8) (59d 8) hon-aeceptance ‘nonpayment, 2of2 roinary acceatance is that 3, In acceptance for honor, pretest is not required while in ordinary. acceptance, there must be previous protest; Jin acceptance for honor, the acceptor isthe drawee while in ordinary acceptance; the acceptor must be a stranger to the bill; c/n acceptance for honor, the conseft of ihe holder is' required while In. ordinary acceptance, such consent is not required ©. Answer net iver © 25.A holder not in due course has the following rights, ¥B 15. the following. are indorsement at the back of the ‘except: a. He may receive payment and if the payment is in due course the instrument is cischarged. , He may sue on the instrument, in his awn name. LAE Ha cannot recover on the instrument. J He's entitled to the instrument ut holds i subject to the same defense as If were roa negotiable. ~~“ BL.SO4DRILL 02se 1977 BUSINESS Law BL.504,SOLUTION NEGOTIABLE 1. Negotianle The requisites of aegetiabilty of bill of exchange. are all” present as Follows: itis in writing and signed by the "drawer; it contains an Unconditional ‘oraer ta pay 3 sum certain in maney: payable on deemand because no timne for nayment is expressed; it s paysbin to bearer and the drawer 1s named or otherwise indicated with eeasonat Because the requisites Promissory ole are all present amely; itis i wring aad signed by the ‘make: eneains an unconaitianal promise to pay 2, sum ertain in money; it is payable at a determinable future time and. iL is payable to order. Because itis payable in wine anit act inmaney. The promise. to gay is condigonal since the instrument = gayable out oF 2 particular fun Because it contains 3 promise to do an act in addition a the peyment of money. Because the riée account meationed 's enly a Source of roumburserncnt Getause the electian to yay maney o Fice is given to the drawee and not £0 the nalder. Because it is very clear that the lection to pay 500,000 or to deliver 500 sacks of rice i given to. the 3. Non-Negotiabs 4. Nlon-Negotiaote 5. Non-Negotiable 6. Negotiable 2, Non-Negotiable 8: Negotiable hotter 8. Noh-Nagotiadle lection is given to maker, 10. Non-Negotiabie Slectian Is given {0 meker because where the abligation is aifernative the Fight of choice generally belongs to the debe Li. Non-Negatiabie Because the note 1s payable by installments. and the same bawve not been stated by specifying the number of ‘installments, the amount ar Arnounis af each instatiment anc the ote or dates when the installment shall becoine eve ord pavabte 12, Negotlabte 3. Wegotable The payable is soll 8 sum certain in money evan if thers is to be paid sttamey’s fees oF cost of calietion # tne: instrument be nut paid at maturity, 14. Wegotiable The better opinion is that even i? the attorney's fees or cost of collection is ot qualified the" sum payable because the said attorney's tees and cost of collection are Lo be paid only beersve, The promise to pay ts subjer! to conaition which is thut of pasting CPA vaare examinations There is ao certainty th the age of 75 yon, 5. Non-Wegotinble Non-wepotiate onl eaach aww. n nah 18, 13, 26. 30 1 GPA REVIEW Non-Hegotiable Nan-Megotiable Non-Negotiable Non-wegotiable Negenanie Non-Negotiable Negauable Non-Negotisvle Hon-Wegatiable Non-Negetiable Negotiable Non-Hegatianle Non-Negotaole Negouable Hon-Regotiabie Negotintle egotiable Negotiable on Negotiable Non-Negetiable MALVAR/J.ONG/T.LOPEZ OCTOBER 2008 hile the death oF X is certainty but dying by essassination is not certain. Because upon the death of x, the note wil ,pscomme 15 days overdue fand commercially speaking the note becomes non-negotiable since no alder in due course can arise under the situation, Payable on December 15. without specifying the year makes” the instrument neither payable ot a fixed time nor at a determinable future time nor is it payable on demand, Even if the date of issue August 27, 2004 1s shown, it does not faecessarily follow that the note onl become payable on December 15, 2008. It could be 2005 ar 2006, etc, The instrument's not signed The additional of selling the collateral security does nat. destroy nnegctiabilty Lecause it is to be done niy after the instrument’ becomes bverdue. Because the nate is payable to a specified person only = the word bearer is used es an adjective only anid nat 2 8 word of negotiabilty. For the seme reason as stated In + use ik 15 payable to a specified person only and net to order or note is what is known as a due and because the requisites. of rnegotiability are all present then the ‘conclusion fs that it Is negotiable Words of courtesy do not have the effect sitering the nature af an order or command, The instrument is clearly one of a request or a supplication and net an order to pay — thus making the instrument non-negotiale 4s payabie to 2 specifies person only collector is just the egent oF the paves. In spite of the amount payable, one weitten in words, the other written in figures , Section 17 can resolve the ‘matter within the meaning of the law. Promise to pay is conditional as being subject to another contract outside oF the instrument AS being violative of Section 128 Bl pithough payable to cao or more Payess jointly because the other Fequisites of negotiabilty are presant. Promise to pay is conditional Date. fixing maturity being absent, it is considered a incomplete snd Uierefore, non-negotiable, cae “BL.50450L.PROFESSIONAL RE\ 39. Negotiabie 40, Non-Negatiabie Waiver of & sight protection of the obligor is nat an Seditions! provision whieh desteoys egotiabiey Where the instrument is payable to order, the payee must be named oF Stherwise indicated with rezsonable certainty = "BOY" does not comply with auch requirement, intended far the ii. TRUE OR FALSE L.faise Treasury warrants are payable out af particular fines the Appropriation Law which makes the order to pay conditional 2 False Gecause when indorsed in blank it becom payable to bearer according to Section & 3.Tiue Because even i incorsed specially, the iatrument may nevertheless be Pegotated by mere delivery, thus retaining. nature. 3s Dayable to bearer 4. true As'per provision of Section 9 S.Faise A’ memorandum check is merely 2 seminder whet the drawer owes the payee, bul ast an arder for the bank to. 6. False. The holder in due course holds the inserument : free trom personal defences nt si subjeet 12 real defenses. Pifalse ies rel defense. S.tiue Because where such instrument 1s completed and nagotiated without authority, it eannat be 3" valid contract. against nay!" person who becomes a party thereto prior to its completion See Section 15, 9, False The description given fts that of @ qualifies indorser 410, False This kind of restrictive Indarsement coulé atl be negotiated 4. True 12) Folse Ie is the other way around as ver provision af Sectian 27 13/Teue Being 9 heider for value is,one ofthe requisites ofa holder in ave course 14. True As when the instrument 1s payable te bearer and i indorsed special, the holder becomes the owner because of the delivery but no: through the indarsernent. 15.True Because there. Is 3 presumption that every holder is @ nalder in due course, except thot when the tile of @ party to the instrument is Shown to be defective, afl parties ofter him to be considerec » holder in-dve course must be shown to have ell the requisites of a holder in due course 16, False Forgery is a real defense and therefore, a5 2painst C whose signature was forged, th 1a eight to enforce payment. 17. True 18. False It isnot notice of dishonor that is'cequired but rather arotere. 19, else It is only reauired to be presented for acceptance in the cases enumerated in Section 193 20, False it muse be presented for payment within a reesoneble time frown the date of Tost Faistration 21. Folse” He is deemed an indor {he provisions of Seetion 17 1H. MATCHING 1D 6H La Be 738 RK 30 26 im xe oF we Se toon ask Page 2 of 2 www. prtccom.ph 22, True False 25. False 25. True 27. True 28. True 29. True 30. False 31, False 32. False 33. True 34. True True 36. Ta a7. Tue 38. Tue 39. True 40, True 41, False 42. True 43, False 44. True 45. Tue 46. True 42, False 48, True 49, False ‘The maker is not secondarily lable because he |g absolutely required to pay the instrument ‘nd therefore primarily liable, Because the Indorsement is valid since it Is an Ingorsement in favor of two or more indorsees sointy See Section 45. See Section 47, He seems to be principal provision of Seerion 119 Unger Suction 131, the holder need not go to the referez but can slready proceed to the diving of notice of eishoner. Because “the pronoun used Is Instrument is payable jointly Ceannat. be regarded as the holder because while he 1s in possession but he is neither @ payee nar indorsee. I is really @ 900d promissory note in the sense that itis a valid obligation but not negotiable. debtar as _per we" the If in the locally where the foreign bill of exchange is dishongred there is no notary Public, the protest may be mede by 3 Fespectable person accompanied ay two or more credible witnesses Under Section 137 where the drawee to whom the blll Is presentes destroys “the same, it is considered implied acceptance, If at the time he took the instrument he paid partially and then possessed all the requisites of a halder in due course and afterwards came ta know the defect of the vile of @ party to the instrument , he will be regarded.as a holder in due course only as to part already paid. Where his immediate transferor is a holder in due courge and he himself is not a party to the legality in the instrument, such holder shall be gerdes 2 having the rights of the former holder in due course, Under Section 143, In such 2 case, the Instrument Is net discharged but only the parties subsequent to the ane whe is discharged. Under Section 165, By the consensus of authorities on the subje insanity constitute a real defense [As provision of Section 28, Refer to Section ©. He becomes a party only when he accepts, but when fhe 2ecepts he should already be called acceptor. Under Section 169 & check of itself does not operates as an assignment in the hands of the drewee bent evailable For the poyment thereoF ana the bank does nat become liable unless anc until certifies the seine. Besides, there is ho privity of contract between the nolder and the draves banie See Section 5 Under Section 12 It only becomes invalid but ot necessarily non-negotiable. IV. MULTIPLE CHOICE Lo B.C 15.8 S.A 16.8 10.€ ws 1.8 lec 220 wa ie 20.8 ia ac BL.504S0L.since 1977 * Mania 73365677247905> cob Cy 95: BUSINESS Law Cb Phil appointed Aldo as his agent sel! his Parcel of land for P100,000. Five Jays afer Ai sec ta Bert the parcel of land for POO 000 by meen publi instrument executed between AiS0 sec’ Se What is the effect and the status of eae Aldo and Bert? 2. The sale is vale because it was executed in a Dublic instrument b. The sale 1s unenforceable because the agent acted beyond the scope of his authori fo Selling the land less than the pice instrctet © The sole is void because the sppainemant ofthe agent is oral & The sale. can be ratified although the appointment of Aldo is ora, becouse the ale he Aldo to Berti in a public instrament € 8 2 The "power to sell” includes three of the following. Which isthe exception 3, The power {0. execute the necessary trenster documents &. The power to selon cre © The power to receive the pride, unless he was authorized to solct orders iy 4. ‘The power tof the place, tine, and mode of delivery A,3. Poul deivered to Aldo 20,000 pieces of Capie sheils Do far the purgose-ofseling them ot 62 each, Oat oh ns Proceeds of the expected sale, Aldo is tO coccuee 10% commission. After 5 days; however, Aide cas niline ems at P2.50 each fo Blade, but on SO-cay pio credit: Under the situation a. Aldo mist pay 4.000 immediately Algo cannat be compelled thay Aldo must pay 50.000 immeanteny 4. Aldo must’ pay P40,000 after ealection from Biade 25 Agency ie extinguished by any of the folloning 5. causes, except by 2 Revocation 8. Withdrawal ofthe agent Death of te agent er of the principal Death oF the agent and agency le coupled with G21 aninterest P'S. without Pete's authonty, Sid sold Pete's car to Bertin Pete's behalt. 2, "The transaction entered by Sid is-unauthoriead therefore unenforceable . The right of Bert is only against Sid aso rue ©The contract: canbe “ratified,” rence ig cansidered'a valdable conten 4. Allofthe oowe 5 Paul authored knton,.16 years ol to sell his carta 12 Oem Anton Sa mero a 200,000; on™ week after, because of the Mlosting mee po rces oF car went up. Paul now antes to nese, the sate, claiming that Anton, ins secre nee eve ana terefore the contract is woldshle and so toy is attached in tne conten 2. Both Anton ang Paul Se Jointly abe te Ben be Only Anton. is Hable. because heres eeey tne agency knowing for inset thet ne wees page T of 2 www.priclcom.ah PROFESSIONAL REVIEW and TRAINING CENTER, Inc. E7777 LGC 122” Davo Cty O82 2300 CPA REVIEW * Cagayan de ea Cay 08822725150 MALVAR/J.ONG/T.LOPEZ ___ OCTOBER 2008 © Paul and Anton are solidarity able to Ben, 9. The contract is with full force and effect even if ‘Anton is incapacitated but Paul (prinipal) i not Ben wrote Sonia, his sister, to sell his parcel of land. Zone, purchased the land, but Sone d@ not farmacd the money to Ben. Ben now wants to recover the parcel of land 2. Ben cannot recover because the sale is valid b. Ben can recover because the sale ‘Soni “and Zane is void, therefore there is no s © Ben can recover only if Ben cen return the money paid by Zane te Sonie. 4. All ofthe above, ‘An agent without any express authority fram the Principal appointed 8 sub-agent to hela him carry out the agency. a. The substitution is voi. 5. The substitution is valid bué the agent is the only fone liable for the acts of the sub-agent Both the agent and the sub-agent are liable to the principal or the acts of the sub-egent usder the valid substitution ©. The substitution is valid but the substitution is the eniy one fiabie for his own.acts, Agency may be created by 2. Appointment bL Ratification &. Estoppel 3. ll oF the above Ado appoints Boza 23 his agent to sell his land. Whieh Of the folowing is valid? 3 The: authority of Bozo is in writing but Bozo ‘mortgages it aiso In writing, b. The authority of Bozo from Ado is by way of letter and Bozo sells the land to Cero in writing. ©The authority of Bozo is oral and Bozo sells the land to Cero for P50,000 ina written contract of sale, 4. The authority of'3020 is in writing but the sale of the land in writing was mage beyond the period expressly set forth by Ado Which of the following statements is true? 8. If @ principal appoints an agent in writing with respect to the sale of a piece of lend. ahd the latter ‘sold it to a buyer. orally, the ‘contract between the agent ans the buyer is vere, B. Acontract of agency is generally gratuitous, © To lease personel property to anather person for ‘more then one year does not require a specie! ower of attorney, 4. The insolvency of the principal but not the agent shaif extinguish the agency Min Co. wrote 2 circular letter to its customers introducing a certein Arca as. its duly suthorecd agent. Cruz, a customer, dealt or trensacied business with Arco. Later, Arco's authority was revoked sod ‘835 published in a newspaper of general ccuiation Not. withstending his knowledge of such revocation, Cruz continues to transact business with Min eo, tres Arco. Is Min Co. still lable for the agent's act even BL.SO5DRILL 01PROFESSIONAL REVIEW a Ci Bus. D7. pis. Page 2 of 2 ®. Yes, because the revocation was not given in the same stay the pawer was granted, b. No more, because the third person (Cruz) es in bad fet < No more, because the transaction that will be 20. lenteree after revocation wll Be void 4d. Allof the above Pat appointed Alma orally as hier agent to seth for F100,000, alma sold the car to Mina and acted in her name. if upon delivery the car has hidden defects is Pat lable? 2. No, because the contact isvunenforceable, it 1s rally eatered inte. Yes, because the thing belongs to the principal No, because the agent acted in his name. All of the above. A passenger bus while im motion collided with ‘another bus. Cesar, the conductor of the bus vos bocily injured. Dado, the driver, although not authorized engaged the services of a physician in the name of the company. In here, there 's an: a. Impliee agency" c. Agency by. necessity b, Agency by estoppels . All of the above Paul appointed Ado as his agent co sell his specific far in cash for PLG0.000 with 10% commission, Ado Using persuasive skills was at sell it for 150,000 on credit. After the sele but hefere payment of the buyer 2. Ado must give 100,000 only 8. _ Ado must give P300.000 minus the commission ©. "Ado must give PL50.090 minus the commission 6. Aco must give P150,000 and in turn is to Swe ‘Ado ®50,000 as commission Pedro appointed Arthur:as_his agent with general Powers on” Jaivery 1. The next day, Xenon transacted business with Arthur, On January 5, Pedra revoked the agency ang published it in a newspaper of general circulation. However, Xenan oid not rea: the newspaper publication. afters days, Xenan onsummeted anotner transaction with Arthur. Is the act of Arthur binding against Pedro? 2. Yes, because Xenon is in good felth 7 b. No, because the agency is considered revokes D 24 and its gublication is sulficient uniting, © No, because the power is general, there must also be a special power. 4. Yes, because there was no special notice sent to Xenon, Az, ‘The principal is not liable FoF the expenses incurred by the agent, 3. I the agent acted principal’ instruction, 1b. Expenses were due t the fault of the agent. © Agent” incurred them “knowing thot unfavorable result would ensue, and principal was nat aware thereot o> Allof the above, In contravention of the the C25 Three of the following requires @ special power of attorney. Which is the exception? 3. Accept inheritance b. To walve obligation grat © To bond the partnership 4. Making a reasonable gift to charity. brincipal in’ a contract of Three of the following are motes of extinguishing an agency. Which is the exception? 4. Insanity of the principal b. Death of the principal, but the agency is for the interest of the princiaal and agent wWww.pric.com.ph & Accomplishment of agency. é 4. Dissolution of the firm or corporation that entrusted or accepted the agency. A guarantee commission agent 3 = Bears the risk of collection on the same terms areed upon wth the purtnase 8. leteble © the prineoe! even if he Buyers ceally € lable Tor damages If he wil nat cllect. the edt on te a. orth sbove, Pablo appointed mold to sell the former's car for 300.000. Arnold sola che car to Juan for 200,000 but Armaid actad in his awn name. After delivery Juan Inspected the car and he found hidden defects in the cer. Con Juan file an action against Pablo even when Arnold actes in his evn name? 2. No, under "caveat emptor” let the buyer bewere. b. Yes, because this is a contract involving property belonging to the principal No, because Amold acted In his own name not of the principal 4, No, because the contract of sale is already perfected Considered "mere acts ef administration", which an, agent is authorized to da if given an agency couched in “general term*. Which is the exception? 2. To sue for the collection of debts and to engage services of 2 counsel to preserve the ownership {nd possession of the principal's property b. To give customary “gifts: for charity or to employees in the business managed by the agent. Unregistered lease of real property to another person for one yeer, 0. To waive any obligation oy uitously. f an agent contracts’ in the name of his principal, exceeding the scope of his authority, what would be the status and effect of tne cantract? 2. Unsaforceable . voldable Bb. void d. vatia Phil, the owner of plece of residential tand orelly authorized Aero to sell the land for P50,000 with 5%. commission. Today Aero sold the land to Cesar. One ‘ay later Phil sold the same land to Darlo, Assuming that both buyers are in good faith, who is the lawful 8. Ceser, being the frst buyer b. Ceser, because Aero wes given authority by Phi © Darla, because the sale made by Aero to Ceser is, only voicable 6. Dano, because isvoid sele between Aero and Cesar Today, Pete appointed Aloe his agent covered by general power to lease his ear to Zen for 6 months, ‘The next day, Pete appointed Alco with special power to lease the same car to Zen for § months, On the Uhird day, Pete directly transacted business with Zen jeasing thé car for 2 manths. What is the effect of agency between the parties? 5. The appointment of Alve is valid becouse it has got 8 arior dete, >. The appointment of Aldo is the one valid because itis covered by a special power, © The agency of Aloe and Aldo are considered revoked because the principal directly transacted weith-Zen, 4. All of the above. “BL.SOSDRILL 4* Men 7339944797903» Cabu Cty 932 Since 1977 BUSINESS LAW BL.502B.PART! COMPILATION OF CPA BOARD EXAM (May 1983 ~ May 1998) PROFESSIONAL REVIEW and TRAINING CENTER, Inc. 57777 LOC 122 * ava Cy 082 225009 ~ Cagayan de Ora Cy 05822725150 CPA REVIEW NERSHIP AND CORPORATION MALVAR/J.ONG/T.LOPEZ ____ OCTOBER 2008 coRPoRATION Taree a), Sythe, folowing are, ateibures ot 9 corporation or its eredtors in respect thereto, (Phil corporation. Which is the exception? (Pril CPA, 85-1). Eon '6y.9) 2. "An artical being 2. Only ist statement is true bas the right of succession Db: Only 2nd statement is true © Hes power, atributes and properties expressiy _¢gaxh a statement Is rue authorized by law or incident to its existence alesth stetsneee sciee @. Created by agreement ofthe eornoration 8. The right of a corporation to exist as juriical person 2 corporation? ol as ne Sezawantage of forming © ing areca ee eens 35 ural person 2 corporation? (Phil CPA, 93-2; 54-2; 96-1) 2. The free and ready transferability of ownership b. The shareholders are not liable for the debts of the business, © Because of the power of succession, the existence of the entity Is not affected by the Personel vicissitudes of the individu shareholders. Incorporation despite the death of any of its stockholders is: (Phil CPA, 92-1) 3, Right of Existence 8, Right of Redemption Right of Suecession 1. Pre-emative Right 8. A corporation where vacancies in the Board of 4. The subservience of minority stockholders to theAA i wishes of the majority subject only to equitable restrain, 3. Rights of the corporation to continue as a juridical entity for the term stated in the artis ot Incorporation despite the death of any stockholders, (Phil CPA, 88-2) 4. Juridical personality “e. Right of succession b. Re-emptive right. Right of existence Corporations organized by private persons Berforming public function and for profits to'pikete Berson are: (oh CPA 69-2) 2. Public Corporations 8 -b-Gavernmert Cantroled Comporations © Quas!-Publie Corporations Directors, are filed only by the remaining members (of the Board, si (Phil CPA, 94-1) 2. Open corporation Corporation sole ©. Eleemosynary corporation 4. Close corporation, © 10. 4 religious order is consigered as a: (Phil CPA, 85-2) 2. Corporation by prescription B. Public corporation ©. Corporation sole a. None of them 11. These do not form part of the eutstanding copital stock: (Phil CPA, 92-2; 96-1) 3. Bonus Shares © Founder's Shares b. Treasury Shares 9. Redeemable Shares G12. The following ere advantages of no-pr value share of Stock, Which i the exceation? (Phil CPA, 90-1) 2. No.per value shares allow flexibility in price. >. The stockholders of n0-par value shares are relieves of personal liability for unpaid. stock subscription, It allons the issue of stacks in exchange of property. ©. No-par value shares afford @ possible remedy of relief from the evil of aver capitalization ond stock watering. 2 They, have no voting rights as long as they 13. These are shares of stock which have been issued ., Private Comporstion Three (3) of the following are attributes of a corporstion. Which is the exception? (Phil CPA, S8-1) 3. created by agreement of the incorporators b. an artificial being . has right of succession % has "powers, attributes and properties expressively authorized by the lew incident to Its existence 4s egords treasury stacks, which is not correct? (Phil PA, 38-2) remain in the treasury >. They maybe distributed as property dividend if there are retained earnings from operations, © They are not enttied to dividenos 4. They are considered part of earned or surplus Profits and therefore distributable dividends, Ast Statement: When par value shares ere issued above par, the premium or excess is to be considered 15 part of the legal caplet, 2nd Statement: Shares issued without par value shall be deemed fully paid and non-essesseble ana 'e holder of such shares shall not be liasle to the Page i of 9 ‘nd fully paid for, but subsequently reacquired by ti issuing corporation: (Phil CPA, 86-2) 2. Redeemable shares c. Founder's share b. Treasury shares 1. None of the three G14. One of the characteristics of treasury shares is that 2 Phil CPR, 91-2), 8. They have the status of the outstanding shares. >. They may not be reissued or sold again, © They participate neither in dividends non in the ‘meetings of the corporation as voting stocks, %. Answer nat given ~~ BL.50268