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1. A Private corporation organized under the corporation law

commences to have corporate existence and juridical personality
and is deemed incorporated from:
a. The date when the Articles of Incorporation is signed by the
incorporators
b. When the Articles of Incorporation and by laws are presented and
received by the Securities and Exchange Commission and the
filing fee is paid.
c. From the date the SEC issues a Certificate of Incorporation
under its official seal.
d. When the Articles of Incorporation is notarized by a Notary Public.
2. The following are the qualifications of Incorporators. Choose the
exception.
a. Majority of whom must be Filipino
b. Majority of whom are residents of the Philippines
c. All are of legal age
d. Natural persons not less than 5 but not more than 15
3. Corporation governed by special laws aside from the requirements
specified under the corporation laws. In order that their Articles of
Incorporation may be approved or accepted, they must present
before the Securities and Exchange Commission.
a. A favorable recommendation from the Ministry of Finance
b. A favorable recommendation of the appropriate government
agency in the effect that such article or amendment is in
accordance with law.
c. A copy of previous income tax return and a statement of assets,
liabilities and networth.
d. An undertaking to change the name of the corporation if there is
already registered with the SEC a name similar to the name
of the corporation
4. A secretary of a stock corporation shall be:
a. A resident and citizen of the Philippines
b. An Incorporator of the corporation
c. A director of the corporation
d. Of legal age and citizen of the Philippines
5. The creditor shall have a right to indemnity for damages when
through the fault of the debtor, all things which are
alternatively the object of the obligation have been lost or
compliance of the obligation has become impossible. The
indemnity shall be fixed on the basis of :
a. The value of the last thing which disappeared
b. The value of the most expensive things
c. The value of the least expensive things.
d. The value of the first thing which disappeared.
6. Which of the following is not a rule in the interpretation of contract?
a. If some stipulation of any contract should admit of several meanings,
it shall be understood as bearing that import which is most
adequate to render the contracts effectual.
b. Word which may have different significations shall be understood in
that which is most in keeping with the nature and object to the
contract.
c. In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally
considered.
d. Although the cause is not stated in the contract, it is
presumed that it does not exists and is unlawful.
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7. Contracts are effective and binding only between the parties, their
assigns and their heirs. Three of the following enumerations are
exceptions as provided by law. Which does not belong to the
exception?
a. When there is a stipulation in favor of a third party
b. Where one of the parties to the contract dies and thereafter a
suit is filed on the basis of the contract
c. Where the obligation arising from contract are not transmissible by
their nature.
d. Where the obligation arising from contract are not transmissible by
stipulation or by provision of law.
8. A and B entered into a universal partnership of all present property.
The common property of the partnership shall be:
a. All the properties which belonged to each of the partners at the time
of the constitution of the partnership
b. All the properties which shall belong to each of the partners after the
constitution of the partnership.
c. All the properties which belonged to each of the partners at
the time of the constitution of the partnership as well
as the profits which they may acquire therewith.
d. All the properties which belonged to each of the partners at the time
of the constitution of the partnership as well as properties
which each may acquire thereafter.
9. Three of the following enumerations are not authorized to issue no
par value shares of stock . Which is the exception?
a. Insurance companies
b. Industrial companies
c. Public utilities
d. Trust Companies
10. A solidary obligation is one in which each of the debtors is liable for
the entire obligation or debt, and each of the creditor is entitled to
the entire credit. Obligations shall also be considered solidary
under the following three exceptions. Which does not belong to the
exception?
a. When the prestation is indivisible and there are two or more
debtors and creditors.
b. When solidary is expressly stipulated in the obligation
c. When the law expressly provides solidarity
d. When the nature of the obligation requires solidarity
11. In order that fraud may make a contract voidable:
a. It may be incidental but should have been employed by both parties.
b. It should be serious and should not have been employed by
both contracting parties.
c. It should be serious and the parties must be in pari delicto.
d. It may be incidental but both parties should not be in pari delicto.
12. Which of the following is not a requisite to consider a person an
accommodation party?
a. He must not be liable to a holder in due course.
b. He must be a party to the instrument signing as maker, drawer,
acceptor or endorser.
c. He must not receive value therefore.
d. He must sign for the purpose of lending his name or credit.
13. Raymond and Rex (but they call themselves as Rhea and Rexy)
insane and demented; respectively, and like to play “Chinese
garter” in a muddy grassless ground who laugh, chuckle and giggle
while waiting for the sun to set in the west when it rains, entered
into a contract. The Contract entered into by and between them is:
a. Rescissible
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b. Voidable
c. Void
d. Unenforceable
14. A Capitalist partner is engaged for his own account in an operation
which is of the kind of business in which the partnership is
engaged. Said partner can be:
a. Compelled to sell his interest in the partnership to the other
capitalist partners.
b. Compelled to dissolve or discontinue the operation of his business.
c. Compelled to bring to the common fund of the partnership any
profits accruing to him from his transactions.
d. Denied his share in the profits of the partnership.
15. Which of the following instruments is not negotiable for the reason
that the instrument is not payable at a determinable future
time?
a. “On the death of X, I promise to pay to the order of B P1,000.
(Sgd.) A”
b. “ On or before October 30, 2010, I promise to pay B or his order P
1,000.
(Sgd.) A”
c. “Sixty days after sight, I promise to pay to the order of B P 1,000.
(Sgd.) A”
d. “Ten days before the death of X, I promise to pay B or his
order.
(Sgd.) A”
16. Which of the following contracts cannot be ratified?
a. Those whose cause or object did not exist at the time to the
transaction.
b. Unauthorized transactions
c. Those where both parties are incapable of giving consent
d. Those that fail to comply with the Statute of Fraud
17. The following except one are the rights of a holder in due course.
Which is the exception?
a. He may enforce payment of the instrument for the full amount
thereof against all parties liable thereon.
b. He may receive payment and if payment is in due course, the
instrument is discharged.
c. He may sue on the instrument on his own name.
d. He holds the instrument subject to the same defense as if it
were non-negotiable.
18. Consignation is a mode of payment which extinguishes an obligation.
Which of the following is not a requisite for consignation?
a. Actual consignation with the proper judicial authorities
b. Existence of a valid debt
c. There must be prior notice of consignation to persons interested in
the fulfillment of the obligation
d. Prior notice has not been made
19. A is indebted to B for P 20, 000. X is the guarantor of A. B is also
indebted to A for P8, 000. How much will X be liable as a guarantor
if B sues A and A cannot pay?
a. P 20, 000
b.P 8, 000
c. X has no liability
d.P 12, 000
20. On September 25, 2014, a few days before the much awaited CPA
board examination, A is indebted to B for P 50, 000 for a 20 day
period. A proposed to B that X will pay A’s debt and that A will be
free from all liabilities. B and X agree to the proposal. On October
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14, 2014, a few days after the result of the CPA board examination
has been published in a newspaper of general circulation, X
became insolvent. At the time of delegation, X was already
insolvent but this was not known to A. The insolvency is not of
public knowledge. So B sues A on the ground that it was A who
made the proposal that A guaranteed X’s solvency. Decide.
a. A is liable because he is presumed to have guaranteed X’s solvency.
b.A is liable because he did not exercise due diligence in determining
the insolvency of X.
c. A is not liable because A does not know the insolvency of X at the
time of delegation and neither was the insolvency of public
knowledge.
d.A is liable because X agree to the proposal to make himself solidarily
liable for the obligation
21. A guardian of B, sold B’s five-story green house and lot perched in
the edge of a rock just above the coast of San Antonio,
Zambales worth P 480, 000 for P 240, 000.
a. The contract cannot be rescinded because there is no fraud, mistake
or undue influence.
b.The contract cannot be rescinded because all elements of the
contract are present.
c. The contract cannot be rescinded it is expressly provided by law as
one of the contracts which cannot be rescinded
d.The contact can be rescinded because of inadequacy of price.
22. On July 15, 2013, X entered into a contract with Y. On February 10,
2014, X discovered that fraud was committed at the time he
entered into the contract, a fraud that vitiated his consent. The
action for annulment shall be brought:
a. Within three years from the time of the fraud
b.Within four years from February 10, 2014
c. Within four years from the time A entered into the contract
d.On February 10, 2013
23. On September 1, 2012, A entered into a contract with B whereby A
sells to B 5, 000 sacks of sugar to be delivered on the 15th and to
be paid in full on the 30th. There was no agreement for rescission
based on nonpayment. A did not deliver on the 15th but on the 30th
he was willing and offering to deliver but B did not make payment
on said date and so A did not like it and refused to make delivery.
Decide.
a. A cannot rescind the contract for nonpayment of the price.
b.A cannot refuse to deliver the goods.
c. B is not entitled to recover damages.
d.A can rescind the contract for nonpayment of price.
24. Rod Baker King alleged that Cora Zone promised to give Rod Baker
King one hectare of land. This is in consideration of Rod Baker
King’s meritorious service to Cora Zone in making the best bread
she has ever tasted. Cora Zone pleads in defense that since the
promise was not in writing, it is unenforceable under the Statue of
Frauds.
a. The promise is unenforceable because it is not in writing.
b.The Statute of Frauds is applied because Rod Baker King has
rendered services already.
c. The Statute of Frauds can apply to partially executed contracts.
d.The Statute of Frauds is inapplicable here because the promise to
give the land is not a sale of real property.
25. A has a daughter, B. X has a son, Y. A, B, X, and Y agree together that
Y will marry B. The agreement is oral. If later on, B refuses to
marry Y who has spent money and valuable money for the
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necessary wedding preparations. X and Y decided to bring an

action against A and B will the actions prosper? Decide.
a. Between Y and B, The action will not prosper because the agreement
is made orally.
b.In case of A and X, the action will prosper because the agreement
which was made orally is enforceable as it is based on the
consideration of marriage.
c. As to A and X, the action will not proper because the agreement is
not enforceable as it was not they who mutually promised to marry
each other.
d.The action of X and Y against A and B will prosper because the
agreement is based on the consideration of marriage other than a
mutual promise to marry.
26. The authorized capital stock of a corporation is P 500, 000 divided
into 1, 000 shares with a par value of P 100 each. At least P 25, 000
or 250 shares of the authorized capital stock must be subscribed.
The 250 shares were subscribed by 25 subscribers. To meet the
minimum amount of subscription that must be paid:
a. Each and every subscriber must always pay P250 which is
25% of their individual subscription.
b. Seven of the subscribers paid P 6, 250 and the rest of the
subscribers did not make any payment.
c. It is enough that 25% of the total subscription is paid,
regardless of the amount paid by each individual.
d. None of these.
27. Which of the following is not a requisite for the existence of a de
facto corporation?
a. The existence of a valid statute under which a corporation with
some of the purposes in question can be formed.
b. An attempt in good faith to form a corporation according to the
requirements of law.
c. As user of corporate powers, there must be a transaction of
business in some ways as if it were a corporation.
d. The organization is not registered with Securities and Exchange
Commission.
28. For qualifying A to be one of the directors of X Inc., one share of
stock is issued to him. The agreement is that he will retransfer the
stock on ceasing to be director. A assigned to B the certificate of
stock as a security of a promissory note in another transaction. B is
not aware of the secret agreement of A to transfer the Stock on
ceasing to be a director. Decide.
a. B has better right to the share than X Inc. because the
certificate of stock is considered quasi-negotiable.
b. X Inc. has a better right to the share because no matter how
innocent B is, the defect of title of prior parties will not acquire
ownership.
c. Having clothed, A apparently will acquire title over the
stock. X Inc. is estopped from asserting its title over it; hence B
has a better right to share than X Inc.
d. B acquired no better right than that of the transferor of the
share in spite of innocence of the infirmity of the certificate.
29. Stock corporations are prohibited from retaining surplus profits in
excess of 100% of their paid in capital stock. Three of the
following enumerations are exceptions. Which does not belong to
the exception?
a. When justified by definite corporate expansion projects or
programs approved by the board of directors.
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b. Where there is pension plan as agreed in Collective

Bargaining Agreement.
c. When the corporation is prohibited under any loan
agreement with any financial institution or creditor whether local
or foreign from declaring dividends without its consent.
d. When it can be clearly shown that such retention is
necessary under the special circumstances obtaining in the
corporation, such as providing for probable contingencies.

30. Which of the following instrument is negotiable?

a. “Pay to B or order, P 1,000 and reimburse yourself out of
my money in your hands.”
(Sgd )A (to C)
b. “ I hereby authorize you to pay P1,000 on our account to the
order of X.”
(Sgd.) A
c. “ I promise to pay X or order P 1,000 on or before October
25.”
(Sgd.) A
d. “Please let the bearer have P1, 000 and place to my account
and you will oblige.”
(Sgd.) A
31. Every person negotiating an instrument by delivery or by a qualified
endorsement warrants the following. Which does not belong to
the warranties?
a. That the person negotiating has no liability to a third
person
b. That the instrument is genuine in all respects what it
purports to be.
c. That he has good title to it and that all prior parties has
capacity to contract.
d. That he has no knowledge of any which would impair the
validity of the instrument or render it valueless.
32. Y sold his sexy horse named Raymond, to Z for P50, 000. No
payment has yet been made and the sales document does not provide
the date of delivery. Before delivery and payment, the horse gave
birth to a baby horse named Raymond Baby.
a. Y is entitled to the fruit (baby horse) as Z has not paid the price yet.
b. Y is entitled to the fruit (baby horse) because it was born before his
obligation to deliver the horse.
c. Z should pay additional amount for the baby horse to be entitled to
it.
d. Z is entitled to the baby horse which was born after the perfection of
the contract.
33. A wrote a letter to B wherein A offers to sell a piece of land to B for P
1, 200, 000.00 B signified his desire to buy the land. In A’s letter, B
was given a period of two months within which to produce the P1,
200, 000.00 After 45 days, A told B that the price of the land is now
P1, 250, 000.00 Can B compel A to accept the P 200, 000 first
offered by A and execute the Deed of Sale.
a. Yes, because there was actual meeting of the minds of the parties.
b. No, for B did not signify his acceptance of A’s offer.
c. Yes, because A is already estopped by his signed letter.
d. Yes, because the period of two months has not expired.
34. A fine-looking man and a good-looking man entered into a simple
contract of loan with real estate mortgage. In the aforesaid contract,
Mr. Balocating owes Mr. John Lloyd P150, 000 due on August 31,
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2012. Mr. Balocating executed a mortgage in favor of Mr. John Lloyd

on Mr. Balocating’s building to guaranty the obligation. On August
10, 2012, the mortgaged building was totally lost due to a strong
typhoon. On August 12, 2012, Mr. John Lloyd demanded payment
from Mr. Balocating. Is Mr. John Lloyd’s demand valid?
a. No, the obligation is with a definite period, thus the creditor cannot
demand fulfillment of the obligation as such would be prejudicial to
the rights of the debtor.
b. No, the obligation is extinguished because the obligation is lost due
to a fortuitous event.
c. Yes, the debt becomes due at once because the guaranty was lost
even though a fortuitous event unless the debtor can mortgage
another property that is equally satisfactory.
d. Yes, the debt becomes due at once because the tenor benefit is given
solely to the creditor thereby giving the creditor the right to
demand performance even before the due date.
35. In the matter of management of the business affairs of the
corporation, this is supreme.
a. majority of the stockholders
b. 2/3 of the stockholders
c. President of the corporation
d. Board of Directors
36. This written acknowledgment of an interest of a stockholder in the
corporation
a. Share of Stock
b. Proxy
c. Capital Stock
d. Certificate of Stock
37. These are the persons who sign the Articles of Incorporation.
a. Trustees
b. Incorporators
c. Directors
d. Promoters
38. They provide and regulate the internal matters of the corporation,
such as calling the Board of Directors’ and Stockholders’ meetings
a. Board of Directors
b. Majority of Stockholders
c. Articles of Incorporation
d. By-Laws
39. This is an authority to vote in a corporation’s stockholders meeting.
a. By- Laws
b. Certificate of Stock
c. Proxy
d. Share of Stock
40. A gratuitous issue of Treasury shares will result in;
a. Capital surplus
b. Watered Stock
c. Additional profit
d. Stock dividend
41. A certificate of stock is not a negotiable instrument because it lacks
the requirement of:
a. The instrument must be in writing and signed by the maker or
drawer.
b. It must be payable to bearer or order
c. It must contain an unconditional promise to order to pay a sum
certain in money
d. It must be payable to bearer on demand, or at a fixed or
determinable future time.
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42. An instrument is considered payable on demand

a. When no time of payment is expressed.
b. When payable to order
c. When the last endorsement is in blank
d. When the last endorsement is restricted
43. A, B and C borrowed P 24, 000 from Y and Z and signed a promissory
note dated January 15, 2012 and due within six months. How
much can Y collect from A?
a. P 12, 000
b. P 4, 000
c. P 8, 000
d. P 24, 000
44. Mrs. Gomez sold and delivered her diamond ring to Mrs. Pangan. It
was agreed upon that after ten days, Mrs. Pangan will name and fix
the price. On the tenth day, Mrs. Pangan called up by telephone Mrs.
Gomez and stated the price of P 10, 000. Mrs. Gomez accepted. Is
the sale perfected?
a. No. At the time of the sale, the price was not fixed.
b. Yes. The price is stated and named by one of the contracting parties
and was accepted by the other.
c. No. The price was left to the discretion of one of the parties.
d. No. At the time of sale, the price is not known.
45. A is the managing partner of ABC and company. X owes A personally
and ABC and Company P 20, 000 each. A collected and received from
X P 10, 000 and he issued a receipt wherein it is stated that the
amount is applied against his personal credit.
a. The amount received will be applied in favor of the partnership
credit.
b. The amount received will be applied in the credit of A.
c. The amount received will be applied in proportion to both credits.
d. All the partners will decide as to whose favor it will apply.
46. The number of Board of Trustee in a non-stock corporation
a. May be more than fifteen upon its organization.
b. Shall not be less than five but not more than eleven.
c. May be less than five upon its organization
d. Shall not be less than five but not more than fifteen.
47. They regulate different internal matters of the corporation such as
calling and defining the conduct of the meeting of the
stockholders
a. Board of Directors
b. Articles of Incorporation
c. Proxy
d. By-laws
48. The document conferring authority to vote stock in a corporate
meeting
a. Power of attorney
b. Proxy
c. Shares of stock
d. Capital stock

49. The minimum requirement of the Corporation Law to corporate

formation
Authorized Capital Subscribed Capital Paid-In Capital
a. P500,000 P100,000 P25,000
b. P500,000 P100,000 P20,000
c. P500,000 P125,000 P25,000
d. P500,000 P125,000 P31,250
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50. This instrument is negotiable:

a. “I promise to pay P20,000.” (Signed:Jose Santos)
b. “Pay Pedro Torres or order P20,000 if he marries Maris
Cunanan.” (Signed: Jose Santos”
c. “I promise to pay Oscar Bamba or order 20 cavans of IR rice in
January.”
d. “Good to Mario Santos or order, P20,000. (Signed:Jose Santos)
51. When there are three, the drawer, the payee and the drawee, the
instrument is a:
a. Bill of exchange
b. Promissory note
c. Certificate of indebtedness
d. Bank check
52. A bill of exchange may be treated and considered a promissory note:
a. When the drawer and the drawee are the same person
b. When the drawee are fictitious
c. When the instrument is ambiguous
d. All of the above
53. Mr. G sold his owner-type jeep to Mr. M for P100,000. There was no
fixed date for the performance of the obligations of Mr. G and
Mr. M. The obligation of Mr. G is:
a. To deliver the jeep immediately as there is a perfected
contract
b. To rescind the contract because no time is fixed for the
performance of their respective obligations
c. To wait for Mr. M to pay P100,000 and deliver the jeep
d. To deliver the jeep after Mr. M demands for the delivery of the
jeep.
54. A, B, and C borrowed P36,000 from X and Y. The three debtors
signed a promissory note dated January 10, 2013 promising to
pay the creditors on or before July 10, 2013. How much can X
collect from C?
a. P18,000
b. P12,000
c. P6,000
d. P36,000
55. When the subject matter of the contract is lost through a fortuitous
event, who is liable?
a. The debtor
b. The creditor
c. Both the creditor and debtor
d. None of them
56. Mr. R and Mr. V are good friends. Mr. R sold and delivered his car
to Mr. V. It was agreed and understood that on Sunday, Mr. R
will name and fix the price of the car. Sunday came. Mr. R
called Mr. V by telephone and stated and fixed the price at
P150,000. Is the sale perfected?
a. Yes. The price was stated and fixed on the date agreed upon
b. No. The price fixed by the seller was not accepted by the
buyer.
c. No. The price was left to the discretion of the seller
d. No. At the time of the sale, the price is not fixed
57. Mr. B sold a parcel of land to Mr. J for P200,000. Mr. B delivered the
Transfer Certificate of Title of the land to Mr. J. Later, Mr. J
wanted to register the land in his name and he needed a Deed
of Sale. What can Mr. J do?
a. Mr. J cannot compel Mr. B to refund the P200,000 because the
contract is not enforceable.
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b. Mr. J can sue Mr. B for enriching himself at the expense of

another.
c. Mr. J can possess and utilize the land as a buyer in good faith.
d. Mr. J may compel Mr. B to execute a Deed of Sale.
58. Three of the following are qualifications of the Board of Directors.
Which is the exception?
a. He must own at least one share of the capital stock.
b. The shares owned must be recorded in the books of the
corporation
c. At least majority of them are citizens of the Philippines.
d. He must continuously own at least one share of the stock of the
corporation.
59. The voting requirement to increase or decrease capital stock.
a. Majority of the board of directors and consented to by the
stockholders representing 2/3 of the outstanding capital stock
b. 2/3 of the board of directors with the consent of majority of the
outstanding capital stock
c. Majority of the board of directors with the consent of majority
of the outstanding capital stock
d. Majority vote of the board of directors and ¾ vote of the
outstanding capital stock
60. A dividend payable partly in cash and partly in stocks, as to class of
dividend is a:
a. Optional dividend
b. Composite dividend
c. Property dividend
d. Liquidation dividend
61. A presented a bill to B, the drawee. B destroyed the bill. What can A
do?
a. A may sue B for the destruction of his property.
b. A may go after the drawee for the bill
c. A may no longer collect since the bill was destroyed
d. A may consider the bill as impliedly accepted by B.
62. This negotiable instrument is always drawn against a bank.
a. Bill of Exchange
b. Due Bill
c. Promissory Note
d. Check
63. A and B are solidary debtors of X, Y and Z, joint creditors to the
amount of P 15, 000. How much can Z collect from B?
a. Z could recover P 7, 500 from B
b. Z could recover P 15, 000 from B. Z in turn has to give X and Y P 5,
000 each.
c. Z could recover P 15, 000 from B. B in turn can collect from A the
amount of P 7, 500.
d. Z could recover P 5, 000 from B
64. Mr. S offered to sell his land to Mr. C for P500, 000. Mr. C accepted
the offer and paid Mr. S P 500, 000 and Mr. S delivered the owner’s
duplicate of the Transfer Certificate of Title of the land. Mr. C wishes
to register the land in his name but the Register of Deeds asked Mr.
C for the Deed of Sale. What can Mr. C do?
a. Mr. C cannot compel Mr. S to return the payment because the
contract is not enforceable.
b. Mr. C may sue Mr. S to return the price under the legal maxim “ no
one may enrich himself at the expense of another.”
c. Mr. C may occupy and use the land as a buyer in good faith.
d. Mr. C may compel Mr. S to execute a Deed of Sale because the
contract is valid.
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65. Indivisibility s distinguished from solidarity:

a. Plurality of subject is indispensible.
b. Refers to the creditors and/or debtors.
c. May either be passive or active.
d. Refers to the prestation which constitutes the object of the
obligation.
66. Bonds which are not secured by any specific mortgage, lien or
pledge or corporate property but the general credit of the
corporation are:
a. Guaranteed bonds
b. Income bonds
c. Redeemable bonds
d. Debenture bonds
67. These are the rules and regulations adopted by the stockholders of a
corporation for the internal government.
a. Rules and Regulations
b. By-laws
c. Articles of Incorporation
d. Minutes of the meetings
68. D pledged his Singer Sewing Machine to C for P8,000. D was unable
to pay the obligation within 60 days after due date. C sold the
machine at a public auction for P6,000.
a. C cannot recover the deficiency of P2,000 even if there is stipulation
that he can.
b. C can recover the deficiency of P2,000 even without stipulation
c. C cannot recover the deficiency of P2,000
d. C can recover the deficiency of P2,000.
69. When cash or property worth P3,000 or more is contributed as
capital, the Articles of Co-ownership shall be in a public
instrument and registered with the Securities and Exchange
Commission. If said requirements are not complied with:
a. It will render the partnership void.
b. It will not affect the liability of the partnership and the partners
thereof to third parties
c. It will not give a legal personality to the partnership
d. It will give the partnership a de facto existence
70. B-1, B-2, and B-3 are equal partners in 3-Brothers Partnership. The
partnership is indebted to PC for P150,000. Partner B-1 is
indebted to SC for P20,000. PC attached and took all the
assets of the partnership amounting to P90,000. B-2 and B-3
are solvent while B-1 is insolvent and all what he owns is a
land valued at P15,000.
a. SC has priority to the land of B-1 as a separate creditor.
b. PC has priority to the land of B-1 to cover B-1’ share of the P60,000
remaining liability of the partnership
c. B-2 and B-3 have priority to the land of B-1 if they paid PC the
P60,000 remaining liability of the partnership.
d. PC and SC shall both have priority to the land of B-1 in proportion to
their claims of P60,000 and P20,000, respectively.
71. Partnership is not dissolved on the death of a:
a. General Partner
b. Industrial Partner
c. Limited Partner
d. General Partner
72. Corporations organized by private persons performing public
function and for profit to private persons are:
a. Public Corporations
b. Government Controlled Corporations
 12

c. Quasi Public Corporations

d. Private Corporations
73. An instrument is payable on demand
a. When no time of payment is expressed
b. When the last endorsement is in blank
c. When the payee is blank
d. When payable to order
74. The following instrument is not negotiable:
a. “Pay to C or order, P20,000 with interest at 2.5%.” To TP
Signed:M
b. “Pay to order of C within six months from date the sum of P20,000
with interest at 12% per annum.” To TP Signed:M
c. “Pay to C or bearer P20,000 six months after date. If not paid on
due date, I agree to pay collection and attorney’s fees.” To
TP Signed:M
d. “Pay to C or order P20,000 in installment.” To TP Signed:M
75. In this case, advance payment by the debtor is recoverable
a. If the advance payment is only for interest due.
b. If the creditor demanded for the advance payment and the debtor
knew it was not yet due.
c. If the advance payment is in reciprocity to the advance payment of
the other party
d. If the debtor was unaware of the period
76. When the debtor abandons and assigns all his properties in favor of
his creditor for the latter to sell to satisfy his credits, this is:
a. Remission
b. Payment by cession
c. Dation in payment
d. Expromission
77. Mr. AB offered in writing to sell his home and lot for P750,000.00 to
Mr. CD on July 1, 1989. Mr. CD requested Mr. AB to give him
60 days within which to raise the P750,000.00. On August 15,
1989 Mr. AB informed Mr. CD that the price is raised and now
at P1,000,000.00. Can Mr. CD compel Mr. AB to sell house and
lot at P750,000.00 which was offered in writing by Mr. AB?
a. Yes, because Mr. AB is already in estoppels by his written offer.
b. Yes, because the 60 days offer has not yet expired.
c. No, because Mr. CD has not accepted the offer of Mr. AB
d. Yes, because there was already meeting of the minds
78. These are the basic principles or characteristics of a contract.
Which is the exception?
a. Freedom or liberty to stipulate
b. Obligatory force and compliance in good faith
c. Binding on third parties
d. Perfection by mere consent
79. The following is considered fraud or fraudulent.
a. Failure to disclose facts when there is duty to reveal them.
b. The usual exaggeration in trade, when the other party had the
opportunity to know the facts.
c. Misrepresentation made in bad faith.
d. “Caveat Emptor” or Let the buyer beware.
80. The following are similarities between a partnership and a
corporation. Which is the exception?
a. Both have juridical personalities separate and distinct from that of
the individuals composing them.
b. Like a partnership, a corporation can act only through agents.
c. Both are organizations composed of an aggregate of individuals
 13

d. The individuals composing both have little voice in the conduct of the
business
81. The number of the Board of Trustees in a non-stock corporation.
a. May be more than fifteen (15) upon its organization
b. Shall not be less than 5 but not more than 11 upon organization
c. Shall not be less than 5 but not more than 15 upon organization
d. May be less than 5 upon its organization
82. A corporation invest its funds in any other corporation or business or
for any purpose other than primary for which it was organized
a. There is a majority vote of the Board of Directors and ratified by the
stockholders representing 2/3 of the outstanding capital
stock
b. It is reasonably necessary to accomplish its secondary purpose, the
approval of the stockholders not necessary
c. There is majority vote of the Board of Directors
d. There is majority vote of the outstanding capital stock
83. The right to vote at meetings, the right to receive dividends and the
right to receive copies of financial statements is known as:
a. Right of existence
b. Directors right
c. Pre emptive right
d. Stockholders right
84. If an instrument conforms to the following:
1. It must be in writing and signed by the maker or drawer
2.It must contain an unconditional promise or order to pay a sum
certain in money
3. It must be payable on demand or at a fixed or determinable future
time, and
4. It must be payable to order or to bearer, the instrument is a
a. Check
b. Bill of exchange
c. Draft
d. Promissory Note
85. Which of the following instruments is negotiable?
a. “Good to Jose dela Paz or order, P20,000.00” (Sgd. Pedro Cura).
b. “I hereby authorize you to pay Jose dela Paz or order,
P20,000.00”(Sgd. Pedro Cura).
c. “I promise to pay Jose dela Paz or order P20,000 worth in sugar.”
(Sgd. Pedro Cura).
d. “I promise to pay Jose dela Paz or order P20,000.00 on May.
86. An indorser of a note or a bill is:
a. Thirty liable
b. Primarily liable
c. Not liable
d. Secondarily liable
87. Which of the following is a necessary requirement in order to make
an instrument negotiable?
a. It must be in writing and signed by the maker
b. It must be payable on demand or at a fixed or determinable future
time.
c. It must contain an unconditional promise to pay a sum certain in
money.
d. All of the three (3) above
88. A owes X P50,000.00 payable on or before June 30, 2005. S who is
not a party to the contract and without the consent and against the
will of A paid X the P50,000.00 on April 2005 when the prevailing
rate of interest was 12% per annum.
 14

a. S can ask reimbursement from A in the amount of P50,000.00 plus

12% interest from April to June 30, 2005.
b. S can ask reimbursement from A in the amount of P50,000.00
c. S cannot ask reimbursement from A because the payment by S is
without the consent and against the will of A.
d. S can ask refund from X because the payment by S was against the
will of A.
89. A distribution of a corporation of shares held by it in another
corporation is:
a. Stock dividend
b. Sales of capital assets
c. Property dividend of actual distribution of corporate assets
d. Sale of treasury stock
90. Which of the following instruments is not negotiable?
a. “I agree to pay to the order of A, P30,000.” (Sgd.)X
b. “Good to A or order, P30,000.” (Sgd.)X
c. “I promise to pay A or order P30,000 on June 30.” (Sgd.)X
d. “I promise to pay A or order, P50,000.” (Sgd.)X
91. The promise or order is conditional, hence non-negotiable.
a. “I promise to pay B or order P20,000.” (Addressed to Z signed by Y).
b. “Pay to B or order P20,000.” (Addressed to Z signed by Y)
c. “Pay to B or order P20,000 and reimburse yourself out of my money
in your possession.” (Addressed to Z signed by Y)
d. “Pay to B or order P20,000 out of my money in your possession.”
92. Which of the following is not necessary in order to make an
instrument negotiable?
a. It must be in writing and signed by the maker
b. It must contain an unconditional promise or order to pay a sum
certain in money
c. It must be payable on demand or at a fixed future time.
d. It must be payable only to a specific person
93. A certificate of stock is not a negotiable instrument because it lacks
the following instrument:
a. It must be in writing and signed by the maker or drawer
b. It must be payable on demand, or at a fixed or determinable future
time.
c. It must be payable to bearer or order
d. It must contain an unconditional promise or order to pay a sum
certain in money.
94. This is the promissory note: “ We promise to pay A, B and C the sum
of one hundred eighty thousand (P180,000) pesos within 60
days. Signed by X,Y and Z.”
a. X is obliged to pay A P20,000
b. X is obliged to pay A P60,000
c. X is obliged to pay A P180,000
d. X is obliged to pay A, B and C P180,000
95. When the capital of a partnership is P3,000.00 or more, it must be in
a public instrument and must be recorded with the Securities and
Exchange Commission (Art. 1772). A, B, and C agreed to form a
partnership and each contributed P10,000.00 as capital of the
partnership. There was no compliance in the provisions of Art. 1772.
a. The partnership was not established.
b. The partnership did not have juridical personality
c. The partnership was established and any partner may compel the
execution of a public instrument.
d. The partnership is void.
96. Three (3) of the following are rights of a partner. Which one (1) is
not?
 15

a. Right to associate another person to his share.

b. Right to admit another partner
c. Right to inspect and copy partnership book
d. Right to ask dissolution of the firm at the proper time.
97. Glicera appointed Salvacion to sell the former’s car for P200,000.00.
Salvacion sold the car to Pamela for P250,000 but Salvacion acted in
her own name. After delivery Pamela inspected the car and she found
defects in the car. Can Pamela file an action against Glicera even when
Salvacion acted in her own name?
a. No, under “caveat emptor” let the buyer beware
b. Yes, because this is a contract involving property belonging to
the principal
c. No, because Salvacion acted in her own name not of the
principal
d. No, because the contract of sale is already perfected.
98. Mr. Santos authorized Mr. Canlas to sell his car for P200,000.00 with
5% agent’s commission. Mr. Canlas sold the car to Mr. Dizon for
P250,000.00. For how much is Mr. Canlas accountable to Mr. Santos?
a. P200,000.00
b. P190,000.00
c. P250,000.00
d. P240,000.00
99. B pledged his Rolex watch to C for P4,000.00. B failed to pay C the
P4,000.00 on due date, C sold the Rolex watch at a public auction to the
highest bidder at P3,500.00
a. C can recover the deficiency of P500.00 from B.
b. C can recover the deficiency of P500.00 even without
stipulation
c. C cannot recover the deficiency of P500.00 unless there is
stipulation
d. C cannot recover the deficiency of P500.00 even if there is
stipulation
100. Which one of the following instruments is negotiable?
a. “I promise to pay C or order P20,000.00 if he will pass the CPA
examinations in October 2005 (Sgd.B)
b. “I promise to pay C or order P20,000.00 in four (4)
installment.” (Sgd.B)
c. “I promise to pay C or order P20,000.00 60 days after the
death of his father.” (Sgd.D)
d. “I promise to pay C P20,000.00.” (Sgd.D).