LAW 1 and LAW 2

REVIWER FOR THE QUALIFYING EXAM

1. X is obliged to give Y a specific car on July 15, 2020. X did not deliver the car on July 15, 2020. On July 20, 2020,
an earthquake destroyed the building where the car was parked, and the car was destroyed. Is X still liable?

a. No. Considering that no demand to deliver was made by Y and the specific thing was lost due to fortuitous event,
hence the obligation is extinguished

b. No. The obligation is extinguished, even if the debtor is already in default, because the debtor can plead
impossibility of performance

c. Yes. X is already in legal delay, thus the obligation to deliver the lost specified thing is converted into monetary
claim for damages

d. Yes. The creditor can instead demand for a substitute of equivalent value from the debtor

2. A owes B P150,000 due on August 31, 2020. A executed a mortgage in favor of B on A’s building to guaranty the
obligation. On August 10, 2020, the mortgaged building was totally lost due to an earthquake. On August 12, 2020,
B demanded payment from A. Is B’s demand valid?

a. No. The obligation is one with a definite period, thus the creditor cannot demand fulfillment of the obligation
before it due

b. No. The mortgage was extinguished because the object of the contract was lost through a fortuitous event

c. Yes. The debt becomes due at once because the guarantee was lost although through a fortuitous event, unless
the debtor can mortgage another property that is equally satisfactory

d. Yes. The debts become due at once because the period’s benefits are given solely to the creditor thereby giving
the creditor the right to demand performance even before the due date

3. A was the registered owner of a passenger jeepney which was involved in a collision accident with a delivery
truck, resulting in the death of 3 passengers and injuries to four. At the time of the accident, A was legally married
to B but was cohabiting with C in a relationship akin to that of a husband and wife. The heirs of the dead
passengers and the injured persons sought to recover damages. Which of the following is correct?

a. The liability of A for damages will be on the basis of culpa contractual

b. The liability of A for damages will be on the basis of quasi-delict

c. B is liable to the same extent as A because she is also the owner of the passenger jeepney

d. C is not liable, as the paramour of A, C is not a co-owner

4. On May 1, 2020, D executed a written undertaking obliging himself to deliver 100 sacks of rice to C on May 31,
2020. On May 28, 2020, C demanded the delivery of 100 sacks of rice from D, but D did not comply. The following
day, a fire of undetermined origin destroyed D’s warehouse together with about 500 sacks of rice stored therein
from which D intended to get 100 sacks of rice for delivery to C

a. D’s obligation to deliver 100 sacks of rice to C is extinguished, the cause of the loss being a fortuitous event

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REVIWER FOR THE QUALIFYING EXAM

b. D’s obligation to deliver 100 sacks of rice to C is not extinguished because he can get 100 sacks of rice from other
sources

c. D’s obligation to deliver 100 sacks of rice to C is not extinguished because D was in default

d. D’s obligation to pay damages because he was in default

5. D promises to deliver a specific thing to C if the latter will pass the CPA Board Exam. Before the fulfillment of such
suspensive condition, D made improvement to the specific thing. Afterwards, C passed the CPA Board Exam. What
is the right of D to such improvement of specific thing during the pendency of condition at his expense?

a. D is the owner of such improvement because it was made at his expense

b. D shall have no other right than that granted to the usufructuary which is the right to enjoy and use the
improved determinate thing for a reasonable time

c. D has the right to retain the improved specific thing by virtue of legal pledge until he was reimbursed by C for the
improvement he made on the specific thing

d. D has the right to ask for reimbursement from C for the improvement he has made on the specific thing

6. Specific performance may not be possible in this civil obligation

a. A, a painter, obliges himself to paint the portrait of B on April 9, 2021

b. C, a farmer, obliges himself to give his only cow to D on February 14, 2021

c. E, a veterinarian, obliges himself to give one of his dogs to F on May 1, 2021

d. G, a registrar of deeds, obliges himself to effect registration of H’s parcel of land on February 28, 2021

7. O brought his laptop at the shop of R for repair. O made several demands for the repair work to be done but R
did not undertake the repairs. Eventually, R returned the laptop, unrepaired and with several parts missing.

Which of the following remedies may be availed by O?

I. Ask another repair shop to make the repair with the repair cost thereof chargeable to R

II. Compel R to undertake the repair

III. Ask for damages for the missing parts of the laptop at the expense of R

a. I and II

b. II and III

c. I and III

d. I, II and III

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REVIWER FOR THE QUALIFYING EXAM

8. A owes B sum of money evidenced by a promissory note which has prescribed. X, without the knowledge of A,
paid B his debt. Later A reimbursed X for the payment of the latter to B although he has no obligation to do so

a. A can recover his reimbursement to X to prevent unjust enrichment on X’s part at the expense of A

b. A cannot recover because he has the civil obligation to reimburse X for the latter paid his debt to B

c. A cannot recover because the payment partakes of natural obligation

d. A cannot recover since there was reimbursement by mistake

9. D obtained a loan of P1,000 from C who was in his right mind at the time he granted the loan to D. On due date,
D paid his obligation to C who has since become insane. Of the total amount received, C lost P700 and spend P300
for his food and other necessary expenses. Which is correct?

a. The total obligation is fully extinguished because C received the payment in full

b. The obligation is extinguished up to P300 only

c. The obligation is extinguished up to P700 only

d. The obligation is voidable subject to legal remedy of annulment

10. D is obliged to deliver a specific horse to C for entry in the derby. The day before the agreed date of delivery,
the horse broke its right leg. While it could walk, it could no longer run. Which is correct?

a. The obligation to deliver the horse is not extinguished because the injury to one leg was only considered partial
loss

b. The obligation is extinguished because the injury to the right front leg of the horse is a partial loss that is so
important in relation to obligation

c. The obligation to deliver the horse is not extinguished because the horse could still walk

d. The obligation to deliver the horse is not extinguished because he can get a horse from other source

11. X has been missing for some time leaving no one to manage his properties. A and B jointly took charge of the
management thereof. However, due to the fault of A, the properties of X were damaged. The liability therefore to X
for damages shall be

a. Only A shall be liable

b. Both shall be jointly liable

c. Both shall be solidarily liable

d. They are not liable since x is at fault

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12. X signs a promissory note and binds himself to pay Y P100,000 plus 15% per annum interest on June 30, 2021.
Which statement is correct?

a. Before June 30, 2021, Y can demand payment

b. If on June 30, 2021 X is paying Y, the latter can refuse payment

c. X can compel creditor Y to accept payment before June 30, 2021

d. Because the period is for the benefit of the debtor and creditor, Y can refuse any tendered payment before June
30, 2021

13. A, B and C are solidarily liable to X for P30,000. A is insolvent and X condoned B’s share in the obligation. Which
of the following statement is correct?

a. C is liable to X in the amount of P10,000 only

b. B is still liable to X in the amount of P20,000

c. X may only collect P10,000 from B

d. X may only collect P10,000 from C

14. A, B and C are solidary debtors of X, Y and Z. solidary creditors, in the amount of P2,700. X renounces the whole
obligation without the consent of Y and Z. the debtors accepted the renunciation

a. The whole obligation is extinguished

b. Only P900 is extinguished

c. No part of the obligation is extinguished because not all the creditors consented to the renunciation

d. Only P300 is extinguished

15. A, B and are liable jointly in the amount of P60,000 to D and E, joint creditors. D condoned the whole
obligation. How much obligation is extinguished by remission?

a. P60,000

b. P30,000

c. P20,000

d. P10,000

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16. D obliged himself to give 5 grams of shabu to C. later, the parties agreed that D would instead give to C 5 sacks
of rice. Which of the following statements is correct?

a. The novation is void because the original obligation is void. Hence, C cannot demand the delivery of 5 sacks of
rice from D

b. The novation is valid because the new obligation is valid. Hence, C can demand the delivery of 5 sacks of rice
from D

c. The original obligation although void is validated by the new obligation. Hence, C can demand the delivery of 5
sacks of rice from D

d. The new obligation is only voidable because D had not yet performed the original obligation at the time of the
novation. Accordingly, the new obligation is binding, and C may demand the delivery of 5 sacks of rice from D until
the new obligation is annulled by a proper action in court

17. Upon the proposal of a third person, a new debtor substituted the original debtor without the latter’s consent.
The creditor accepted the substitution. Later, however, the new debtor became insolvent and defaulted in his
obligation. What is the effect of the new debtor’s default upon the original debtor?

a. The original debtor is freed of liability since novation took place and this relieved him of his obligation

b. The original debtor shall pay or perform the obligation with recourse to the new debtor

c. The original debtor remains liable since he gave no consent to the substitution

d. The original debtor shall pay or perform 50% of the obligation to avoid unjust enrichment on his part

18. D has a grains warehouse in Davao, while C has a grains warehouse in Cebu. D borrowed 10 sacks of rice worth
P10,000 from C for D’s customer in Cebu. Later, C borrowed 10 sacks of rice which was also worth P10,000 from D
for C’s customer in Davao. Both the obligations are already due. Transport costs to Davao amount to P1,000, while
those for Cebu amount to P800

a. D and C need not pay each other since their debts compensated each other

b. D and C need not pay each other since their debts compensated each other, except for the delivery charges
which C must pay to D in the amount of P200 (P1,000 less P800)

c. Compensation cannot take place because the debts are payable at different places

d. D must pay C P10,800, while C must pay D P11,000

19. A has checking account in BDO Unibank with positive balance of P1,000,000. A borrowed of P1,000,000 from
the same bank. At the maturity date of the loan payable of A, what mode of extinguishing obligation is present?

a. Condonation

b. Merger

c. Compensation

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20. On January 15, 2023, A obliged himself to give to B his only cow or his only dog or his only cat on December 25,
2023. On July 4, 2023, the cow died after giving birth to a young cow. Two months later, the cat died due to the
fault of A. And on November 1, 2023, the dog died due to a fortuitous event. Which of the following is true?

a. The obligation of A is extinguished

b. B is entitled to the young cow having been born after the perfection of the contract

c. A is liable for the value of the cat plus damages

d. B can require A to replace the cat by another cat which is equally satisfactory

21. A was having his house repaired by B, who needed construction materials, so A orally told the seller C, "Give B
the materials, I shall be responsible. I shall pay in 30 days." C delivered the materials. As a result, the contract

a. Is unenforceable because A made an oral agreement to answer for the debt of B

b. Is enforceable because A did not make a special promise to answer for the default of another person

c. Shall be enforceable if there is ratification by A

d. The contract shall be unenforceable if the value is at least PHP 500

22. A, minor, sold the ring of his brother without authority. The ring has a fair market value of PHP 1,000,000 and
selling price was PHP 600,000. The contract is

a. Rescissible

b. Voidable

c. Unenforceable

d. Void

23. Using the preceding number, the remedy is

a. A can ask for annulment

b. The brother can ask for annulment

c. The buyer can ask for annulment

d. The brother can just ignore the contract

24 Which of the following contract is rescissible?

a. Those which were entered into by guardians whenever the wards they represent suffer lesion of 1/4 off the
value of the object of the contract

b. Those executed in representation of a principal, if the latter suffers lesion of more than 1/4 of the value of the
object of the contract

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c. Those where one of the parties is incapable of giving consent to a contract

d. Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them

25. P authorized A to sell his land. However, A leased out in writing the said land to T in the name of P. What is the
status of the contract of lease?

a. Rescissible

b. Voidable

c. Unenforceable

d. Void

26. What is the prescriptive period for filing an action for rescission of rescissible contract or an action for
annulment of voidable contract?

a. Four years

b. Five years

c. Six years

d. Ten years

27. A died leaving properties estimated at P1,000,000 to his sons S and T. Subsequently, S sold one-half of his
inheritance to X for P300,000, although his share was still to be delivered.

a. The contract is valid since the inheritance is an existing inheritance.

b. The contract is void because what S sold is future inheritance which may not be the object of a contract as a rule

c. The contract is rescissible

d. The contract is unenforceable

28. A was forced by B to sign a contract. C, a creditor of A, wants to annul the contract. Is C allowed by law to do
so?

a. No, because a third person cannot assail a contract

b. Yes, because the contract is voidable and C is damaged

c. Yes, a third person can annul a rescissible contract

d. No, because a third person cannot assail a voidable contract

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29. In a contract of sale executed by S and B, S sold his car to B for P500,000. It turned out however, S has three
vehicles: Fortuner valued at P800,000, Monterosport valued P700,000 and a Trailblazer valued at P600,000. Which
of the following is correct?

a. The contract shall be reformed because there was mistake

b. The parties can ask for interpretation because the word motor vehicle is ambiguous

c. There is no contract

d. The parties can ask for annulment of the contract

30. S sold to B a fake 2020 model Lebron James pair of shoes on February 3, 2020. On March 10, 2020, B
discovered that the shoes he bought from S was an imitation. The law provides that he can annul the sale as a
voidable contract within four years. Prescription starts from

a. February 3, 2020 when the sale was perfected

b. March 10, 2020, when the fraud was discovered

c. The time of delivery of the shoes to B

d. The time they first talked about the sale of the shoes

31. S owns an oil painting. Being in need of money, S sold the painting to B for P1,000. After the sale, it was
discovered that the painting was valuable and worth P5,000

a. S may rescind the contract due to lesion or inadequacy of cause

b. S may annul the contract because of the fraud

c. B is entitled to the benefit of the contract because it is valid and binding

d. S may annul the contract on the ground of error

32. S convinced B to buy a gold-plated bar which S told B was made of pure gold. B bought the thing believing that
it was really made of pure gold. The contract between S and B is

a. Valid

b. Voidable

c. Rescissible

d. Void

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33. A forced B to sell him his ring. B sued for annulment, but A had already lost the ring thru fortuitous event. Is A
liable for loss?

a. A is not liable because the loss was without his fault

b. A is liable to pay damages if he cannot replace the ring

c. A is not liable to because no one shall be responsible for the loss of a thing due to fortuitous event

d. A is liable for the loss even if it was due to fortuitous event because of his bad faith

34. Example I: S sold his land to B in a private instrument. Later, B wanted to have the sale registered but it requires
a public instrument. In here, B may compel S to execute the needed public instrument

Example II: S orally sold his land to B. After B paid S, he wants to register the land in his name but he needs a public
instrument of sale. In here, B may compel S to execute the needed public instrument

a. Both examples are false

b. Both examples are true

c. Only the first is true

d. Only the second is true

35. A, minor, sold to B a parcel of land registered in his name misrepresenting to the latter that he is of legal age.
Having been misled as to the true age of A, B entered into the contract. Is the contract voidable?

a. It is voidable because the seller is the person incapable of giving consent to the contract being a minor

b. It is voidable because of mistake on the part of B when he thought that A was of legal age

c. It is not voidable because of the fraud committed by the minor seller and the buyer being in good faith

d. It is not voidable, but rather void because of lack of consent of A, who is only a minor being in good faith

36. X alleged that Y promised to give him one hectare of land. This is in consideration of X’s meritorious services to
Y. Y pleads in defense that since the promise was not in writing, it is unenforceable under the statute of Frauds.
Decide.

a. The promise is unenforceable because it is not in writing

b. The Statute of Frauds is not applicable here, because the promise to give the land is not a sale of real property

c. The statute of Frauds is applicable because A has rendered services

d. The statute of Frauds can apply to partially executed contract

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37. A made a donation to B. Later, A contracted several debts. What A has left as assets are much less than his
present liabilities. May the donation be rescinded?

a. No, because the debts were incurred after the donation has been made

b. No, if A gave a guaranty or security for his debts

c. Yes, because the donation is rescissible being in fraud of creditors

d. Yes, because A has become insolvent after the donation

38. D borrowed P100,000 from C. On due date, C demanded payment but D refused. This prompted C to threaten
to file a civil case to collect a sum of money against D. Afraid that he would be sued, D executed a contract
transferring his car to C with book value of P95,000 as payment of the obligation which the latter accepted. Which
is correct?

a. The obligation is extinguished but only up to P95,000 by way of special mode of payment of cession

b. The executed contract is valid and binding because the threat was just and lawful

c. The special mode of payment is governed by Law on Obligation

d. The executed contract is voidable because the consent of D was vitiation by intimidation

39. S sold his specific lot consisting of 100 square meters to B. However, the deed of sale signed by the parties
showed total area of 120 square meters due to the mistake of the secretary who drafted the contract. Later, S
discovered the mistake. What remedy is available to either party?

a. Action for annulment of contract

b. Action for reformation of instrument

c. Action for remission of contract

d. Action for declaration of nullity of contract

40. C filed a complaint against D which sought to collect a claim from D in the amount of P200,000 and attached D’s
specific lot located in Makati City. The trial court accordingly issued a writ of attachment on the said lot located in
Makati City. While the civil case is pending, D sold his other specific lot located in Quezon City to B. T, another
creditor of D, now questions the sale of the lot located in Quezon City contending that it is intended to defraud the
creditor. Which is correct?

a. T may not question the sale of lot in Quezon City because he was not the attaching creditor in the civil case

b. C may not question the sale of lot because it was not the subject matter of the writ of attachment

c. Either T or C may ask for the rescission of contract of sale because it was presumed to be intended to defraud the
creditor

d. Neither T nor C may ask for the rescission of contract because they are not party to a contract of sale, thus
violating relativity of contract

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41. A, B, C and D are partners in AB and Company, contributing Php 20,000, Php 30,000, Php 50,000 and industry
respectively. Due to financial reverses, they decided to dissolve the partnership. At the time of dissolution only Php
10,000 is left but the obligation to Y - Php 50,000; to partner B - Php 30,00 and to partner C - Php 20,000 remain
unpaid. Which of the following is correct if there is no profit and loss sharing agreement?

a. The partnership, A, B, C and D will pay Y Php 10,000 each

b. Y can collect Php 12,500 each from partners A, B, C and D

c. D is exempt from loss, hence only A, B and C will bear the Php 90,000 loss in proportion to their capital
contribution

d. Only partner A will make additional contribution because partners B and C can claim legal compensation

42. A, B, C and D are partners contributing Php 10,000, Php 20,000, Php 30,000 and Php 40,000 respectively. A, B
and D are the general partners while C is the limited partner. If only Php 30,000 assets remain and the partnership
has unpaid obligations to Y - Php 50,000, to partner B - Php 30,000 and to partner C - Php 20,000. Which of the
following is correct if there is no profit and loss sharing agreement?

a. Y collects Php 30,000 from the partnership and Php 5,000 each from partners A, B, C and D

b. C is exempt from loss hence, he can recover the Php 20,000 obligation of the partnership to him from either A, B
or D

c. The Php 20,000 obligation of the partnership to C can be used to offset C's capital deficiency

d. Y collects Php 30,000 from the partnership and the balance of Php 20,000 will be collected from A, B and D in
equal share

43. A, B, C and D are partners in AB and Company. A parcel of land in the name of AB and Company was sold by A in
the name of AB and Company but without express authority to Y, which of the following is correct?

a. Title to the property passes to Y even if AB and Company is not engaged in buying and selling of land if Y acted in
good faith

b. AB and Company may recover the land if it is not engaged in selling of land

c. If Y donated the land to W, AB and Company can no longer recover such land

d. AB and Company may recover the land from Y because the sale made by A to Y is unenforceable

44. Phoebe, Monica and Rachel are partners of PM Limited Partnership, where Rachel is a limited partner. They
contributed to the capital of the partnership equally and agreed to share profits and losses equally. The assets of
the partnership by the end of 2023 was P200,000, while the liability to Ross is still P320,000. In this case, how much
can the Ross collect from Rachel?

a. P120,000 c. P 40,000

b. P60,000 d. P0

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45. Sheldon, Leonard, Raj and Howard formed a partnership. Sheldon, in behalf of the partnership and acting with
apparent authority, received from Penny P100,000 as an advance on goods to be purchased. However, Sheldon
misappropriated the same and bought himself model trains. Who shall be liable to Penny for the misappropriation?

a. Sheldon only

b. Sheldon, Leonard, Raj and Howard

c. Sheldon, Leonard, Raj, Howard and the Partnership

d. Only the Partnership

46. The interest of a general partner which was sold in execution may be redeemed using:

a. Partnership property

b. Properties of the other general partners

c. Either partnership property or properties of the other general partners

d. Neither partnership property nor properties of the other general partners

47. In this kind of universal partnership, properties acquired gratuitously during the existence of the partnership
remain the properties of the partners:

a. Universal Partnership of All Present Property

b. Universal Partnership of All Profits

c. Both Universal Partnership of All Present Property and Universal Partnership of All Profits

d. Neither Universal Partnership of All Present Property nor Universal Partnership of All Profits

48. Ted, Marshall and Barney are partners of HIMYM Partnership. Ted was internally appointed as the partner who
will handle tax matters when they received a Letter of Authority. Eventually, the BIR issued a Final Assessment
Notice which was dated April 14, 2023 and was received by Marshall on April 17, 2023. The same was given to Ted
only on May 10, 2023. Until when can the partnership file a protest?

a. May 14, 2023

b. May 15, 2023

c. May 17, 2023

d. June 11, 2023

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49. A, B, C, D and E are general partners in ABCDE Partnership. E is appointed as managing partner in a separate
document other than the articles of co-partnership. Which of the following statements is correct?

a. E may be removed as managing partner by the vote of controlling partners regardless of the reasons

b. E’s decision on acts of management requires ratification of the majority of the partners to be valid

c. E’s decision on acts of management may not be reversed by the majority vote of the partners if E acted in good
faith

d. Majority vote of all partners is necessary for act of administration

50. A, B, C, D and E are general partners in ABCDE Partnership. No one is appointed as managing partner. Which is
correct?

a. All the partners shall be considered agents and whatever any one of them may do alone shall bind the
partnership

b. Unanimous vote is necessary for the validity of an act of management

c. The vote of controlling partner shall prevail in case of dispute in act of management

d. Majority vote is enough for act of strict dominion

51. A is the managing partner of ABC Partnership. X owes A personally and ABC Partnership P20,000 each. A
collected and receive from X, P10,000 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 will be applied in proportion to both credits

c. The amount received will be applied in the credit of A

d. All the partners will decide as to whose favor it will apply

52. A, B, C and D are partners in ABCD Company with D as manager. T owes ABCD Company P5,500 and A, in A’s
personal capacity, P4,500. T’s debt to A is secured by a pledge of her diamond ring. Both debts are already due. T
pays P4,500 to A and tells her that the same is in payment of her debt to A. Thus, A issues her personal receipt.
Which is correct?

a. The payment of P4,500 will be applied to the partnership credit at 2,475 and to A’s credit at P2,025

b. The payment will be applied entirely to A’s credit

c. The payment will be applied as follows: P5,500 to partnership and the balance to A in the amount of P1,000

d. T, A and ABCD Company will have to agree as to which credit the payment shall apply

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53. A, B and C are partners in ABC Partnership. Later, they sold their ABC Partnership business to D with the
agreement that D shall assume all the liabilities of the partnership to third persons. However, the third persons
have no knowledge of the sale to D. Which is correct?

a. The liabilities of ABC Partnership to third persons are extinguished

b. Third party creditors may only ask from D for payment of ABC partnership obligation

c. The creditors of ABC partnership are no longer creditors of A, B and C

d. A, B and C remain to be liable to the creditors of ABC Partnership in addition to D’s liability to these creditors

54. A, B and C are partners in ABC Partnership. On June 15, 2020, partner C died. Not knowing that C died, on June
20, 2020, A contracted a liability to D who also does not know the death of C. The partnership debt is in the
amount of P30,000, he can collect

a. P30,000 from A

b. P15,000 from A and P15,000 from B

c. P10,000 from estate of C; P10,000 from A; P10,000 from B

d. P20,000 from A and P10,000 from B

55. X is an accountant and Y is a lawyer. Can they form a particular partnership for an accounting practice?

a. Yes, they are both professionals

b. No, because in the practice of profession, all partners must belong to the same profession and the partnership
should be for the exercise of common profession

c. No, because they have different fields of interest

d. Yes, partnership may pertain to the particular of profession

56. Three lawyers formed a law partnership. The senior and well-known partner died. Can they still continue using
the name of such deceased partner?

a. Yes, as long as they will put some mark in the name indicating that such partner is already deceased

b. Yes, since he was a partner

c. No, as he is already excluded from the partnership

d. No, as the partnership has been dissolved

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57. First Statement: Every partner may associate another person with him in his share.

Second Statement: Such associate may be considered a partner if he is already occupying a managerial position.

Third Statement: The partnership is responsible to every partner for the amounts he may have disbursed on behalf
of the partnership and for the corresponding interest from the time the demand was made.

Fourth Statement: The partnership books shall be kept in the principal place of business unless otherwise agreed.

A. Only 1 statement is true

B. Only 2 statements are true

C. Only 3 statements are true

D. All 4 statements are true

58. In this kind of partnership, the properties acquired gratuitously after the formation of the partnership are
considered exclusive to the partners:

A. Universal Partnership of All Profits

B. Universal Partnership of All Present Property

C. Both Universal Partnership of All Profits and Universal Partnership of All Present Property

D. Neither Universal Partnership of All Profits nor Universal Partnership of All Present Property

59. Which partner is allowed to engage in a business of a similar industry to the partnership if he is a limited
partner in that other business?

A. Industrial partner

B. Capitalist partner

C. Both industrial and capitalist partners

D. Neither industrial nor capitalist partners

60. D is indebted to MP and ABC Partnership for P40,000 and P60,000, respectively. MP is the managing partner of
ABC Partnership. D paid P30,000 and chose to apply the same to his debt to MP which he considers more onerous
to him. MP issued a receipt in his name. In this case, how much of the payment will be applied to the partnership
credit?

A. P30,000

B. P18,000

C. P12,000

D. P0

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Corporation

Choices from 61- 80

a. Both statements are true

b. Only Statement 1 is true

c. Only Statement 2 is true

d. Both statements are false

61. Statement 1: A stock corporation is a corporation which has capital stock divided into shares of stocks and are
authorized to distribute to the holders of such share’s dividends or allotments of the surplus profits on the basis of
the shares held

Statement 2: A non-stock corporation is a corporation where no part of its income is distributable as dividends to
its members and the capital of the corporation is not divided into shares of stocks

62. Statement 1: A civil corporation is a corporation established for business or profit

Statement 2: An eleemosynary corporation is a corporation established for charitable purposes

63. Statement 1: A corporation sole is a religious corporation which consists of one member only or his successors

Statement 2: A lay corporation is a corporation organized for a purpose other than for religious

64. Statement 1: A domestic corporation is a corporation organized under the laws of the Philippines

Statement 2: A foreign corporation is a corporation organized under laws other than those of the Philippines and
whose laws allow Filipino citizens and corporations to do business in its own country or State

65. Statement 1: Incorporators refer to the persons mentioned in the Articles of Incorporation as originally forming
and composing the corporation, having signed the Articles and acknowledged the same before notary public

Statement 2: Corporators in a stock corporation are called stockholders

66. Statement 1: Corporation by estoppel or ostensible corporation refers to all persons who assume to act as a
corporation knowing it to be without authority. It has no juridical personality. It has no corporate existence and is
not considered an artificial being in contemplation of Revised Corporation Code

Statement 2: The status of contract entered into between an ostensible corporation/corporation by estoppel and
another person valid and binding by reason of estoppel on both parties

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67. Statement 1: A de jure corporation refers to a corporation which actually exists both in fact and in law. It has
complied with all the requirements of law and therefore its juridical personality is not subject to the direct attack
by the state through quo warranto proceedings

Statement 2: A de factor corporation refers to a corporation which actually exists for all practical purposes as a
corporation but which has no legal right to corporate existence as against the State since it has not complied with
all the formalities or requirements provided by law. This corporation has a corporate existence but its juridical
personality may be directly attacked by the state through quo warranto proceedings

68. Statement 1: Persons who have agreed to take and pay for original unissued shares of a corporation formed or
to be formed are called subscribers

Statement 2: Persons who bring about or cause to bring about the formation and organization of a corporation by
bringing together the persons interested in the enterprise are called promoters

69. Statement 1: The interest or right of the stockholder in the corporation’s profit or in the net assets of
corporation on dissolution is shares of stock

Statement 2: Certificate of stock refers to the paper representation or tangible evidence of the stock itself and of
the various interests therein and expresses the contract between the corporation and the stockholder. It is not
actually necessary to render a person a stockholder in a corporation because it is merely evidence of the shares of
stock covered

70. Statement 1: Common shares refer to the basic class of ordinary shares usually without extraordinary rights and
privileges, and the owners thereof are entitled to pro-rata share in the profits of the corporation and in its assets
upon dissolution and likewise in the management of its affairs. This type of shares which has complete voting rights
is required to be present in every stock corporation

Statement 2: Preferred shares refer to a type of shares of stocks that is issued with some privileges in the
distribution of dividends and net assets of the corporation

71. Statement 1: The status of contracts entered into by a de facto corporation is valid and binding to protect
members of the public who deal in good faith with a corporation who seems to be properly authorized

Statement 2: The liability of officers and directors of a de facto corporation to creditors is only up to the extent of
their subscription unless they acted in bad faith

72. Statement 1: Under the Revised Corporation Code, a delinquent corporation refers to a corporation that
becomes continuously inoperative for a period of at least five (5) years after its formal organization within the
period provided by law

Statement 2: Under the Revised Corporation Code, the period allowed by law to a delinquent corporation to
resume its operation from the notice given by SEC in order for SEC to lift the delinquency status of such delinquent
corporation is within 2 years

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73. Statement 1: Under the Revised Corporation Code, the period for reporting to SEC of non-holding of elections
of directors/trustees and the reasons therefore is within 30 days from the date of the scheduled election

Statement 2: Under the Revised Corporation Code, the latest period for the holding of new election in case of non-
holding of elections of directors/trustees shall not be later than 60 days from the scheduled date or original date

74. Statement 1: The period for reporting the names, nationalities and residences of directors, trustees and officers
elected to the SEC by the corporate secretary or any other officer is within 30 days after the election

Statement 2: The period for reporting in writing the death, resignation or ceasing as such of directors, trustees and
officers to the SEC by the corporate secretary or any other officer is within 7 days from the knowledge of the said
death, resignation or cessation

75. Statement 1: As a general rule, directors of a corporation are not entitled to receive any compensation except
for reasonable per diems or unless the compensation is fixed by by-laws or when granted by the vote of
stockholders

Statement 2: The maximum amount to be granted as compensation to board of directors in such capacity is 10% of
the net income of corporation before tax of the immediately preceding year

76. Statement 1: Pre-emptive right refers to the right of shareholders to subscribe to all issues or disposition of
shares of any class in proportion to their present shareholdings in order to preserve their ownership interest in the
corporation unless properly denied in the articles of incorporation. It is intended to protect both the proprietary
and voting rights of a stockholder in a corporation, since such proportionate interest determines his proportionate
power to vote in corporate affairs when the law gives the shareholders a right to affirm or deny board actions. It is
a common law right which may be exercised by stockholders even when no provision is stated in the law

Statement 2: Right of first refusal provides that a stockholder who may wish to sell or assign his shares must first
offer the shares to the corporation or to other existing stockholders of the corporation, under terms and conditions
which are reasonable; and that only when the corporation or the other stockholders do not or fail to exercise their
option, is the offering stockholder at liberty to dispose of his shares to third parties. It arises only by virtue of
contractual stipulations in which case the right is construed strictly against the right of persons to dispose of or deal
with their property. It is normally available in a close corporation as stated in its articles of incorporation as a type
of transfer restriction

77. Statement 1: As a general rule and in compliance of trust fund doctrine, dividends can be declared only out of
unrestricted retained earnings

Statement 2: As a general rule, the maximum surplus profits that can be retained by a stock corporation is 100% of
paid up capital

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78. Statement 1: Liquidating dividends are dividends which are actually distributions of the assets of the
corporation upon dissolution or winding up of the same

Statement 2: Stock dividend is an example of dividends required to be ratified by the stockholders owning at least
2/3 of the outstanding capital stock entitled to vote

79. Statement 1: A management contract refers to any contract whereby a corporation undertakes to manage or
operate all or substantially all of the business of another corporation, whether such contracts are called service
contracts, operating agreements or otherwise

Statement 2: As a general rule, the maximum period for one term of management contract is 5 years

80. Statement 1: In case the by-laws is silent, the regular meeting of stockholders shall be held annually

Statement 2: In case the by-laws is silent, the regular meeting of board of directors shall be held monthly

For items 81-85 here are the choices

a. All statements are true

b. Only one statement is true

c. Only two statements are true

d. All statements are false

81. Statement 1: Certificate of incorporation or registration refers to the document issued by the SEC to a newly
formed corporation which evidenced the existence of the juridical personality of the corporation. It is also known
as the primary franchise of a corporation

Statement 2: By-laws refer to the document that defines the charter of relationships between the State and the
corporation, the stockholder and the State, and between the corporation and its stockholders. It must be
submitted to Securities and Exchange Commission (SEC) by the incorporators in order for the proposed corporation
to obtain its juridical personality

Statement 3: Articles of Incorporation refer to the rules of action adopted by a corporation for its internal
government and for the regulation of conduct, and it prescribes the rights and duties of its stockholders or

82. The Articles of Incorporation and By-Laws provide for a maximum of 15 directors for JD, Inc. During 2021:

Statement 1: 3 directors resigned and 4 directors died. The vacancies can be filled up either by plurality vote of the
majority of the outstanding capital stock entitled to vote or by majority vote of the remaining members of board of
directors

Statement 2: 3 directors were removed by stockholders’ vote and 2 directors’ term expired. The vacancies can only
be filled up by plurality vote of the majority of the outstanding capital stock entitled to vote

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Statement 3: 2 directors resigned, 2 directors died and 4 directors were disqualified. The vacancies can only be
filled up by plurality vote of the majority of the outstanding capital stock entitled to vote

83. Statement 1: An independent director refers to a person who, apart from shareholdings and fees received from
the corporation, is independent of management and free from any business or other relationship which could, or
could reasonably be perceived to materially interfere with the exercise of independent judgment in carrying out
the responsibilities as a director

Statement 2: A self-dealing director, trustee or officer refers to a director, trustee, or officer who personally
contracts with the corporation in which he is director, trustee or officer

Statement 3: An interlocking director, trustee or officer refers to a person who is a director, trustee or officer in
different corporations

84. Statement 1: Express powers refer to the powers expressly provided, enumerated and granted by the Revised
Corporation Code or special law to a corporation

Statement 2: Implied or necessary powers are those powers inferred from or reasonably necessary for the exercise
of the provided powers of the Corporation. They flow from the nature of the underlying business enterprise

Statement 3: Incidental or inherent powers are powers that attached to a corporation at the moment of its creation
without regard to its expressed powers or particular primary purpose and may be said to necessarily arise from its
being a juridical person engaged in business. They flow from the nature of the corporation as a juridical person

85. Statement 1: In case the by-laws is silent, the President has the authority to order the calling of regular and
special meeting of board of directors and regular meeting of stockholders

Statement 2: In case the by-laws is silent, the Chairman of the Board shall preside the regular meeting of board of
directors or regular meeting of shareholders

Statement 3: In case the by-laws is silent, the Secretary has the obligation to call the regular and special meeting of
board of directors or regular meeting of stockholders after being properly authorized

86. What is required vote for fundamental amendment of the articles of incorporation?

a. At least majority vote of the board of directors/trustees provided in Articles of Incorporation and the vote or
written assent of the stockholders representing at least majority of the outstanding capital stock or the vote or
written assent of at least majority of the members if it be a non-stock corporation

b. At least majority vote of the board of directors/trustees provided in Articles of Incorporation and the ratification
of the stockholders representing at least majority of the outstanding capital stock or the ratification of at least
majority of the members if it be a non-stock corporation

c. At least majority vote of the board of directors/trustees provided in Articles of Incorporation and the vote or
written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or the vote
or written assent of at least two-thirds (2/3) of the members if it be a non-stock corporation

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d. At least majority vote of the board of directors/trustees provided in Articles of Incorporation and the ratification
vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or the ratification of
at least two-thirds (2/3) of the members if it be a non-stock corporation

87. What is the quorum or required number of present stockholders for validity of election of board of directors in
a stock corporation?

a. Owners of at least 100% of the outstanding capital stock

b. Owners of at least 25% of the outstanding capital stock

c. Owners of at least majority of the outstanding capital stock allowed to vote

d. Owners of at least majority of the outstanding capital stock

88. In the absence of quorum stipulated in the articles of incorporation, what is required quorum for the validity of
the meeting conducted by Board of Directors regarding a corporate act or act of administration or management?

a. At least 2/3 of the number of directors as fixed in the articles of incorporation

b. At least majority of the number of directors as fixed in the articles of incorporation

c. At least 2/3 of the number of directors filled up

d. At least majority of the number of directors filled up

89. For the validity of the decision of the Board of Directors regarding corporate acts or acts of administration, what
is the required vote?

a. At least 2/3 of the number of directors as fixed in the articles of incorporation

b. At least majority of the number of directors as fixed in the articles of incorporation

c. At least majority of the present members of board of directors in a meeting where there is a quorum

d. At least majority of the number of directors filled up

90. What is the quorum required for the election of corporate officers by the Board of Directors to be valid?

a. At least 2/3 of the number of directors as fixed in the articles of incorporation

b. At least 2/3 of the number of directors filled up

c. At least majority of the number of directors as fixed in the articles of incorporation

d. At least majority of the number of directors filled up

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91. What is the vote necessary for the valid election of the mandatory corporate officers by the Board of Directors?

a. At least 2/3 of the number of directors as fixed in the articles of incorporation

b. At least majority of the present members of board of directors in a meeting where there is a quorum

c. At least majority of the number of directors as fixed in the articles of incorporation

d. At least majority of the number of directors filled up

92. What is the required vote for the removal of incumbent director or trustee?

a. At least majority vote of the members of the board and at least 2/3 of the outstanding capital stock entitled to
vote or at least 2/3 of members

b. At least majority vote of the members of the board

c. Owners of at least majority of the outstanding capital stock or at least majority of members

d. Owners of at least 2/3 of the outstanding capital stock entitled to vote or at least 2/3 of members entitled to
vote

93. Under the Revised Corporation Code, what is the required vote for the granting of compensation to board of
directors in such capacity other than reasonable per diems?

a. At least majority vote of the directors and at least 2/3 of the outstanding capital stock

b. Owners of at least 2/3 of the outstanding capital stock

c. At least majority vote of the directors and at least majority vote of the outstanding capital stock

d. Owners of at least majority of the outstanding capital excluding the directors concerned

94. What is the required vote for the ratification of the voidable contract entered into by a self-dealing director if
the essential requisites for a contract entered into by self-dealing director/officer with the corporation to be
perfectly valid even without requiring ratification from stockholders are not complied with?

a. Owners of at least majority of the outstanding capital stock

b. At least majority vote of the directors and at least 2/3 of the outstanding capital stock

c. At least majority vote of the directors and at least majority vote of the outstanding capital stock

d. Owners of at least 2/3 of the outstanding capital stock

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95. If the interlocking director’s interest in one corporation is substantial (more than 20% of outstanding capital
stock) and his interest in the other corporation is merely nominal (20% or less of outstanding capital stock), then all
the requisites for contracts with self-dealing directors must all be present to be perfectly valid. If either of the first
two first requires are absent, the contract can be ratified by how many votes?

a. At least majority vote of the directors and at least 2/3 of the outstanding capital stock

b. Owners of at least majority of the outstanding capital stock

c. At least majority vote of the directors and at least majority vote of the outstanding capital stock

d. Owners of at least 2/3 of the outstanding capital stock in the corporation where the interlocking director has
nominal interest

96. What is the required vote for the ratification of disloyalty conducted by a director against the corporation?

a. At least majority vote of the directors and at least 2/3 of the outstanding capital stock

b. Owners of at least 2/3 of the outstanding capital stock

c. At least majority vote of the directors and at least majority vote of the outstanding capital stock

d. Owners of at least majority of the outstanding capital stock

97. What is the required vote for the extension/shortening of corporate term?

a. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing
at least majority of the outstanding capital stock or members

b. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing
at least 2/3 of the outstanding capital stock or at least 2/3 of members

c. Approval by at least majority vote of the board of directors/trustees

d. Approval by stockholders representing at least 2/3 of the outstanding capital stock or members

98. What is the required vote for the increase/decreasing of authorized capital stock?

a. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least
majority of the outstanding capital stock

b. Approval by at least majority vote of the board of directors

c. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least
2/3 of the outstanding capital stock

d. Approval by stockholders representing at least 2/3 of the outstanding capital stock

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99. What is the required vote for incurring, creating or increasing bond indebtedness?

a. Approval by stockholders representing at least 2/3 of the outstanding capital stock or members

b. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing
at least 2/3 of the outstanding capital stock or at least 2/3 of members

c. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing
at least majority of the outstanding capital stock or members

d. Approval by at least majority vote of the board of directors/trustees

100. What is the required vote for validity of denial of pre-emptive right?

a. Approval by at least majority vote of the board of directors and ratification by at least 2/3 of stockholders

b. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least
majority of the outstanding capital stock

c. Approval by at least majority vote of the board of directors

d. Approval by stockholders representing at least 2/3 of the outstanding capital stock

101. What is the required vote for the sale, disposal, lease or encumbrance of all or substantially all of corporate
assets?

a. Approval by stockholders representing at least 2/3 of the outstanding capital stock or members

b. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing
at least 2/3 of the outstanding capital stock or at least 2/3 of members

c. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing
at least majority of the outstanding capital stock or members

d. Approval by majority vote of the board of directors/trustees

102. What is the required vote for acquisition of treasury shares?

a. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least
majority of the outstanding capital stock

b. Approval by at least majority vote of the board of directors and ratification by at least 2/3 of stockholders

c. Approval by stockholders representing at least 2/3 of the outstanding capital stock

d. Approval by at least majority vote of the board of directors

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