BLAW Flashcards
S sold to B a truck worth P2,500,000, where the P500,000 will be payable upon sale and the balance to be paid i installments of P100,000. A chattel mortgage was executed over the truck and to further secure the obligation of B, his brother X executed a real estate mortgage over his (X’s) land. Unable to pay 3 installments, S foreclosed the real estate mortgage over the land of X which resulted in a deficiency of P300,000. In this case,
A. S can still recover the P300,000 deficiency
B. S can still cancel the sale and recover the truck
C. S can no longer recover the P300,000 deficiency since he already foreclosed the mortagge on the land
D. S can still foreclose the mortgage over the truck to cover the deficiency
S can still recover the P300,000 deficiency
If a buyer already paid 8 years’ worth of installment, his Cash Surrender Value shall be:
A. 50%
B. 55%
C. 60%
D. 65%
65%
In this contract, future obligations may be covered without need of a separate or new agreement:
A. Pledge
B. Real Estate Mortgage
C. Chattel Mortgage
D. All of the choices
B
Which of the following is a characteristic of a partnership?
A. Remuneratory
B. Consensual
C. Innominate
D. Unilatera
Consensual
Which of the following can validly be considered a limited partnership?
A. A, B and C are all limited partners
B. A and B are both general partners
C. A, is a general partner while B and C are limited partners
D. A, B and C are all general partners
A, is a general partner while B and C are limited partners
A, B and C are partners of ABC partnership, where A committed an act, with the authority of B and C which cause
injury to X, a third party. The liability for the damages caused would be:
A. A will be primarily liable, B and C are subsidiarily liable
B. A, B and C are jointly liable
C. A, B and C are solidarily liable
D. A, B, C and ABC partnership are solidarily liable
D
If a limited partner lends money to the partnership where a property of the partnership is given as a security, the contract
of security is:
A. Valid
B. Rescissible
C. Unenforceable
D. Void
Rescissible
If a limited partner’s name is included in the partnership name,
A. There is effect to the partnership but the other partners are responsible for the limited partner’s share in the liability
B. The partnership shall be treated as a general partnership
C. The limited partner may be liable upto his personal assets
D. There is no effect on the partnership and the partners
The limited partner may be liable upto his personal assets
Pactum Leonina is a stipulation
A. That distributes partnership profits equally
B. That excludes a partner from sharing in the profits and losses
C. That is valid
D. That exempts a partner from sharing in the liability after exhaustion of partnership assets
That excludes a partner from sharing in the profits and losses
If a corporation has three purposes, in its Articles of Incorporation,
A. It shall indicate only the primary purpose
B. It shall indicate only the secondary purpose
C. It shall indicate which one is the primary purpose, the secondary and the tertiary purpose
D. It shall indicate the primary purpose and the other two will be indicated as secondary purposes
It shall indicate the primary purpose and the other two will be indicated as secondary purposes
The following are valid considerations for shares of stock of a corporation, which one is not:
A. Cash
B. Stocks of another corporation
C. Intangible property
D. All of the choices are valid considerations
All of the choices are valid considerations
To be considered as a disqualification of a director, the penalty for the offense committed must be imprisonment for a
period:
A. At least 3 years
B. Exceeding 3 years
C. At least 6 years
D. Exceeding 6 years
Exceeding 6 years
In this kind of voting method, the number of shares is multiplied by the number of directors to be elected to determine
the number of votes:
A. Straight Voting
B. Cumulative Voting
C. Straight Voting and Cumulative Voting
D. Neither Straight nor Cumulative Voting
Cumulative Voting
The number of votes required to approve a transaction of a self-dealing director of a corporation vested with public
interest, aside from majority of the independent directors:
A. Majority of the Board of Directors present and constituting a quorum
B. Majority of the entire membership of directors
C. 2/3 of the Board of Directors present and constituting a quorum
D. 2/3 of the entire membership of directors
2/3 of the entire membership of directors
Which of the following is a correct match of the requirements for corporate officers?
A. President – required to be a citizen of the Philippines
B. Treasurer – required to be a director
C. Secretary – required to be a resident and a citizen of the Philippines
D. None of the choices is correct
Secretary – required to be a resident and a citizen of the Philippines
Shares of stock covered by a subscription contract may be declared delinquent if the subscription is not fully paid within
______ from the date fixed for their payment or from the call made by the Board.
A. 15 days
B. 30 days
C. 45 days
D. 60 days
30 days
The following will require concurrence of 2/3 of the stockholders, except:
A. Shortening the corporate term
B. Declaration of cash dividends
C. Create bonded indebtedness
Declaration of cash dividends
Proxy voting may be allowed in:
A. Stockholders’ Meeting
B. Directors’ Meeting
C. Both Stockholders’ and Directors’ Meeting
D. Neither Stockholders’ and Directors’ Meeting
Stockholders’ Meeting
In case of mergers/consolidation, the required notice must be provided:
A. 30 days before the meeting
B. 20 days before the meeting
C. In the same manner as that of stockholders’ meeting
D. In the same manner as that of directors’ meeting
In the same manner as that of stockholders’ meeting
Considering that stockholders of a close corporation may directly manage the corporation, the effective maximum number
of directors may be:
A. 15
B. 20
C. 25
D. 30
20
A foreign corporation is doing business in the country if it is continuing the body or substance of the enterprise of business
for which it was organized. This is otherwise known as:
A. Continuity test
B. Substance test
C. Contract test
D. None of the choices
Substance test
If a corporation has a fixed term, any extension must be filed not earlier than:
A. 3 years prior to the expiration of the term
B. 5 years prior to the expiration of the term
C. 3 years after the expiration of the term
D. 5 years after the expiration of the term
3 years prior to the expiration of the term
The voting rights of a common shareholder may only be limited by this kind of share:
A. Preferred shares
B. Redeemable shares
C. Founders shares
D. Treasury shares
Founders shares
When summoned by the Securities and Exchange Commission, the officer required to appear under the Revised Code
of Corporate Governance is the:
A. President
B. Compliance Officer
C. Corporate Secretary
D. Treasurer
Compliance Officer
A corporation using the fiscal year is required to submit its Financial Statements to the SEC within how many days from
the close of the fiscal year?
A. 105
B. 110
C. 115
D. 120
120
The following are transactions exempt from registration under the SRC, except:
A. A broker’s transaction, executed upon customer’s orders, on any registered Exchange or other trading market.
B. The sale of capital stock of a corporation to its own stockholders exclusively
C. Subscriptions to unissued shares within the authorized capital stock
D. At any judicial sale, or sale by an executor, administrator, guardian or receiver or trustee in insolvency or bankruptcy
Subscriptions to unissued shares within the authorized capital stock
In case no-par value shares are issued for less than the issue price or stated value, the liability will be borne by:
A. The Board of Directors
B. The Stockholder
C. Both
The Board of Directors
The quorum in stockholders’ meetings is generally:
A. 25%
B. Majority
C. 2/3
D. ¾
Majority
First statement: When a single stockholder acquires all the stocks of an ordinary stock corporation, the latter may apply
for conversion into n OPC, subject to the submission of such documents as the SEC may require.
Second statement: As a rule, the OPC converted from an ordinary stock corporation shall not be liable for the outstanding
liabilities of the ordinary stock corporation as of the date of conversion.
A. Both statements are correct
B. Both statements are incorrect
C. Only the first statement is correct
D. Only the second statement is correct
Only the first statement is correct
Selling of the corporate assets and distribution of the proceeds refer to:
A. Dissolution
B. Liquidation
C. Termination
D. None of the choices
Liquidation
A corporation created for charitable purposes:
A. Ecclesiastical corporation
B. Lay corporation
C. Eleemosynary corporation
D. Public corporation
Eleemosynary corporation
In case of natural persons, these are required to be of legal age:
A. Corporators
B. Incorporators
C. Both Corporators and Incorporators
D. Neither Corporators nor Incorporators
Incorporators
In the expiration of a director’s term, who will fill-up the vacancy?
A. The BOD if it still has a quorum
B. The BOD even if it no longer has a quorum
C. The Stockholders if the BOD no longer has a quorum
D. The Stockholders even if the BOD still has a quorum
The Stockholders even if the BOD still has a quorum
In the event of a director’s death or resignation, the vacancy must be filled-up within __ days from the time the vacancy
arose:
A. 15
B. 30
C. 45
D. 60
45
Which committee has the responsibility of monitoring and evaluating the adequacy and effectiveness of the corporation’s
internal control system?
A. Remuneration Committee
B. Audit Committee
C. Executive Committee
D. Nomination Committee
Audit Committee
Under the Revised Corporation Code, corporations vested with public interest are required to have independent directors
which shall be at least __ of such board:
A. 1/10
B. 20%
C. 1/3
D. 50%
20%
This attribute of the corporation describes the Corporate Entity Theory
A. Artificial Being
B. Created by Operation of Law
C. Having the Right of Succession
D. None of the choices
Artificial Being
The filing of a petition for rehabilitation of a corporation will require the majority of the directors and stockholders
representing ________ of the outstanding capital:
A. 50%
B. Majority
C. 2/3
D. 20%
2/3
The following are unenforceable under the Statute of Frauds if not in writing,
except:
A. A guaranty executed by G to answer for the debt of D to C
B. The purchase of B of a cellphone worth P78,999
C. The lease of a real property for 18 months
D. The authority of an agent to sell land in a public instrument
The authority of an agent to sell land in a public instrument
Those entered into in the name of a person by one who has been given no authority
or legal representation, or who has acted beyond his powers is considered:
A. Rescissible
B. Voidable
C. Unenforceable
D. Void
Unenforceable
If there is no time provided in the Certificate of Limited Partnership for the
return of the limited partners’ contributions, he may validly demand for the same
by giving ____ notice:
A. 30 days’
B. 60 days’
C. 6 months’
D. 12 months’
6 months
All of the following dissolves a partnership by operation of law, except:
A. The termination of the definite term or particular undertaking specified in the agreement
B. The death of any partner
C. The insolvency of any partner or of the partnership
D. The civil interdiction of any partner
The termination of the definite term or particular undertaking specified in the agreement
A, B, C and D are partners to ABC Partnership. C and D are limited partners. It was agreed that any and all liabilities are to be shared equally. By the end of the fiscal year, the partnership’s assets were P120,000 but the liabilities amounted to P210,000. In this case,
A. A and B are liable for P45,000 each
B. A, B and C are liable for P30,000 each
C. A, B, C and D are liable for P22,500 each
D. A and B are solidarily liable for P90,000
A, B, C and D are liable for P22,500 each
Which of the following is incorrect as to the consequences of co-ownership of the
partners with regards to their rights to specific partnership property?
A. A partner, subject to any agreement between the partners, has an equal right
with his partners to possess specific partnership property for partnership
purposes.
B. A partner’s right in specific partnership property is not assignable except in
connection with the assignment of rights of all the partners in the same
property.
C. partner’s right in specific partnership property is not subject to attachment
or execution, except on a claim against the partnership.
D. A partner’s right in specific partnership property is subject attachment for
legal support.
D. A partner’s right in specific partnership property is subject attachment for
legal support.
X, Y and Z are partners of XYZ Partnership. D, misrepresenting himself to be a
partner, persuaded C to extend a loan to the partnership for P100,000, to which
only X and Y agreed and received the proceeds of the loan in behalf of the
partnership. In this case, who may be liable for the loan?
A. X and Y only
B. X, Y and D only
C. X, Y, Z and D only
D. XYZ Partnership and D
XYZ Partnership and D
If a partner contributes real property to the partnership, the requirement of
executing an inventory, signed by the partners, and attached to a public instrument
will be for:
A. Validity
B. Enforceability
C. Convenience
D. To affect third persons
Validity
The following are attributes of a corporation, except:
A. It is an artificial being
B. It has powers, attributes and properties expressly authorized by law
C. It is created by agreement of the parties
D. It has the right of succession
It is created by agreement of the parties
Which of the following powers is now available to a foreign corporation because
of the amendments of the Revised Corporation Code?
A. To form a partnership or joint venture
B. To make reasonable donations for public welfare including giving aid to
political parties
C. To form a One Person Corporation
D. To form a partnership for the practice of a common profession
To form a partnership or joint venture
Rebecca, Jack, Kate, Kevin and Randall is organizing a corporation whose Authorized
Capital Stock is P64,000. How much is the minimum paid-up capital requirement under
the Revised Corporation Code if the incorporators subscribed to 25% of the Authorized
Capital Stock?
A. P4,000
C. P16,000
B. P5,000
D. None of the choices
None of the choices
The existence of a corporation sole begins from:
A. The time the parties came to an agreement to form a corporation and contribute
money or property
B. Filing of the verified articles of incorporation
C. Issuance of a certificate of registration
D. First day of the year following the filing of the Articles of Incorporation
Filing of the verified articles of incorporation
Under the Revised Corporation Code, the non-use of the corporate charter or failure
to organize for a period of 5 years from the issuance of its Certificate of
Registration will result in:
A. Automatic dissolution
B. Suspension of the right to operate
C. A ground to file for dissolution of the corporation
D. All of the choices
Automatic dissolution
A vacancy created by the increase in the number of directors, under the Revised
Corporation Code, will be filled by:
A. Stockholders
B. Board of Directors if they constitute a quorum
C. Board of Directors regardless if they constitute a quorum or not
D. Corporate Officers if the BOD and stockholders do not constitute a quorum
Stockholders
A contract entered into by two corporations with the same director (an interlocking
director) is generally valid. However, it may be regarded as voidable if the interest
of the director in one corporation is substantial, and in the other, nominal. What
constitutes substantial interest?
A. Not less than 10% interest
B. Not less than 20% interest
C. More than 10% interest
D. More than 20% interest
More than 20% interest
Which of the following is now a required to be a resident of the Philippines under
the Revised Corporation Code:
A. Treasurer
C. Compliance Officer
B. President
D. Internal Auditor
Treasurer
The election of corporate officers would necessitate:
A. Majority of the directors present in the meeting
B. Majority of the total number of directors
C. 2/3 of the directors present in the meeting
D. 2/3 of the total number of directors
Majority of the total number of directors
Randall Pearson bought no-par value shares of the Big Three Corporation for P9,
where the stated value or issue price thereof was fixed at P10. The shares were
issued to Randall. Which of the following is false?
A. Randall is not liable for the difference of P1
B. Only the Board of Directors will be liable for the watering of stocks
C. There is no watering of stocks in no-par value shares
D. The members of the Board that filed their written objection to the issuance will
not be liable
There is no watering of stocks in no-par value shares
A subscriber will be entitled to all the rights of a stockholder even before fullpayment of the subscription, except:
A. Right to vote
B. Appraisal right
C. Right to dividends
D. Right to a certificate of stock
Right to a certificate of stock
The signature of ___ of the incorporators is necessary to adopt the by-laws prior
to the issuance of the Certificate of Registration and shall be filed together with
the Articles of Incorporation:
A. Majority
B. Two-thirds
C. Three-fourths
D. All
All
The issuance of stock dividends would necessitate:
A. A majority vote of the Board of Directors
B. 2/3 vote of the Board of Directors
C. A majority vote of the Board of Directors and concurrence of majority of the
stockholders
D. A majority vote of the Board of Directors and concurrence of 2/3 of the
stockholders
A majority vote of the Board of Directors and concurrence of 2/3 of the
stockholders
In order for the restriction on the transfer of shares in a close corporation to be
binding, the prohibition must be indicated in:
I.
Articles of Incorporation
II. By-laws
III. Stock Certificate
The stockholders’ meeting is conducted _____ on ______.
A. Annually; the date indicated in the by-laws
B. Monthly; any day as determined by the Board
C. Annually; any date after April 15
D. Monthly; the date indicated in the by-laws
Annually; the date indicated in the by-laws
Under the Revised Corporation Code, the place of directors’ meeting shall be: In case the by-laws is silent, where shall the meeting of the board of directors of a stock corporation be held?
A. The principal office
B. The city or municipality where the principal office is located
C. Anywhere in the Philippines
D. Anywhere even outside the Philippines
Anywhere even outside the Philippines
The merger or consolidation of two corporations would necessitate all of the
following, except:
A. A resolution of the Board of the two corporations
B. A resolution of the stockholders of the two corporations
C. The issuance of the certificate of merger or consolidation by the SEC
D. Liquidation of the absorbed corporation, in case of a merger, or the constituent
corporations, in case of consolidation
Liquidation of the absorbed corporation, in case of a merger, or the constituent
corporations, in case of consolidation
The number of stockholders in this type of corporation cannot exceed 20:
A. Stock Corporations
C. Foreign Corporations
B. Close Corporations
D. Non-stock Corporations
Close Corporations
Under the Revised Corporation Code, the required number of votes in case of voluntary
dissolution of a corporation where no creditors are affected:
A. 25%
C. 2/3
B. Majority
D. 3/4
Majority
A One Person Corporation may be incorporated by the following, except:
A. An individual
B. A trust corporation
C. An estate
D. None of the choices is an exception
A trust corporation
Despite dissolution, a corporation nonetheless, continues to be a body corporate
for a period of ______ for purposes of liquidation and winding up:
A. 1 year
B. 2 years
C. 3 years
D. 5 years
3 years
To qualify as a Filipino corporation, whenever a certain percentage is required by
law, the consideration is
A. Ownership of the shares of stock
B. Appointment of a resident agent
C. Agreement of the parties
D. Under what country’s law it was incorporated
Ownership of the shares of stock
Under the Revised Corporation Code, unless the bylaws provide for a longer period,
the stock and transfe book or membership book shall be closed at least __ days
before the regular meetings:
A. 3
B. 7
C. 10
D. 20
2p
The sale of securities to any number of the following qualified buyers are exempt
from the registration requirement, except:
A. Bank
B. Investment House
C. Insurance Company
D. Pension fund managed by a corporation
Pension fund managed by a corporation
Continuous Inoperation by a corporation for a period of 5 years,
A. Will be a ground to dissolve the corporation
B. Will result in automatic dissolution of the corporation
C. Will place the corporation under a delinquent status
D. Will have no effect in the corporations’ operations
Will place the corporation under a delinquent status
D is a director of ABC Corporation and XYZ Corporation. The two corporations had a
transaction with each other. D owns 25% in XYZ Corporation, in order for the
transaction to be voidable, the ownership of D in ABC must be:
A. 20%
B. 30%
C. 40%
D. 50%
20%
The General Assembly may delegate its powers to a smaller body by how many votes
of the members with voting rights, present and constituting a quorum?
A. Majority
B. 2/3
C. 3/4
D. 100%
3/4
The annual regular meeting of the general assembly shall be ______, if there is
no annual date in the by-laws:
A. 90 days after the close of the fiscal year
B. 120 days after the close of the fiscal year
C. Any day in April
D. Any day after April 15
90 days after the close of the fiscal year
If a buyer of residential realty paid 8 years’ worth of installment, the right he
is entitled to would include:
A. A grace period of 270 days
B. Cash surrender value of 65% of all payments made
C. Both a grace period of 270 days and 65% of all payments made
D. Neither a grace period of 270 days nor 65% of all payments made
Cash surrender value of 65% of all payments made
Disposal or sale of the thing is absolutely allowed in this contract:
A. Pledge
B. Real Estate Mortgage
C. Chattel Mortgage
D. All of the choices
Real Estate Mortgage
The requirement of recording the public instrument containing the real estate
mortgage is for purposes of:
A. Validity
B. Enforceability
C. Convenience
D. None of the choices
Convenience
Zorro purchased a fourth sword from Luffy for P120,000 payable in 12 equal
installments. The purchase price is secured by a chattel mortgage over the sword.
Zorro was able to pay 2 installments but defaulted in the next 3. Luffy then
foreclosed the chattel mortgage. In this case,
A. If the proceeds of the sale is P80,000, Luffy can recover the deficiency
B. If the proceeds of the sale is P120,000, Zorro is entitled to the excess
C. Luffy may cancel the sale and retain the installment payments
D. If Luffy cancelled the sale instead, Zorro will be allowed to retain the sword
If the proceeds of the sale is P120,000, Zorro is entitled to the excess
D promises to deliver a specific thing to C if the latter will pass the CPA Board Exam. Before the fulfilment 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 usufruactuary 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.
D shall have no other right than that granted to the usufruactuary which is the right to enjoy and use the improved
determinate thing for a reasonable time.
H and W are legally separated based on a court judgment. The decision requires H to give monthly support to W of P10,000 at the
beginning of each month. On March 2018, W purchased goods on account from H’s business in the amount of P10,000 with
maturity date on May 1, 2018. H has not given W’s monthly support for the months of April 2018 and May 2018. Which is
incorrect?
A. If W demands her support for the month of April, H may set up compensation as regards to the debt W owes him.
B. If W demands her support for the month of May, H may claim compensation as regards to the debt W owes him.
C. If H demands payment of the debt from the sale of goods, W may set up compensation as regards to her support for the
month of April.
D. If H demands payment for the debt from the sale of goods, W may set up compensation as regards to her support for the
month of May.
If W demands her support for the month of May, H may claim compensation as regards to the debt W owes him
D owes C P30,000 due on June 20. C owes D the following debts: P15,000 due on June 2; P4,000 due on June 14; P6,000 due on
June 16; and P3,000 due on June 18. On June 17, C assigned his right to X. C notified D of the assignment but D did not given his
consent thereto. On June 20, how much may X collect from D?
A. P30,000
B. P5,000
C. P2,000
D. Nothing
P5,000
sold and delivered to B for P5,000 a specific cow which S new was suffering from Mad Cow Disease. B had no idea that the cow
is suffering from such contagious disease so he paid the price of P5,000 to S. Which is correct?
A. B can still retain the cow suffering from mad cow disease and the authorities of the state cannot condemn it.
B. S can recover the cow from B since void contract produces no effect whatsoever.
C. B may recover the money he has paid.
D. B can still recover the cow suffering from mad cow disease and the authorities of the state cannot condemn it.
B may recover the money he has paid.
S sold and delivered to B for P5,000 a specific cow which S new was suffering from Mad Cow Disease. B had no idea that the cow
is suffering from such contagious disease so he paid the price of P5,000 to S. Which is correct?
A. B can still retain the cow suffering from mad cow disease and the authorities of the state cannot condemn it.
B. S can recover the cow from B since void contract produces no effect whatsoever.
C. B may recover the money he has paid.
D. B can still recover the cow suffering from mad cow disease and the authorities of the state cannot condemn it.
B may recover the money he has paid
These are void contracts but which one will produce legal effect?
A. Contract involving illegal service
B. Illegal contract with one party incapable of giving consent
C. Contract with cause and object which are not determinable
D. Contract involving object outside the commerce of men
Illegal contract with one party incapable of giving consent
S sold his only car to B for P100,000 payable in 10 equal monthly installments of P10,000 each. As security, B executed a chattel
mortgage on the car. What is the remedy of S if B fails to pay one installment?
A. Exact fulfillment of the obligation with recovery for deficiency even without stipulation to that effect.
B. Cancel the installment sale of car.
C. Foreclose the chattel mortgage on the thing sold, if one has been constituted without right to recover any deficiency.
D. Any of the above.
Exact fulfillment of the obligation with recovery for deficiency even without stipulation to that effect.
S sold his ring to B for P50,000 under the following terms: down payment of P30,000 and the balance payable at month end. As
security, B executed a chattel mortgage on the ring. B defaulted in the payment of the balance. By reason thereof, S foreclosed the
chattel mortgage on the ring. However, only P15,000 was realized in the foreclosure sale. Can S still proceed against B to collect the
deficiency of P5,000 arising from foreclosure of chattel mortgage on the ring sold?
A. No because Recto Law prohibits recovery of deficiency.
B. Yes if deficiency has been agreed upon contrary to Recto Law.
C. Yes because Recto Law does not apply to sale on straight term and the general rule is that if the foreclosure sale in
chattel mortgage results in deficiency, the same may be recovered by the mortgagee in the absence of stipulation to
the contrary.
D. No because recovery of deficiency is only available in execution sale.
Yes because Recto Law does not apply to sale on straight term and the general rule is that if the foreclosure sale in
chattel mortgage results in deficiency, the same may be recovered by the mortgagee in the absence of stipulation to
the contrary.
S sold to B the December 2020 harvest of his specific farm lot. Unfortunately, due to a typhoon, the said harvest did not materialize.
What is the status of above mentioned contract of sale of future harvest?
A. The contract of sale remains to be valid because validity of contract is determined upon meeting of minds.
B. The contract of sale becomes void because of the absence of subject matter.
C. The contract of sale becomes unenforceable because it is still executor.
D. The contract of sales becomes voidable because of vitiation of consent.
The contract of sale becomes void because of the absence of subject matter
On September 12, 2018, S sold under contract to sell a specific car to B without delivery. On September 15, 2018, S sold again the
said car to D under contract of sale with delivery but without payment of price. On September 17, 2018, B fully paid the price to S.
Which is correct?
A. B has better right over the car than D because he has earlier title.
B. B has better right over the car because he is the first payer of the car.
C. The rule on double sale will not apply because there is no double sale.
D. There is double sale upon payment of the price by B.
The rule on double sale will not apply because there is no double sale.
On September 12, 2018, S sold under contract to sell a specific car to B without delivery. On September 15, 2018, S sold again the
said car to D under contract of sale with delivery but without payment of price. On September 17, 2018, B fully paid the price to S.
Which is correct?
A. B has better right over the car than D because he has earlier title.
B. B has better right over the car because he is the first payer of the car.
C. The rule on double sale will not apply because there is no double sale.
D. There is double sale upon payment of the price by B
The rule on double sale will not apply because there is no double sale.
The contract of chattel mortgage stipulates that the foreclosure sale of mortgaged personal property will be done in a private auction
instead of a public sale as provided by the Chattel Mortgage Law in case of debtor’s default in the payment of secured obligation. Is
the stipulation for private auction of mortgaged personal property valid?
A. No because the Chattel Mortgage Law requires the foreclosure sale to be done in public auction only.
B. Yes by virtue of autonomy of contract and doctrine of estoppel.
C. No because public auction will be prejudicial to the interest of the mortgagor.
D. Yes provided the proceeds from the public auction will exceed the amount of the secured obligation
Yes by virtue of autonomy of contract and doctrine of estoppel.
Which partner is exempted from making additional capital contribution to the partnership in order to save the venture from
imminent loss?
A. Industrial partner
B. Managing partner
C. Silent partner
D. Secret partner
Industrial partner
Which of the following may not be contributed by a pure limited partner?
A. Cash
B. Personal property
C. Real property
D. Services, industry or labor
Services, industry or labor
TIR Limited Partnership LTD is organized by A, B and C. A contributed cash to the partnership. B contributed property, plant and
equipment to the partnership. C contributed services to the partnership. Who among the partners may be classified as limited
partner?
A. A, B and C
B. A and B only
C. A only
D. B and C only
A and B only
A, B and C are partners in ABC Partnership. Later, they sell 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 obligations.
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.
A, B, and C remain to be liable to the creditors of ABC Partnership in addition to D’s liability to these creditors.
TRIUMPH Company, a partnership engaged in the buying and selling of car spare parts, has the following partners with their
respective contributions: T-P10,000; R-P20,000; I-P30,000; U-P40,000; M-P100,000; P-P200,000 and H-P300,000. No one was
appointed as manager of the partnership. In the course of the operation of the partnership, T proposed to buy car spare parts from
Dominion Motors but his proposal was opposed by R. A voting among the partners took place and I, U and M sided with T, while P
and H sided with R. Which is correct?
A. The group of T, I, U and M will prevail because they constitute the majority.
B. The group of R, P and H will prevail because they constitute the controlling interest.
C. None will prevail because no one is appointed as manager of the partnership.
D. The partners will have to appoint a manager in order to resolve the conflict.
The group of T, I, U and M will prevail because they constitute the majority.
This principle means that a shareholder is not personally liable for the debts of the corporation and that a corporation is not also
liable for the personal debts of its shareholder.
A. Doctrine of Separate Personality
B. Limited Liability Rule
C. Trust Fund Doctrine
D. Business Judgement Rule
Doctrine of Separate Personality
GREAT Company, a partnership engaged in the distribution of generators is composed of G, R, E, A and T. G is the managing
partner. Which the following transactions entered into by the following partners in behalf of the partnership without any authority is
binding to the partnership?
A. The sale of a generator by R to a customer who was not aware that R had no authority. The customer has paid for
the generator which is due for delivery.
B. The purchase of a car by E from Honda Comopany whose owner was not aware of E’s lack of authority. The car and the
price are due for delivery and payment, respectively.
C. Both A and B
D. Neither A nor B
A
Under Old Corporation Code of the Philippines, which of the following statements is false?
A. Private corporation has the express power to establish pension, retirement, and other plans for the benefit of its directors,
trustees, officers and employees.
B. Private corporation has the express power to give donations in aid of any political party or candidate or for
purposes of partisan political activity.
C. Both A and B
D. Neither A nor B
Private corporation has the express power to give donations in aid of any political party or candidate or for
purposes of partisan political activity.
If not specified, the preferred shares in a private corporation under the Corporation Code of the Philippines are?
A. Cumulative preferred shares
B. Preferred as to earnings
C. Preferred as to assets
D. Participating as to earnings
Preferred as to earnings
Under Revised Corporation Code of the Philippines, which of the following statements is true?
A. Domestic corporation has the express power to give donations in aid of any political party or candidate or for
purposes of partisan political activity.
B. Foreign corporation has the express power to give donations in aid of any political party or candidate or for purposes of
partisan political activity.
C. Both A and B
D. Neither A nor B
A
What is the difference between discounted shares and watered shares?
A. Discounted shares are stocks issued for a consideration the valuation of which is intentionally understated while watered
shares are stocks issued that resulted to understatement of stockholders’ equity.
B. Discounted shares are stocks issued above its fair market value while watered shares are stocks issued above its par value
or issue price.
C. Discounted shares are stocks issued below its fair market value while watered shares are stocks issued below its par
value or issue price.
D. All of the above
Discounted shares are stocks issued below its fair market value while watered shares are stocks issued below its par
value or issue price.
The Board of Directors of ABC Inc. agreed to tax evasion. Securities and Exchange Commission filed an action directly against the
Board of Directors. The Board of Directors denies, stating that the corporation has a separate juridical personality. Which is true?
A. The Board of Directors can never be sued because it has personality separate and distinct from the corporation.
B. The SEC is right. Corporation can never be held criminally liable for fines but only its directors.
C. The SEC is right. The juridical personality of the corporation may be pierced if it is used to commit tax evasion.
D. The Board of Directors is right because it can invoke the principle of business judgement rule.
The SEC is right. The juridical personality of the corporation may be pierced if it is used to commit tax evasion.
Shareholders who shall receive dividends are those who are registered as such in the stock and transfer book as of the:
A. Date of declaration
B. Date of record
C. Date of payment
D. None of the above
Date of record
The Board of Directors of ABC Inc. agreed to tax evasion. Securities and Exchange Commission filed an action directly against the
Board of Directors. The Board of Directors denies, stating that the corporation has a separate juridical personality. Which is true?
A. The Board of Directors can never be sued because it has personality separate and distinct from the corporation.
B. The SEC is right. Corporation can never be held criminally liable for fines but only its directors.
C. The SEC is right. The juridical personality of the corporation may be pierced if it is used to commit tax evasion.
D. The Board of Directors is right because it can invoke the principle of business judgement rule.
The SEC is right. The juridical personality of the corporation may be pierced if it is used to commit tax evasion.
Which distinction between a cash dividend and a stock dividend is false?
A. The declaration of cash dividend requires only a majority of the quorum of the board of directors, whereas the
declaration of stock dividend requires the approval of at least 2/3 of the members of the board.
B. Cash dividend, once declared, belongs to the stockholder and cannot be transferred to any surplus account of the
corporation; whereas the declaration of stock dividend may be rescinded before its actual issuance.
C. Cash dividend has the effect of distributing the accumulated profits to the stockholders; whereas stock dividend has the
effect of capitalizing such accumulated profits thereby increasing the corporation’s capital.
D. A delinquent stockholder is still entitled to receive cash dividend but it must be applied to his unpaid subscription balance
whereas stock dividend shall be withheld until the delinquent stockholder pays the subscription in full.
A
X is a director owning 20% of the outstanding capital stock of ABC Corporation and 40% of DEF Corporation. The corporations
entered into a contract whereby ABC sold its commercial lot to DEF Corporation. The contract was approved as follows: ABC
Corporation – 15 directors in Articles of Incorporation; 6 out of 9 attending directors voted in the affirmative including X; DEF
Corporation – 11 Directors in Articles of Incorporation; 5 out of 7 attending directors voted in the affirmative, including X. What is
the status of the contract entered into by the two corporations having interlocking director?
A. Perfectly valid
B. Voidable
C. Unenforceable
D. Void
Perfectly valid
The power to amend or repeal any by-laws or adopt a new by-laws may be delegated to the board of directors or trustees by ____, and revoke such delegation by ____.
2/3 vote
majority vote
A person can be both the ___ and ___ at the same time
Secretary
Treasurer
Between the President, Secretary, and Treasurer, only the ___ is required to be a director
President
refers to the period of time an incumbent actually holds office. It is different from “term”.
Tenure
A President ___ be the Secretary or Treasurer at the same time. except
CANNOT
in case of OPCs, provided that he posts a bond
A voting trust agreement can be valid for _____ if it is executed as required in a loan agreement, but it shall
be automatically terminated upon full payment of said loan.
more than 5 years
Directors and trustees can never vote by proxy in
directors’ or trustees’ meeting
A proxy form can be valid for just one meeting or for a period not exceeding
5 years
All matters where a stockholder’s right of appraisal is available, require ____ of the stockholders holding
outstanding capital stock.
2/3 vote
___ can incorporate a corporation
Foreigners
_____ are not covered by the trust fund doctrine. They cannot be used to pay the creditors of the corporation.
Advances for future subscription
A ___ cannot be considered as a valid consideration for shares of stocks
postdated check
For services to be a valid consideration for shares of stocks, it must have already been ___.
rendered
In case of increase of authorized capital, the ____ must be based on the net increase
25%-25% rule
minimum paid up capital for corporations
0 or no minimum
___ of a corporation may be natural or juridical persons.
Incorporators
The Roman Catholic Church is a corporation by
prescription
A corporation sole has no
nationality
A corporation is said to be have a strong juridical personality because of its inherent attribute that it has the
right of succession.
The power to amend or repeal any by-laws or adopt a new by-laws may be delegated to the board of directors or trustees by _____, and revoke such delegation by ____
2/3 vote
majority vote
When a director or trustee dies or resigns, the resulting vacancy may be filled up by the remaining _____ still constituting majority.
directors or trustees
A delinquent stockholder may not vote or be voted upon, but still has the
right to receive dividends
When the board of directors declare stock dividends, it requires the ___ of the outstanding stockholders. If cash or property dividends are declared, it does not require stockholders’ approval.
2/3 vote
When treasury shares are distributed as dividends, it is considered as ___ dividends
property
An independent director is still required to own at least ___ share of stock where he is supposed to sit as independent director.
one
A derivative suit may only be filed before the ____ which has jurisdiction over the principal office of the corporation.
Regional Trial Court
In stockholders’ or members’ meetings, voting by ___ communication is allowed provided it is allowed under the by-laws.
remote
Membership in a non-stock corporation and all rights arising therefrom are ___ and __, unless the
articles of incorporation or the by-laws otherwise provide.
personal
non-transferable
No person shall be elected as ___ unless he is a member of the corporation.
trustee
Any corporation may be incorporated as a ____, except mining or oil companies, stock exchanges, banks, insurance companies, public utilities, educational institutions and corporations declared to be vested with public interest in accordance with the provisions of Corporation Code
close corporation
An existing corporation which has an authorized capital stock of 40,000 shares @ P100 par value out of which only 10,000 shares
have been offered for subscription which are now fully paid and subscribed. The corporation increased its authorized capital stock
by an additional 20,000 shares @ P100 par value. What is the minimum subscription and paid up requirement prior to the approval
of the increase in the authorized capital stock?
A. At least 15,000 shares must be subscribed and at least 3,750 shares thereof must be paid before the increase in capital
stock will be approved by the SEC.
B. At least 12,250 shares must be subscribed and at least 3,125 shares thereof must be paid before the increase in capital
stock will be approved by the SEC.
C. At least 5,000 shares must be subscribed and at least 3,125 shares thereof must be paid before the increase in
capital stock will be approved by the SEC.
D. None of the above
At least 5,000 shares must be subscribed and at least 3,125 shares thereof must be paid before the increase in
capital stock will be approved by the SEC.
Which of the following defects would make the corporate a de facto corporation?
A. The corporate name which resembles the name of a pre-existing corporation is likely to deceive the public but the
certificate of registration has already been issued by SEC.
B. Failure to file the articles of incorporation with the SEC.
C. Absence of certificate of incorporation or registration from SEC.
D. Continuing business operations despite the discovery of the defect or defects after incorporation without any action to
correct them
The corporate name which resembles the name of a pre-existing corporation is likely to deceive the public but the
certificate of registration has already been issued by SEC.
Which of the following amendments to the articles of incorporation requires for its approval at least majority vote of the board of
directors and only the vote or written assent of at least 2/3 of the outstanding capital stock instead of personal voting or ratification
vote by at least 2/3 of the outstanding capital stock?
A. Amendment to decrease or increase capital stock
B. Amendment to increase the number of the sits in the board of directors
C. Amendment to incur bonded indebtedness
D. Amendment to reduce voting requirement in a close corporation
Amendment to increase the number of the sits in the board of directors
What is the term of corporate existence under Old Corporation Code of the Philippines?
A. The term as specified in the articles of corporation which must not be less than 50 years.
B. The term as specified in the articles of corporation which must not be more than 50 years.
C. 50 years.
D. Indefinite number of years.
The term as specified in the articles of corporation which must not be more than 50 years.
