Professional Documents
Culture Documents
Suarez BL
Suarez BL
OBLIGATION
1. Statement no. 1: The creditor may be compelled to accept payment in checks as
long as the check is negotiable.
2. The buyer has the right to the fruit of the thing from:
a. The time the thing is delivered
b. The time the contract is perfected
c. The time the obligation to deliver the thing arises
d. The time the fruits are delivered
3. Statement no. 1: Just before the obligation became due and demandable, the
debtor proposed to the creditor that he would give him a specific car instead of
paying 150,000.00, and which proposal was accepted by the creditor. Here, there
is extinguishment of an obligation by way of dacion en pago.
4. Meeting in one person of the characteristics of both the debtor and creditor in
one and the same obligation extinguishers the obligation by way of:
a. Novation
b. Compensation or set-off
c. Condonation or remission
d. Merger or confusion
5. Consignation alone, as a special form of payment, may extinguish an obligation
under any of the following instances. Which is the exception?
a. When the creditor is absent, or is unknown or does not appear in the place
of payment.
b. When the creditor is capacitated to receive payment
c. When the creditor refuses to issue receipts
d. When there are two or more persons claiming title to one and the same
obligation
e. When title to the same obligation has been lost
Statement no. 2: In the case of a joint obligation, the co-debtors may be held
liable for the share of an insolvent co-debtor.
a. Both Statement are true
b. Both statement are false
c. Statement no. 1 is true while statement no. 2 is false
d. Statement no. 1 is false while statement no. 2 is true
7. An obligation based on positive law and give right to enforce its performance.
a. Civil Obligation
b. Moral Obligation
c. Legal Obligation
d. Natural Obligation
8. An obligation wherein various things are due, but the payment of one of them is
sufficient to extinguish the obligation is called:
a. Simple obligation
b. Conjoint obligation
c. Alternative Obligation
d. Facultative Obligation
9. An obligation wherein various things are due but the complete performance of all
of them is necessary to extinguish the obligation
a. Facultative obligation
b. Conjoint obligation
c. Alternative obligation
d. Pure or simple obligation
10. Statement no. 1: “I will give you 10,000.00 if you will not marry X this year”. If by
the end of the year, X entered the convent, my obligation is extinguished.
Statement no. 2: “I will give you 10,000.00 when my means permit me to do so”.
This is a conditional obligation for the benefit of the debtor.
a. Both are true
b. Both are false
c. No. 1 is true; no. 2 is false
d. No. 1 is false; no. 2 is true
12. Which of the following is not a ground for the extinguishment of an obligation?
a. Remission
b. Merger
c. Compensation
d. Death of creditor
e. None of the above
13. S owns an oil painting. Being in need of money, S sold the painting to B for
1,000.00. After the sale S discovered that the painting was valuable and worth
5,000.00.
a. B is entitled to the benefit of the contract because it is valid and binding.
b. S may annul the contract on ground of error
c. S may annul the contract on ground of fraud
d. S may rescind the contract on ground of lesion or inadequacy of cause.
14. A and B are jointly and severally liable to C for 20,000.00. A is a minor.
a. C can collect 20,000.00 from B
b. C can collect 10,000.00 from B
c. C can collect 10,000.00 from A that is the share of B.
d. C can collect 20,000.00 because minority is not a defense
15. Every obligation whose performance does not depend upon a future or uncertain
event, or upon a past event unknown to the parties, is demandable at once. This
refers to:
a. Divisible and Indivisible obligation
b. Joint and Solidary obligations
c. Pure obligation
d. Obligations with a period
16. DR promised to give DE, his grandson, a car if the latter will pass the bar
examinations. When his grandson passed the said examinations, which of the
following statement is true?
a. DR may refuse to deliver because the condition is purely a potestative
one.
b. The obligation is valid because the condition depends upon the sole will of
the debtor.
c. Both the obligation and the condition are ineffective because they depend
upon the sole will of the donor.
d. The obligation is valid although potestative because they depend upon the
sole will of the done.
17. A, B and C executed a promissory note worded as follows: “We promise to pay to
X, Y and Z the sum of 90,000.00 (Sgd.) A, B and C”.
a. A is obliged to pay to X, Y and Z 90,000.00
b. A is obliged to pay to X 30,000.00
c. A is obliged to pay to X 60,000.00
d. A is obliged to pay to X 10,000.00
18. “I’ll give you my car one year after your death.” The obligation is
a. Valid because the event is sure to come
b. Void, not legally possible
c. Valid, the obligation is conditional
d. Valid, but disregard the condition.
19. Statement no. 1: D oblige to give a specific car to C on Dec. 20, 2006. If on the
date stated D did not comply with his obligation, the next day he is considered in
default without the need of demand.
Statement no. 2: S sold to B a specific car for 10,000.00. Both parties promise to
comply with their obligations the day after tomorrow. If on the date stated S
delivers the car to B, but B is not ready to comply with his obligation, from
thereon he is considered in default without the need of a demand.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
21. Conrad and Charlie are jointly indebted to Pete for 100,000.00. Pete assigned his
interest to Crispin who assigned it back Conrad.
a. The debt is totally extinguished by compensation
b. The debt is totally extinguished by merger
c. The debt is partially extinguished by compensation
d. The debt is partially extinguished by merger
22. In three of the following cases, compensation shall not be proper. Which is the
exception?
a. Commodatum
b. Gratuitous support
c. Civil liability arising out of criminal offenses
d. Bank deposit
25. Statement no. 1: The debtor of a thing cannot compel the creditor to receive a
different one, although the latter may be of the same value or more valuable than
that which is due.
26. I will give you specific car if you will marry X this year, 20016. Which of the
following statement in incorrect?
a. If on December 25, X died, without marriage, my obligation is effective
because one party is dead, marriage is impossible to take place.
b. If on December 25, X died, without marriage, my obligation is extinguished
because one party is dead. Marriage is impossible to take place.
c. If the year has ended, no marriage taking place, both parties are alive, just
the same my obligation is extinguished because the time indicated has
already elapsed
d. If you marry X on December, my obligation is to give you the car
27. Mr. Debtor owes Mr. Creditor who has two (2) legitimate children, 50,000.00
payable on December 31, 2006.
a. If Mr. Debtor dies before December 31, 2006, Mr. Creditor cannot collect
from the heirs of Mr. Debtor.
b. If Mr. Debtor dies before December 31, 2006, Mr. Creditor can collect from
the heirs of Mr. Debtor.
c. If Mr. Creditor dies, his two (2) legitimate emancipated children cannot
recover from Mr. Debtor his obligation.
d. If both Mr. Debtor and Mr. Creditor die, the heirs of Mr. Creditor can collect
from the heirs of Mr. Debtor.
29. A owes B 2,000.00 demandable and due on September 10, 2006. B on the other
hand, owes A 2,000.00 demandable and due on or before September 30, 2006. If
B claims compensation on September 10, 2006, can A rightfully oppose?
a. No. B who was giving the benefit of the term, may claim compensation
because he could then choose to pay his debt on September 10, 2006
which is actually “on or before September 30, 2006.”
b. Yes, A can properly oppose because for compensation to take place,
mutual consent of both parties is necessary.
c. Yes, A c ab properly oppose and if B still refuses to accept his payment
made on September 30, 2006, A can deposit his payment in court.
d. None of the above.
30. Statement no. 1: Merger taking place in the person of the guarantor shall
extinguish only the secondary contract such as the contract of guaranty but not
the principal obligation.
Statement no. 2: when the debtor promises to pay his obligation “whenever his
means permit him to do so” the obligations is with a period.
a. Both statement are true
b. Both statement are false
c. Statement no. 1 is true while statement no. 2 is false
d. Statement no. 1 is false while statement no. 2 is true
31. D obliged himself to paint the house of C or to paint the picture of C, in a
standing position, using 10 by 10 canvass. Later because of financial reverses, C
sold his house to X. which of the following statement is correct?
a. The obligation of D is extinguished because he cannot make a choice.
b. D may paint the picture of C
c. D may cancel the contract and ask for damages
d. None of the above
32. D obliged himself to give a specific car to C on December 25, 2006, stipulating
that D is liable even if the thing is lost due to fortuitous event, and without the
need of a demand. On the due date, the car got lost due to fortuitous event.
Which of the following is correct?
a. Obligation remains to subsist, but converted into monetary consideration
b. C can compel D to deliver another car
c. C can require another person to deliver a car, expenses chargeable to D.
d. Obligation is totally extinguished
33. Statement no. 1: The debtor of a thing cannot compel the creditor to receive a
different one, although the latter maybe of the same value or more valuable than
that which is due.
34. A is obliged to give B his only car on September 1, 2006. On the said date, A did
not deliver. On September 2, 2006, an earthquake completely destroyed the car.
Is A still liable?
a. No. Considering that no demand to deliver was made by B and the
specific thing was lost due to fortuitous event, 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. A is already in legal delay thus the obligation to deliver the lost
specific thing is converted into monetary claim for damages.
d. Yes. The creditor can instead demand for a substitute of equivalent value
from the debtor.
35. A sold his cow to B for 2,500.00. No date was stipulated for the delivery of the
cow. While still in the possession of A, the cow gave birth to a calf.
a. A is entitled to the calf because it was born before his obligation to deliver
the cow arises.
b. A is entitled to the calf as B has not paid the price
c. B is entitled to the calf which was born after the perfection of the contract
d. B, in order to be entitled to the calf, should pay additional cost for the calf
to be agreed upon by both parties.
36. The kind of compensation which may only be raised by the creditor and not by
the debtor in the obligation to give gratuitous support:
a. Judicial compensation
b. Conventional compensation
c. Facultative compensation
d. Legal compensation
37. Statement no. 1: Legal compensation takes place by operation of law even if the
parties may not be aware of it.
38. Debtor obliged himself to deliver to creditor 100 cavans of rice on 06/01/2001. On
said date, D failed to make delivery despite repeated demands by C. In this case:
a. C has no remedy under the law
b. C can compel D to deliver 100 cavans of rice plus damages
c. C may ask a third person to deliver 100 cavans of rice to him, the value
recoverable from D plus damages
d. None of the above.
39. The kind of compensation which arises by way of proved counterclaim in a case
called:
a. Legal compensation
b. Voluntary compensation
c. Judicial compensation
d. Facultative compensation
42. X, Y and Z solidary bound themselves to pay to solidary creditors A, B and C the
amount of 75,000.00. The loan was secured by a mortgage on B’s land. Out of
gratuity, A, in a public instrument, renounced the obligation in favor of X, with the
formality required by law. In this case, which statement is correct?
a. The principal obligation is extinguished
b. The real estate mortgage is extinguished
c. Both the principal obligation and the mortgage are extinguished by
remission
d. Both the principal and accessory obligations subsist.
45. Bernie offered Zo a specific parcel of land at a specified price. Bernie gave Zo 60
days within which to accept. Zo agreed.
a. Within 60 days, Bernie cannot withdraw but may increase the price
b. There can’t be no withdrawal because the period is binding
c. Bernie may withdraw or increase the price within the 60 day period
d. There can be no withdrawal because there is a perfected option contract
46. “I will give you this book provided that if I like to have it back, you will return the
same to me”
a. The obligation is void, because the fulfillment depends upon the will of the
debtor
b. The obligation is void, because the fulfillment depends upon the will of the
creditor
c. The obligation is valid, because the condition merely causes the loss of
rights already acquired.
d. Combination of A and B
47. “I will give you this book provided that if I like to have it back, you will return the
same to me”
a. The obligation is void, because the fulfillment depends upon the will of the
debtor
b. The obligation is void, because the fulfillment depends upon the will of the
creditor.
c. The obligation is valid because the condition merely causes the loss of
rights already acquired
d. Combination of A and B.
48. The following, except one, are requisites of payment as a mode of extinguishing
an ordinary obligation. Which is the exception?
a. Complete or full payment
b. Payment in due course when the obligation is due and demandable
c. Payment using negotiable instrument
d. Payment using legal tender, except if payable in foreign currency.
50. Fruits as resulting from spontaneous products of the soil without the intervention
of human labor, as well as animal offspring are:
a. Industrial fruits
b. Civil fruits
c. Natural fruits
d. All of above fruits
CONTRACTS
26. One of the stipulations contained in the contract between M Company and its
employees is that the company shall pay a bonus to employees of the company
who shall continue its employment for at least 2 consecutive years, unless be
quits or is discharged before the expiration of the period of 2 years. X, an
employee of the company was discharged without just cause, one week before
the completion of the two-year period.
a. X is not entitled to the bonus because his discharge was in accordance with
the contract.
b. X is entitled to the bonus because the debtor company has voluntarily
prevented the happening of the condition.
c. X is not entitled to the bonus, because the employer’s right to terminate is
superior than the right of the employee to be employed.
d. X is entitled to the bonus whether the discharge is with or without cause.
27. Statement No. 1: if one party was mistaken and the other acted fraudulently or
inequitably in such a way that the instrument does not show their true intention,
the former may ask for the annulment of the instrument.
Statement No. 2: The statement of a false cause in contracts shall render them
void, if it should not be proven that they were founded upon another caused
which is true and lawful.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both are false d. No. 1 is false; No. 2 is true
28. Must be in writing to be enforceable:
a. Lease of land for 12 months
b. Lease of care for 18 months
c. Both of a and b
d. None of a and b
29. Which of the following is not a requisite for the validity of a contract?
a. Consent d. Cause or consideration
b. Object e. None of the above
c. Delivery of the thing
30. D owes C P500. However, C’s right has already prescribed. Notwithstanding the
knowledge of thus fact, D paid the amount. Realizing this mistake, D wants to
recover the amount he paid.
a. D can be made to recover on ground of mistake.
b. D can be made to recover on the ground that his obligation is not legally
enforceable.
c. D can be made to recover because this will enrich C at the expense of D.
d. D cannot recover.
31. Three of the following contracts are void. Which is the exception?
a. Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy.
b. Those which re absolutely stimulated or fictitious.
c. Those where both parties are incapable of giving consent to a contract.
d. Those which cause or object did not exist at the time of the transaction.
32. X, a former government employee, suffered from severe paranoia and was
confined in the mental hospital in 2006. After his release he was placed under the
guardianship of his wife to enable his to get his retirement pay. In 2009, he
became a mining prospector and sold some mining claims. In 2012, he sues to
annul the sale claiming that he was not mentally capacitated at the time of sale.
The sale in question was
a. Illegal c. Void
b. Valid d.Voidable
33. Which of the following is presumed not to be legal subrogation?
a. When a creditor pays another creditor who is preferred
b. When a third person, not interested in obligation, pays with the approval of
the debtor
c. When a third person interested in the obligation, pays even without the
approval of the debtor
d. None of them
34. Essential requisites of a contract:
a. Consent c. Subject
b. Cause d. All of them
35. Which of the following instruments is not subject to reformation?
a. Simple donations inter vivos wherein no condition is imposed
b. Wills
c. When the real agreement is void
d. All of the above
36. Valid until annulled unless there has been a ratification
a. Rescissible contract c. Voidable contract
b. Inexistence contract d. None of the above
37. In three of the following defective contracts, ratification ceases the defects.
Which is the exception?
a. Sale of piece of land thru an agent the authority is oral
b. Sale of immovable property or interest orally entered into
c. Contracts entered into by a person who has been given no authority.
d. Both parties are incapable of giving consent.
38. S makes an offer to B on January 1, 2007. B makes known his acceptance in a
letter sent on January 2, and received by S on January 10. Meantime, on
January 5, S become insane.
a. The contract is voidable because on party is insane
b. The contract is not binding because there is no meeting of minds.
c. There is already a meeting of minds, the contract is perfected.
d. None of the above
39. In the preceding number S is perfectly sane but only an un- emancipated minor
of the time the acceptance is communicated to him.
a. There is no meeting of minds between the parties, unless ratified by the
guardian of S.
b. The contract is not binding because the party is incapacitated
c. The contract is binding between the parties
d. None of the above
40. Which of the following contracts is voidable?
a. Those where one of the parties is incapacitated.
b. Those whose object is outside the commerce of men.
c. Those which are absolutely fictitious.
d. Those which contemplate an impossible service
41. The stipulation in a contract to the effect that the debtor should remain as a
servant in the house and in the service of her creditor so long as she had not
paid her debt is void because it is:
a. Contrary to good custom
b. Contrary to public policy
c. Contrary to law and morality
d. None of the above.
42. X, after the death of his father, sold his inheritance though its amount has not yet
been determined to B, for a consideration of P50, 000.
a. The contract is valid only if the inheritance valued at least equal or more than
p50, 000
b. The contract is rescissible.
c. The contract is valid even though nothing remains of the inheritance to be
turned over to B.
d. Contract is void, future inheritance cannot be the object of sale.
43. X, alleged that Y promised to give X one hectare of land. This is in consideration
Y’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 applied because A has rendered services
c. The Statute of Frauds can apply to partially executed contract.
d. The Statute of Frauds is inapplicable here, because the promise to give the
land is not a sale of really property.
44. Statement No. 1: In voidable contracts, there is no need to ratify same before
they can be considered valid. In unenforceable contracts, however ratification is
mandatory before they can be considered enforceable.
Statement No. 2: There is undue influence if insidious words or machinations
were employed by a party on the other just to obtain the latter’s consent, without
which the latter would not have entered into contract.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both re false d. No. 1 is false; No. 2 is true
45. Three of the following are void contracts. Which is the exception?
a. Contracts where the cause is immoral
b. Contracts to prevent a known supporter of a political rival from voting for his
candidate for a valuable consideration
c. Contracts with valid consideration but with unlawful motives
d. Absolutely simulated contracts
46. Statute of Frauds is applicable to
a. Contract not to be performed within a year from the making thereof
b. Partially executed contracts
c. Oral contract of loan when the amount involved is less than P500
d. All of the above.
47. Which of the following is correct?
a. An action to enforce judicially a natural obligation prescribes in 4 years
b. An action to declare a contract void is not subject to prescription
c. An action for annulment of contract is imprescriptible
d. An action for rescission of contract prescribes in five (5) years counted from
the execution of the contract.
48. B fraudulently induces S to sell to him (B) a masterpiece painting for P10, 000.
Subsequently, B sold it to X for P12, 000, a good faith purchaser. S is entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
c. Recover damages from B
d. Rescind the contract between B and X
49. Which of the following contracts is not rescissible?
a. Those which are entered into by guardians whenever the wards whom they
represent suffer a lesion of more than ¼ of the value of the object of the
contract.
b. Those where one of the parties is incapable of giving consent to a contract.
c. Those executed in representation of an absentee, if the latter suffer a lesion
of more than ¼ of the value of the object of the contract.
d. Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them.
e. Those which refer to things under litigation if they have been entered into by
the defendant without the knowledge and approval of the litigants or of
competent judicial authority.
50. When there is concurrence of offer and acceptance, there is
a. Payment c. Revocation
b. Consent d. none of the above
PARTNERSHIP
CORPORATION
1. Which of the following cannot be lawfully exercised by a non-stock corporation?
a. Pay dividend
b. Elect trustees
c. Amend the Articles of Incorporation
d. Adopt by-laws
2. A bond issue to pay-off prior floating indebtedness of the corporation issuing it is
called
a. Convertible bond
b. Equipment bond
c. Collateral bond
d. Funding bond
e. None of the above
3. A bond secured by stocks or other bonds or both which are owned by the debtor,
the securities being deposited with a trustee for the bondholder is called:
a. Mortgage bond
b. Collateral trust bond
c. Equipment bond
d. Debenture bond
e. None of the above
4. Involuntary dissolution of the corporation is caused by
a. an expiration of the period for which it was lawfully formed.
b. judicial decree of forfeiture or by order of the SEC.
c. legislative enactment.
d. failure to organize formally and commence the transaction of its
business within two years from the date of incorporation.
e. All of the above.
5. To revoke the power granted to the board to make the by-laws.
a. Majority vote of the board and of the outstanding capital stock of the
members
b. 2/3 of the outstanding capital stock of the members.
c. Majority of the quorum of the board and 2/3 of the outstanding capital
stock of the members.
d. Majority of the outstanding capital stock or of the members.
6. A corporate officer or director cannot take advantage their personal benefit in
business opportunity which the corporation is financially able to undertake.
a. Doctrine of corporate fiction
b. Trust fund doctrine
c. Doctrine of corporate opportunity
d. Doctrine of limited capacity
e. None of the above
7. One of the following does not require stockholder’s approval.
a. Merger or consolidation
b. Change of corporate name
c. Investment of corporate funds for a purpose outside of the main
purpose of the corporation
d. Declaration of cash dividend
8. The required minimum authorized capital stock for stock corporation is:
a. Not less than P5,000
b. 25% must be subscribed and 25% must be paid
c. At least 25% must be subscribed and at least 25% must be paid and in
no case shall it be less than P5,000
d. None
9. Which of the following must be contained in a corporation’s Articles of
Incorporation?
a. Names of stockholders
b. Name of temporary treasurer
c. Provisions for issuance of par and no par value shares
d. Quorum voting requirement
10. Shares deposited by the seller or his agent with a bank or third party to be
delivered to the buyer or subscriber only upon the fulfillment of the stipulated
suspensive condition
a. Promotion shares
b. Founders shares
c. Redeemable shares
d. Escrow shares
11. A corporation cannot be an incorporator in the Philippines because only natural
persons may become incorporators, except
a. Cooperative as incorporator of rural bank
b. Eleemosynary corporations
c. Charitable organizations incorporated under the Philippines laws
d. Corporation sole
12. Every decision of the directors or trustees shall be valid as a corporate act at
which there is quorum by
a. Majority of all members of the board
b. Majority of the directors or trustees present
c. 2/3 vote of the members of the board
d. 2/3 vote of the directors or trustees present
13. The following are expressed powers of a corporation, except:
a. To sue and be sued
b. The power of succession
c. To adopt and use a corporate seal
d. To amend its Corporate Charter
e. None of the above
14. The right of pre-emption shall not apply:
a. When such profit is denied in the corporate charter
b. To share to be issued in compliance with the laws requiring stock
offering or minimum stock ownership by the public
c. To share to be issued in good faith with the approval of the
stockholders owning 2/3 of the outstanding capital stock in exchange
for property needed for corporate purpose of a previously contracted
debt
d. All of the above
e. None of the above
15. Ultra vires act
a. Acts which are beyond the powers expressly or impliedly conferred
upon the corporation
b. Unenforceable
c. May be ratified by the stockholders
d. May not be attacked by competitors in business
e. All of the above
16. The difference of a proxy and a voting trust agreement is
a. Proxy is required to be notarized
b. Voting trust agreement is not required to be notarized
c. Presence of the stockholder in the meeting where the proxy is given
automatically cancels the proxy
d. Voting trust must only be written
17. A, B, C, D and E organized a corporation. An article of incorporation was
prepared, signed and acknowledge before a notary public and filed with the SEC.
The corresponding certificate of incorporation was issued. It turned out, however,
that A, B and C are not residing in the Philippines. What is the status of the
corporation?
a. De jure corporation
b. De facto corporation
c. Corporation by estoppel
d. Corporation by prescription
e. None of the above
18. The SEC may reject the article of incorporation or disapproved any amendments
thereto if
a. It is not substantially in accordance with the form prescribed by law
b. The purpose or purposes of the corporation patently unconstitutional,
illegal or immoral
c. The treasurer’s affidavit concerning in the amount of capital stock
subscribed and/or paid is false
d. The required percentage of ownership of the capital stock to be owned
by the citizen of the Philippines has not been complied with
e. All of the above
19. Incorporators
a. Any number of natural persons not less than 5 but more than 15
b. Majority are residents of the Philippines
c. Must own or be subscriber to at least 1 share of the capital stock of the
stock corporation to be formed
d. Need not be citizen of the Philippines
e. All of the above.
20. Director or trustees who willfully and knowingly vote for or assent to patently
unlawfully act of the corporation or who are guilty of gross negligence or bad faith in
directing the affairs of the corporation or acquire any personal or pecuniary interest
in conflict with their duty shall be liable
a. As a trustee for the corporation
b. Criminally for violation of the corporation code
c. Jointly and severally liable for the damages suffered by the corporation
d. None of the above
21. Which of the following is(are) valid consideration for the purchase of stocks of a
corporation
I. Real estate
II. A negotiable promissory note in money
III. Monetary consideration for services to be performed
a. I only
b. II only
c. Both I and III
d. Both II and III
22. Suppose “X’ Corporation has an authorized capital stock of 100,000 divided into
1000 shares of stock with par value of 100 each Subscribers:
A – 100 shares and paid 8,000
B – 160 shares and paid 100
C – 250 shares and paid 4,000
D – 50 shares and paid 5,000
E – 200 shares and paid 600
Which of the following subscription will qualify the Pre-subscription requirement
of Incorporation.
a. Combination of A and E
b. Combination of C and D
c. Combination of A and B
d. All of the above
24. “X’ company is a stock corporation composed of the Reyes family engaged in the
real estate business. Because of the regional crisis, the stockholders decided to
convert their stock corporation into a charitable non-stock and non-profit association
by amending the articles of incorporation.
Could this be legally done?
Would your answer be the same if at the inception. “X” company is a non-
stock corporation to a stock corporation? Why?
Answers:
A. Yes, by amending the articles of incorporation. Be it noted that the
stock coporation is not distributing assets to the stockholders.
B. No, because in a non-stock corporation the members are not entitled
to share in the profit.
25. Suppose that “X” Corporation has already issued the 1000 originally authorized
shares of the corporation so that its board of directors and stockholders wish to
increase “X’s” authorized capital stock. After complying with the requirements of the
law on increase of capital stock, “X” issued an additional 1000 shares of the same
value. “S” presently holds 200 shares out of the original 1000 shares. Which of the
following statement is true?
a. “S” must be offered equivalent 200 shares under his pre-emptive right
of stated in the articles of incorporation
b. Such preemptive right shall only be given if it is stated in the by-laws of
the corporation.
c. The increased in share must be offered first to the stock-holders of
record under the “doctrine of first refusal”. If they refuse it will be
offered to the general public.
d. If ever there is a preemptive right, the same must be exercised within a
reasonable time as fixed by the board of directors if the articles and the
by-laws are silent.
26. Plaintiffs filed a collection action against “X” Corporation. Upon execution of the
court’s decision, “X” Corporation was found to be without assets. Thereafter plaintiffs
filed an action against its present and past stockholder including “Y” Corporation
which owned substantially all of the stocks of “X” corporation. The two corporations
have the same board directors and “Y” corporation financed the operations of “X”
corporation. May “Y” corporation be held liable for the debts of “X” corporation?
a. Yes, under the principle of “corporate opportunity “of interlocking
directors.
b. Yes, under the principle of “trust fund doctrine”
c. No, under the doctrine of “separate entity”
d. Yes, under the principle of “piercing the veil of corporate entity.”
28. In the matter if managing the business if the corporation, the exercise if
corporate power and handling of corporate properties, this is supreme:
a. 2/3 approval of the stockholders of the corporation
b. Majority vote of the outstanding capital stockholders of the corporation
c. Majority vote of the Board of Directors
d. The president of the corporation
31. Statement no. 1: Directors can attend and vote by proxy at board meetings.
Statement no. 2: The articles of incorporation may expressly provide that
redeemable shares by a corporation may be purchased upon the expiration of a
fixed period, regardless of the existence of unrestricted retained earnings in the
books of the corporation.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
32. Three of the following statement are true; which is the exception?
a. Redemption of redeemable stock is required even if the corporation at
that time has no unrestricted earnings
b. The requirement that at least 25% of authorized capital must be
subscribed applies only to non-stock corporation
c. Directors are entitled to compensation as a matter of rights
d. Derivatives suits can be filed only by dissenting stockholders.
35. An action brought by a stockholder against the corporation for direct violation of
his contractual rights
a. Representative suit
b. Individual suit
c. Derivative suit
d. Corporate suit
39. Unless the by-laws provide otherwise, written notice of regular meetings shall be
sent to all stockholders or record
a. At least one day prior to the meeting
b. At least two days prior to the meeting
c. At least one week prior to the meeting
d. At least two weeks prior to the meeting
42. Statement no. 1: the liability of the stockholders for the payment of corporate
debts is limited to the value of the shares.
Statement no. 2: the entire consideration received by the corporation for its no-
par value share shall be treated as capital and shall not be available for
distribution as dividends.
a. Both are true
b. Both are false
c. No. 1is true; No. 2 is false
d. No. 1 is false; No. 2 is true
43. Stocks which has been issued by a corporation as fully paid up when in fact it is
not, because it has been issued as bonus or otherwise, without any consideration at
all, or for less than par, or for property, labor or services at an overvaluation.
a. Watered stocks
b. Over issued stocks
c. Treasury stocks
d. Redeemable stocks
e. None of the above
44. Which of the following qualifications is necessary in order that one may be
elected secretary of the corporation?
a. He must be a citizen and a resident of the Philippines
b. He must be a director of the corporation
c. He must be a stockholders of the corporation
d. He must be a secretary of any other corporation
e. All of the above
45. Three of the following are similarities between a partnership and corporation.
Which is not?
a. The individuals composing both have little voice in the conduct of the
business
b. Both have juridical personality separate and distinct form that the
individuals composing them
c. Like a partnership, a corporation can act only through agents
d. Both are organizations composed of an aggregate of individuals
46. The right given to stockholder to dissent and demand payment of the fair value
of their shares is called
a. Right of proxy
b. Appraisal right
c. Pre-emptive right
d. Stock right
e. None of the above
47. All of the close corporation’s issued shares shall be held of record by bot more
than
a. 10 persons
b. 15 persons
c. 20 persons
d. None of the above
48. A bond which is payable to a particular individual whose name is entered on the
books of the corporation as the registered owner is called
a. Registered bond
b. Coupon bond
c. Convertible bond
d. Guaranteed bond
e. None of the above
49. The authorized capital stock of a proposed corporation is 100,000 dividend 1,000
shares with a par value of 100 each. At least 25,000 or 250 shares was subscribed
by 25 subscribers. To meet the minimum amount of subscription that must be paid
a. It is enough that 25% of the total subscription is paid, regardless of the
amount paid by each individual subscription
b. Each and every subscriber must always pay 250 which is 25% of their
individual subscription
c. Seven of the subscribers paid 6,250 and the rest of the subscribers
d. None of the above