Law 1@2

Law 1
1.The following are the requisites of an obligation, except
A. Passive and active subject

B. Prestation
C. Efficient cause
D. Demand
2.The right of the creditor that is enforceable against a definite debtor is
A. Real right
B. Natural right
C. Moral right
D. Personal right
3. Which of the following is a civil obligation?
A. X obliges himself to pay Y P10,000 on October 30, 2009.

B. A is a debtor of B for P20,000 due on September 30, 1995.
C. The obligation of a husband and wife to observe fidelity.
D. The obligation of a catholic to hear mass every Sunday.
4. 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, 2009

B. C, a farmer, obliges himself to give his only cow to D on February 14, 2009
C. E, a veterinarian, obliges himself to give one of his dogs to F on May 1, 2009
D. G, a registrar of deeds, obliges himself to effect registration of H’s parcel of land on
February 28, 2009.
5. The source of obligations which is a rule of conduct, just and obligatory, promulgated by
legitimate authorities for common good, benefit and observance
A. Contracts
B. Quasi-contracts
C. Delicts
D. Law
6. A juridical necessity to give, to do or not to do
A. Civil obligation
B. Natural obligation
C. Moral obligation
D. Social obligation
7. They give a right of action to compel their performance
A. Civil obligation
B. Moral obligation
C. Natural obligation
8. The obligee has a right to enforce the obligation against the obligor in a court of law
A. Civil obligation
B. Moral obligation
9. This is based on equity and justice
A. Civil obligation
B. Moral obligation
10. The person in whose favor the obligation is constituted
A. Obligor
B. Obligee
C. Passive subject
D. Debtor
11. Synonymous to obligee
1. Creditor 2. Active subject 3. Debtor 4. Passive subject
A. 1 and 2 C. 2 and 3
B. 1 and 4 D. 3 and 4
12. The person who has the duty of giving, doing or not doing.
A. Obligee C. Active subject

B. Obligor D. Creditor
13. Synonymous to obligor
1. Creditor 2. Active subject 3. Debtor 4. Passive subject
A. 1 and 2 C. 2 and 3
B. 1 and 4 D. 3 and 4
14. The object or subject matter of the obligation
A. Prestation C. Active Subject

B. Vinculum D. Passive subject
15. The efficient cause or juridical tie why the obligation exists
A. Active subject
B. Passive subject
C. Prestation
D. Vinculum
16. The duty not to recover what has voluntarily been paid although payment was no longer
required
A. Civil obligation C. Moral obligation

B. Natural obligation D. Juridical obligation
17. The following are sources of obligations derived from law, except
A. contracts C. delicts
B. quasi-contracts D. quasi-delicts
18. Cannot be enforced by court action and depend exclusively upon the good conscience of the
debtor.
A. civil obligation C. moral obligation

B. natural obligation D. social obligation
19. A owes B P1,000. A, knowing that the debt has prescribed, nevertheless, still pays B. Can A
recover what he voluntarily paid?
First answer Yes, because B has no right to demand the payment effected by A.
Second Answer No, the payment extinguished the natural obligation.
A. Both answers are correct.

B. Both answers are wrong.
C. Only the first is correct.
D. Only the second is correct.
20. The duty to pay taxes and support one’s family are obligations arising from
A. Law
B. Contracts
C. Quasi-contracts
D. Delicts
21. The obligation of husband and wife to render mutual help and support arises from
A. Contract
B. Law
C. Quasi-contract
D. Quasi-delict
22. A supports B, a minor, because B’s father refuses to support B. The father is obliged to
reimburse A. The source of obligation is
A. contracts C. delicts
B. quasi-contracts D. quasi-delicts
23. A juridical relation resulting from a lawful, voluntary, and unilateral act and which has for
its purpose the payment of indemnity to the end that no one shall be unjustly enriched or
benefited at the expense of another.
A. Contract
B. Quasi-contract
C. Delicts
D. Quasi-delicts
24. When a person voluntarily takes charge of another’s abandoned business or property
without the owner’s authority where reimbursement must be made for necessary and useful
expenses.
A. Quasi-contract
B. quasi-delict
C. Negotiorum gestio
D. Solutio indebiti
25. When something is received when there is no right to demand it, and it was unduly
delivered thru mistake, the recipient has the duty to return it.
A. Quasi-contract
B. Quasi-delict
D. Solutio indebiti
26. - A quasi-contract is an implied contract.

- A defendant who is acquitted in a criminal case is no longer liable civilly.
A. True; true
B. True; false
C. False; true
D. False; false
27. Tort or culpa aquiliana is
A. Quasi-contract
B. Quasi-delict
D. Solutio indebiti
28. A fault or act or omission of care which causes damage to another, there being no pre-
existing contractual relations between the parties.
A. Quasi-contract
B. Quasi-delict
D. Solutio indebiti
29. Omission of the diligence which is required by the circumstances of person, place and time.
A. Ignorance
B. Negligence
C. Impotence
D. Insanity
30. Unless the law or the stipulation of the parties require another standard of care, every person
obliged to give something is also obliged to take care of it with the proper diligence.
A. Observing utmost care.

B. Observing extraordinary diligence
C. Of a father of a good family
D. Observing ordinary diligence
31. Ordinary diligence is
A. Diligence of a good father of a family.

B. Extraordinary diligence
C. Diligence required by law
D. Diligence of a father of a good family.
32. The creditor has the right to the fruits of the thing.
A. From the time the obligation to deliver it arises.

B. From the time the fruits have been delivered.
C. From the time there is meeting of the minds.
D. From the perfection of the contract.
33. From the time the fruits have been delivered, the creditor shall acquire
A. Real right
B. Personal right
C. Moral right
D. Inchoate right
34. If A sells to B a fountain pen, the giving by A to B of the fountain pen is
A. Actual tradition
B. Constructive delivery
C. Symbolical tradition
D. Traditio longa-manu
Items 35-39 A kind of constructive delivery whereby:

35. There is delivery when the keys of a warehouse are given.
A. Traditio simbolica
B. Traditio longa-manu
C. Traditio brevi-manu
D. Traditio constitotum possessorium
36. There is delivery by mere consent or pointing out of an object.

37. A possessor of a thing not as an owner, becomes the possessor as owner.
38. A possessor of a thing as an owner retains possession no longer as an owner, but in some
other capacity
D. Traditio constitutom possessorium
39. The opposite of brevi-manu
A. Longa-manu
B. Simbolica
C. Constitutom possessorium
D. Quasi-tradition
40. If a thing is capable of particular designation.
A. Generic
B. Specific
C. Indeterminate
D. Indeterminable
41. If a thing refers to a class, to a genus and cannot be pointed out with particularity.
A. Generic
B. Specific
C. Determinate
D. Indeterminable
42. A wife was about to deliver a child. Her parents brought her to the hospital. Who should
pay the expenses for medical attendance?
Answer 1 – The husband, because it is his duty to support his wife and support includes medical
attendance.
Answer 2 – The parents, because they were the persons who brought the “wife” to the hospital.
A. Both answers are correct.

B. Both answers are not correct.
C. Only the first is correct.
D. Only the second is correct.
43. The following are kinds of fruits of an obligation, except
A. natural
B. industrial
C. civil
D. penal
44. Spontaneous products of the soil and the offspring and other products of animals
A. natural
B. industrial
C. civil
D. penal
45. Products of the soil through cultivation or intervention of human labor.
A. natural
B. industrial
C. civil
D. penal
46. Fruits arising out of contracts- like rental payments.
A. natural
B. industrial
C. civil
D. penal
47. When does the obligation to deliver arise?
Answer 1 – If there is no term or condition, then from the perfection of the contract.
Answer 2 – If there is a term or condition, then from the moment the term arrives or the
condition happens.
A. True; true
B. True; false
C. False; true
D. False; false
48. A is obliged to give B 10 kilos of sugar, which of the following is not correct?
A. B can demand that A obtain the sugar and deliver it to him.

B. B can just buy 10 kilos of sugar and charge the expense to A.
C. A can insist on just paying B damages or the monetary value of the sugar.
D. B may require another person to deliver the sugar and charge the expenses to A.
49. Where demand by the creditor shall be necessary in order that delay may exist.
A. When time is of the essence of the contract.

B. When demand would be useless.
C. When the obligor has expressly acknowledged that he is in default.
D. When the obligor requested for an extension of time.
50. Debtor’s default in real obligation.
A. Mora accipiendi
B. Mora solvendi ex-re
C. Mora solvendi ex-persona
D. Compensatio morae
51. Debtor’s default in personal obligation.
A. Mora accipiendi
52. Default on the part of the creditor
A. Mora accipiendi
53. Default on the part of both parties.
A. Mora accipiendi
54. A borrowed money from B payable on December 10, 2008. If A failed to pay on due date,
will A be in delay?
A. Yes, because there is stipulation as regards the due date.

B. Yes, if the obligation is in writing.
C. No, because demand has not been made by B.
D. No, if A has the money to pay B.
55. Damages awarded for mental and physical anguish.
A. Moral
B. Exemplary
C. Nominal
D. Temperate
56. Damages awarded to vindicate a right.
A. Liquidated
B. Actual
C. Nominal
D. Exemplary
57. Damages awarded to set an example.
A. Exemplary
B. Liquidated
C. Nominal
D. Moral
58. When the exact amount of damages cannot be ascertained.
A. Exemplary
B. Liquidated
C. Temperate
D. Moral
59. Damages determined beforehand.
A. Temperate
B. Liquidated
C. Actual
D. Moral
60. A obliged himself to deliver to B the following:

1) 2008 Sing-It Yamaha Organ
2) Magalona passenger jeepney with engine No. 69 and chasis No. 88
First Statement- In case A failed to deliver the 2008 Yamaha Organ, the court may compel A
to deliver the 2008 Yamaha Organ plus damages
Second Statement - In case A failed to deliver the jeepney, the court may compel A to deliver
the jeepney plus damages.
A. True; true
B. True; false
C. False; true
D. False; false
61. I – If a person obliged to do something fails to do it, the same shall be executed at his cost.
II - Those who in the performance of their obligations are guilty of fraud, negligence, or
delay and those who in any manner contravene the tenor threof, are liable for damages.
A. True; true
B. True; false
C. False; true
D. False; false
62. I - Responsibility arising from fraud is demandable in all obligations. Any waiver of an
action for fraud is void.
II – If the law or contract does not state the diligence which is to observed in the
performance of an obligation, that which is expected of a father of a good family shall
be required.
A. True; true
B. True; false
C. False; true
D. False; false
63. I – The receipt of a later installment of a debt without reservation as to prior installments,
shall give rise to a rebuttable presumption that such installments have been paid.
II – If a taxpayer pays his income tax liability for the current year, there is a presumption that
tax liability for the previous year has been paid.
A. True; true
B. True; false
C. False; true
D. False; false
64. With regard to the right as to the fruits of the thing, which is not correct?
A. If the obligation is subject to a suspensive condition, the obligation to deliver arises from
the moment the condition happens.
B. If the obligation is subject to a suspensive condition, the obligation to deliver arises upon
the expiration of the term or period.
C. If there is no condition or term for its fulfillment, the obligation to deliver arises from the
perfection of the contract or creation of the obligation.
D. If the obligation arises from the contract of sale, the vendor has a right to the fruits
of the thing from the time the obligation to deliver arises.
65. A is obliged to deliver his only car to B on November 20, 2009. If A does not deliver, and
on November 22, 2009, a typhoon destroys the car.
A. A is not liable because the obligation is extinguished.

B. A is liable because he is in delay.
C. A and B will divide the loss equally.
D. A’s obligation is converted into a monetary obligation.
66. I – When what is to be delivered is a determinate thing, the creditor may compel the debtor
to make the delivery and if the debtor refuses, the creditor may ask that the obligation be
complied with at the expense of the debtor.
II – The obligation to give a determinate thing includes that of delivering all its accessions
and accessories, even though they may not have been mentioned.
A. True; true
B. True; false
C. False; true
D. False; false
67. What is the basis of the liability of a school when a student is stabbed inside the campus by
a stranger in the school?
A. Contracts C. Delicts
B. Quasi-contracts D. Quasi-delicts
68. The following except one, are included in civil liability. The exception is
A. Restitution C. Indemnification
B. Reparation D. Starvation
69. The thing itself shall be restored, as a rule
70. The court determines the amount of damage taking into consideration the price of the thing
and its sentimental value to the injured person.
71. The consequential damages suffered by the injured person and those suffered by his family
or third person by reason of the act.
72. Action to impugn or rescind acts or contracts done by the debtor to defraud the creditors.
A. Accion reinvindicatoria
B. Accion pauliana
C. Accion subrogatoria
D. Accion quanti-minoris
73. A borrower agreed, that in case of non-payment of his debt, to render services as a servant.
Which of the following is not correct?
A. If the services will be rendered in satisfaction of the debt, the stipulation is valid.
B. If the services will be “for free”, the stipulation is void for being contrary to law and
morals.
C. If the services will not be gratuitous, specific performance of the service will be the
proper remedy in case of non-compliance.
D. Should there be a valid stipulation as regards the rendition of services, an action for
damages should be brought in case of non-compliance.
74. A ordered B, a 10 year old boy to climb a high and slippery mango tree with a promise to
give him part of the fruits. B was seriously injured when he fell while climbing the tree. Is
A liable?
First Answer - No, because no person shall be responsible for fortuitous events.
Second Answer – Yes, because A is negligent in making the order without taking due care to
avoid a reasonable foreseeable injury to B.
A. True; true
B. True; false
C. False; true
D. False; false
75. A pays for B’s transportation fare, without B’s knowledge and later discovers that B was
entitled to half-fare. Which is not correct?
A. A can recover the half-fare from B.

B. A can recover the half-fare from the carrier.
C. A can recover the ½ from B and ½ from the carrier.
D. A can recover half-fare from B only.
76. A borrowed P100,000 from B. the loan was secured by a mortgage of A’s land in favor of
B. Without the knowledge of A, C paid B the sum of P100,000 for A’s debt. As a result
A. C may foreclose the mortgage on A’s land if A cannot pay.

B. C cannot claim reimbursement from A in as much as the payment was made without the
knowledge of B.
C. C can recover the amount from B in case A refuses to reimburse C.
D. The obligation of A to B was extinguished but A should reimburse C the amount of
P100,000 because he was benefited by the payment.
77. When the debtor of a debtor is ordered not to pay the latter so that preference would be
given to the latter’s creditor.
A. Garnishment
B. Interpleader
C. Injunction
D. Attachment
78. A obtained a loan from B bank. The loan was embodied in several promissory notes. As
security the borrower executed a chattel mortgage on his standing crops. Said crops were
however subsequently destroyed by typhoon “Rosing”. Is A still liable for the loan despite
the destruction of the crops by a fortuitous event?
1st Answer - Yes, the obligation of A was to deliver a generic thing – money.
2nd Answer – No, the obligation was to deliver determinate things – the standing crops.
A. True; true
B. True; false
C. False; true
D. False; false
79. A sold a half-interest in his specific car to B. It was agreed that the price to be paid by B
would be used in installing a new engine on the car. Later, the car was destroyed by a
fortuitous event. Is B’s obligation to pay the price extinguished?
1st Answer - Yes, there is no more use of installing a new engine since the car has already been
destroyed by a fortuitous event.
2nd Answer – No, B must still pay because his obligation to pay in generic.
A. True; true
B. True; false
C. False; true
D. False; false
80. I – A commits the crime of theft and is asked to return the car to its owner B. If, before the
car is delivered to B it is destroyed by a fortuitous event, Is A’s liability extinguished?
II – Using above statement, A had previously asked the owner to accept the car, but the
owner without any justifiable reason refuses to accept the car, and it is destroyed by a
fortuitous event, Is A’s liability extinguished?
A. Yes; Yes
B. No; Yes
C. Yes; No
D. No; No
81. I - There is no delay in an obligation not to do something.
II – Solutio indebiti and negotiorum gestio are implied contracts.
A. True; true
B. True; false
C. False; true
D. False; false
82. I - Consent of the parties is required in quasi-contract.
II – The creditor acquires real rights over the thing from the time the obligation to deliver
arises.
A. True; true C. False; true

B. True; false D. False; false
83. The creditor has a right to the fruits of the thing from the time
A. The thing is delivered.

B. The fruits are delivered.
C. The obligation to deliver the thing arises.
D. The sale is perfected.
84. The buyer has a right to the fruits of the thing from the time
A. The thing is delivered.

B. The fruits are delivered.
C. The obligation to deliver the thing arises.
D. The sale is perfected.
85. Which is not considered as quasi-contract?
A. Solutio indebiti
B. Negotiorum gestio
C. When the third person with the knowledge of the debtor, pays the debt.
D. Reimbursement due the person who saved property during fire or typhoon without the
knowledge of the owner.
86. No longer enforceable by court action but is binding on the party who oblige with it in
conscience is
A. Civil obligation C. Moral obligation

B. Natural obligation D. Conditional obligation
87. If A pays a debt that has prescribed
1. Not knowing it has prescribed, A can recover on the ground of undue payment.
2. Knowing it has prescribed, A cannot recover for this would be a case of natural
obligation.
A. Both 1 and 2 are true C. Only 2 is true

B. Only 1 is true D. Both 1 and 2 are false
88. On June 24, 2009 A is obliged to give B his specific car. There was no delivery until June
30 when the garage of the car collapsed due to heavy rain and strong winds of Typhoon
Ondoy, and the car was totally destroyed. Is A still liable?
A. No, even if A was in default, he could plead impossibility of performance.]

B. Yes, because the contract is perfected.
C. No, because there was no demand by B to deliver the car.
D. Yes, the obligation to deliver the car is changed to pay the equivalent value because B is
in legal delay.
89. This obligation is demandable at once when it
A. has a resolutory condition. C. is with a term ex-die.

B. has a suspensive condition D. has a period.
90. When the debtor binds himself to pay when his means permit him to do so, the obligation
shall be deemed to be with a
A. Resolutory period C. Potestative condition

B. Suspensive condition D. Period.
91. A promise to give B his Volvo car if B passes the CPA Board Exams. Pending the results of
the exams, the car is destroyed by a fortuitous event without any fault on the part of A, As a
result
A. The obligation of A is extinguished.

B. The obligation of A is converted into monetary obligation.
C. The obligation of A will equitably reduced.
D. A will have to give B another car of equivalent value.
92. A period with a suspensive effect.
A. I will support you beginning January 1 of next year.

B. I will support you until January 1 of next year.
C. I will support you if A dies of TB.
D. I will support you if A marries B.
93. A period with a resolutory effect.
A. I will support you beginning January 1 of next year.

B. I will support you until A dies.
C. I will support you if A dies.
D. I will support you if A dies of TB.
94. The obligation begins only from a day certain or upon the arrival of said period.
A. Ex die C. Conditional
B. In diem D. With a period
95. The obligation remains valid up to a time certain but terminates upon the arrival of said
period.
A. With a period C. Ex die

B. Conditional D. In diem
96. Anything paid or delivered before the arrival of the period, the obligor being unaware of the
period or believing that the obligation has become due and demandable.
A. May be recovered without interests.

B. May be recovered with interests.
C. May be recovered with fruits and interests.
D. May not be recovered.
97. Whenever in an obligation a period is designated, it is presumed to have been established

for the benefit
A. Of both the creditor and debtor C. Of the debtor only

B. Of the creditor only D. Of third persons
98. This is a valid obligation.
A. A will give B P100,000 if B will kill C.

B. A will give B P1,000,000 if B will agree to be the mistress of A.
C. A will give B P100,000 if B can make C rise from the dead.
D. A will give B P1,000 if B will not pose nude in a painting session.
99. Where two or more prestations have been agreed upon but only one is due, the obligation is
A. Alternative C. Conjoint
B. Facultative D. Solidary
100. Using the preceding number, the right of choice, belongs
A. To the debtor
B. To the creditor
C. To both the creditor and debtor
D. To third person
101. A is obliged to give B, at A’s option either object No. 1, Object No. 2, or Object No. 3. If
all objects were lost thru A’s fault, which is correct?
A. The value of the first thing lost plus damages must be given to B.
B. The value of the last thing lost plus damages must be given to B.
C. The value of any of the things lost plus damages must be given to B.
D. The obligation is extinguished.
102.I - Using the preceding number, if objects nos. 1 1and 2 were destroyed by a fortuitous
event and later object No. 3 is destroyed by A’s fault, A would still be liable.
II - Using the preceding number, if objects nos. 1 1and 2 were destroyed by A’s fault
and later object No. 3 is destroyed by fortuitous event, A would still be liable.

103. A is obliged to give B either objects No. 1 or No. 2 or No. 3 at B’s option. Before B
communicated his choice to A. object No. 1 had been destroyed, thru A’s fault and object
No. 2 had been destroyed by a fortuitous event. B may
A. Demand object No. 3 only as it is still available.

B. Demand the price of object No. 1 only plus damages because it was destroyed by A’s
fault.
C. Demand the value of object No 2 as the right of choice belongs to B.
D. Demand either object No. 3 or the price of object No. 1 plus damages.
104. Any of the debtors is bound to render compliance of the entire obligation.
A. alternative C. joint
B. facultative D. solidary
105. In a joint obligation, joint means any of the following, except
A. pro-rata C. mancomunada simple

B. proportionate D. individually and collectively
106. In Facultative obligations, if substitution has been made, which of the following is false?
A. The obligation is extinguished.

B. The loss of the original prestation is immaterial.
C. The obligation is converted into a simple obligation.
D. The obligation ceases to be facultative.
107. Using the preceding number, and the substitute is lost by a fortuitous event, which is true?

B. The debtor is liable for damages.
C. The original prestation must be given.
D. The debtor must give another object which is equally satisfactory.
108. Using the preceding number, but the substitute is lost due to debtor’s fault, which is true?

B. The debtor is liable for damages.
C. The original prestation must be given.
D. The debtor must give another object which is equally satisfactory.
109. Instances where the law imposes solidary liability, except
A. obligations arising from tort.

B. obligations of bailees in commodatum.
C. liability of principals, accomplices and accessories of a felony.
D. liability of partners arising out of a contract.
110. This will result to a solidary liability
A. vitiated consent on the part of one of the debtors.

B. insolvency of one of the debtors.
C. default on the part of one of the debtors.
D. quasi-delict commited by one of the partners acting in the ordinary course of
business.
111. Where only one prestation has been agreed upon, but the obligor may render another in
substitution, the obligation is
112. Where two or more prestations have been agreed upon, and all of them must be performed,
the obligation is
113. A and B are solidary debtors of C and D, solidary creditors, to the amount of P1,000. C can
demand
A. P1,000 from A or P1,000 from B C. P500 from A or P500 from B

B. P1,000 from A and P1,000 from B D. P500 from A and P500 from B
114. A and B solidary debtors of C and D, joint creditors, to the amount of P1,000 – C can
demand
A. P1,000 from A or P1,000 from B C. P500 from A and P500 from B

B. P500 from A or P500 from B D. P250 from A and P250 from B
115. A and B joint debtors of C and D, solidary creditors, to the amount of P1,000 – C can
demand
A. P1,000 from A or P1,000 from B C. P500 from A and P500 from B

B. P500 from A or P500 from D. P250 from A and P250 from B
116. A and B are joint debtors of C and D, joint creditors, to the amount of P1,000 – C can
demand
A. P500 from A or P500 from B C. P250 from A and P250 from B

B. P250 from A or P250 from B D. P500 from A and P500 from B
117. This is synonymous to joint obligation
A. Joint and several C. Individually and collectively

B. In solidum D. Mancomunada simple
118. This is synonymous to solidary obligation
A. Pro-rata C. Proportionate
B. Mancomunada D. Juntos o separadamente
119. A, B and C are joint debtors of D for P3,000.If A is insolvent, how much should B pay D?
A. P1,000 C. P2,000
B. P1,500 D. P3,000
120. In 2007, A, B and C bound themselves in solidum to give D P9,000 subject to the
following conditions: A will pay in 2007, B, if D passes the 2008 CPA board exams and C
will pay in 2009. In 207, how much can D demand from C?
A. P9,000 C. P3,000
B. P6,000 D. P0
121. A, B and C are solidary debtors of D for P3,000. D remitted C’s share. A therefore paid
later only P2,000. A can recover reimbursement from B in the amount of
A. P1,000 C. P500
B. P1,500 D. P0
122. Using the preceding number, if B is insolvent, A can recover from C the amount of
A. P1,000 C. P500
B. P1,500 D. P0
123. A, B and C are solidary debtors of D for P1,000. D remitted the entire obligation when A
offered to pay. A can demand reimbursement from B in the amount of
A. P1,000 C. P333
B. P500 D. P0
124. A, B and C are solidary debtors of D for P3,000 but A was incapacitated to give his consent
as he was a minor. If D sues B, how much will B be liable for?
A. P3,000 C. P1,000
B. P2,000 D. P 0
125. Using the preceding number, if D sues A, how much will A be liable for?
A. P3,000 C. P1,000
B. P2,000 D. P 0
126. A is indebted to solidary creditors B, C, and D, for P90,000. Without the knowledge of B
and C, D remitted the obligation of A, as a result,
A. The obligation of A to pay P90,000 is extinguished.

B. The obligation is not extinguished because there is no consent from B and C.
C. The obligation is extinguished only up to P30,000.
D. The obligation is extinguished up to P60,000.
127. A, B and C borrowed P6,000 from D and E, payable in 3 months with A giving in pledge
her diamond ring as security for the amount borrowed. How much can E collect from C?
A. P1,000 C. P3,000
B. P2,000 D. P6,000
128. A is obliged to give B her college ring. If she fails to do so, she must give P10,000. This is
A. Alternative obligation
B. Conjoint obligation
C. Facultative obligation
D. Obligation with a penal clause
129. Where the penalty takes the place of indemnity for the damages and for the payment of
interest.
A. Where there is stipulation to the effect that damages or interest may still be recovered,
despite the presence of the penalty clause.
B. When the debtor refuses to pay the penalty imposed in the obligation.
C. When the debtor is guilty of fraud or dolo in the fulfillment of the obligation.
D. Where there is breach of the obligations.
130. This is an obligation with a resolutory obligation.
A. I’ll give you P10,000 if you pass the 2009 CPA board examination.
B. I’ll give you my car now, but should you fail in any of your subjects, your ownership
will cease and it will be mine again.
C. I’ll give you P10,000 on December 31, 2009.
D. I’ll give you P10,000 if A dies of TB.
131. I - If the condition is potestative on the part of the debtor, the obligation is void.
II - If the condition is potestative on the part of the creditor, the obligation is valid.

132. A owns a house rented by B. A sold the house to C where C agreed to pay the balance of
the purchase price as soon as B leaves the premises. It was further agreed that C will take
care of seeing to it that B vacates the house. Which is correct?
A. The contract is void because it is potestative on the part of C.

B. The contract is void because the consent of B was not obtained.
C. The contract is valid because the condition is mixed.
D. The contract is valid if B is willing to vacate the premises.
133. I – The condition that some event happens at a determinate time shall extinguish the
obligation as soon as the time expires or it has become indubitable that the event will
not take place.
II – The condition that some event will not happen at a determinable time shall render the
obligation effective from the moment the time indicated has elapsed, or it has become
evident that the event cannot occur.

134. I - A father promised to give his son if the son will marry B this year. If by the end of the
year, B is already dead or the son has not married B, the obligation to give a car is
effective and demandable.
II - A father promised to give his daughter a car if the daughter will not marry her
boyfriend earlier than December 31,2009. If by December 31, 2009, has not yet
married her boyfriend, or if prior thereto, her boyfriend has died, the obligation is
extinguished.

135. I - Obligations with a resolutory period take effect at once, but terminate upon arrival of
the day certain.
II - Obligations with a resolutory condition take effect at once, but terminate upon
happening of the condition.

136. A borrowed money from B and pledged her ring as security. It was agreed that A was to pay
the money loaned with interest at the end of one year. Before the expiration of the one-year
period.
A. A may compel B to accept her payment.

B. A may be allowed to pay B, if B consents.
C. A may compel B to accept her payment because the period is deemed for the benefit of
A.
D. B may refuse A’s payment as the period is deemed for the benefit of B.
137. The debtor shall lose every right to make use of the period, except
A. When after the obligation has been contracted, he becomes insolvent, unless he gives a
guaranty or security for the debt.
B. When he does not furnish the creditor the guarantees or securities which he has promised.
C. When through fortuitous events or by his own acts the guaranties or securities have
been impaired, unless he immediately gives new ones equally satisfactory.
D. When the debtor violates any undertaking in consideration of which the creditor agreed to
the period.
138. I - “We promise to pay” when there are two or more signatures=joint liability
II – “ I promise to pay” when there are two or more signatures= solidary liability

139. A oblige himself to pay B P100,000 in 30 days plus a penalty of P10,000 if A fails to pay
the obligation in due time. A failed to pay the obligation in 30 days, B can demand from A
A. The principal of P100,000 plus P10,000 penalty.

B. The principal of P100,000 plus P10,000 penalty plus legal interest.
C. The principal of P100,000 plus P10,000 penalty, plus legal interest, plus damages.
D. The principal of P100,000 plus legal interest, plus damages.
140. The creditor is entitled to recover damages and interest in addition to the penalty stipulated
1. When the debtor refuses to pay the penalty.
2. When the debtor is guilty of fraud in the fulfillment of the obligation.

141. Action where a person in possession of certain property may bring an action against the
conflicting claimants to compel them to interplead and litigate their several claims among
themselves.
A. Garnishment C. Injunction
B. Interpleader D. Attachment
142. A judicial process by virtue of which a person is generally ordered to refrain from doing
something
A. Garnishment C. Injunction
B. Interpleader D. Attachment
143. Where a property is alienated to the creditor in satisfaction of a debt in money.
A. Dation in payment C. Application of payment

B. Payment by cession D. Consignation
144.Where a debtor transfers all his properties not subject to execution in favor of his creditors
so that the latter may sell them and thus apply the proceeds to their credits.
A. Dation in payment C. Application of payment

B. Cession D. Consignation
145. The act of offering the creditor what is due him together with a demand that the creditor
accept the same.
A. Application of payment C. Datio in solutum

B. Tender of payment D. Cession
146. The act of depositing the thing due with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment.
A. Tender of payment C. Application of payment

B. Consignation D. Datio in solutum
147. The meeting in one person of the qualities of creditor and debtor with respect to the same
obligation.
A. Confusion C. Novation
B. Compensation D. Condonation
148. When two persons on their own right are creditors and debtors of each other
B. Compensation D. Condonation
149. This is not necessary in order that compensation may prosper.
A. That the two debts are both due.

B. That the two debts be liquidated and demandable.
C. That there be retention or controversy commenced by third persons and
communicated in due time to the debtor.
D. Both debts consists in a sum of money, or if the things due are consumable, they be of the
same kind, and also of the same quality if the latter has been stated.
150. Compensation cannot take place, except
A. When one debt arises from the obligations of a depositary.

B. When one debt arises from the obligations of a bailee in commodatum.
C. When one debt arises because of a claim for support due to gratuitous title.
D. When one debt arises from a bank deposit.
151. The substitution or change of an obligation by another, which extinguishes or modifies the
first
B. Compensation D. Consignation
152. Novation which changes the object or the principal condition of the obligation
A. Real C. Mixed
B. Personal D. Partial
153. Novation which changes the parties to the obligation
A. Real C. Mixed
154. Expromission, delegacion or subrogating a third person in the right of the creditor.
A. Real C. Mixed
155. Novation which changes the object and parties of the obligation.
A. Real C. Mixed
156. Substitution of debtor where the initiative comes from a third person.
A. Delegacion C. Subrogation
B. Expromission D. Novation
157. Substitution of debtor where the initiative comes from the debtor.
158. The transfer to a third person of all the rights appertaining to the creditor.
159. Legal subrogation is presumed in the following. Which is not correct?
A. When a third person, not interested in the obligation, pays with the approval of the
creditor.
B. When a creditor pays another creditor who is preferred, even without the debtor’s
knowledge.
C. When a third person, not interested in the obligation, pays with the express or tacit
approval of the debtor.
D. When, even without the knowledge of the debtor, a person interested in the fulfillment of
the obligation pays, without prejudice to the effects of confusion as to the latter’s share.
160. I - Proof of actual damages suffered by the creditor is not necessary in order that the
penalty previously agreed upon may be demanded.
II – Proof of actual damages suffered by the creditor is not necessary in an obligation with
a penal clause.

161.
CONTRACTS
1.A delivered his bracelet to B for B’s necklace. No written agreement was signed by the parties.
Which of the following is appropriate description of the contract between A and B?
A. Onerous and bilateral C. Bilateral and innominate

B. Bilateral and innominate D. Aleatory and nominate
2.They are the elements that are found in certain contracts and are presumed to exist unless set
aside by the parties
A. Accidental elements C. Artificial elements
B. Natural elements D. Incidental elements
3.They refer to the elements that may be stipulated by the contracting parties
A. Accidental elements C. Artificial elements

B. Natural elements D. Incidental elements
4.The following are some accidental elements of a contract of sale, except
A. Terms of payment C. Place of payment

B. Interest rate D. Accession and accessories
5. A contract where the cause with respect to each contracting party is the prestation or the
promise of a thing or service by the other is
A. An onerous contract C. An innominate contract

B. A gratuitous contract D. An aleatory contract
6. A contract where one party receives no valuable consideration and the cause is the liberality
of the benefactor is
A. A gratuitous contract C. An onerous contract

B. A unilateral contract D. A commutative contract
7. A delivered his van to B for the latter’s use for one week without any compensation. The
cause of the contract is
A. The van of A C. The period of one week

B. The generosity of A D. The delivery of the van
8. The principle that contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, moral,
public policy and public order, refer to the principle of
A. Liberty of contract C. Consensuality of contract

B. Relativity of contract D. Mutuality of contract
9. The following instances will render an offer ineffective before acceptance is conveyed. Which
one will not? When one of the parties
A. Is civilly interdicted C. Becomes insane

B. Becomes insolvent D. Is placed under a hypnotic spell
10. The following statements pertain to the cause of a contract. Which statement refer to motive?
A. It is the essential reason of a contract.

B. It is always known to the contracting parties
C. It is illegality does not affect the validity of the contract
D. there will be no contract without it
11. The bargaining point, that is, when negotiation is in progress (stage in the life of a contract)
A. Consummation C. Perfection
B. Conception D. Birth
12. The meeting of minds regarding the object and cause of the contract (stage in the life of a
contract)
A. Conception C. Death
B. Preparation D. Birth
13. The point where the parties have performed their respective obligations and the contract is
Terminated
A. Preparation C. Perfection
B. Conception D. Consummation
14. When there is concurrence of offer and acceptance, there is
A. Payment C. Consent
B. Consignation D. Tender of payment
15.
24. An absolutely simulated or fictitious contract is
A. Void C. Rescissible
B. Voidable D. Unenforceable
25. A sold to B his cow for P5,000. No date is fixed by the parties for the performance of their
respective obligations. The obligation of A is
A. To deliver the cow immediately as there is a perfected contract.

B. To deliver the cow within the reasonable time from the perfection of the contract
C. To deliver the cow upon the payment by B of P5,000
D. To rescind the contract as there is no time fixed for the delivery and payment.
27. A owes B P10,000 due on March 10, 2010. A owes B P8,000 due on March 11, 2010. A
obliged himself to deliver to B a cow valued at P6,000 on March 12, 2010. On March 13,
2010, a paid B P10,000. If A makes an application of payment,
A. The P10,000 should be applied to the first debt only

B. The P10,000 should be applied to the second debt only
C. The P10,000 may be applied either to the first debt or second debt
D. The P10,000 may be applied to the first debt, or to the second debt or to the third debt
28. A contract where both contracting parties are incapable of giving consent is
A. Void C. Unenforceable
B. Rescissible D. Voidable
29. The conception of a contract is when
A. When there is meeting of the minds

B. When negotiations are in progress
C. When the contract is executed
D. When the parties come to an agreement
30. Contract which has no effect at all
A. Rescissible C. Unenforceable
B. Voidable D. Void
31. Contract which can not be ratified
B. Voidable D. Void
32. If mistake, fraud, accident or inequitable conduct has prevented a meeting of the minds of the
parties to a contract, the proper remedy is
A. Ratify the contract C. Annulment of the contract

B. Ask for a specific performance D. Reformation of the contract
33. A sold his land to B. The sale was made orally. B paid the agree price. B wanted to have the
sale registered but he needs a public instrument. Which is correct?
A. B may sue A for the return of his money as no one shall be unjustly enriched at the
expense of another.
B. B cannot demand the return of the purchase price because the sale is unenforceable.
C. B may compel A to execute the public instrument because the sale is valid.
D. B may only occupy and use the land as buyer in good faith
35. A is the guardian of B, a minor. B sold A’s land in writing to C valued at P1M for P.7M. The
sale is (stage in the life of a contract)
B. Voidable D. Void
37. Although validly agreed upon, courts can nullify this contract because of damage to one of
the parties or to a third person and its enforcement, may cause injustice by reason of some
external facts
A. Rescissible contracts C. Unenforceable contracts

B. Voidable contracts D. Void contracts
38. A contract where the fulfillment is dependent upon the chance, so the values may vary
because of the risk or chance.
A. Commutative C. Remunerative
B. Aleatory D. Gratuitous
39. A clause providing that the mortgagee will automatically own the property mortgaged if the
debt is not paid at maturity is
A. Dacion en pago C. Pactum Commissorium

B. Payment by cession D. Upset price
43. The contact must bind both contracting parties
A. Consensuality of contract C. Mutuality of contract

B. Simplicity of contract D. Relativity of contract
44. Not a characteristic of contract

45. Contracts are generally effective only between the parties, their assigns and their heirs

46. A stipulation in favor of a third person
A. Stipulation pour autrui C. Assignment of credit

B. Stipulation pour over D. Pactum commissorium
48. Not a requisite of stipulation pour autrui
A. The contracting parties must have clearly and deliberately conferred a favor upon third
person
B. The stipulation must be part of the contract
C. The third person communicated his acceptance to the obligor before its revocation
D. There must be an agency between either of the parties and the third person
49. The following contracts are not perfected until the delivery of the object of the obligations,
except
A. Pledge C. Commodatum
B. Deposit D. Sale
50. Pledge, deposit and commodatum are
A Consensual contracts C. Solemn contracts

B. Real contracts D. Formal contracts
52. Acceptance of an offer made by letter or telegram shall bind the offeror. From the time the
A. Offeree accepted the offer

B. Offeree sent his letter or telegram
C. Acceptance came to the knowledge of the offeror
D. Offeror made the offer
53. A contract where consent is given through mistake, violence, intimidation, undue influence
or fraud is
B. Voidable D. Void
70. The mortgagor will execute an instrument to transfer the ownership over the property
mortgaged to the mortgagee if the debt is not paid at maturity is
A. Void C. Valid
B. Voidable D. Unenforceable
75. A, B and C are jointly liable to D in the amount of P9,000. D assigns the entire credit to A. In
this case
A. The obligation is extinguished because of confusion

B. B and C will not be liable to A
C. a becomes the new creditor and may demand from B and C P4,500 each
D. A’s share in the obligation is extinguished because of confusion.
90. One is not a requisite needed in order that obligation shall be extinguished by loss or
destruction of the thing due:
A. When the thing is lost without the fault of the debtor

B. When the thing lost is generic
C. When the thing is lost before the debtor has incurred in delay.
D. When the thing lost is specific
92. The obligation is demandable on the date of the obligation and shall continue to be in force
up to the arrival of the day certain:
A. Resolutory period C. Indefinite period

B. Suspensive period D. Legal period
96. Characteristic of void contracts, except
A. Defense of illegality cannot be waived

B. Cannot be ratified
C. Action for declaration of inexistense does not prescribe
D. The inexistence can be assailed by third person
99. Unless ratified, suits will not prosper if the contract is
B. Voidable D. Void
TEST BANK
PARNERSHIP & CORPORATION
FR: DIAZ
PARTNERSHIP
1. All present properties are contributed
A. Universal partnership[
B. General partnership
C. Limited partnership
D. None of the above
2. Composed of capitalist and industrial partners

A. Universal partnership
3. Partners shall enjoy practically all the profits:

A. Universal partnership[
4. They have no voice in the management of partnership affairs:

A. Managing partners
B. Silent partners
C. Both A and B
5. They have priority if the partnership is insolvent:

A. Separate creditors
B. Partnership creditors
C. Both A and B
6. May contribute money, property or industry to the common fund:

A. Both general and limited partners
B. Limited partner
C. General partners
D. Capitalist partners
7. One who takes charge of the winding up to partnership affairs upon dissolution:
A. Silent partner
B. General partner
C. Ostensible partner
D. Liquidating partner
8. A, B and C are partners. A contributed his services only; B, P20,000; and C, P10,000.The
partnership was liquidated. After payment of the partnership’s obligation, only P9,000 worth
of assets remained. The share of A will equal to:
A. P3,000
B. Equal of share of B
C. Equal of share of C
9. A and B entered into a universal partnership of all present property. The common property of
the partnership shall be:
A. All the properties which belonged to each of the partners at the time of the constitution of the
partnership.
B. All the properties which belonged to each of the partners after the constitution of the
partnership.
C. All the properties which belonged to each of the partners at the time of the constitution
of the partnership as well as the profits which they may acquire therewith.
D. All the properties which belonged to each of the partners at the time of the constitution of the
partnership as well as the profits which they may acquire thereafter.
10. A capitalist partner engaged for his own account in an operation which is of the kind of
business in which the partnership is engaged. Said partner can be
A. Compelled to sell his interest in the partnership to the other capitalist partners.
B. Compelled to dissolve or discontinue the operation of his business
C. Compelled to bring to the common funds of the partnership any profits accruing to him
from his transactions.
D. Denied his share in the profits of the partnership.
11. If a partner in a partnership is insolvent, the first order of preference in the distribution of his
assets are:
A. Partnership creditors
B. Partners contribution to the partnership
C. Separate creditors of the debtor
D. Pro-rata between the separate creditors of the debtor and the partnership creditor
12. A, B and C are partners in a partnership. C contributed his industry. After payments of the
partnership’s obligations, only P6,000 cash remains. No other assets. In the absence of terms
to the contrary, the share of C in the remaining assets is:
A. Equal to share of A
B. Equal to the share of B
C. P2,000
D. Nothing
13. X, Y and Z are equal partners of Xyz Partnership. A owes the XYZ Partnership for p9,000.
Z, a partner collected from A, P3,000 before X and Y received anything. Z issued a receipt
on the P3,000 as his share of what A owes. When X and Y collected from A, A was
insolvent.
A. Partner Z shall share partners X and Y with the P3,000
B. Z cannot be required to share X and Y with the P3,000
C. X and Y should first exhaust all remedies to collect from A.
D. X and Y can automatically deduct from the capital contributions of Z in the partnership their
respective share in the P3,000
14. A and B are partners in a real estate partnership . The partnership owns a piece of land which
C desired to buy. C contacted A and inform him of his desire to buy the land and A did not
tell to B about it. A bought B out of the partnership and afterwards sold the land to C with a
big profit.
A. The partnership is dissolved when A became the sole owner
B. The sale of the land to C is void because it was without the knowledge of B.
C. A is not liable to B for the latter’s share in the profits
D. A is liable to B for the latter’s share in the profits
.
15. A, B and C are partners in ABC Partnership. D represented himself as a partner in ABC
Partnership to E, who, on the belief of such representation, extended P50,000 credit to ABC
Partnership. Assuming only B and C consented to such representation, who will be held
liable to E?
A. E extended the credit to ABC Partnership, so a partnership liability exists, thus, all the
partners, A, B and C are liable
B. B, C and D are partners by estoppels and thus, are liable prorate to E
C. Partners A, B and C who benefited from the credit extended by E are liable.
D. D who made the representation is liable to E
16. A and B are partners in a real estate business. A and B were approached by X who offered to
buy a parcel of land owned by the partnership. Thereafter, b sold to A, B’s share in the
partnership. Then, A sold the land to X at a big profit.
A. A is liable to B for B’s share in the profits
B. The partnership is dissolved when A became the sole owner
C. A is not liable to B for the latter’s share in the profits
D. The sale of the land to X is void.
17. One of the following incidents may be a cause for involuntary dissolution of a partnership.
Which is?
A. Termination of the term of the partnership
B. Insolvency of any partner
C. Express will of any partner
D. Expulsion of any partner
18. A and B are equal partners in AB Partnership. Y presented himself as a partner in AB

Partnership to Z, who relying on such representation, extended P50,000 credit to AB
Partnership. Of the two (2) partners only B knew and consented to the representation of Y.
Who should be held liable to Z?
A. Only Y, who presented himself as partner is liable.
B. Since the credit was extended to AB Partnership, a partnership liability was created, so the
two (2) partners and Y are liable.
C. Partners A and B who benefited from the credit extended to the partnership AB Partnership
shall be liable to Z.
D. B and Y are partners by estoppel and, thus, are liable to Z.
19. The following persons are disqualified to form a universal partnership. Who are the
exception?
A. Brother and sister
B. Husband and wife
C. Those guilty of adultery and concubinage
D. Those guilty of the same criminal offense, if the partnership is entered into a consideration of
the same.
20. A is the capitalist partner and B the industrial partner. A is engaged personally in the same
kind of business the partnership is engaged in.
A. If there are losses, the partnership will bear the losses
B. If there are profits, the profits will be shares by A and the partnership
C. If there are profits, A will give the profits to the partnership
D. A will be excluded from the partnership and pay damages.
21. 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 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
22. Three (3) of the following are similarities between a partnership and a 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 from that of 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
23. A, B and C are general partners in ABC Partnership. A, the managing partner engaged
personally in a business that is the same as the business of the partnership without the
consent of B and C.
A. If there are profits, A will give the profits to the partnership
B. If there are losses, the partnership will bear the losses
C. If there are profits, they will be shared by partner A and the ABC Partnership
D. The profits or losses will be shared equally by A and the ABC Partnership
24. Three (3) of the following are rights of a general partner and also of a limited partner in a
limited partnership. Which is not?
A. To inspect and copy at reasonable hours the books of the partnership and have them kept at
the principal place of business
B. To demand true and full information of all matters affecting the partnership and a formal
account of partnership affairs
C. To have dissolution and winding up by decree of court
25. The partnership is insolvent. These are preferred as regards to the partnership property.
A. Partnership creditors
B. Partners separate creditors
C. Partners with respect to their capital
D. Partners with respect to their profits
26.
27. Bears the loss of property contributed to the partnership
A. Capitalist partner
B. Limited partner
C. None of the above
D. Partners contributing usufructory rights
28. When cash or property worth P3,000 or more is contributed as capital. The Articles of Co-
Partnership shall be in a public instrument and be registered with the Securities and
Exchange commission. If the said requirements are not complied with:
A. It will render the partnership void.
B. It will not affect the liability of the partnership and the partners to third parties.
C. It will not give a legal personality to the partnership.
D. It will give the partnership a de-facto existence.
29. A, B and C are equal partners in Santos Brothers Partnership. The partnership is indebted to
PC for P150,000. Partner A is indebted to SC for P20,000 PC attached and took all the assets
of the partnership amounting to P90,000. B and C are solvent while A is insolvent and all
what he owns is a land valued at P15,000.
A. SC has the priority to the land of A as a separate creditor.
B. PC has priority to the land of A to cover A’s share of the P60,000 remaining liability of the
partnership
C. B and C have priority to the land of A if they paid PC the 60,000 remaining liability of the
partnership.
D. PC and AC shall have priority to the land o A in proportion to their claim of P60,000 and
P20,000 respectively
30. A partnership is not dissolved upon the death of a:

A. General partner
B. Industrial partner
C. Limited partner
D. General limited partner
31. A and B are equal partners in AB Partnership C contacted XYZ and Co. and represented
himself as partner in AB Partnership. XYZ and Co. contacted A who confirmed that C is in
fact a partner of AB Partnership XYZ and Co. extended credit to C for AB Partnership in the
amount of P60,000. Who is liable to XYZ and Co.?
A. A and C are partners by estoppels and are liable to XYZ and Co.
B. XYZ and Co. extended the credit to C for AB Partnership, so a partnership liability exists, so
both partners, A and B together with C are liable.
C. The AB Partnership benefited, so it is liable
D. Only C who made the representation is liable
32. A, B and C are partners in a trucking and freight business. B and C without the knowledge
of A approached X and offered to sell to X all the trucks of the partnership at a price very
much higher than their book value. Then B and C bought-out A from the partnership and
thereafter X bought all the trucks with a big profit of B and C.
A. The sale of the trucks to X is void because it is without the knowledge and consent of A.
B. B and C are not liable to A whatsoever
C. B and C are liable to A for his share in the profits in the sale.
D. When A was bought-out of the partnership, the partnership was dissolved so A has no more
share in the profits in the sale.
33. When the capital (of a partnership) is P3,000 or more, it must be in a public instrument and
must be recorded with the Securities and Exchange Commission (Article 1772). A, B and C
agreed to form a partnership and each contributed P10,000 as capital of the partnership.
There was no compliance in the provisions of Article 1772.
A. The partnership was not established
B. The partnership did not have juridical personality
C. The partnership was established and any partner may compel the execution of a public
instrument
D. The partnership is void
34. A, as a partner contributed P30,000; B as partner, P15,000; and C as industrial partner, his
services in the partnership. After payment of all liabilities and expenses, only P18,000
remain as partnership assets.
A. A, P12,000; B, P6,000; C, None
B. A, P6,000; B, P6,000; C, P6,000
C. A, P9,000; B, P9,000; C, None
D. A, P8,000; B, P4,000; C, P6,000
35. This is the order of preference in the liquidation of a partnership:

A. 1.Outside creditors
2.Partners with respect to their capital
3.Partners with respect to their profit
4.Partners aside from capital and profit
B. 1. Partners with respect to their capital

3.Partners aside from capital and profit
4. Outside creditors
C. 1. Outside creditors
2. Partners aside from capital and profit
3. Partners with respect to their capital
D. 1. Partners aside from capital and profit

2. Outside creditors
3.Partners with respect to their capital
36. Three (3) of the following are rights of a partners. Which one is not?
A. Right to associate another person to his share
B. Right to admit another partner
C. Right to inspect and copy partnership book
D. Right to ask dissolution of the firm at the proper time
37 The following are similarities between partnership and a corporation. Which is the
exception?
A. Both have juridical personalities separate and distinct from that of the individuals
composing them.
B. Like a partnership, a corporation can act only through agents
C. Both are organization of an aggregate of individuals
D. The individuals composing both have little voice in the conduct of the business.
38. In the partnership of A, B and C, A was appointed in the Articles of Co-Partnership as

managing partner. As such manager in good faith:
A. His power is revocable even without consent
B. His power can be revocable at any time even without just cause provided
C. He may execute all acts of administration despite the opposition of B and C
D. He can be removed for valid cause even without the vote of the partners owning the
controlling interest
39. In the ABC Partnership, A and B contributed P20,000 each and C , his services. After
paying all the creditors of the partnership, only P18,000 in cash remains. In the absence of
terms to the contrary, the share of C is equal to:
A. P6,000
B. The share of A
C. The share of B
D. Nothing
40 . X and Y established a partnership by contributing, each at P50,000. Z, a third party allowed

his name to be included in the firm name of the partnership. The partnership was insolvent
and after exhausting all the remaining asset, there was left a liability to third persons the
amount of P30,000. The creditors can compel:
A. Z to pay P30,000 remaining liability
B. X, Y and Z to pay P10,000 each
C. X or Y to pay P30,000 remaining liability
D. X and Y to pay P15,000 each
41. W, X, Y and Z formed a partnership. W, X and Y are general partners and contributed
P50,000 each while Z, an industrial partner contributed his services only. All the partners
signed an agreement stipulating that the liability of W is limited to its contribution After all
the assets of the partnership were exhausted there remains an unpaid liability of P40,000.
The creditors of the partnership can compel:
A. X and Y to pay the P40,000
B. X, Y and Z to pay the P40,000
C. W, X, Y and Z to pay P10,000 each and W and Z can demand reimbursement from X
and Y.
D. X and Y to pay P40,000
42. A partner in a partnership who is not really a partner, not being a party to the partnership
agreement, but is made liable as a partner for the protection of innocent third persons is
known as
A. Secret partner
B. Dormant partner
C. Nominal partner or partner by estoppel
D. Answer not given
43. A and B are capitalist partners, with C as industrial partner. A and B contributed P15,000
each to the capital of the partnership. A contractual liability of P40,000 was incurred by the
partnership in favor of X. The capital assets of P30,000 shall first be exhausted thereby
leaving an unsatisfied liability of P10,000. X can recover the amount from:
A. A and B only
B. A, B and C
C. A, B and C and C can recover for reimbursement from A and B
D. Answer not given
44. A, B and C are partners engaged in a retail business. Their contribution is P20,000 each. D is
admitted as a new partner with a contribution of P8,000. At the time of his admission, the
partnership has an outstanding obligation to E in the amount of P80,000. In this case:
A. D is not liable to E for this obligation
B. D is liable to E for this obligation so that amounting to P68,000 will be exhausted
leaving a balance of P12,000. Only A, B and C shall be liable jointly or pro-rata, out of
their separate property.
C. D is liable to E for this obligation so that after the assets of the partnership will be exhausted,
leaving a balance of P12,000, all the partners shall be liable jointly or pro-rata, out of their
separate property.
D. Answer not given.
45. A, B and C are general partners in ABC Partnership. D is a debtor to the partnership in the
amount of P15,000. A received from Debtor D the sum of P5,000 and issued a receipt
identifying the amount as his share. Then D became insolvent, B and C cannot collect the
P10,000.
A. A cannot be compelled to share the P5,000 with B and C
B. B and C can charge the capital of A with their share of the P5,000
C. A can be compelled to share B and C the P5,000
D. B and C automatically sue D to collect the P10,000
46. M and O are partners of M & O Partnership. M is the managing partner. N owes M P10,000
and M & O partnership P30,000. The obligations of N are both due. M collected from N the
debt of N to M in the amount of P10,000 and issued a receipt in the name of M. To which
obligation will the P10,000 be applied?
A. The whole of the P10,000 be applied to debt of N to M
B. The P10,000 be applied to debt of N to M and to the partnership
C. P5,000 each of debt of N to M and to the partnership
D. P2,500 to debt of N to M and P7,500 debt of N to the partnership
47. A, B and C are partners in D-3 Partnership. On April 29,2010, partner C died. Not knowing
that C died, on May 1, 2010, A contracted a liability to D who also do 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
48. This the order of preference in the liquidation of a general partnership:

A. Outside creditors; Partner as creditors; Partners capital; Partners profit
B. Partner as creditors; Outside creditors; Partners capital; Partners profit
C. Partners capital; Outside creditors; Partner as creditors; Partners profit
D. Outside creditors; Partner capital; Partners profit; Partners as creditors
49. R, S and T are partners. T is the industrial partner who in addition to his services, he also
contributed capital to the partnership. There is no stipulation as to sharing of profits and
losses. The partnership realized profits of P21,000. The share of T in the profits:
A. R and will determine T’s share I, in the profits
B. T’s share is P7,000
C. Pro-rata to his contributed capital
D. Nothing, because he is an industrial partner
50. W, X, Y and Z are partners. They contributed capital as follows: W, P50,000; X, P30,000;
Y, P20,000 and Z, is an industrial partner, his services. The partnership’s obligation to
outsiders exceed the total net assets by P18,000. Who and by how much will the partners be
liable for the payment of the P18,000?
W X Y Z
A. P9,000 P5,400 P3,600 0
B. P4,500 P4,500 P4,500 P4,500
C. P6,000 P6,000 P6,000 P6,000
D. P4,500 P2,700 P1,800 P9,000
51. Which of the following is a characteristic of partnership as a contract?

A. Formal
B. Innominate
C. Gratuitous
D. Preparatory
52. One who takes active part in the business, but is not known to be a partner by outside parties
is:
A. Silent partner
B. Dormant partner
C. Nominal partner
D. Secret partner
53. Can the partners stipulate that the newly admitted partner shall not be held liable for the
obligations of the partnership arising before his admission? Which of the following
statement is not correct?
A. No, because the newly admitted partner should be deemed to have assumed all the debts of
the partnership upon his voluntary participation in the partnership.
B. No, because newly admitted partner is liable with respect to his capital contribution which
forms part of the partnership
C. No, because the third person are always protected by law.
D. No, because the subject of the stipulation is that the liability of the new partner should
not be satisfied out of the partnership property.
54. I. The arrival of the term of a partnership with a fixed term or period shall not dissolve the
partnership if the partners continue with the business of the partnership but such
partnership may be terminated anytime dependent on the will of the continuing partners.
II. The general rule is that the loss of the specific thing contributed to the partnership when
only the use of the thing is contributed by the partner and such thing after its transfer to
the partnership which used the same or sometime was subsequently lost, the partnership
is not dissolved.
A. True; False
B. True; True
C. False; False
D. False; True
55. May contribute money, property or industry to the common fund:

A. General partner
B. Industrial partner
C. Limited partner
D. Managing partner
56. A limited partner who takes active part in the management of the firm becomes:
A. A managing partner
B. Liable as a general partner
C. A general partner
D. A general partner and a limited partner at the same time
57. Which of the following statements is not correct?

A. A general partner in a limited partnership manages the business of the partnership but
cannot perform acts of ownership without the consent of the limited partners
B. Valid contributions of a limited partner are money and property but not services.
C. Additional limited partners may be admitted into the limited partnership with the consent of
all the partners.
D. A person who is both a general partner and a limited partner is deemed a limited partner only
with respect to the return of his contribution.
58. A is the managing partner of A and Company. X is indebted to A for P20,000 and to the
partnership for P60,000. When both debts mature, X pays A P20,000 and the latter issues a
receipt for his personal credit. The payment for P20,000 shall be applied:
A. ¼ in favor of A and ¾ in favor of the partnership
B. To the whole debt owing to A
C. ½ in favor of A and ½ in favor of the partnership
D. To the debt owing to the partnership
59. Which of the following is an essential element of partnership?

A. There must be a contribution of money, property, or industry to a common fund.
B. It must an association for profit with the intention to divide the profits among themselves.
C. There must be a valid and voluntary agreement.
D. All of the above.
60. A and B are partners. On June 15, 2009 when the total obligation of the partnership totaled
P80,000. C was admitted as new partner. At the time C’s admission, the partnership
creditors were M for P50,000 and N for P30,000. After June 15, the partnership borrowed
from O P20,000 and P40,000 from P. On December 15, 2009, the partnership became
insolvent leaving an obligation totaling P140,000 and partnership assets amounting to
P30,000. The creditors are going after the separate properties of the partners to satisfy their
remaining claims. How are the creditors’ claims satisfied?
Answer 1 - M and N can go after the separate properties of A and B but C’s separates
properties are not answerable to their claims.
Answer 2 – O and P can go after the separate properties of A, B and C.
A. Both answers are wrong

B. Answer 2 is wrong but answer 1 is correct
C. Both answers are correct
D. Answer 2 is correct but answer 1 is wrong
61. A and B are capitalist partners with C as industrial partner. A and B contributed P20,000
each to the capital of the partnership. A contractual liability of P50,000 was incurred by the
partnership in favor of X. The assets of the partnership had been exhausted still leaving an
unpaid liability of P10,000. X can recover the amount from:
A. A, B and C and C can recover by way of reimbursement from A and B unless stipulated
otherwise.
B. A and B only
C. C only
D. A, B and C and C has no right for reimbursement from A and B unless expressly stipulated.
62. Which of the following liabilities of the partnership shall rank first in the order of payment?
A. Those owing to creditors other than partners
B. Those owing to partners in respect to profits
C. Those owing to partners in respect to capital
D. Those owing to partners other than for capital and profits
63. I. The contribution of a limited partner may be cash, property or service.

II. A limited partner who takes part in the management of the business of the partnership is
not a general partner but he shall be liable as a general partner.
A. True; True
B. True; False
C. False; False
D. False; True
64. I. A person may be a general and a limited partner in the same partnership at the same time.
II. A person admitted as a partner into an existing partnership is not liable for partnership
obligations existing before his admission.
A. True; True
B. True; False
C. False; False
D. False; True
65. I. A partner cannot assign his interest in the partnership to a third person without the
consent of the other partners.
II. A partner’s interest in the partnership is his personal property.
A. True; True
B. True; False
C. False; False
D. False; True
66. I. The creditor of each partner shall be preferred to those of the partnership as regards the
partner’s separate property.
II. An industrial partner is exempted from losses but not from partnership liabilities
A. True; True
B. True; False
C. False; False
D. False; True
67. I. An industrial partner with the consent of the other partners can engage in any business
for his own account.
II. An industrial partner is not a general partner.
A. True; True
B. True; False
C. False; False
D. False; True
68. I. A general partner not a managing partner can engage in a business different from the
business of the partnership for his own account without the consent of the other partners.
II. A general partnership can be formed orally.
A. True; True
B. True; False
C. False; False
D. False; True
69. I. All the partners in a general partnership are considered managing partners if thee is no
stipulation as to who shall act as managing partner.
II. A partner is liable to the partnership for whatever property he agrees to contribute
without necessity of demand.
A. True; True
B. True; False
C. False; False
D. False; True
70. I. If the capital contribution of the partners amount to P3,000 or more the contract of
partnership must be in public a public document, otherwise the contract is void.
II. A contract of partnership is void, whenever immovable property is contributed thereto if
an inventory of said property is not made, signed by the parties and attached to the public
document.
A. True; True
B. True; False
C. False; False
D. False; True
71. I. Dissolution does not terminate the partnership.

II. Insanity of a general partner in a limited partnership dissolves the partnership.
A. True; True
B. True; False
C. False; False
D. False; True
72. I. A general partner in a limited partnership has all the rights, powers and liabilities as
though the partnership is not limited.
II. A general partner is personally liable for partnership obligations while a limited partner is
not liable for partnership liabilities.
A. True; True
B. True; False
C. False; False
D. False; True
73. I. A limited partner is simply a contributor to the partnership.

II. A limited partner has a right to the return of his contribution upon the dissolution of the
partnership.
A. True; True
B. True; False
C. False; False
D. False; True
CORPORATION
1. The nationality of a corporation is determined by the law of its domicile or place of principal
business. The test is known as:
A. The control theory
B. The full absorption theory
C. The incorporation theory
D. The management theory
2. This is unincorporated business organization created by an instrument by which property is to be

held and managed by trustees for the benefit and profit of such person as may be or become the
holders of transferable certificates evidencing the beneficial interests in the estate
A. Business Trust
B. Close Corporation
C. Condominium Corporation
D. Joint Stock Company
3. When preferred shares are issued by a corporation with a fixed annual interest on the face
thereof, the effect is:
A. The contract of subscription is between the corporation and the stockholder subsists
B. The stockholder is a plain investor who may rise or fall with the financial success or
failure of the corporation.
C. The stockholder is a creditor of the corporation
D. The shares of stock are negotiable instruments under the Negotiable Instruments Law
4. This class of shares are those issued for no consideration or inadequate consideration:
A. Bonus shares
B. Deferred shares or founders shares
C. Over issued shares
D. Watered shares
5. The power to deny pre-emptive right as a corporate power is classified as an:

A. Express power
B. Incidental power
C. Implied power
D. Discretionary power
6. The power to invest corporate funds in another corporation or business or for any other purpose
as a corporate power is classified as an:
A. Express power
B. Incidental power
C. Implied power
7. The power of conducting commercial contracts (to increase the business) and sponsoring athletic
contest for employees to keep them in good health or maintaining a hospital for the employees is
an example of:
A. Express power
B. Incidental power
C. Implied power
8. To establish pension, retirement, and other plans for the benefits of its directors, trustees, officers
and employees is an example of:
A. Express power
B. Incidental power
C. Implied power
9. A religious order is considered as a:

A. Corporation by prescription
B. Public corporation
C. Corporation sole
D. None of them.
10. Place of residence of a corporation shall be its:

A. Place of incorporation
B. Place of residence of majority of stockholders
C. Place where the principal office is established
D. None of them
11. This shall constitute a quorum for transaction of corporate business:

A. Majority of the members
B. Majority of the stockholders
C. Majority of the directors
D. All of them
12. Juridical personality of a corporation begins:

A. From the date of issuance of certificate of incorporation
B. By agreement of the parties
C. Acknowledgement before a Notary Public
D. None of them
13. Right which the existing stockholders of corporation cannot be deprived without the consent is
their right to subscribe or to purchase new stock issued by the corporation; or unissued original
stock, in proportion to their holdings before it can be offered to others:
A. Right of redemption
B. Pre-emptive right
C. Right to purchase
D. None of them
14. A private corporation organized under the corporation law commences to have corporate
existence and juridical personality and is deemed incorporated from:
A. The date when the articles of incorporation is signed by the incorporators
B. When the articles of incorporation and by laws are presented and received by the Securities
and Exchange Commission and the filing fee is paid
C. From the date the SEC issues a certificate of incorporation under its official seal
D. When the Articles of Incorporation is notarized by a Notary Public
15. The following are the qualifications of incorporators . Choose the exemption:
A. Majority of whom must be Filipinos
B. Majority of whom are residents of the Philippines
C. All are of legal age
D. Natural persons, not less than five but not more than 15.
16. These are the shares of stock which have been issued and fully paid for, but subsequently
reacquired by the issuing corporation:
A. Redeemable shares
B. Treasury shares
C. Founder’s share
D. None of the three
17. In the amendment of the Articles of Incorporation of a stock corporation, the following is
necessary:
A. Amendment by the majority vote of the Board of Directors plus a vote or written assent
of the stockholders representing at lest 2/3 of the outstanding capital stock.
B. Amendment by a vote of 2/3 of the stockholders
C. Amendment by the majority vote of the Board of Directors
D. None of the three
18. Corporation governed by special laws, aside from the requirements specified under the
corporation laws, in order that their articles of incorporation may be approved or accepted, must
present before the Security and Exchange Commission:
A. A favorable recommendation from the Ministry of Finance
B. A copy of previous income tax return and a statement of assets, liabilities and net worth
C. A favorable recommendation of the appropriate government agency to the effect that
such articles or amendment is in accordance with law.
D. An undertaking to change the name of the corporation if found that there is already registered
with the SEC a name or a name similar to the name of this corporation
19. The following are some of the requisites of a de facto corporation. Choose the exception:
A. Valid law under which it is incorporated
B. Attempt to incorporate
C. Assumption of corporation power
20. The following are the qualifications of director in a corporation. Choose the exemption:
A. Majority of the directors must be Filipino citizens
B. He must own at least one share of the stock in his name
C. Majority of the corporate directors must be residents of the Philippines
D. He must not have convicted by final judgment of an offense carrying an imprisonment
exceeding 6 years or an offense constituting a violation of the Corporation Code
21. The secretary of a stock corporation shall be:

A. A director of the corporation
B. An incorporator of the corporation
C. A resident and citizen of the Philippines
D. Of legal age and citizen of the Philippines
22. Directors or trustees who willfully and knowingly vote or assent to patently unlawful act of the
corporation or who are guilty of gross negligence or had 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 trustee for the corporation
B. Criminally for violation of the corporation code
C. Jointly and severally for the damages suffered by the corporation
23. The following are methods of dissolving a corporation:

A. Expiration of the term
B. Failure to organize and commence business within two (2) years from date of issuance of
certificate of incorporation
C. Shortening of the corporate term
D. All of the above
24. Three of the following enumeration are not authorized to issue no par value shares of stock.
Which is the exception?
A. Insurance companies
B. Industrial companies
C. Public utilities
D. Trust companies
25. Any stockholder of a corporation shall have the right to dissent and demand payment of the fair
value of his share/s in three of the following corporate acts. Which is the exception?
A. In case of any amendment to the articles of incorporation which has the effect of changing or
restricting the rights of any stockholder or class of shares.
B. In case of merger or consolidation
C. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or
substantially all of the corporate assets and property of the corporation.
D. In case of incurring, creating or increasing bonded indebtedness
26. The authorized capital stock of a proposed corporation is P100,000 divided into 1,000 shares
with a par value of P100.00 each. The minimum amount of subscription that must be paid is:
A. P8,750 or 87.5 shares C. P5,000 or 50 shares
B. P6,250 or 62.5 shares D. P7,500 or 75 shares
27. In the matter of management of the business affairs of a corporation, this is supreme:
A. Majority of the stockholders
B. 2/3 of the stockholders
C. Board of Directors
D. President of the corporation
28. This is the equitable right of stockholders to subscribe to newly issued shares of the corporation
in proportion to their present shares in order to maintain their equity in the corporation.
A. Right of redemption
B. Concept of corporation entity
C. Right to sue and be sued
D. Pre-emptive right
29. This is a written acknowledgement of an interest of a stockholder in the corporation.

A. Proxy C. Certificate of Stock
B. Share of stock D. Capital Stock
30. These are the persons who sign the Articles of Incorporation, who may or may not be subscribers
of shares
A. Incorporators C. Directors
B. Trustees D. Promoters
31. Choose the minimum requirement of the Corporation Law to corporate formation:
Authorized Capital Subscribed Capital Paid-In Capital

A. P100,000 P20,000 P5,000
B. 100,000 20,000 4,000
C. 100,000 25,000 5,000
D. 100,000 25,000 6,250
32. They provide and regulate the internal matters of the corporation, such as calling the Board of
Directors and Stockholders meetings.
A. Board of Directors C. By-laws
B. Majority of Stockholders D. Articles of Incorporation
33. This is an authority to vote in a corporation stockholders meeting.

A. Proxy C. Certificate of stock
B. By-laws D. Share of stock
34. A gratuitous reissue of Treasury shares will result in:

A. Capital surplus C. Watered stock
B. Additional profit D. Stock dividend
35. Three (3) of the following are similarities between a partnership and a corporation. Which is not?
A. The individuals composing both have title voice in the conduct of the business
B. Both have juridical personality separate and distinct from that of the individuals composing
them
C. Like a partnership, a corporation can act only through agents
D. Both are organizations composed of an aggregate if individuals
36. One of the following is the limitation on proxies. Which is?

A. Proxy acquires legal title to the shares of the stock
B. A proxy votes even in the presence of the stockholder
C. The proxy is voted only for the meeting for which it was intended
D. A proxy is revocable at any time
37. The number of the Board of Trustees in a non-stock corporation:

A. Shall not be less than five but not more than eleven
B. May be more than fifteen upon its organization
C. May be less than five upon its organization
D. Shall not be less than five but not more than fifteen
38. One of the following is a ground for the suspension or revocation of the certificate of
incorporation by the Securities and Exchange Commission.
A. If the corporation has commenced its business transactions and afterwards ceased
operation continuously for a period of at least five (5) years
B. If the corporation fails to commence and start to operate and the failure is due to causes
beyond the control of the Corporation
C. If the corporation does not formally commence its business transaction and subsequently
become continuously inoperative for a period of two (2) years
39. Right of the corporation to continue as a juridical entity for the term stated in the articles of
incorporation despite the death of any stockholder.
A. Juridical personality C. Right of succession
B. Pre-emptive right D. Right of existence
40. Original signatories in the articles of incorporation are called:

A. Corporators C. Stockholders
B. Promoters D. Incorporators
41. They regulate different internal matters of the corporation such as calling and defining the
conduct of the meeting of stockholders and directors.
A. Board of directors C. Articles of incorporation
B. By-laws D. Proxy
42. The document conferring authority to vote stock in a corporate meeting:

A. Power of attorney C. Capital stock
B. Shares of stock D. Proxy
43. The minimum requirement of Corporation Law to corporate formation.
Authorized Subscribed Capital Paid in Capital

A. P500,000 P100,000 P25,000
B. 500,000 125,000 31,250
C. 500,000 100,000 20,000
D. 500,000 125,000 25,000
44. Three (3) of the following are attributes of a corporation. Which is the exception?
A. An artificial being
B. Has the right of succession
C. Has powers, attributes and properties expressly authorized by law or incident to its existence
D. Created by agreement of the incorporators
45. Three of the following are qualifications of the Board of Directors. Which is the exception?
A. He must own at least one (1) share of the capital stock
B. At least majority of them are citizens of the Philippines
C. The shares owned must be recorded in the books of the corporation.
D. He must continuously own at least one )1) share of the stock of the corporation
46. The voting requirement to increase or decrease capital stock

A. Majority vote of the board of directors and consented by the stockholders representing
two-thirds (2/3) of the outstanding capital stock
B. Two-thirds (2/3) vote of the board of directors with the consent of majority of outstanding
capital stock
C. Majority vote of the board of directors and with consent if majority of the outstanding capital
stock
D. Majority vote of the board of directors and three-fourths (3/4) vote of the outstanding capital
stock
47. A dividend payable partly in cash and partly in stocks, as to class of dividend, is a :
A. Optional dividend C. Liquidation dividend
B. Property dividend D. Composite dividend
48. Bonds which are not secured by any specific mortgage lien of pledge or corporate property but
by the general corporation are:
A. Guaranteed bonds C. Income bonds
B. Debenture bonds D. Redeemable bonds
49. These are the rules and guidelines adopted by the stockholders of a corporation for the internal
government.
A. Rules and regulations C. Minutes of the meetings
B. Articles of Incorporation D. By-law
50. Which of these conditions comply with the minimum requirement of the law to corporate
formation?
Authorized Capital Subscribed Capital Paid In Capital

A. P100,000 P25,000 P12,500
B. 64,000 16,000 4,000
C. 200,000 50,000 10,000
D. 200,000 40,000 10,000
51. A distribution by a corporation of shares held by it in another corporation is:
A. Stock dividend
B. Sales of capital asset
C. Property dividend of actual distribution of corporate assets
D. Sale of treasury stock
52. Corporations organized by private persons performing public function and for profit to private
parties are:
A. Public corporations
B. Government controlled corporation
C. Quasi-public corporation
D. Private corporation
53. This is a document of a corporation acknowledging the interest of a stockholder in the

corporation’s assets.
A. Certificate of stock C. Share of stock
B. Capital stock D. Stockholder’s equity
54. In a corporation, any two (2) or more positions may be hels concurrently by the same person,
except that no one (1) person shall act as:
A. Chairman of the Board and President
B. Secretary and Treasurer
C. President and Secretary
D. Treasurer and Director
55. A corporation may invest its funds in any other corporation of business or any purpose other than
the primary purpose for which it was organized, only if:
A. There is majority vote of the Board of Directors and ratified by the stockholders
representing 2/3 of the outstanding capital stock
B. It is reasonably necessary to accomplish its secondary purpose, the approval of the
stockholders not necessary
C. There is a majority vote of the Board of Directors
D. There is majority vote of the outstanding capital stock
56. The following are advantages of no-par value share of stock. Which is the exception?
A. No-par value share allow flexibility in price
B. The stockholders of no-par value shares are relieved of personal liability for unpaid stock
subscription
C. It allows the issue of stock in exchange of property
D. No-par value shares afford a possible remedy or relief from the evil of over-
capitalization and stock watering
57. The right to vote at meetings, the right to receive dividends and the right to receive copies of
financial statements is known as:
A. Right of existence C. Pre-emptive right
B. Directors right D. Stockholder’s right
58. The Garcia Realty Development Corporation has a capital stock of P1,000,000 divided into
10,000 shares with a par value of p100 each. 5,000 shares are ordinary share and 5,000 shares are
10% preference share. In 2008 there was no declared dividends but in 2009 dividends in the
amount of P200,000 were declared. The holders of the preference share are entitled to receive:
A. P50,000 if cumulative, non-participating
B. P125,000 in non-cumulative, participating
C. P125,000 if cumulative, participating
D. P100,000 if non-cumulative, non-participating
59. Persons who compose the corporation whether as stockholder in a stock corporation or member
in a non-stock corporation, are called:
A. Incorporators C. Promoters
B. Subscribers D. Corporators
60. In three of the following, these persons qualify to be incorporators. Which is the exception?
A. Must have paid at least 25% of their subscription
B. Natural persons not less than five, not more than 15
C. Majority are residents of the Philippines
D. Need not be citizens of the Philippines
61. Dividends are declared and paid out of the

A. Paid-up capital
B. Capital stock
C. Net income of the current year
D. Unrestricted retained earnings
62. The following defect will preclude the creation of even a de facto corporation:
A. The name of the corporation closely resembles that of a pre-existing corporation that it will
tend to deceive the public
B. The incorporators or a certain number of them are not residents of the Philippines
C. Lack of certificate of incorporation from the Securities and Exchange Commission
D. Answer not given
63. The distinction between a proxy and a voting trust is that in a voting trust:
A. The trust has a legal title to the shares of the transferring stockholder
B. Unless coupled with interest, is revocable at any time
C. Is not limited to any particular meeting
D. Answer not given
64. The distinction between subscription of shares from purchase of shares is that in subscription of
shares:
A. It is an independent agreement between the individual and the corporation to buy shares of
stock from it at a stipulated price
B. It takes place before or after incorporation and is generally paid in installment or upon
call.
C. In case of insolvency of the corporation, the subscription price cannot be enforced on the
theory that the corporation can no longer perform its obligation to deliver the certificate of
stock
D. Answer not given
65. A corporation created in strict or substantial conformity with the statutory requirements for
incorporation and whose right to exist as a corporation cannot be successfully attacked even in a
direct proceeding for that purpose by the State is known as:
A. De jure corporation C. De facto corporation
B. Corporation by estoppels D. Answer not given
66. One of the characteristics of treasury shares is that:

A. They have the status of outstanding shares
B. They may not be reissued or sold again
C. They participate neither in dividends nor in the meetings of the corporation as voting
stocks
D. Answer not given
67. Which of the following will not qualify as incorporator of a corporation?
A. A minor who is emancipated by voluntary concession or marriage
B. A married woman without the consent of her husband where the property involved in the act
of incorporation is paraphernal
C. A corporation
D. Answer not given
68. The articles of incorporation is required to state the names, nationalities and residences of
persons who act as directors or trustees are duly elected and qualified. This requirement is
intended to provide a basis by which the Securities and Exchange Commission could determine
whether the Articles of Incorporation has complied with the requirement that:
A. At least a majority of the directors or trustees are residents of the Philippines
B. All the directors or trustees are residents of the Philippines
C. 2/3 of the directors or trustees are residents of the Philippines
D. Answer not given
69. The power to revoke corporate franchise for causes specified by law is vested only in the:
A. President of the Republic of the Philippines
B. Securities and Exchange Commission
C. Court of component jurisdiction
D. Answer not given
70. Corporate dissolution may take place by voluntary inaction which will in the cessation of its
corporate powers and the corporation shall be deemed dissolved. Such dissolution may result
from:
A. Inaction by the corporation through its failure to formally organize and commence with
the transaction of its businesses or the construction of its works within two years from
the date of its incorporation
B. Failure of the corporation to submit the annual reports required by the Securities and
Exchange Commission for a period of five years
C. Merger or consolidation with respect to absorbed corporation
D. Answer not given
71. Watered stocks are shares of stock issued by a corporation for a consideration in any form other
than cash valued in excess of its fair value. In this regard:
A. The issue by itself is void
B. The agreement that it shall be paid less than its par or issued value is illegal and void
and can not be enforced
C. The subscriber and purchaser shall not be liable for the full par value of the shares
D. Answer not given
72. The voting proportion required to enable a corporation to invest its funds in any other
corporation on business of for any purpose other than its primary purpose:
A. 2/3 vote of the board of directors and ratified by majority of the outstanding capital stock
B. Majority vote of the board of directors and ratified by majority of the stockholders
C. Majority of the board of directors and ratifies by 2/3 of the outstanding stockholders
D. Majority of the board of directors and ratified by 2/3 of the outstanding capital stock
73. An officer of a corporation may hold two or more positions in the corporation but not as:
A. Chairman of the Board and President
B. President and Treasurer
C. Secretary and Treasurer
D. Vice President and Secretary
74. The right of a corporation to exist as juridical person during its term as stated in its Articles of
Incorporation despite the death of any of its stockholders is:
A. Right of existence C. Right of succession
B. Right of redemption D. Pre-emptive right
75. The interest or right of the owner in the corporation’s profits or in the net assets of the
corporation on dissolution is:
A. Dividend C. Certificate of stock
B. Share of stock D. Capital
76. Requirement to effect the amendment of by-laws of a corporation.

A. Majority vote of the board of Directors
B. Vote of 2/3 of the outstanding capital stock
C. Majority vote of the Board of Directors and majority vote of the outstanding capital
stock
D. Majority vote of the outstanding capital stock
77. The nationality of the corporation is determined by the place of the controlling stockholders. This
test is:
A. Control test C. Incorporation test
B. Domicile test D. Capitalalization test
78. The following person can not be incorporator of a corporation.

A. A resident alien
B. A married woman without the consent of the husband even if the payment of her shares is her
paraphernal property
C. A subscriber on the share of the corporation who pays less than 25% of his subscription
D. A corporation organized under the laws of the Philippines
79. One of the following is not required and does not form part of the three-fold duty of directors of
a corporation. Which one?
A. Duty of diligence C. Duty of obedience
B. Duty of loyalty D. Duty of efficiency
80. These do not form part of the outstanding capital stock:

A. Bonus shares C. Founder’s shares
B. Treasury shares D. Redeemable shares
81. 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
82. Under this test, a corporation is a national of the country pursuant to whose laws it is
incorporated:
A. Nationality test C. Control test
B. Capitalization test D. Incorporation test
83. Which of the following statements is not correct?

A. In the delinquency sale at public auction, the highest bidder is one who offers to pay the
full amount of the balance of the subscription plus interest and expenses of the sale for
the highest number of shares.
B. The sale of delinquent stock at public auction can be stopped if the Board of Directors stops
the sale for valid reason.
C. Payment of unpaid subscription may not be enforced by applying cash dividends to
delinquent stockholders.
D. The Board of Directors shall order, by resolution, the sale of delinquent stock specifying the
amount due plus accrued interest, the place, time and date of the sale
84. A stockholder who does not approve the action taken by the Board of Directors in proposing to
amend the Articles of Incorporation is allowed to withdraw from the corporation in one of the
following instances:
A. Merger or consolidation
B. Investment of corporate funds in another corporation
C. Creating, incurring, increasing or decreasing any bonded indebtedness
D. Shortening or prolonging corporate existence
85. I. Membership in a non-stock corporation and all rights arising therefrom cannot be transferred
even if provided in the articles of incorporation or by laws because membership and the
rights arising therefrom are personal and non-transferable.
II. Treasury stocks sold for less than par or issued value are considered “watered stock” and as
such are prohibited by law. Which is correct?
A. True; False
B. Both statements are false
C. False; True
D. Both statements are true.
TEST BANK
LAW ON PARTNERSHIP & CORPORATION
fr: cpar
PARTNERSHIP
1. One of the following is not a characteristic of a contract of partnership
A. Real, in that the partners must deliver their contributions in order for the partnership
contract to be perfected.
B. Principal, because it can stand by itself.
C. Preparatory, because it is a means by which other contracts will be entered into.
D. Onerous, because the parties contribute money, property or industry to the common fund.
2. One of the following is not a requisite of partnership. Which is it?

A. There must be a valid contract.
B. There must be a mutual contribution of money, property or industry to a common fund.
C. It is established for the common benefit of the partners which is to obtain profits and divide
the same among themselves.
D. The articles are kept secret among the members.
3. The minimum capital in money or property except when immovable property or real rights
thereto are contributed, that will require the contract of partnership to be in public instrument
and be registered with SEC.
A. P 5,000
B. P10,000
C. P 3,000
D. P30,000
4. X and Y entered into a universal partnership of all present property. At the time of their
agreement. X had a four-door apartment which he inherited from his father 3 years earlier. Y,
on the other hand, had a fishpond which he acquired by dacion en pago from Z. During the
first year of the partnership, rentals collected on the four-door apartment amounted to
P480,000; while fish harvested from the fishpond were sold for P300,000. During the same
period. B received by way of donation a vacant lot from an uncle. The partners had an
stipulation that future property shall belong to the partnership. Which of the following does
not belong to the common fund of the partnership?
A. Fish pond
B. Rental of P480,000
C. Apartment
D. Vacant lot
5. D and E entered into a universal partnership of profits. At the time of execution of the articles
of partnership, D had a two-door apartment which he inherited from his father 3 years earlier.
E on the other hand, had fleet of taxis which he purchased two years before. In the first year
of the partnership, D earned P500,000 as radio talent while E won P1,000,000 in the lotto.
During the same period, rentals of P120,000 were collected from the apartment, while fare
revenues of P200,000 were realized from the operation of the fleet of taxis. Which of the
following belongs to the partnership?
A. Two-door apartment
B. Lotto winnings of P1,000,000
C. Salary of P500,000
D. Fleet of taxis
6. A partnership formed for the exercised of a profession which is duly registered is an example
of
A. Universal partnership of profits
B. Universal partnership of all present property
C. Particular partnership
D. Partnership by estoppel
7. A, B and C are partners in ABC Enterprises. Not having established yet their credit standing,
the three partners requested D, a well known businessman, to help them negotiate a loan
from E, a money lender. With the consent of A, B and C, D represented himself as a partner
of ABC Enterprises. Thereafter, E granted a loan of P150,000 to ABC enterprises. What kind
of partner is D?
A. Managing partner
B. Liquidating partner
C. Ostensible partner
D. Partner by estoppel
8. Using the preceding number, assuming ABC Enterprises was unable to pay the loan on due
date at which time the assets of the partnership amounted to P120,000. From whom may E
collect the payment?
A. D only for the whole amount of P120,000.
B. A, B and C who are liable jointly for P50,000 each.
C. ABC Enterprises for its assets of P120,000; hereafter, A, B and C from their separate assets at
P10,000 each.
D. ABC Enterprises for its assets of P120,000 thereafter, A, B, C and D from their separate
assets at P7,500 each.
9. Which of the following losses will not cause the dissolution of a partnership?
A. Loss before delivery of a specific thing which a partner had promised to contribute to the
partnership.
B. Loss of a specific thing after its delivery to and acquisition of its ownership by the
partnership from the partner who contributed the same.
C. Loss after delivery of a specific thing where the partner contributed only its use and
enjoyment where such partner reserved the ownership thereof.
D. Loss before delivery of a specific thing where the partner promised to contribute only its use
and enjoyment, reserving the ownership thereof.
10. A partner can engage in business for himself without the consent of his co-partners if he is
A. A capitalist partner whether or not the business he will engage in is of the same kind as or
different from the partnership business.
B. An industrial partner whether or not the business he will engage in is of the same kind as or
different from the partnership business.
C. A capitalist partner and the business he will engage in is of a kind different from the
partnership business.
D. An industrial partner and the business he will engage in is of a kind different from the
partnership business.
11. The partnership will bear the risk of loss of three of the following things, except
A. Things contributed to be sold.
B. Fungible things or those that cannot be kept without deteriorating.
C. Non-fungible things contributed so that only their use and fruits will be for the common
benefit.
D. Things brought and appraised in the inventory.
12. A partner’s interest in the partnership is his share of the profits and surplus which he may
assign to a third person. Which of the following statements concerning such right is correct?
A. The conveyance of a partner’s interest will cause the dissolution of the partnership.
B. The assignee becomes a partner.
C. The assignee has the right to interfere in the management of the partnership business.
D. The assignee has the right to receive the profits which the assigning partner would
otherwise be entitled thereto.
13. Partnership as distinguished from corporation

A. Acquires juridical personality upon approval by the SEC and the issuance of certificate.
B. Has limited liability.
C. Created by operation of law.
D. No power of succession.
14. Essential elements or feature of a partnership, except

A. Must have a lawful object or purpose
B. There must be a contribution of money, property or industry to a common fund
C. With intention to divide and contribute whatever profits they make to other people.
D. Must be established for the common benefit or interest of the partners.
15. Partner who contributes money and/ or property, except

A. General
B. Capitalist
C. Industrial
D. Managing
16. Partner who contributes industry or labor

A. General
B. Capitalist
C. Industrial
D. Managing
17. Partner who contributes both capital and industry

A. General
B. Limited
C. Managing
D. Capitalist-industrial
18. Partner who is liable beyond the extent of his contribution

A. General
B. Limited
C. Industrial
D. Silent
19. Partner who is liable only to the extent of his contribution

A. Limited
B. General
C. Industrial
D. Managing
20. Partner who manages actively the firm’s affairs

A. Silent
B. Liquidating
C. Managing
D. Dormant
21. Partner who does not participate in the management though he shares in the profits or losses.
A. Liquidating
B. Nominal
C. Ostensible
D. Silent
22. Partner who winds up the affairs of the firm after it has been dissolved
A. Liquidating
B. Managing
C. Industrial
D. Capitalist
23. Partner whose connection with the firm is known to the public
A. Ostensible
B. Secret
C. Silent
D. Nominal
24. Partner whose connection with the firm is concealed or kept secret
A. Ostensible
B. Secret
C. Silent
D. Nominal
25. Partner who is both a secret and silent partner

A. Nominal
B. Ostensible
C. Limited
D. Dormant
26. Partner who is not really a partner but who may become liable as such insofar as third
persons are concerned
A. Nominal
B. Ostensible
C. Silent
D. Secret
27. May contribute money, property or industry to the common fund
A. Limited partner
B. General partner
C. Both limited and general partners
D. Dormant partner
28. May be required to make additional contribution in case of imminent loss:

A. Capitalist partner
B. Limited partner
C. Industrial partner
D. Choices A, B and C
29. A, B and C are partners each contributing P10,000. The firm’s indebtedness amounts to
P90,000. It was stipulated that A would be exempted from liability. Assuming that the capital
of P30,000 is still in the firm, which of the following is not correct?
A. The creditors may get the P30,000 and still collect each P20,000 from A, B and C.
B. A can recover P10,000 each from B and C should he (A) be required to pay the creditors.
C. A cannot recover his original capital of P10,000.
D. The creditors can recover P45,000 each from B and C.
30. A newly admitted general partner is liable to creditors existing at the time of his admission
and his liability is
A. Up to his capital contribution only if there is stipulation.
B. Up to his separate property even there is no stipulation.
C. Up to his capital contribution even if there is stipulation.
D. Up to his separate property only if there is stipulation.
31. Using the preceding number, but the obligations were contracted after his admission, which of
the following is correct?
A. He is liable to the creditors before and after his admission up to his separate property.
B. He is liable to the creditors before and after his admission only up to his capital contribution.
C. He is liable to the creditors before and after his admission up to his capital contribution
and to the creditors after his admission up to his separate property..
D. He is not liable to creditors existing before his admission.
32. A and B are partners engaged in the real estate business. A learned that C was interested in
buying a certain parcel of land owned by the partnership, even for a higher price. Without
informing B of C’s offer A was able to convince B to sell to him (A) his (B’s) share in the
partnership. Then A sold the land at a big profit. Which of the following is correct?
A. A is liable to B for the latter’s share in the profit.
B. C is liable to B for the latter’s share in the profit.
C. A new partnership is formed between A and C.
D. The sale of the land to C is void since it was without the knowledge of B.
33. A and B are partners in a real estate business. A and B were approached by X who offered to buy
a parcel of land owned by the partnership. Thereafter B sold to A, B’s share in the partnership.
Then A sold the land to X at a big profit. Which is correct?
A. The sale of the land to X is void
B. A is liable to B for B’s share in the profits.
C. B may rescind the contract between A and X
D. A is not liable to B for any share in the profits.
34. The following persons are disqualified to form a universal partnership, except
A. Husband and wife
B. Brother and sister
C. Those guilty of adultery and concubinage
D. Those guilty of the same criminal offense; if the partnership is entered into in consideration
of the same.
35. A, B and C are capitalist partners while D is an industrial partner. A, the managing partner
engaged personally in a business that is the same as the business of the partnership without the
consent of the other partners. As a result,
A. If there are losses, the partnership will bear the losses
B. If there are profits, the profits will be shared by A and the partnership.
C. If there are profits, A will give the profits to the partnership.
D. A will be excluded from the partnership and will pay damages.
36. A, a managing partner is B’s creditor to the amount of P1,000 already demandable. B also owes
the partnership P1,000, also demandable. A collects P1,000 from B. One is not correct.
A. If A gives a receipt for the partnership it is the partnership’s credit that has been collected.
B. If A gives a receipt for his own credit, it is A’s credit that has been collected.
C. If A gives a receipt for his own credit, P500 will be given to him, P500 to the partnership.
D. B may decide that he is paying only A’s credit if the personal credit of A is more onerous to
B.
37. The remedy of capitalist partners against an industrial partner who engaged in a business for
himself without the expressed permission from the partnership is:
A. To compel him to sell his interest to the said capitalist partners.
B. To exclude him from sharing in the profits of the partnership.
C. To remove him as manager if he is appointed as manger of the partnership.
D. To expel him from the partnership and claim for damages.
38. A partnership which comprises all the profits that the partners may acquire by their work or
industry during the existence of the partnership is called:
A. Universal partnership of all present property
B. Universal partnership of profits
D. Partnership at will
39. A partnership whereby the partners contribute to a common fund all the property actually
belonging to them at the time of the constitution of the partnership, with the intention of dividing
the same among themselves, as well as the profits which they may acquire therewith is:
40. A partnership without a definite period of existence and which can be dissolved at any time by
any of the partners is called:
41. A, B and C, capitalist partners, each contributed P10,000 and D, the industrial partner
contributed his services. Suppose X, is the creditor of the firm amounting to P90,000. After
getting the P30,000 capital assets of the partnership, which is correct?
A. X can recover P20,000 each from A, B and C only.
B. X can recover P60,000 from either A, B and C only.
C. X can recover P15,000 each from A, B, C and D.
D. X can recover P15,000 each from A, B and C but D is exempt because he is an industrial
partner.
42. A, B and C are partners. D is admitted as a new partner. Will D be liable for partnership
obligations contracted prior to his admission to the partnership?
A. No, only for those contracted after his admission.
B. Yes, and his liability would extend to his own individual property.
C. Yes, but his liability will extend only to his share in the partnership property and not to
his own individual property.
D. Yes, as if he had been an original partner.
43. A partner who has all the rights, powers and subject to all restrictions of a general partner but
whose liability is, among themselves, limited to his capital contribution is:
A. General partner
B. Limited partner
C. General-limited partner
D. Dormant partner
44. Bears the risk of things contributed to the partnership:

A. General partner
B. Limited partner
C. Partner contributing usufructuary rights over fungible things
D. Partner contributing usufructuary rights over non-fungible things
45. A, B and C, capitalist partners, each contributed P10,000. After exhausting the assets of the firm,
the firm’s indebtedness amounts to P90,000. It was stipulated that A would be exempted from
liability. Which is correct?
A. A may recover his original capital of P10,000.
B. The creditors may collect P30,000 each from A, B and C.
C. A can recover P20,000 each from B and C should he be required to pay the creditors.
D. The creditors can recover P45,000 each from B and C.
46. Instances when a partnership is unlawful, except

A. A partnership formed to furnish apartment houses which would be used or prostitution
B. A partnership formed for the purpose of acquiring parcels of land
C. A partnership formed for gambling purposes.
D. A partnership formed to create illegal monopolies or combinations in restraint of trade.
47. A and B orally agreed to form a partnership two years from today, each one to contribute P1,000.
If at the arrival of the period, one refuses to go ahead with the agreement, can the other enforce
the agreement?
A. Yes, because the partnership contract is not governed by the Statute of Frauds
B. Yes, because the prior agreement was voluntarily made.
C. No, because the agreement was merely oral and executor
D. No, since the agreement is to be enforced after one year from the making thereof, the same
should be in a public instrument to be enforceable.
48. Where at least one partner is a general partner and the rest are limited partners
A. General partnership
B. Partnership by estoppels
C. Partnership de facto
D. Limited partnership
49. Where all the partners are general partners

A. General partnership
B. Partnership by estoppels
C. Partnership de facto
D. Limited partnership
50. A and B are equal partners in AB Partnership by contributing P50,000 each on June 1, 2010. On
July 1, 2010, the partnership contracted an obligation to pay Z the amount of P180,000 on
August 31, 2010. On August 10, 2010, C was admitted as a new partner. C contributed P50,000.
How will the obligation be paid?
A. A P60,000; B P60,000; C P60,000
B. A P90,000; B P90,000; C None
C. A P180,000 or B P180,000 and C P50,000
D. A P65,000; B P65,000; C P50,000
51. A, B and C are equal partners in ABC Partnership. On April 29, 2010, C died. Not knowing that
C is dead, on May 2, 2010, A contracted a liability to D who also did not know about the death of
C. The liability is P90,000. After D exhausted the net assets of the partnership in the amount of
P60,000, he can collect
A. P30,000 from A or P30,000 from B.
B. P15,000 from A and P15,000 from B.
C. P10,000 from the estate of C, P10,000 from A and P10,000 from B.
D. P30,000 from the estate of C or P30,000 from B or P30,000 from C.
52. A, B and C are partners. Their contributions are as follows: A, P60,000; B, P40,000 and C,
services. The partners agreed to divide profits and losses in the following proportions: A, 35%;
B, 25% and C 40%. If there is a loss of P10,000, how should the said loss be shared by the
partners?
A. A P6,000; B P4,000; C nothing
B. A P3,000; B P2,000; C P5,000
C. A P3,500; B P3,500; C P3,000
D. A P3,500; B P2,500; C P4,000
53. Using the preceding number, but the partners did not agree on how to divide profits and losses. If
there is a loss of P10,000, how should the said loss be shared by the partners?
A. A P6,000; B P4,000; C nothing
B. A P3,000; B P2,000; C P5,000
C. A P3,500; B P3,500; C P3,000
D. A P3,500; B P2,500; C P4,000
54. When the manner of management has not been agreed upon, who shall mange the affairs of the
partnership?
A. Capitalist partners
B. Industrial partners
C. Capitalist-industrialist partners
D. All of the partners
55. A, B and C are partners in a partnership business. A contributed P10,000, B contributed P5,000
and C his services only. After payment of partnership debts, what remains of the partnership
assets is P6,000 only. In the absence of stipulation to the contrary, the share of C will equal to:
A. That of A
B. P2,000
C. That of B
D. Nothing
56. A, B and C are partners in ABC Co. D owes the partnership P4,500. A, a partner, received from
D a share of P1,500 ahead of partners B and C, giving D a receipt for his share only. When B
and C were collecting from D, the latter was already insolvent. Which of the following is
correct?
A. Partner A can be required to share the P1,500 with B and C.
B. A cannot be required to share the P1,500 with B and C.
C. B and C should automatically exhaust first all remedies to collect from D.
D. B and C can automatically deduct from the capital contribution of A in the partnership, their
respective share in the P1,500.
57. A partnership suffered losses in the first year of its operation. A, a capitalist partner, cannot
contribute an additional share to the capital because of insolvency. Can A be obliged to sell his
interest to the other partners on the ground of such refusal?
A. Yes, A’ refusal to contribute additional share reflects his lack of interest in the continuance of
the partnership.
B. No, because there is actually no imminent loss of the business.
C. Yes, provided that A is paid the value of his interest.
D. No, because his refusal is justifiable.
58. Which of the following is considered prima facie evidence of the existence of a partnership?
A. Where payment of interest on a loan depends on the profit of the business.
B. The receipt by a person of a share in the profits.
C. The sharing of gross returns of a business.
D. Where the parties are established as co-owners of a property.
59. A and B are partners, with A as the managing partner. D is indebted to A in the amount of
P10,000 and to the partnership in the amount of P5,000. Both debts are due and demandable. D
paid AP3,000. A issued to D a receipt in his own name. How should the amount of P3,000 be
applied?
A. The P3,000 should be applied to the indebtedness of D to A.
B. The P3,000 should be applied to the indebtedness of D to the partnership.
C. P2,000 should be applied to the indebtedness of D to the partnership and P1,000 to the
indebtedness of D to A.
D. P1,000 should be applied to the indebtedness of D to the partnership and P2,000 to the
60. Using the preceding no. but A issued to D a receipt in the name of the partnership. How should
the payment of P3,000 be applied?
A. The P3,000 should be applied to the indebtedness of D to A.
B. The P3,000 should be applied to the indebtedness of D to the partnership.
C. P2,000 should be applied to the indebtedness of D to the partnership and P1,000 to the
D. P1,000 should be applied to the indebtedness of D to the partnership and P2,000 to the
61. A, B, C and D are partners. Their contributions are as follows: A, P50,000; B, P30,000; C,
P20,000; D, services. The partnership incurred obligations to third persons which the firm was
unable to pay. After exhausting the assets of the partnership, there still is unpaid balance of
P10,000 to E. Who are liable to E for the payment of the unpaid balance of P10,000 and how
much should each pay to E?
A. A P5,000; B P3,000; C P2,000; D nothing
B. A P2,500; B P2,500; C P2,500; D P2,500
C. A P4,000; B P3,000; C P2,000; D P1,000
D. A P4,000; B P4,000; C P2,000; D nothing
62. One or more but less than all the partners have no authority to perform the following acts,
except:
A. Do any act which would make it impossible to carry on the ordinary business of the
partnership.
B. Submit a partnership claim or liability to arbitration.
C. Renounce a claim of the partnership.
D. Convey partnership property in the ordinary course of partnership business.
63. A, B and C are equal partners in ABC Partnership. The partnership is indebted to D for
P150,000. Partner A is indebted to E for P20,000. D attached and took all the assets of the
partnership amounting to P90,000. B and C are solvent while A is insolvent and that he owns is a
land valued at P15,000. Which is correct?
A. E has priority to the land of A as a separate creditor
B. D has priority to the land of A to cover A’s share of the P60,000 remaining liability of the
partnership.
C. B and C have priority to the land of A if they paid D the P60,000 remaining liability of the
partnership.
D. D and E shall both have priority to the land of A in proportion to their claims of P60,000 and
P20,000, respectively.
64. A, B and C are partners. A is an industrial partner. During the first year of operation, the firm
realized a profit of P60,000. During the second year, the firm sustained a loss of P30,000. So, the
net profit for the two years of operation was only P30,000. In the Articles of Partnership, it was
agreed that A, the industrial partner would get 1/3 of the profit but would not share in the losses.
How much will A, the industrial partner will get?
A. A will get only P20,000 which is 1/3 of the profit of the 1st year of operation.
B. A will get only P10,000 which is 1/3 of the net profit.
C. A will get only P20,000 in the first year and none in the second year.
D. A will share in the loss in the second year.
65. Three (3) of the following are rights of a partner. Which one (1) is not?
A. Right to associate another person to his share.
B. Right to admit another partner.
C. Right to inspect and copy partnership books
D. Right to ask dissolution of the firm at the proper time.
66. I. Partnership with a capital of three thousand pesos or more, in money or property, shall appear
in a public instrument, and recorded at SEC. Failure shall not affect the liability of a
partnership and members thereof to third person.
II. When immovable property is contributed, an inventory of said property is needed, signed by
the parties and attached to the public instrument, otherwise the contract of partnership is
void.
A. True; True
B. False; False
C. True; False
D. False; True
67. I. Co-ownership or co-possession does not in itself establish a partnership, except when such co-
owners or co-possessors share in the profits made by the use of the property.
II. The sharing of gross returns does not of itself establish a partnership, except when the persons
sharing them have a joint or common right or interest in any property from which the returns
are derived.
A. True; True
B. False; False
C. True; False
D. False; True
68. I. The receipt by a person of a share of the profits of a business is conclusive evidence that he is a
partner in the business.
II. A partnership of all present property is where the partners contribute all property which
actually belong to them to a common fund, with the intention of dividing the same among
themselves, as well as all the profits which they may acquire therewith.
A. True; True
B. False; False
C. True; False
D. False; True(?)
69. I. In a universal partnership of all present property, the property which belong to each of the
partners at the time of constitution of the partnership becomes a common fund of all partners
and all profits which they may acquire through inheritance, legacy, or donation cannot be
included in such stipulation, except the fruits thereof.
II. The universal partnership of profits comprises all that the partners may acquire by industry or
work during the existence of the partnership. Movable or immovable property which each
may possess at the time of the celebration of the contract shall continue to pertain exclusively
to each, only the usufruct passing to the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
70. I. A partnership must have a lawful object or purpose, and must be established for the common
benefit or interest of the partners.
II. When an unlawful partnership is dissolved by a judicial decree, the profits and partners’
contributions shall be confiscated in favor of the State.
A. True; True
B. False; False
C. True; False
D. False; True
71. I. A partnership may be constituted in any form, except where immovable property or real rights
are contributed thereto, in which case a written instrument shall be necessary.
II. Every contract of partnership having a capital of three thousand pesos or more in money or
property shall appear in a public instrument which must be recorded in the office of the SEC,
otherwise the partnership is void.
A. True; True
B. False; False
C. True; False
D. False; True
72. I. A contract of partnership is void, whenever immovable property is contributed thereto, if an

inventory of said property is not made, signed by the parties and attached to the public
instrument.
II. A universal partnership of profits is that in which the partners contribute all the property
which actually belongs to them to a common fund with the intention of dividing the same
among themselves, as well as the profits which they may acquired therewith.
A. True; True
B. False; False
C. True; False
D. False; True
73. I. In a universal partnership of profits, the property which belong to each of the partners at the
time of the constitution of the partnership becomes the common property of all the partners,
as well as all the profits which they may acquire therewith.
II. A universal partnership of all present property comprises only all that the partners may
acquire by their industry or work during the existence of the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
74. I. A universal partnership of profits comprises all movable or immovable property which each of
the partners may possess at the time of the celebration of the contract and all that the partners
may acquire by their industry or work during the existence of the partnership.
II. Future property by inheritance, legacy or donation, including the fruits thereof cannot be
included in the stipulation regarding the universal partnership of all present property.
A. True; True
B. False; False
C. True; False
D. False; True
75. I. A and B are partners in a universal partnership of profits. Subsequently, A won first prize in
the sweepstakes. The prize money will belong to the partnership.
II. A and B are partners in a universal partnership of profits. Later A purchased a parcel of land.
The fruits of said land belong to the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
76. I. Persons who are prohibited from giving each other any donation or advantage cannot
enter into universal or particular partnership.
II. A partnership begins from the moment of the execution of the contract, unless it is otherwise
stipulated.
A. True; True
B. False; False
C. True; False
D. False; True
77. I. If property has been promised by a partner as contribution to the partnership, the fruits
Arising from the time the property should have been delivered should also be given provided
prior demand was made.
II. A partner who has undertaken to contribute a sum of money and fails to do so becomes a
debtor for the interest and damages from the time he should have complied with his
obligation, without the need of any demand.
A. True; True
B. False; False
C. True; False
D. False; True
78. I. The partners shall contribute equal shares to the capital of the partnership.
II. If there is no agreement to the contrary, in case of an imminent loss of the business of the
partnership, any partner who refuses to contribute additional share to the capital, to save the
venture, shall be obliged to sell his interest to the other partners.
A. True; True
B. False; False
C. True; False
D. False; True
79. I. If a partner collects a demandable sum, which was owed to him in his own name, from a
Person who owed the partnership another sum also demandable, the sum thus collected shall
be applied to the two credits in proportion to their amounts, even though he may have given a
receipt for his own credit only, but should he have given it for the account of the partnership
credit, the amount shall be fully applied to the latter.
II. The risk of specific and determinate things contributed to the partnership so that only their use
and fruits may be for the common benefit, shall be borne by the partner who owns them.
A. True; True
B. False; False
C. True; False
D. False; True
80. I. In the absence of stipulation, the share of each partner in the profits and losses shall be equal
to each other.
II. A stipulation which excludes one or more partners from any share in the profits or losses is
void, as a general rule.
A. True; True
B. False; False
C. True; False
D. False; True
81. I. The partner who has been appointed manager may execute all acts of administration despite
the opposition of his partners, unless he should act in bad faith and his power is irrevocable
without just or lawful cause.
II. When the manner of management has not been agreed upon, none of the partners may,
without the consent of the others, make any important alterations in the property of the
partnership, even if it may be useful to the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
82. I. Every partner may associate another person with him in his share, provided it is with the
consent of all of the other partners.
II. The capitalist partners cannot engage for their own account in any operation which is of the
kind of business in which the partnership is engaged, unless there is stipulation to the
contrary.
A. True; True
B. False; False
C. True; False
D. False; True
83. I. Every partnership shall operate under a firm name, which shall include the name of one or
more of the partner.
II. All partners, excluding industrial ones, shall be liable pro-rata with all their property and after
all partnership assets have been exhausted, for the contracts which may be entered into in the
name of and for the account of the partnership, under its signature, and by a person authorized
to act for the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
84. I. Persons who are not partners as to each other are not partners as to third persons, except in
cases of estoppel.
II. An admission or representation made by any partner concerning partnership affairs is
evidence against the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
85. I. A person admitted as a partner into an existing partnership is liable for all the obligations of
the partnership arising before his admission as though he had been a partner when incurred
and that such liability will extend to his own individual property.
II. B has worked for M and Co., as procurer of contracts for fertilizers to be manufactured by the
firm, and as supervisor of the mixing of the fertilizers. However, he had no voice in the
management of the business except in his task of supervising the mixing of said fertilizers.
For his service, he is entitled to 35% of the profits in the fertilizer business. He is a partner in
M and Co.
A. True; True
B. False; False
C. True; False
D. False; True
86. I. C was a bookkeeper in a partnership named “AB”, with a yearly salary amounting t 5% of the
net profits or each year. C, however had no vote at all in the management of the business. He
is a partner in AB.
II. Unless there is a stipulation to the contrary, the partners shall contribute equal shares to the
capital of the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
87. I. Every partner may associate another person with him in his share, but the associate shall not be
admitted in the partnership without the consent of all the other partners, even if the partner
having an associate should be a manager.
II. Articles of universal partnership, entered into without specification of its nature, only
constitute universal partnership of profits.
A. True; True
B. False; False
C. True; False
D. False; True

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Law 1

1.The following are the requisites of an obligation, except

A. Passive and active subject

2.The right of the creditor that is enforceable against a definite debtor is

3. Which of the following is a civil obligation?

A. X obliges himself to pay Y P10,000 on October 30, 2009.

4. 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, 2009

6. A juridical necessity to give, to do or not to do

7. They give a right of action to compel their performance

9. This is based on equity and justice

10. The person in whose favor the obligation is constituted

11. Synonymous to obligee

1. Creditor 2. Active subject 3. Debtor 4. Passive subject

A. Obligee C. Active subject

13. Synonymous to obligor

1. Creditor 2. Active subject 3. Debtor 4. Passive subject

14. The object or subject matter of the obligation

A. Prestation C. Active Subject

A. Civil obligation C. Moral obligation

A. civil obligation C. moral obligation

A. Both answers are correct.

26. - A quasi-contract is an implied contract.

27. Tort or culpa aquiliana is

A. Observing utmost care.

31. Ordinary diligence is

A. Diligence of a good father of a family.

A. From the time the obligation to deliver it arises.

34. If A sells to B a fountain pen, the giving by A to B of the fountain pen is

Items 35-39 A kind of constructive delivery whereby:

36. There is delivery by mere consent or pointing out of an object.

37. A possessor of a thing not as an owner, becomes the possessor as owner.

39. The opposite of brevi-manu

40. If a thing is capable of particular designation.

A. Both answers are correct.

43. The following are kinds of fruits of an obligation, except

45. Products of the soil through cultivation or intervention of human labor.

46. Fruits arising out of contracts- like rental payments.

47. When does the obligation to deliver arise?

A. B can demand that A obtain the sugar and deliver it to him.

A. When time is of the essence of the contract.

50. Debtor’s default in real obligation.

51. Debtor’s default in personal obligation.

52. Default on the part of the creditor

53. Default on the part of both parties.

A. Yes, because there is stipulation as regards the due date.

56. Damages awarded to vindicate a right.

57. Damages awarded to set an example.

58. When the exact amount of damages cannot be ascertained.

59. Damages determined beforehand.

60. A obliged himself to deliver to B the following:

A. A is not liable because the obligation is extinguished.

69. The thing itself shall be restored, as a rule

A. A can recover the half-fare from B.

A. C may foreclose the mortgage on A’s land if A cannot pay.

81. I - There is no delay in an obligation not to do something.

II – Solutio indebiti and negotiorum gestio are implied contracts.

82. I - Consent of the parties is required in quasi-contract.

A. True; true C. False; true

A. The thing is delivered.

A. The thing is delivered.

85. Which is not considered as quasi-contract?