MONDRIAAN AURA COLLEGE

Refresher 1/Batch 1
RFBT
Final Exam

1. Honda Philippines is fully owned by Japanese nationals. Its main office is located in Tokyo, Japan but it
was incorporated under the provisions of the Corporation Code of the Philippines. It engages its
business in the Philippines. What is the classification of the corporation under the Corporation Code?
a. Residential corporation
b. Foreign corporation
c. Domestic corporation
d. Non-resident corporation

2. A contract by virtue of which A, in consideration of the payment of a certain sum to B, acquires the
privilege of buying from or selling to B certain properties within a limited time at a specified price.
a. Contract of sale
b. Contract to sell
c. Conditional sale
d. Option contract

3. Which of the following stipulations is valid?

a. A stipulation excluding a capitalist partner form profits.
b. A stipulation excluding a capitalist partner form losses.
c. A stipulation excluding an industrial partner form profits.
d. A stipulation excluding an industrial partner form losses.

4. SEC cannot require the annual renewal of the certificate of registration of a corporation because it will
be inconsistent with the Section 11 of BP 68. What is the maximum term of a private corporation as
stated in the Old Corporation Code?
a. 50 years only.
b. 50 years extendable for periods not exceeding 50 years in a single instance which extension cannot
be made earlier than 10 years prior to the expiration date unless there are justifiable reasons for an
earlier extension as may be determined by the SEC.
c. 50 years extendable for periods not exceeding 50 years in a single instance which extension cannot
be made earlier than 5 years prior to the expiration date unless there are justifiable reasons for an
earlier extension as may be determined by the SEC.
d. 50 years extendable for periods not exceeding 50 years in a single instance which extension cannot
be made earlier than 3 years prior to the expiration date unless there are justifiable reasons for an
earlier extension as may be determined by the SEC.

5. JPIA-MAC, Inc. has an authorized capital stock of P60,000 with actual subscription of P40,000. What is
the minimum paid up capital?
a. P10,000 (40k x 25%)
b. P3,750
c. P5,000
d. P15,000

6. D is indebted for P5,000 to ABC Trading, a partnership managed by A to whom D also owes P10,000.
The two debts which are both demandable are secured. D remits P4,500 to A in payment of his debt to
him. Accordingly, A issued a receipt for his own credit. To which credit should the payment be applied?

a. To A’s credit because the payment made by D is intended for his debt to A who issues his own
receipt.
b. To A’s credit because its amount is greater than that of the partnership’s.
c. To both the partnership credit and A’s credit proportionately at P1,500 and P3,000, respectively.
d. To the partnership credit because the managing partner should not prefer his own interest to that of
the partnership.

7. Under the SEC Revised Guidelines, the corporate name shall contain any of the following words, except
a. Corp.
b. Ltd.
c. Inc.
d. Incorporated

8. Which of the following losses will not cause the dissolution of a partnership?
a. Loss before delivery of a specific thing which a partner has promised to contribute to the
partnership.
b. Loss after delivery of a specific thing where the partner contributed only its use and enjoyment, he
having reserved the ownership thereof.
 c. Loss before delivery of a specific thing where the partner promised to contribute only its use and
enjoyment, reserving the ownership thereof.
d. Loss of a specific thing after its delivery to and acquisition of its ownership by the partnership from
the partner who contributed the same.

9. MacLaren’s, Inc., a pub, was granted the certificate of registration by the SEC. However, after 2 years
from issuance of the certificate, the corporation was unable to formally organize and commence
operations. What is the status of the corporation based on the Old Corporation Code?
a. The corporation is ipso facto dissolved by operation of law.
b. That shall be a non- automatic ground for suspension or revocation of the corporate charter.
c. The corporation shall be criminally liable.
d. None of these.

10. In case there are interlocking shareholders or directors between the managed corporation and the
managing corporation, what is the required vote on the part of the managing corporation and managed
corporation?
a. Approval by at least majority of the board of directors and ratification by the stockholders
representing at least majority of outstanding capital stock of managing corporation and approval by
at least majority of the board of directors and ratification by the stockholders representing at least
majority of outstanding capital stock of managed corporation.
b. Approval by at least majority of the board of directors and ratification by the stockholders
representing at least 2/3 of outstanding capital stock of managing corporation and approval by at
least majority of the board of directors and ratification by the stockholders representing at least
majority of outstanding capital stock of managed corporation.
c. Approval by at least majority of the board of directors and ratification by the stockholders
representing at least majority of outstanding capital stock of managing corporation and approval by
at least 2/3 of the board of directors and ratification by the stockholders representing at least
majority of outstanding capital stock of managed corporation.
d. Approval by at least majority of the board of directors and ratification by the stockholders
representing at least majority of outstanding capital stock of managing corporation and approval by
at least majority of the board of directors and ratification by the stockholders representing at least
2/3 of outstanding capital stock of managed corporation.

11. The following shares are not allowed to vote, except

a. Treasury shares
b. Fractional shares
c. Unpaid subscribed shares not yet declared delinquent
d. Escrow shares before the fulfillment of condition

12. It happens when the directors or stockholders of a close corporation are so divided respecting the
management of the business and affairs of the corporation that the votes required for any corporate
action cannot be obtained and as a result, business and affairs can no longer be conducted to the
advantage of the stockholders.
a. Deadlock
b. Tie
c. Equal
d. Same

13. The deficiency is recoverable in

I. Allan borrowed P10,000. To secure the debt, Allan pledged his ring. Allan defaults. The ring is sold
for P9,500 in a public auction.

II. Barry bought a car for P480,000 from Allen. The price, which is payable in 12 equal monthly
installments of P40,000, is secured by a chattel mortgage on the car, Barry defaults in the payment of 4
installments. C foreclosed the chattel mortgage and the car is sold for 260,000 in a public auction.

a. Both I and II
b. I
c. II
d. None of them

14. Rose commissioned Jack to make a painting of Rose’s mother. After finishing the painting, he delivered
it to Rose, and then donated the painting to her mother as a birthday gift. Who owns the copyright?
a. Rose
b. Jack
c. Rose’s mother
d. There is no copyright
15. Rona, Ange, Roge, Flow, Dora and Yang are partners of Truepa Enterprises, a dealer in cosmetics and
other beauty products with contributions of P50,000, P25,000, P100,000, P75,000, P125,000 and
P150,000, respectively. No one was appointed as managing partner in the articles of co-partnership.
a. Yang shall be the managing partner since she has the biggest investment.
b. Every act in the ordinary course of business will have to be decided by the majority determined on a
per head basis.
c. Every act in the ordinary course of business will have to be decided by the controlling interest
although the partners owning them do not constitute the majority.
d. All the partners are agents of the partnership and any one of them may perform acts of
administration.

16. Which of the following corporate actions does not require ratification from the stockholders?
a. Approval of management contract
b. Acquisition of treasury shares
c. Dissolution of corporation
d. Amendment of post-incorporation by laws without any delegation

17. Upon winding up of the corporate affairs, any asset distributable to any creditor or stockholder or
member who is unknown and cannot be unknown shall be escheated and forfeited in favor of the
a. National government
b. City or municipality where such property is located
c. Barangay where such property is located
d. None of these

18. A, B, C, D, E, F and G are the duly elected directors for 2019 of Abakada Corp. whose articles of
incorporation provide for 7 directors. On August 1, 2019, Directors A, B, C, D and E met to fill up the
vacancies in the board brought about by the valid removal of F for disloyalty and death of G. In the said
meeting, the remaining directors voted for X to replace F and Y, a son of G, to replace his father. Both
X and Y are owners of at least one share of the corporation. The election of X and Y by the remaining
directors is
a. Valid for X; invalid for Y
b. Invalid for X; valid for Y
c. Valid for X and Y
d. Invalid for and Y

19. In the meeting of the board of the directors of Build, Build, Build Corporation, a construction company,
held on August 31, 2019, directors A, B, C, D and E were present among the 9 directors. The meeting
was held for its agenda:
 The appointment of a new treasurer.
 The approval of the contract for the purchase of cement worth P50,000 from X Construction
Supplies Co.
When the voting took place, directors A, B, C, D voted for the election of Y as the new treasurer; and
directors A, B and C voted for the approval of contract with X Construction Supplies Co.
a. Both corporate acts are valid.
b. The election of Y as the new treasurer is valid; the approval of contract is invalid.
c. The election of Y as the new treasurer is invalid; the approval of contract is valid.
d. Both corporate acts are invalid.

20. Willie sold his residential house and lot to Vic at an installment price of P18,000,000 payable in 25
years at P60,000 per month. After payment of total installments amounting to P4,320,000. B defaulted
on the next installments. After following the necessary procedures required by law, the contract of sale
is properly cancelled. How much is the cash surrender value is Vic from Willie?
a. P2,376,000
b. P2,160,000
c. P1,296,000
d. P 0

21. A is a director and owns 50% of the outstanding capital stock of Asus Corp. which is engaged in the
trading of computers. Asus Corp. purchased computer tables from Tabla Corp. of which A is also a
director and owns 15% of its outstanding capital stock. The articles of incorporation of both corporation
provide for 5 directors, in the approval for the said contract, A did not attend the meeting of the board of
directors of Asus Corp., while in the meeting of the Tabla Corp. which was called for the same purpose,
directors A, B and C were present with all of them voted for the approval of the contract. Assuming
there is no fraud and that the contract is fair and reasonable under the circumstances, the contract
between Asus Corp. and Tabla Corp is
a. Valid.
b. Voidable at the option of Asus Corp.
c. Voidable at the option of Table Corp.
d. Void.
22. Which of the following provisions in the article of incorporation cannot be amended?
a. Name of corporation
b. Primary purpose
c. Term of existence
d. Name and numbers of incorporators

23. On September 2, 2019, Suzzy sold to Bailey a specific car owned by Consuela for P50,000. Suzzy
promised the delivery of the car on September 8, 2019. Suzzy bought the car from Consuela on
September 7, 2019 and delivered it to Bailey on September 8, 2019. Is the contract of sale between
Suzzy and Bailey valid?
a. No because there is no delivery of the car on September 2, 2019 which is an essential requisite of a
contract of sale.
b. No because Suzzy must be the owner of the car at the time of perfection of the contract of sale to
Bailey.
c. Yes because Suzzy need not to be the owner of the specific car.
d. Yes even if Consuela is no longer the owner of the thing sold on September 8, 2019.

24. Shares that may be issued lower than P5 per share is/are
a. Par value shares
b. No par value shares
c. Both A and B
d. Neither A nor B

25. Cazzie a creditor of Margaret who is a stockholder of record of P1,000 of KG Corp. Margaret sells the
shares to Dani Gurl through a deed of absolute sale that has not yet been recorded in the books of KG
Corp. The transfer of shares by Margaret to Dani Gurl is
a. Valid and binding between Margaret and Dani Gurl.
b. Valid against KG Corp. and Cazzie.
c. Valid to Cazzie, Margaret, Dani Gurl and KG Corp.
d. Invalid because you do note is the liar is ma peyk.

26. How much fine can the court impose in case of conviction for violation of BP 22?
a. P 100,000
b. P 200,000
c. P 500,000
d. P2,000,000

27. The articles of incorporation of Hula Hula Corporation provide for 15 directors. Which of the following
is invalid concerning its by-laws?
a. That the quorum in the meetings of board of directors be at least 8 directors.
b. That the quorum in the meetings of board of directors be at least 7 directors.
c. That the quorum in the meetings of board of directors be at least 9 directors.
d. Cannot be determined based on the given information.

28. Annie sold her laptop with a value of P20,0000 to Precious and the latter will give the former her ring
with a value of 9,000 and cash of P11,000 cash. What is the name of the contract?
a. Contract of barter
b. Contract to sell
c. Contract of sale
d. Contract of lease

29. One of the distinctions between a partnership and a corporation is that a corporation
a. Is managed by the board of directors.
b. Has the right of succession.
c. May be dissolved only with the consent of the State.
d. Is characterized by the principle of delectus personae.

30. An auditing firm composed of CPA’s may validly form

I. A partnership
II. A corporation

a. Neither of the two.

b. Only II
c. Only I
d. Only I and II

31. C Corporation obtained a loan amounting to P1M from B Bank. To secure the obligation, P, the
president of C Corporation, mortgaged his own building in favor of the bank. The contract of loan and
deed of mortgage have been signed by the parties but have not been acknowledged before a notary
public.
 a. C Corporation and P are one and the same.
b. P may validly mortgage his own property to secure the obligation of the corporation to the bank.
c. The mortgage is not binding between the parties since it has not been notarized.
d. The mortgage contract can stand independently for the contract of loan.

32. AAAAA Rentals, a partnership engaged in the business of renting out video films, is owned by Aldo,
Aldi, Albi, Ali, Al and Alfi with Albi as the managing partner. Aldrin owes the partnership P6,000 and
Aldi P4,000. Both debts are unsecured and already due. Aldrin pays Aldi P4,000 for which Aldi issues
his own receipt.
a. The payment should be applied to AAAAA Rentals’ credit only.
b. The payment should be applied to Aldi’s credit only.
c. The payment should be divided proportionately between AAAAA Rentals and Aldi at P2,400 and
P1,600, respectively.
d. The payment should be divided equally between between AAAAA Rentals at P2,000 each.

33. Assuming all other requisites of negotiability are present, which of the following is not payable to
bearer?
a. “Pay to the order of CASH.”
b. “Pay to the order of Bernardo Ignacio or bearer.”
c. “Pay to the order of Pedro Padernal, bearer.”
d. “Pay to the order of Emilio Aguinaldo, Philipines’ first president.”

34. LAVANGO, a laundy shop in Tuguegarao, is a partnership composed of Lily, Anny, Vicky, Amy,
Nicky, Girly and Oddy. Without the knowledge of the other partners, Girly used a fur coat, brought to
the shop by a customer for dry-cleaning, in a pool party she attended. The coat was accidentally stained
with different condiments that even the ‘talo ng sampung kamay’ technology of a detergent brand
cannot remove. Who will be liable to the customer for damages?
a. Girly only since she used the coat without the knowledge of the other partners.
b. LAVANGO and Girly solidarily.
c. LAVANGO and all the partners jointly.
d. LAVANGO and all the partners solidary.

35. STATEMENT I: An instrument originally payable to order may be converted to a bearer instrument
and converted back to being an order instrument.

STATEMENT II. A bearer instrument is always a bearer instrument.

a. I is true.
b. Both are true.
c. II is true.
d. Both are false.

36. M, P and I want to form a partnership with M contributing P500,000; P contributing a building and I,
his services. If the three were to for a limited partnership, who among them may be a limited partner(s)?
a. Either M or I or both.
b. Either P or I or both.
c. Either P or M or both.
d. All of them must be limited partners for it will be a limited partnership.

37. Dominador and Domingo have been partners for 10 years in the car dealership business. At the start of
the 11th year, Dominador assigned his interest in the partnership to Demetrio, but Domingo objected on
the ground that he did not want Demetrio to be his partner.
a. Demetrio automatically became a partner of Domingo when Dominador conveyed his interest to
him.
b. Dominador and Domingo continue to be partners despite Dominador’s conveyance of his interest to
Demetrio.
c. The partnership between Dominador and Domingo automatically dissolved when Dominador
conveyed his interest to Demetrio.
d. The conveyance of interest of Dominador to Demetrio entitled the latter to inspect partnership’s
books and participate in the management.

38. Purificacion executes a promissory note for P55,000 indicating therein that the maker is Mercedes and
that it is payable to the order of Purificacion. Thereafter, she forges the signature of Mercedes and
indorses the note to Alba. Alba to Bonificia, Bonifacia to Corazon, and Corazon to Helena, holder.
Based on the foregoing data, which of the following statements is incorrect?
a. Helena can collect from Mercedes if Helena is a holder in due course.
b. Helena cannot collect from Mercedes whether Helena is a holder in due course or not.
c. Helena can collect from Alba, Bonifacia and Corazon whether Helena is a holder in due course or
not.
d. Helena can collect from Purificacion whether Helena is a holder in due course or not.
39. VICTORY Company, a partnership engaged in the selling of computer parts, has for its partners and
their respective contributions the following: Victorio P10,000; Idelfonso P20,000; Carlito P30,000;
Tarsilo P40,000; Odencio P100,000; Rodolfo P200,000 and Yusebio P300,000. No one was appointed
as the managing partner of the partnership. In the course of the operation of the business, Victorio
proposed to buy computer parts from Bogus Comparts, but his proposal was opposed by Idelfonso. A
voting among the partners took place Odencio, abstained; Carlito and Tarsilo sided with Victorio while
Rodolfo and Yusebio sided with Idelfonso.
a. The partners will have to appoint a managing partner to resolve the conflict.
b. The group of Rodolfo, Yusebio and Idelfonso will prevail.
c. The group of Carlito, Tarsilo and Victorio will prevail.
d. No one will prevail because the voting was equal.

40. A person admitted to all the rights of a limited partner who has died or has assigned his interest in the
partnership is known to be
a. A general-limited partner.
b. A partner by estoppel.
c. An ostensible partner.
d. A substituted-limited partner.

41. Martin executes a promissory note for P25,000 payable to order of Peter, a minor. Martin and Peter had
a private understanding that Martin is liable only for the discounted amount of P22,000. Peter indorsed
the note to Arthur, Arthur to Ben, Ben to Charles, Charles to Darwin, and Darwin to Henry, holder.
a. Martin may refuse to pay Henry on the ground that Peter is a minor.
b. If Martin dishonors the note, Arthur may refuse to pay Henry on the same ground that Peter is a
minor.
c. The indorsement made by Peter passed title to the instrument in favor if Arthur.
d. Assuming that Peter was already of the age of majority at the time of execution of the , Martin is
liable to Henry for P22,000 since that was the amount that he agreed with Peter that he should pay.

42. A single-purpose cooperative may transform into a multi-purpose cooperative or may create subsidiaries
only after how many year(s) of operations?
a. One
b. Two
c. Three
d. Five

43. Dorothy borrowed P60,000 from Charlie. The obligation bears 7% per annum. To secure the debt,
Dorothy agreed with Charlie that the fruits from the agricultural lot of Dorothy shall be applied for the
interest and principal obligation. Assuming the form required by law was complied with, the contract
entered into by Dorothy and Charlie for the application of the fruits from the lot of Dorothy to the
interest and principal obligation known to be a/an
a. Antichresis
b. Pledge
c. Real estate mortgage
d. Chattel mortgage

44. A remedy in equity by means of which a written instrument is made or construed so as to express or
conform to the real intentions of the parties when some error or mistake has been committed
a. Rescission
b. Ratification
c. Reformation
d. Annulment

45. It is the highest policy-making body of a cooperative.

a. Board of directors
b. Board of trustees
c. General assembly
d. Executive committee

46. On September 2, 2019, Juan bought suka from the store of Aling Nena amounting to P15,000, issuing a
note for P21,000 against his account in Insolvent Bank. Juan knew that his fund with Insolvent Bank
was insufficient to cover the check. Consequently, the check was dishonored by Insolvent bank when
Aling Nena presented for encashment. What offense may be charged against Juan?
a. Violation of BP 22
b. Estafa under the Revised Penal Code.
c. Both A and B
d. B only
47. In 2017, A, 17 years old, sold his land orally to B, of legal age, payable in three annual installments. B
paid in 2017, 2018 and 2019. Which is correct?
a. The sale is unenforceable
b. The sale is voidable
c. A cannot ask for annulment
d. B cannot ask for annulment

48. Reggie obtained a loan of P1M from Ray. to secure the debt, D executed deed of mortgage covering two
of his lots, Lot A is in Cubao and Lot B is in Pasay City, each of which is under the name of Reggie in
the certificate of title. The mortgage of Lot A was recorded within one week in the Office of Register of
Deeds, but that of Lot B could not be processed as other documents were being required by the Register
of Deeds. In the meantime, Reggie sold Lot A to Jerry and Lot B to Archie. Jerry was not aware on the
mortgage of Lot A but Archie was aware of the mortgage of Lot B.
a. Both Jerry and Archie are bound by the mortgage on the lot sold to each of them.
b. Both Jerry and Archie will not be bound. In the case of Archie, the mortgage was not registered.
c. Jerry is bound by the mortgage on Lot A. Archie is not bound by the mortgage on Lot B.
d. Jerry is not bound by the mortgage on Lot A. Archie is bound by the mortgage on Lot B.

49. The following are the indirect causes of extinguishment of pledge

I. Written abandonment of the thing pledged.

II. Appropriation of the thing pledged if not sold at two public auctions.
III. Sale of the thing pledged.
IV. Return of the thing pledged.

a. I and III
b. II and IV
c. II and III
d. I and IV

50. A real mortgage is binding between the parties

a. Even if it was entered into orally.
b. Only if it was entered into writing, whether public or private.
c. Only if it was executed in public instrument.
d. Only if it was recorded in the Registry of Property.