CPA REVIEW SCHOOL OF THE PHILIPPINES

MANILA

Final Pre-Board Examination October 2022

Regulatory Framework for Business Transactions DO DELA CRUZ

1. Which of the following is not correct?

a. A check must be presented for payment within a reasonable time after its issue or the drawer will
be discharged from liability thereon
b. Where a check is certified by the bank on which it is drawn, the certification is equivalent to
acceptance
c. Where the holder of a check procures it to be certified or accepted, the drawer and all indorsers
are discharged from liability thereon
d. A check of itself does not operate as an assignment of any part of the funds to the credit of the
drawer with the bank, and the bank is not liable to the holder unless and until it accepts or
certifies the check
2. In payment of his debt in favor of X, Y gave X a Manager's Check in the amount of PHP 100,000 dated
May 30, 2022. Which phrase best completes the statement - A Manager's Check
a. Is a check issued by a manager of a bank for his own account
b. Is a check issued by a manager of a bank in the name of the bank against the bank itself for the
account of the bank
c. Is like any ordinary check that needs to be presented for payment also
d. Is better than a cashier's check in terms of use and effect
3. The drawee bank may not refuse to pay checks drawn against it even
a. If there is a " stop payment " issued by the drawer
b. If the drawer is insolvent
c. If the drawer's deposit is insufficient
d. When the bank receives notice of the drawer's death
4. The following are the essential elements of the criminal violation of BP 22 for the issuance of
worthless checks, except
a. There must be making, drawing, and issuance of any check to apply for an account or for value
b. The must be knowledge of the maker, drawer, or issuer that at the time of issue he does not have
sufficient funds in or credit with the drawee bank for the payment of the check in full upon its
presentment
c. There must be subsequent dishonor of the check by the drawee bank for insufficiency of funds or
creditor dishonor for the same reason had not the drawer, without any valid cause, ordered the
bank to stop payment
d. There must be intent of the drawer, maker, or issuer of the check to defraud the creditor
5. What is the prima facie evidence of knowledge of insufficiency of funds or credit by the maker, issuer,
or drawer of checks?
a. The making, drawing, and issuance of a check payment of which is refused by the drawee
because of insufficient funds in or credit with such bank when presented within 90 days from the
date of the check
b. The making, drawing, and issuance of a check payment of which is refused by the drawee
because of insufficient funds in or credit with such bank, when presented within 120 days from
the date of the check
c. The making, drawing, and issuance of a check payment of which is refused by the drawee
because of insufficient funds in or credit with such bank when presented within 6 months from
the date of the check
d. The making, drawing, and issuance of a check payment of which is refused by the drawee
because of insufficient funds in or credit with such bank, when presented within 1 year from the
date of the check

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6. What is the defense or evidence to be presented by the issuer or drawer of a check in order to destroy
the prima facie presumption of the law as regards to the knowledge of the issuance of worthless
checks?
a. The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for
payment in full by the drawee of such check within 5 banking days after receiving notice that
such check has not been paid by the drawee
b. The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for
payment in full by the drawee of such check within 10 banking days after receiving notice that
such check has not been paid by the drawee
c. The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for
payment in full by the drawee of such check within 15 banking days after receiving notice that
such check has not been paid by the drawee
d. The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for
payment in full by the drawee of such check within 20 banking days after receiving notice that
such check has not been paid by the drawee
7. Under BP 22, it shall be the duty of the drawee-bank of any check, when refusing to pay the same to the
holder thereof upon presentment, to cause to be written, printed, or stamped in plain language thereon,
or attached thereto, the reason for drawee's dishonor or refusal to pay the same: Provided, that where
there are no sufficient funds in or credit with such drawee bank, such fact shall always be explicitly
stated in the notice of dishonor or refusal. Notwithstanding receipt often order to stop payment, the
drawee-bank shall state in the notice that there were no sufficient funds in or credit with such bank for
the payment in full of such check, if such be the fact. In all prosecutions under this act, the introduction
and evidence of any unpaid and dishonored check, having the drawee's refusal to pay stamped or written
thereon or attached thereto, with the reason therefore as aforesaid, shall be prima facie evidence of the
following, except
a. the making or issuance of said check
b. The due presentment to the drawee for payment of the check and the dishonor thereof
c. The check was properly dishonored for the reason written, stamped, or attached by the drawee on
such dishonored check
d. The maker or issuer has intention to defraud the creditor
8. Upon winding up of the corporate affairs, any asset distributable to any creditor or stockholder or
member who is unknown and cannot be found shall be escheated and forfeited in favor of the
Old Corporation Code Revised Corporation Code
a. Barangay where such property is located Province where such property is located
b. Province where such property is located City where such property is located
c. City or municipality where such property is National government
located
d. National government City or municipality where such property is
located

9. They are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying
security at a predetermined price, called the exercise or strike price, on or before a predetermined date,
called the expiry date, which can only be extended by SEC upon stockholders’ approval
a. Option contract
b. Subscription contract
c. Contract of sale
d. Bond indenture

10. Which government agency is entrusted with the administration of the Securities Regulation Code?
a. Board of Accountancy
b. Securities and Exchange Commission
c. Bangko Sentral ng Pilipinas
d. Insurance Commission

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11. Which of the following securities is exempted from registration before the Securities and Exchange
Commission?
a. Insurance policy
b. Bond indenture
c. Share warrants and share options
d. Fractional undivided interest in oil or mineral rights
12. It means a publicly announced intention by a person acting alone or in concert with other persons to
acquire outstanding equity securities of a public company, or outstanding equity securities of an
associate or related company of such public company which controls the said public company
a. Tender offer
b. Insider trading
c. Fraudulent practices
d. Issuer tender offer
13. It refers to the act of an insider or selling or buying a security of the issuer, while in possession of
material information with respect to the issuer or the security that is not generally available to the
public
a. Tender offer
b. Manipulation of price
c. Fraudulent practice
d. Insider trading
14. Which of the following acts is not considered unlawful manipulation of security prices under
Securities Regulation Code?
a. To make false or misleading statement with respect to any material fact, which he knew or had
reasonable grounds to believe was so false or misleading, for the purpose of inducing the
purchase or sale of any security listed or traded in an exchange
b. To effect, either alone or others, any series of transactions for the purchase and/or sale of any
security traded in an exchange for the purpose of pegging, fixing, or stabilizing the price of such
security
c. To use or employ, in connection with the purchase or sale of any security any manipulative or
deceptive device or contrivance
d. To sell securities in order to obtain gain on changes in the fair value of the stocks
15. He refers to a corporate officer who must monitor compliance by the corporation with the Revised Code
of Corporate Governance and the rules and regulations of regulatory agencies and, if any violations are
found, report the matter to the Board of Directors and recommend the imposition of appropriate
disciplinary action on the responsible parties and the adoption of measures to prevent a repetition of the
violation
a. independent director
b. Compliance officer
c. Controller
d. Treasurer

16. What is the quantitative threshold to be considered a small entity under SRC Rule 68?
a. Those with total assets between PHP 100M to PHP 350M are total liabilities of between PHP
100M to PHP 250M
b. Those with total assets of more than PHP 350M or total liabilities of more than PHP 250M
c. Those with total assets between PHP 3M to PHP 100M or total liabilities of between PHP 3M to
PHP 100M
d. Those with total assets below PHP 3M and total liabilities below PHP 3M

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17. What is the quantitative threshold to be considered a micro entity under SRC Rule 68?
a. Those with total assets between PHP 100M to PHP 350M are total liabilities of between PHP
100M to PHP 250M
b. Those with total assets of more than PHP 350M or total liabilities of more than PHP 250M
c. Those with total assets between PHP 3M to PHP 100M or total liabilities of between PHP 3M to
PHP 100M
d. Those with total assets below PHP 3M and total liabilities below PHP 3M
18. 20 professional doctors are intending to establish an entity for the rendition of medical services. What
is the maximum foreign investment in such an entity?
a. 0%
b. 60%
c. 40%
d. 30%
19. This test of nationality of corporation is a three-level relationship test by which the percentage of
Filipino equity is computed in a corporation engaged in fully or partly nationalized areas of activity
provided in the Constitution and other nationalization laws, in cases where corporate shareholders are
present in the situation, by attributing the nationality of the second or even subsequent tier of
ownership to determine the nationality of the corporate shareholder
a. Place of incorporation test
b. Control test
c. Dominancy test
d. Grandfather rule test

20. Albay Corporation is 60% owned by Filipinos and 40% owned by Americans. Uranus Corporation is
owned 55% by Albay corporation, 10% by other Filipino citizens and the remaining interest by
Australians. Does Uranus Corporation, a public utility, comply with the minimum Filipino ownership?
a. It cannot be determined
b. Yes under the grandfather rule test
c. No under grandfather rule test
d. No under incorporation test
21. Venus corporation is 50% owned by Filipinos and 50% owned by Germans. Legaspi Corporation is
owned 60% by Venus Corporation, 25% by other Filipino citizens and the remaining interest by Italians.
Does Legaspi Corporation, a public utility, comply with the minimum Filipino ownership?
a. It cannot be determined
b. Yes under the grandfather rule test
c. No under grandfather rule test
d. No under incorporation test
22. On January 1, 2019, Jasper invented the technology of the cacao lamp and was using it already for three
years. On January 1, 2022, Justin invented the same technology as cacao lamp. Justin made an
application for registration with the intellectual property office. Who has better rights over the patent of
the technology?
a. Justin
b. Jasper
c. Justin, for 20 years and thereafter Jasper
d. Jasper, for 20 years and thereafter Justin
23. It means the unauthorized, replication or use of a patented invention or process
a. Patent laundering
b. Patent infringement
c. Patent misappropriation
d. Patent destruction

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24. This defense may be set up by a respondent in an action for patent infringement when the respondent
is any prior user, who, in good faith was using the invention or has undertaken serious preparations to
use the invention in his enterprise or business, before the filing date or priority date of the application
on which a patent is granted
a. Doctrine of fair use
b. Doctrine of prior use
c. Doctrine of good faith
d. Doctrine of bad faith
25. It refers to the defense in a suit in a copyright infringement which pertains to a privilege to use the
copyrighted material in a reasonable manner without the consent of the copyright owner or as copying
the theme or ideas rather than their expression. It is an exception to the copyright owner’s monopoly
of the use of the work to avoid stifling the very creativity which that law is designed to foster
a. Doctrine of Fair use
b. Doctrine of Unfair use
c. Doctrine of Inappropriate use
d. Doctrine of Authorized use
26. What government services are covered by the Ease of Doing Business and Efficient Government
Service Delivery Act of 2018?
a. Government services covering business transactions
b. Government services covering nonbusiness transactions
c. Both A and B
d. Neither A nor B
27. They refer to applications or requests submitted by applicants or requesting parties of a government
office or agency which only require ministerial actions on the part of the public officer or employee or
that which present only inconsequential issues for the resolution by an officer or employee of said
government office
a. Simple transactions
b. Common transactions
c. Ordinary transactions
d. Normal transactions
28. It refers to the government agency, attached to the Office of the President, entrusted with the
implementation of the Ease of Doing Business and Efficient Government Service Delivery Act of
2018
a. Anti-Fixer Authority
b. Anti-Bureaucracy Authority
c. Anti-Red Tape Authority
d. Anti-Influencer Authority
29. This is a policy that prohibits government officers or employees to have any contact with an
application except (1) during the preliminary assessment of the request and evaluation of sufficiency
of submitted requirements and (2) necessary with any requesting party concerning an application or
request
a. Zero-Contact Policy
b. Online Policy
c. Invisible Policy
d. Intangible Policy

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30. It shall serve as a central system to receive applications and capture application data involving
business-related transactions, including primary and secondary licenses, and business clearances,
permits, certifications, or authorizations issued by the local government units: (LGUs) Provided, that
such system may also provide links to the online registration or application systems established by
National Government Agencies (NGAs)
a. Central Business Portal
b. Center Binding Program
c. Cost-Benefit fit Plan
d. Control Brand Premium
31. Any person who has sufficient funds in or credit with the drawee bank when he makes or draws and
issues at check shall not fail to keep sufficient funds or to maintain a credit to cover the full amount of
the check, if presented within a period of -- from the date appearing therein
a. 30 days
b. 60 days
c. 90 days
d. 120 days
32. Which of the following statements is correct?
a. All obligations or loans of the depositor with the closed bank as of bank closure shall be deducted
from the depositor’s total deposit with the said bank for purpose of computing the insured deposit
b. In case a depositor maintains a simple account and joint accounts with a closed bank, his insured
deposit is PHP 500,000 for simple account and PHP 500,000 for a joint account
c. PDIC shall pay deposit insurance on all valid deposits of PHP 500,000 per depositor of a closed
bank
d. In the case of a joint account involving a juridical person and a natural person, the maximum
deposit of PHP 500,000 to such joint account shall be divided equally between the juridical
person and the natural person
33-35. Georgia works as a legal researcher in a Gen. Prof. Pshp receives a daily rate of PHP 800.00 as
compensation. How much will she receive as compensation if the particular day where she reported
for work is
33. A special holiday
a. PHP 1,000
b. PHP 1,040
c. PHP 1200
d. PHP 1600
34. A special holiday which is also her rest day
a. PHP 1000
b. PHP 1040
c. PHP 1200
d. PHP 1600
35. A regular holiday which is also her rest day
a. PHP 1600
b. PHP 2080
c. PHP 2000
d. PHP 2040

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36-37. Using the facts in no. 33 but Georgia was required to render two additional hours of overtime
work, how much will she receive as compensation if the particular day where she performed the overtime
work is
36. An ordinary day
a. PHP 1000
b. PHP 1040
c. PHP 1050
d. PHP 1060
37. On her rest day
a. PHP 1060
b. PHP 1378
c. PHP 1352
d. PHP 1690
38. A married male employee may be able to avail of a paternity leave of
a. 7 days
b. 10 days
c. 12 days
d. 14 days
39. The current partner of an unmarried woman who gave birth, may be able to avail of a maternity leave
of
a. 0 days
b. 7 days
c. 10 days
d. 12 days
40. S sold his car to B on installment and a chattel mortgage was constituted on the car. B defaulted in
two installment payments. S foreclosed the chattel mortgage and sold the car at a public auction. If
there is deficiency, can S recover the deficiency?
a. Yes, even without stipulation
b. Yes, if there is stipulation
c. No, even if there is stipulation
d. No, unless there is stipulation
41. B borrowed 100,000 from S secured by a chattel mortgage on B's car. The debt is payable installment.
When B defaulted in two installment payments, S foreclosed the chattel mortgage and sold the car at a
public auction. If there is excess, who is entitled to the excess?
a. S, even without stipulation
b. B, only if there is stipulation
c. S, unless there is stipulation
d. B, even without stipulation
42. Inadvertently, the SEC approved the Articles of Incorporation and issued a Certificate of
Incorporation to Wholesome Corporation. Thereafter it was discovered that the incorporators have not
completed the required period of residency in the Philippines. As a result, which of the following is
not correct?
a. The corporation should be considered as a de facto corporation
b. The right to exercise corporate powers can be inquired into collaterally in any private suit to
which the corporation may be a party
c. The corporation has no legal personality and the incorporators may be held personally liable for
damages
d. The Solicitor General has the right to question or contest the validity of its corporate existence
through a quo-warranto proceedings

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43. In case a managing partner collects a demandable debt from his debtor who also owns the partnership
a demandable debt, which of the following is not correct if payment is not enough to cover the two
debts?
a. The sum shall be applied to the partnership credit
b. It shall be applied to the two credits in proportion to their amounts
c. The debtor has the right to have the payment applied to his debt to the partner if it should be
honest to him
d. The partner cannot apply the payment to his own credit
44. May not require stockholders’ approval
a. Declaration of cash dividend
b. Management contract
c. Increase of bonded indebtedness
d. Removal of a director
45. The following are the effects of unlawful partnership, except
a. The contract is void ab initio and the partnership never existed in the eyes of the law
b. The profits shall be confiscated in favor of the government
c. The instruments, or tools and proceeds of the crime shall be forfeited in favor of the government
d. The contributions of the partners shall be confiscated in favor of the government
46. A person cannot be admitted into the partnership without the consent of
a. All the partners
b. Majority of the partners
c. Two third of the partners
d. Partners representing the controlling interest
47. On April 1, 2022, A and B entered into a contract of partnership for the purpose of buying and selling
textbooks, with the former as capitalist partner and the latter as industrial partner. It was agreed that A
shall contribute 100,000 to the common fund on May 2, 2022. Upon the arrival of the designated date,
A failed to deliver the contribution he promised. As a result
a. B should make a demand upon A for the delivery of his contribution to render A in default
b. The contract of partnership becomes void because A failed to give his contribution to the
common fund
c. B can compel A to deliver his contribution with interest and damages without the necessity of
demand
d. The contract of partnership was never perfected because there was no delivery of contributions by
the partners
48. The following are ways of enforcing payment of unpaid subscription. Which is the exception?
a. Sale at public auction of delinquent stock
b. Denying delinquent stock cash dividend
c. Filing a court action to recover unpaid subscription
d. Denying delinquent stock the right to vote and be voted upon
49. A contract where the creditor acquires the right to receive the fruits of an immovable of his debtor,
with the obligation to apply them to the payment of interest if owing, and thereafter to the principle of
his credit is
a. Antichresis
b. Pledge
c. Real estate mortgage
d. Commodatum

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50. May a stock certificate be issued before full payment?
Statement 1 – No, in case of stock with par value
Statement 2 - Yes, in case of stock without par value
a. True, true
b. True, false
c. False, true
d. False, false
51. Which of the following corporate acts will not require the approval of the stockholders or the
members of the private corporation?
a. To amend the bylaws
b. To increase the capital stock
c. To invest corporate funds in another corporation or business
d. To elect the officers of the corporation
52. When a real property is contributed to the partnership
a. A real contract is perfected
b. A written instrument is required
c. A public instrument complete with inventory is required
d. A partner can make important alteration is beneficial to the partnership
53. A is the listed owner of 10,000 shares with the par value of PHP 100/share in ABC Corporation. ABC
sued A for the payment of A’s indebtedness of P 1M. A contends that such debt must be compensated
by his shares of stocks with the plaintiff corporation. The contention of A is
a. Valid due to legal compensation
b. Valid by virtue of judicial compensation
c. Untenable since he is not a creditor of the corporation
d. Automatically extinguished if the fair market value of the shares is PHP 1 million
54. A promissory note reads: “I promise to pay B PHP 100,000. Sgd. A” B assigned the note to C. Later,
Y stole the note from C. Which of the following is correct?
a. If A pays Y in good faith, A’s obligation is extinguished
b. C can collect from B
c. C can collect from either A or B
d. C can collect from A
55. As regards treasury shares, which is not correct?
a. They have no voting rights as long as they remain in the treasury
b. They are considered as part of earned or surplus profits and therefore distributable as dividends
c. They are not entitled to dividends
d. They may be distributed as property dividends if there are retained earnings arising from the
business of the corporations
56. The assets of the corporation as represented by its capital stock are to be maintained unimpaired that
there can be no distribution of such assets among the stockholders without provision being first made
for the payment of corporate debts
a. Doctrine of corporate fiction
b. Trust fund doctrine
c. Doctrine of corporate opportunity
d. Doctrine of limited capacity

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57. A non-voting stock may vote in the following corporate acts, except in case of
a. Approval of the compensation of directors
b. Merger or consolidation
c. Increase or decrease in capital stock
d. Sale, please, exchange, mortgage, pledge or other disposition of all or substantially all of
corporate property
58. One of the following acts may be performed by the executive committee of a corporation. Which is it?
a. Declaration of stock dividends
b. Filling of vacancies in the board of directors
c. Amendment of repeal off the bylaws or adoption of new bylaws
d. Approval of contracts in the ordinary course of business
59. A corporation may acquire its own shares for a legitimate purpose provided it has unrestricted
retained earnings. In which of the following acquisitions is the requirement of unrestricted retained
earnings not imposed?
a. When the acquisition is made to eliminate fractional shares
b. When delinquent shares are acquired in a delinquency sale
c. When redeemable shares are repurchased in accordance with the terms provided in the articles of
incorporation
d. When shares are acquired from stockholders who exercised their appraisal rights
60. Statement 1 - The stockholders of a stock corporation have the power to declare dividends out of the
unrestricted retained earnings which shall be payable in cash, in property or in stock all stockholders
on the basis of the outstanding shares held by them
Statement 2 - Cash dividend and stock dividend are declared by the board with the concurrence of the
stockholders representing at least two-thirds of the outstanding capital stock
a. Both are true
b. Both are false
c. Only the first is true
d. Only the second is true
61. A and B orally agreed to form a partnership two years from today, each one to contribute 1,000. 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 executory
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
62. A newly admitted general partner is liable to creditors existing at the time of his admission and his
liability is up to his
a. Capital contribution only if there is a stipulation
b. Separate property even if there is no stipulation
c. Capital contribution even if there is stipulation
d. Separate property only if there is a stipulation
63. Using the preceding number, but the obligations were contracted after his admission, which of the
following is correct? He is
a. Liable to the creditors before and after his admission up to his separate property
b. Liable to the creditors before and after his admission only up his capital contribution
c. Liable to the creditors before his admission up to his capital contribution and to the creditors after
his admission up to his separate property
d. Not liable to creditors existing before his admission

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64. A, B, and C are partners. A is an industrial partner. During the first year of operation, the firm realized
a profit of PHP 60,000. During the second year, the firm sustained a loss of PHP 30,000. So, the net
profit for the two years of operation was only PHP 30,000. 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 get? A will
a. Get only PHP 20,000 which is 1/3 of the profit of the 1st year of operation
b. Get only PHP 10,000 which is 1/3 of the net profit
b. Get only PHP 20,000 in the first year and none in the second year
c. Share in the loss in the second year

65. A, 17 years old, sold to B, of legal age, her necklace worth PHP 20,000 for PHP 15,000. Later, B sold
the necklace to C for PHP 20,000. Which of the following statements is correct?
a. A has got a voidable title because at the time of sale, she is a minor
b. A can ask for rescission of the sale to C because she suffered a lesion of more than one-fourth of
the value of the property
c. If C is in bad faith, C becomes the owner of the necklace upon delivery to him but his title is
voidable
d. A can ask for the annulment of the sale to C because at the time of sale she is a minor
66. Goods are deemed in transit
a. When the buyer accepts the delivery of the goods upon arrival at destination
b. When the buyer intercepts and lawfully takes possession of the goods at any point before
destination
c. From the time they are delivered by the seller to a common carrier or other bailee for transmission
to the buyer, up to the time that the buyer or his agent takes delivery of the goods from the carrier
or bailee
d. When the carrier or bailee, upon arrival of the goods at destination acknowledges to the buyer or
his agent that he is holding the goods as bailee for the letter
67. Emptio spei as distinguished from emptio rei speratae
a. Sale of a future thing
b. Should come into existence
c. Its quantity and quality are unknown
d. Sale of a present thing
68. This is not an essential element of a contract of sale
a. Subject matter which should be determinate
b. Consent of the contracting parties
c. Warranty against eviction
d. Consideration which is certain and money or its equivalent
69. In a contract of sale of personal property, the price of which is payable in installments, the vendor
may exercise any of the following remedies, except
a. Exact fulfillment of the obligation, should the vendee fail to pay any installment
b. Cancel the sale, showed the vendee's failure to pay cover two or more installments
c. Foreclose the chattel mortgage on the thing sold, if one has been constituted show the vendee's
failure to pay cover two or more installments
d. Rescind the sale should the vendee fail to pay any installment

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70. A sold to B a parcel of land for PHP 3.8M. The sale is evidenced by a memorandum of agreement sale
written in the Bicolano dialect. One week later, A sold the same parcel of land to C for PHP 4M. This
is evidenced by a formal deed of sale. Upon buying the property, C, who was aware of the first sale,
immediately took possession of the lot. When informed of the second sale, B subsequently registered an
adverse claim to the property. Later, C registered the deed of sale in her favor. The parcel of land shall
belong to
a. B, because he has gotten an older title
b. C, because she is the first to register
c. C because he is the first to take possession
d. No one as both sales are void

71. A, B, and C are co-owners of an undivided parcel of land. A sold his 1/3 interest to B absolutely.
Which is correct?
a. C may exercise his right of redemption on the interest sold by A to B
b. C cannot exercise the right of redemption because the sale was made in favor of a co-owner
c. The sale made by A to B is void because it was not made in favor of a stranger
d. C may redeem only one-half of the interest sold by A to B
72. A leased to B a 5 DOC generator for two years at a lease rental fee of 1,000 per month and signed an
option in favor of B to buy the generator at the end of the term of the lease at 60,000. All rental fees paid
are to be considered as partial payment of the sale. After 12 months, B was able to pay the rental fees
for 9 months and was in arrears for three months. A terminated the lease contract and repossessed the
generator. The consequence of the transaction is
a. A can collect the rental fees for three months which are in arrears
b. A can collect the rental fees for the unexpired 12 months of the lease contract
c. When A took possession of the generator, he has no further action against B
d. A in terminating the list and repossessing the generator is obliged to refund the nine months rental
fee, paid by B even if there is a stipulation to the contrary

73. G was appointed as the guardian of M, the latter being 17 years old. Later, without authority from G,
M sold G's watch in writing to B valued at 100,000 for 70,000. Suffering lesion by more than one-
fourth of the value, the contract is
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
74. A sold to be his cow for 5,000. No date is fixed by the parties for the performance of their respective
obligations. The obligation of A is to
a. Deliver the cow immediately as there is a perfected contract
b. Deliver the cow within the reasonable time from the perfection of the contract
c. Deliver the cow upon the payment by B of 5,000
d. Rescind the contract as there is no time fixed for the delivery and payment
75. The conception of a contract is when
a. 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
76. 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
b. Relativity of contract
c. Consensuality of contract
d. Mutuality of contract

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77. Which of the following statements is false?
a. Treasury shares revert to the unissued shares of the corporation and being in the treasury they
don't have the status of outstanding shares
b. Shares issued without par value shall be deemed fully paid and nonassessable and the holder of
such shares shall not be liable to the corporation or its creditors in respect thereto
c. Redeemable shares may be deemed regardless of the existence of unrestricted retained earnings
provided such redemption would not cause insolvency or inability of the corporation to meet its
debts as they mature
d. When par value shares are issued above par, the premium or excess is not to be considered as part
of the legal capital
78. In case the members of the board of directors of a corporation still constitute a quorum, and there are
vacancies, who will fill up such vacancies?
Removal Resignation Expiration of term Increase in the number
of Directors
a. Stockholders Board Stockholders Board
b. Board Board Stockholders Stockholders
c. Stockholders Board Stockholders Stockholders
d. Stockholders Stockholders Board Stockholders

79. A, B and C organized ABC and Co, limited, unlimited partnership with A as a general partner, B as a
limited partner, and C as an industrial partner, contributing PHP 200,000, PHP 200,000, and industry
respectively. The partnership failed and after disposing all its assets to pay partnership debts, there still
remains a note payable in the sum of 30,000. Against whom can the creditor demand payment?
A B C
a. PHP 30,000 PHP 0 PHP 0
b. PHP 15,000 PHP 0 PHP 15,000
c. PHP 10,000 PHP 10,000 PHP 10,000
d. PHP 15,000 PHP 15,000 PHP 0

80. Dividends on shares of stocks can only be declared out of unrestricted retained earnings of the
corporation
Answer 1 - True, dividends whether cash or stock can be validly declared only out of unrestricted
retained earnings
Answer 2 - False, during the receivership, the assets and properties of the corporation are being
gathered for conversion into cash in preparation for distribution to creditors
a. Both answers are correct
b. Both answers are incorrect
c. Only answer 1 is correct
d. Only answer 2 is correct
81. The articles of incorporation differ from the by-laws in that the articles of incorporation are
a. The rules of action adopted by a corporation for its internal government
b. Adopted before or after incorporation
c. A condition precedent in the acquisition by a corporation of a juridical personality
d. Approved by the stockholders if adopted after the incorporation
82. If the remaining directors constitute a quorum, they can fill up the vacancy
a. In case of removal of a director
b. In case of expiration of term of a director
c. If there is an increase in the number of directors
d. In case of resignation of a director

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83. A, B, C, D, E, F, and G are the duly elected directors of Delicious Corporation whose article of
incorporation provides for 7 directors. On August 1, 2018, directors A, B, C, D, and E met to fill the two
vacancies in the board brought about by the valid removal of F for disloyalty to the corporation and the
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 stock of the corporation. The election
of X and Y by the remaining directors
a. Valid for both X and Y
b. Not valid for both X and Y
c. Valid with respect to X, not valid with respect to Y
d. Not valid with respect to X, valid with respect to Y
84. In the meeting of the board of directors of Gold Corporation, a construction company held on March
31, 2018, directors A, B, C, D, and E were present among the nine directors. The meeting had for its
agenda the following
I. The appointment of new treasurer
II. The approval of the contract for the purchase of cement worth 50,000 from X Supplies Co.
When the voting took place, directors A, B, C, and D voted for the election of Y as the new treasurer,
end directors A, B, and C voted for the approval of the contract with X Supplies
a. Both corporate acts are valid
b. Both corporate apps are not valid
c. The election of Y as a new treasurer is valid, the approval of the contract with X Supplies is not
valid
d. The election of Y as a new treasurer is not valid, the approval of the contract with X . Supplies is
valid
85. The board of directors of a corporation consists of nine members, where two members were removed
and two have resigned, who fills up the vacancy?
First Answer: Remaining members of the board
Second Answer: Stockholders
a. Both answers are true
b. Both answers are false
c. Only the first answer is true
d. Only the second answer is true
86. A, B, C, and D are partners contributing P20,000 P30,000 P50,000 and industry, respectively. The
partnership failed to the partners decided to dissolve the partnership. At the time of liquidation, the
unpaid application amounted to 100,000 distributed as follows.
To partnership creditor, Y - P50,000
To partner A - P30,000
To partner B - P20,000
If the remaining cash amounting to P10,000 was given to Y as partial payment. Which of the
following is correct?
a. Y can collect 10,000 from the separate property of D
b. As an industrial partner, D is not liable to Y
c. A, B and C are liable to Y in proportion to their capital contribution
d. A, B, and C are liable to Y at PHP13,333 each
87. Using the above information, if Y succeeds in collecting the deficiency from the partners concerned,
which of the following is not correct?
a. Only C will be liable to the other partners
b. A and B will not make additional contribution
c. D is entitled to get reimbursement from A, B, and C
d. C will pay P 35,000 to his partners

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88. A, B, C, and D are partners in Y and Co., a limited partnership contributing 10,000, 20,000, 30,000,
and 40,000 respectively. A, C, and D or the general partners while B is the limited partner. The
partnership failed and the partners decided to dissolve the partnership. At the time of liquidation, the
unpaid obligation amounted to 100,000 distributed as follows,
To partnership creditor, Y - P50,000
To partner A - P30,000
To partner B - P20,000
If the remaining cash amounting to P20,000 was given to Y as partial payment. Which of the
following is correct?
a. Y can collect P7,500 each from the separate properties of the partners
b. Y can collect P30,000 from A or C or D, but not from B
c. B is not liable to Y because B is also a creditor of the partnership
d. Y can collect P10,000 each from A, C, and D
89. A issued a check dated April 2, 2017, in favor of B in payment of A's obligation to B amounting to
P100,000. B kept the check in his drawer and failed to encash it due to his busy schedule. On February
16, 2018, B presented the check to the drawee bank for payment. The bank refused to pay the check
for failure of B to present the check within the reasonable time after its issue. In this case,
a. A's obligation to B is extinguished because the impairment of the check is due to B’s fault
b. B can sue the bank because as drawee it is the party primarily liable
c. A's obligation to B is not extinguished because the failure of B to present the check for payment
within a reasonable time did not cause any injury to A
d. When B accepted the check when A tendered payment, A's obligation is extinguished
90. I. A corporation commences to have a juridical personality upon the execution of the Articles of
Incorporation unless a different date is set by the incorporators
II. A partnership begins from the moment of the execution of the partnership contract unless a different
date is set by the partners
a. True, true
b. True, false
c. False, true
d. False, false
91. Spouses H and W or under the regime of absolute community of property. H, through violence and
intimidation, obtained the signature of W to a contract of sale involving W's exclusive property in
favor of H. The fair market value of the property is P1M but the selling price is only P 700,000. The
sale is
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
92. A contract of loan is
a. A consensual contract
b. A real contract
c. A formal contract
d. A solemn contract

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93. A, husband and B, wife are legally separated. By order of the court, which decreed the legal
separation, A is obliged to give a monthly support of P 50,000 to B payable in advance within the first
5 days of the month. B owes A P 50,000 by way of loan. On the other hand, A has not yet given B
support of P 50,000 for the preceding month and another P 50,000 of the present month. All the debts
are already due. Based on the foregoing, which of the following statements is incorrect?
a. If B demands her support for the preceding month, A may set up compensation as regards the loan
that B owes him
b. If B demands her support for the present month, A may claim compensation as regards the loan
that B owes him
c. If A demands payment of the loan, B may set up compensation as regards her support for the
preceding month that A owes her
d. If A demands payment of the loan, B may set up compensation as regards her support for the
current month that A owes her
94. On January 1, 2021, A bought a parcel of land from B who was insane. The deed of sale was duly
acknowledged before a notary public. Six months after the sale, A realized that he needed a larger
area on which to construct the commercial building. At about the same time, B who had been
undergoing psychiatric treatment was declared of sound mind by his neurologist. Should a court
action be filed today, which is correct?
a. A may successfully prosecute a court action to annul the contract on the ground of B's insanity
b. B may successfully prosecute a court action to annul the contract on the ground of his insanity
c. Neither A nor B may successfully prosecute a court action to annul the contract
d. A may successfully prosecute a court action to annul the contract on the ground of mistake as to
the area of the parcel of land
95. In payment of 10 grams of shabu, A made a promissory note which reads "I promise to pay B P
10,000. Sgd. A ." B transferred the note to C, who acted in good faith. Which is correct?
a. C can collect from A
b. B can collect from A
c. C can collect from either A or B
d. C can collect from B
96. The following items, pertain to a contract of sale, which pertains to a contract to sell?
a. Ownership of the thing sold is transferred upon delivery
b. Ownership of the thing is transferred to the buyer at some future time
c. The risk of loss is on the buyer upon delivery
d. The risk of loss is on the buyer if the price is not yet fully paid
97. The following statements pertain to a voting trustee, except
a. The representative acquires legal title to the shares
b. It is good only for the meeting for which it was intended
c. It is generally irrevocable and the representative may vote even in the presence of the stockholder
d. The agreement giving the representative the power to vote must be duly notarized and a copy
thereof must be submitted to the SEC to be effective and enforceable
98. The subscriber of shares even if not fully paid but who is not delinquent is entitled to the following
rights except
a. Rights to receive dividends
b. Rights to vote in stockholders’ meetings
c. Right to demand his stock certificate
d. Rights to inspect corporate books and records

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99. The duty to make disclosure, where otherwise there would be a great and unfair relation of directors to
stockholders
a. Special circumstances rule
b. Doctrine of corporate opportunity
c. Trust fund theory
d. Incorporation theory
100. Any director of a corporation may be removed from office by a vote of
a. Majority of the members of the board
b. Majority of the stockholders present
c. 2/3 of the stockholders present
d. 2/3 of outstanding capital stock

The End

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