REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK OBLIGATIONS 1. The following are the requisites of an oblicon, except: a. Passive subject, debtor
... [Show More] or obligor. b. Active subject, creditor, or oblige. c. Efficient cause. d. Demand. 2. Obligations may arise from any of the following, except: a. Contracts. b. Quasi-contracts. c. Law. d. Prestation. 3. It is the voluntary administration of the property of another without his consent. a. Negotiorum gestio b. Solutio indebiti c. Quasi-delict d. Contract 4. It is a wrong committed without any pre-existing relations between the parties. a. Natural obligations b. Quasi-delict c. Quasi-contract d. Crime 5. Unless the law or the stipulations of the parties require another standard of care, every person obliged to give something is also obliged to take care of it with: a. Extra-ordinary diligence. b. Diligence of a father of a good family. c. Diligence of a good father of a family. d. Good diligence of a father of a family. 6. The creditor has a right that is enforceable against a definite passive subject. This right is known as: a. Personal right. b. Real right. c. Natural right. d. Civil right. 7. It is a thing that is particularly designated or physically segregated from all others of the same class. a. Generic thing. b. Indeterminate thing. c. Determinate thing. d. Real thing. Page 1 of 63 contact: [email protected] REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 8. One of the following is a determinate thing. Which is it? a. A cow. b. A horse. c. A Toyota car with engine no. 12345, body no. 34890 and a plate no. ABC 123. d. A ring with diamond embellishment. 9. Demand must be made on the due date of the obligation in order for delay to exist in one of the following cases. Which is it? a. When it was stipulated by the parties that demand need not be made. b. When the law provides that demand need not be made. c. When the obligation does not indicate whether demand must be made or not on due date. d. When time is of the essence of the contract. 10. This refers to delay on the part of the creditor. a. Mora solvendi ex re b. Compensation morae c. Mora solvendi ex personae d. Mora accipiendi 11. There shall be no liability for loss due to fortuitous events in one of the following cases. Which is it? a. When the debtor delays. b. When the parties so stipulated that there shall be liability even in case of loss due to fortuitous events. c. When the nature of the obligation requires the assumptions of risks. d. When the obligation is to deliver a determinate thing and there was no stipulation as to the liability of the debtor in case of loss due to fortuitous events. 12. The following are the remedies of the creditor to pursue his claims against the debtor, except to: a. Pursue the property owned and in possession of the debtor. b. Exercise all the rights and bring all the actions of the debtor (accion subrogatoria) c. Impugn the acts which the debtor may have done to defraud his creditors (accion pauliana). d. Compel the debtor to perform the service in obligations to do. 13. D borrowed P50, 000.00 from C. C dies before he has collected the debt leaving S, his son, as heir. Which of the following statements is correct? a. S can collect from D although D and C did not agree that the credit right will pass on to the heirs of C. b. S cannot collect because the credit right is personal to C. c. S can collect only if D and C agreed that the credit right will pass on the heirs of C. d. S cannot collect because the law prohibits the transmission of the credit right. Page 2 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 14. D is obliged to give C a specific car if C passes the CPA Licensure Examination. D’s obligation is an example of: a. A pure obligation b. An obligation with a suspensive condition. c. An obligation with a resolutory condition. e. An obligation with a period. 15. One of the following obligations is not immediately demandable. a. Pure obligation. b. Obligation with a resolutory condition. c. Obligation with an in diem period. d. Obligation with an ex die period. 16. One of the following is a void obligation: a. D is obliged to give C P5, 000.00 if C does not go to the moon. b. D is obliged to give C P5, 000.00 if D goes to Baguio. c. D is obliged to give C P5, 000.00 if C goes to Baguio. d. D is obliged to give C P5,000.00 if D wins first prize in the sweepstakes on a ticket that he had already purchased. 17. D is obliged to give C P10,000.00 if X dies. This is an example of: a. An obligation with a suspensive condition. b. An obligation with a resolutory condition. c. An obligation with a period. d. A pure obligation. 18. When the debtor binds himself to pay when his means permit him to do so, the obligation is: a. An obligation with a resolutory condition. b. A pure obligation. c. An obligation with a suspensive condition. d. An obligation with a suspensive period. 19. Whenever a period is designated in an obligation, the said period shall be presumed to have been established for the benefit of: a. The debtor. b. The creditor. c. Both debtor and creditor. d. Neither of the parties. 20. The debtor shall lose the right to make use of the period in the following cases, except when he: a. becomes insolvent b. Violates any undertaking in consideration of which the creditor agreed to the period. c. Attempts to abscond. d. Does not furnish any guaranty or security to the creditor. 21. An obligation ceases to be alternative and becomes a simple obligation in the following cases, except when: a. The debtor has communicated his choice to the creditor. Page 3 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK b. The right of choice has been expressly granted to the creditor and his choice has been communicated to debtor. c. Among the several prestations that are due only one is practicable. d. Three prestations are due but one of them is unlawful or impossible. 22. D is obliged to give C a specific watch, a specific ring, or a specific bracelet. The parties agreed that C will have the right to choose the thing which will be given to him. Before C could make his choice, the watch and the ring are lost through D’s fault, successively. What is the right of C? a. C may choose the delivery to him of the bracelet, or the price of the watch or the price of the ring plus the damages. b. C cannot choose the price of the watch or the price of the ring because the said objects have already been lost. c. C can only choose to have the bracelet because anyway, D can still perform his obligation. d. C can only choose to have delivery of the bracelet or the price of the ring which was the last item that was lost plus damages. 23. D is obliged to give C a specific ring . The parties agreed that D may give a specific bracelet as substitute. Which of the following statements is true? a. If the ring is lost through a fortuitous event before substitution, the obligation is extinguished. b. If the bracelet is lost through a fortuitous event before substitution, the obligation is extinguished. c. If the ring is lost through a fortuitous event after substitution, the obligation is extinguished. d. If the ring is lost through the debtor’s fault after substitution, the debtor shall pay damages. 24. A, B, C and D are obliged to give V, W, X, Y and Z, P20,000.00 a. V may collect from A P20,000.00 b. V may collect from A P5,000.00 c. V may collect from A P1,000.00 d. V may collect from A P4,000.00 25. A, B, C, and D, joint debtor, are obliged to give V, W, X, Y, and Z, solidary creditors, P20,000.00 a. V may collect from B P20,000.00 b. V may collect from B P4,000.00 c. V may collect from B P5,000.00 d. V may collect from B P1,000.00 26. A, B, C, and D solidary debtor, are obliged to give V, W, X, Y, and Z, joint creditor, P20,000.00 a. V may collect from B P20,000.00 b. V may collect from B P4,000.00 c. V may collect from B P5,000.00 d. V may collect from B P1,000.00 27. A, B, C and D, solidary debtors, are obliged to give V, W, X, Y and Z, solidary creditor P20,000.0 Page 4 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK a. V may collect from D P20,000.00 b. V may collect from D P4,000.00 c. V may collect from D P5,000.00 d. V may collect from D P1,000.00 28. A, 25, B, 35 and C, 17, are solidary debtor of X in the amount of P9,000.00 a. X may collect from A P9,000.00 b. X may collect from A P6,000.00 c. X may collect from A P1,000.00 d. X may collect nothing because the obligation is voidable, C is being minor. 29. The following obligations are divisible, except an obligation: a. To give definite things. b. Which has for its object the execution of a certain of days of work. c. Which has for its object the accomplishment of work by metrical units. d. Which by its nature is susceptible of partial performance. 30. In obligations with a penal clause, the creditor as a rule may recover from the debtor in case of breach the following: a. the penalty as agreed upon, plus damages and interest. b. the penalty and damages. c. the penalty and interest. d. only the penalty. 31. Rockman and Company published an advertisement in the newspapers which reads as follows “INVITATION TO BID: Construction of the company’s warehouse located at 123 Luzon Street, Sta. Quiteria, Quezon City”. The advertisement also included the specifications of the warehouse to be constructed. three companies submitted their bids: ABC Company, with a bid price of P4,5000,000.00. After considering the financial capability, reputation and experience of the bidders, the kind and quality of materials to be used and other factors, Rockman and Company, the lowest bidder, now questions the award made by Rockman Company to DEF Company which submitted a higher bid. a. The award to DEF Company is voidable because it was only the second lowest bidder. b. ABC Company should be the winning bidder having submitted the lowest bid. c. The award to DEF Company is valid because Rockman Company was not bound to accept the lowest bidder. d. The award to DEF Company is void by reason of Rockman’s violation of the terms of the invitation to bid. 32. One of the following is not incapable of giving his consent. a. Insane persons. b. Deaf-mutes who do not know. c. Deaf-mutes who know how to read. d. Unemancipated minors. 33. A contract entered into by an incapacited person is: Page 5 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK a. Void. b. Voidable. c. rescissible. d. Unenforceable. 34. Contracts entered into in a state of drunkenness or during hypnotic spell are: a. Valid. b. Voidable. c. rescissible. d. Void. 35. A contract entered into by an insane person during a lucid interval is: a. Valid. b. Voidable. c. rescissible. d. Void. 36. Aside from fraud and undue influence, the following are the vices of consent, except: a. Violence. b. Intimidation. c. Mistake. d. Dealer’s talk. 37. Mistake in three of the following will make a contract voidable. Which one will not? a. Mistake as to the substance of the thing which is the object of the contract. b. Mistake as to the principal conditions which principally moved one or both parties to enter into the contract. c. Mistake as to the identity or qualifications of one of the parties, which identity or qualifications have been the principal cause of the contract. d. Simple mistake of account. 38. D owes C the following debts: P6, 000.00 due on June 12; P6, 000.00 due on June 18; and P6, 000.00 due on June 20. All debts are unsecured except the debt due on June 20 which is secured by a pledge of D’s diamond ring to C. By agreement, the benefit of the term on 4 debts was granted to C. Assuming that D has P6, 000.00 on June 18 and is ready to pay C, which of the following statements is correct? a. D may apply his payment of P6, 000.00 to any of the debts due on June 12, June 15, and June 18 since they are all due as of June 18. b. D may apply his payment only to the debt due on June 20 because it is the most burdensome to him. c. D must apply the payment proportionately to the debts due as of June 18 at P2,000.00 each. d. D may apply the payment to any of the four debts. 39. The offer made by the debtor to pay his obligation to his creditor is known as; a. Consignation. b. Tender of Payment. c. Application of payment. d. Dation of payment. Page 6 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 40. Consignation alone without any tender of payment is sufficient in the following cases, except: a. When the creditor is absent or unknown or does not appear at the place of payment. b. When the creditor presents the title to the obligation for collection. c. When without just cause, the creditor refuses to give a receipt. d. When two or more persons claim the same right to collect. 41. M owes P P10, 000.00. The obligation is evidenced by a promissory note. Subsequently, P assigned the note to A, to B, B to C, and C back to M. The obligation of M is extinguished by: a. Compensation. b. Confusion. c. Condonation. d. The obligation is not extinguished because there was no payment. 42. In order that condonation may extinguished an obligation involving a movable property whose value exceeds P5, 000.00- a. It is sufficient that the condonation and the acceptance are in writing, even a private one. b. It is required that the condonation and the acceptance be in publicinstrument. c. The delivery of the document evidencing the debt is sufficient since the property is movable. d. The condonation and the acceptance may be made orally. 43. One of the following is not a requisite of legal compensation. Which is it? a. That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other. b. That the two debts be due. c. That both debts be liquidated and demandable. d. That the debts are payable at the same place. 44. Henry, husband, and Wilma, wife, are legally separated. By order of the court which decreed the legal separation, Henry is obliged to give a monthly support of P10, 000.00 to Wilma payable within the first five days of the month. Wilma owes Henry P10, 000.00 by way of a business loan. On the other hand, Henry has not yet given Wilma’s support of P10, 000.00 for this month. Both debts are already due. Which of the following statements is correct? a. a. Both debts are extinguished by legal compensation because both are already due. b. Wilma will claim compensation but not henry. c. Henry may claim compensation but not Wilma. d. Neither one may claim compensation because the debts are not of the same kind. 45. D owes C P10, 000.00 with G as guarantor. C, on the other hand, owes D, P8, 000.00. Both debts are already due but D is insolvent. In this casea. C may collect from G P10, 000.00. Page 7 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK b. C may collect from G P2, 000.00 because a guarantor can set up compensation as regards what the creditor owes the principal debtor. c. C may collect nothing from G because D is insolvent. d. C may collect P8, 000.00. 46. D borrowed P50, 000.00 from C. Subsequently, D proposed to C that T would assume his (D’s) debt. C accepted the proposal of D. This substitution of debtor is known as- a. Expromision. b. Delegacion. c. Tradition. d. Dacion en pago. 47. Refer to the facts in No. 46. Assume also that on due date, T could not pay because of his insolvency which was in fact subsisting but was not known to D or of public knowledge at the time that D delegated his debt. In this case- a. C can revive D’s debts because T’s insolvency already existing at the time that D delegated his debt. b. C can revive D’s debt whether or not he (D) was aware of T’s insolvency since he (D) proposed the substitution. c. C cannot hold D liable because his (D’s) obligation was extinguished when he was substituted by T. d. The novation is void because D did not take steps to determine the solvency of T when he (D) delegated his debt. 48. D obliged himself to give 5 grams of “shabu” to C. Later, the parties agreed that D would instead give to C 5 sacks of rice. Which of the following statements is correct? a. The novation is void because the original obligation is void, Hence, C cannot demand the delivery of 5 sacks of rice from D. b. The novation is valid because the new obligation is valid. Hence, C can demand the delivery of sacks of rice from D. c. The original obligation although void is validated by the new obligation. Hence, C can demand the delivery of 5 sacks of rice from D. d. The new obligation is only voidable because D had not yet performed the original obligation at the time of novation. Accordingly, the new obligation is binding and C may demand the delivery of 5 sacks of rice from D until the new obligation is annulled by a proper action in court. 49. On July 1, 2015, D is obliged himself to give C P50,000.00 if C will marry X on or before December 31, 2015. The condition of the obligation is a: a. Positive condition. b. Negative condition. c. Joint condition. d. Impossible condition. 50. Refer to No. 49. Which of the following statements is incorrect? a. The obligation of D is demandable if C marries X on or before December 31, 2015. Page 8 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK b. The obligation of D is extinguished if it is already January 1, 2016 and C has not yet married X. c. The obligation of D is extinguished on December 2, 2015 if X dies on the said date and C has not yet married X. d. The obligation is demandable if C marries x on January 1, 2016. CONTRACT Page 9 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 1. A meeting of minds between two persons whereby one binds himself with respect to the other to give something or to render some service is known as: a. obligation. b. consent. c. contract. d. Stipulation. 2. The stages of a contract according to the order of their occurrence are: a. birth, conception and consummation. b. conception, consummation and birth. c. conception, birth and consummation. d. consummation, conception and birth. 3. The elements of a contract without which a contract would not exist are known as: a. accidental elements. b. natural elements. c. special elements. d. essential elements. 4. A consensual contract has the following essential elements: a. consent of the contracting parties, object certain and cause or consideration. b. consent of the contracting parties, object certain, cause or consideration and delivery of the object. c. consent of the contracting parties, object certain, cause or consideration and formalities required by law. d. Consent of the contracting parties, object certain, delivery of the object, and formalities required by law. 5. A real contract has the following essential elements: a. consent of the contracting parties, object certain and cause or consideration. b. consent of the contracting parties, object certain, cause or consideration and delivery of the object. c. consent of the contracting parties, object certain, cause or consideration and formalities required by law. d. consent of the contracting parties, object certain, delivery of the object, and formalities required by law. 6. A solemn or formal contract has the following essential elements: a. consent of the contracting parties, object certain, and cause or consideration. b. consent of the contracting parties, object certain, cause or consideration and delivery of the object. c. Consent of the contracting parties, object certain, cause or consideration and formalities required by law. d. consent of the contracting parties, object certain, delivery of the object, and formalities required by law. Page 10 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 7. Elements that accompany certain contracts unless set aside or suppressed by the parties are known as: a. natural elements. b. accidental elements. c. essentials elements. d. original elements. 8. The warranty against hidden defects in a contract of sale is an example of: a. natural element. b. accidental element. c. original element. d. stipulated element. 9. They refer to particular stipulations of the parties in a contract. a. Accidental elements. b. Natural elements. c. Inherent elements. d. Essential elements. 10. One of the following is a natural element of a sales contract. a. Terms of payment. b. Rate of interest. c. Place of delivery. d. Warranty against eviction. 11. A contract that can stand by itself is known as: a. accessory contract. b. principal contract. c. commutative contract. d. Gratuitous contract. 12. A contract that does not have any special name under the law is known as: a. nominate contract. b. innominate contract. c. special contract. d. nominal contract. 13. A contract where both parties are required to do or give something is known as a: a. bilateral contract. b. unilateral contract. c. gratuitous contract. d. commutative contract. 14. A contract where the parties contemplate a real fulfilment, hence, equivalent values are given is known as: a. commutative contract. b. gratuitous contract. c. onerous contract. Page 11 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK d. aleatory contract. 15. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. This is known as the principle of: a. liberty of contract. b. mutuality contract. c. relativity of contract. d. obligatory force of contract. 16. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. This is known as the principle of: a. mutuality of contract. b. relativity of contract. c. consensuality of contract. d. freedom to contract. 17. Contracts take effect only between the contracting parties, their assigns and heirs, except in cases where the obligations and rights arising from the contract are not transmissible by their nature, or by stipulation or provision of law. This principle of contract is known as: a. relativity of contract. b. mutuality of contract. c. obligatory force of contract. d. liberty of contract. 18. D borrowed P500,000.00 from C. D died without having paid his loan obligation to C. He left S, his son and heir, properties worth P400,000.00. a. S is liable to C for P500,000.00. b. S is liable to C for P400,000.00. c. S is liable to C for P100,000.00. d. S is not liable at all because he should not be made to shoulder the obligation of his father. 19. A contract may be enforced by or against a third person, except: a. in the case of stipulation pour autrui b. when a third person induces another to violate his contract. c. in case of contracts intended to defraud creditors. d. when the benefit to the third person is merely incidental. 20. The principle that contracts are perfected by mere consent is known as: a. consistency of contract. b. consensuality of contract. c. consummation of contract. d. mutuality of contract. 21. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. From perfection, the parties are bound not only to the fulfilment of what has been Page 12 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. This is known as the principle of: a. consummation of contract b. consenquality of contract c. obligatory force of contract and compliance in good faith d. mutuality of contract 22. One of the following is not a real contract. a. pledge b. Commodatum c. Deposit d. Sale 23. D borrowed P100,000.00 from C. The obligation is secured by a mortgage on D’s land and building. C registered the mortgage with the Register of Deeds. Thereafter, D sold the land and building to X who was not personally aware of the existence of the mortgage at the time of sale since only the photocopy of the transfer certificate of title which did not yet contain the annotation of the mortgage was shown to him. It was only when he went to the Register of Deeds to register the sale of the land and building to him that he learned of the mortgage. a. C can collect from D and if D cannot pay, C can foreclose the mortgage although the land and building are now owned by X. b. C can collect from D, but if D cannot pay, C cannot foreclose the mortgage because X was not aware of the existence of the mortgage at the time he bought the land and building. c. C cannot collect from D. He can only go after the mortgage which has given as security. d. C cannot foreclose the mortgage because X was not a party thereto. 24. It is the manifestation of the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. a. Consideration b. Contract c. Consent d. Cause 25. On June 1, 2015, S offered to sell his only car to B for P100,000.00. B accepted the offer by mailing his letter of acceptance on June 10, 2015. On June 12, 2015, B revoked his previous acceptance and mailed his leter of revocation on June 15, 2015 a. The contract was perfected on June 14, 2015 when S received B’s letter of acceptance. b. The contract was not perfected because at the time the acceptance was received, the parties were no longer of one mind. c. The contract was perfected on June 10, 2015 when B sent his letter of acceptance. d. The perfection of the contract retroacts to June 1, 2015 when the offer was made. Page 13 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 26. On may 1, 2015, S offered to sell a specific car to B for p500,000. B sent his letter of acceptance to S on May 8, 2015. On may 10, 2015, however, S died in a vehicular accident and his secretary received the letter of acceptance on May 12, 2015 unaware that S had already died. a. The contract was perfected on May 8, 2015 when B sent his letter of acceptance. b. The contract was perfected on May 12, 2015 on May 12, 2015 when the secretary of S received the letter of acceptance. c. The contract was not perfected because the offer of S became ineffective when he died. d. The contract was perfected on May 1, 2015because the acceptance made by H on May 8, 2015 retroacts to the date of the offer. 27. Three of the following instances will render an offer ineffective before acceptance is conveyed. Which one will not? a. Civil interdiction of either party b. Insolvency of either party c. Insanity of either party d. Intoxication of either party 28. S offers to sell his car to B for P125,000.00 cash. B accepts the offer but is willing to pay only P120,000.00. a. The contract was perfected at the price of P120,000.00 b. The contract was perfected at the price of P125,000.00 c. The contract was perfected at the price of P122,500.00, the average price of the offer and the acceptance. d. The contract was not perfected because the acceptance by B was qualified and it constituted a counter-offer. 29. P appointed A as his agent to sell P’s only Honda Civic car for P400,000.00 cash. On November 7, 2015, A, pursuant to the authority granted to him by P, offered to sell the car to B at the price of P400,000.00. B accepted the offer on November 8, 2015 by sending aletter of acceptance to A, which letter of acceptance was received by A on November 9, 2015. On November 10, 2015, A informed P and B had accepted the offer. a. The contract was perfected on November 8, 2015 when B sent his letter of acceptance b. The contract was perfected on November 9, 2015 when A received the letter of acceptance. c. The contract was perfected on November 10, 2015 when A notified P, the true owner of the car that B had accepted the offer. d. d. The contract was perfected on November 7, 2015 since the acceptance by B retroacts to the date of the offer. 30. On July 1, 2015, Serrano offered to sell his only Mercedes Benz car for P1,000,000.oo to Benitez, Serrano stated that he was giving Benitez up to July 31, 2015 to make up his mind whether to buy the car or not. On July 25, 2015, Serrano personally went to Benitez to inform him that he was no Page 14 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK longer swilling to sell the car unless the price was increased in buying the car for the said amount of P1,400,000.00. a. Benitez may compel Serrano to sell to him the car for P1,000,000.00 b. Serrano may validly withdraw his offer to Benitez because the option was not founded upon a consideration. c. Serrano may not withdraw his offer until after the lapse of the option period that he gave to Benitez. d. The increased in the price made by Serrano was not valid because it was made within the option period. 30. On July 1, 2015, Serrano offered to sell his only Mercedes Benz car for P1,000,000.oo to Benitez, Serrano stated that he was giving Benitez up to July 31, 2015 to make up his mind whether to buy the car or not. On July 25, 2015,Serrano personally went to Benitez to inform him that he was no longer swilling to sell the car unless the price was increased in buying the car for the said amount of P1,400,000.00. a. Benitez may compel Serrano to sell to him the car for P1,000,000.00 b. Serrano may validly withdraw his offer to Benitez because the option was not founded upon a consideration. c. Serrano may not withdraw his offer until after the lapse of the option period that he gave to Benitez. d. The increased in the price made by Serrano was not valid because it was made within the option period. PARTNERSHIP Page 15 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 1. Which of the following statements is false when no one among the partners was appointed as manager? a. Each partner will be considered as agent of the partnership. b. Any one may make an important alteration in the immovable property of the partnership without the consent of the others provided it is useful to the partnership. c. In case the act of one partner is opposed by another, the decision of the majority of the partners will prevail. d. In case of a tie in the voting, the tie shall be resolved by the vote of the partner owning the controlling interest. 2. The following statements pertain either to a partner appointed as manager in the articles of partnership or through a document after the formation of the partnership. I. He may be removed as manager only for a just or lawful cause by the vote of the partners owning the controlling interest. II. He may be removed as manager with or without just or lawful cause by the vote of the partner owing the controlling interest. III. He may perform all acts of administrators despite the opposition of his partners provided he is in good faith. IV. He may perform all acts of administration in good faith but opposing partners may resort to his removal if he persists. Based on the foregoing: a. I and III pertain to a partner appointed as manager in the articles of partnership. b. I and III pertain to a partner appointed as manager through a document after the formation of the partnership. c. II and III pertain to a partner appointed through a document after the formation as manager in the articles of partnership. d. I and IV pertain to a partner appointed as manager in the articles of partnership. 3. Campos, Urbano, Tamesis and Encanto are partners in CUTE Company each one contributing P300,000.00 except for Encanto who is an industrial partner. The partners agreed that Campos shall be exempted from liability to third persons. Three years of continued losses after the formation of the partnership resulted in unpaid partnership liabilities to third persons amounting to P500,000.00. Partnership assets have also been reduced to P200,000.00. From whom may third persons collect the partnership debts? a. From the partnership assets of P200,000.00; thereafter, from the partners for their separate assets at P100,000.00 each except Campos who was exempted from liability to third persons by agreement. b. From the partnership assets of P200,000.00; thereafter, from the partners for their separate assets at P100,000.00 each except for Encanto since an industrial partner does not share in the losses. c. From the partnership assets of P200,000.00; thereafter, from all the partners for their separate assets at P75,000.00 each including Campos and Encanto. d. From the partnership assets of P200,000.00; thereafter, from Urbano and Tamesis only for their separate assets at P150,000.00 since Campos was exempted from liability by agreement, while Encanto, being an industrial partner is not liable for losses. Page 16 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 4. The partnership will bear the risk of the loss of three of the following things. Which is the exception? a. Things contributed to be sold. b. Fungible things or those that cannot be kept without deteriorating. c. Things contributed so that only their use and fruits will be for the common benefit. d. Things brought and appraised in the inventory. 5. 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 a 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 to. 6. 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. 7. The following statements pertain either to a partner appointed as manager in the articles of partnership or through a document after the formation of the partnership. V. He may be removed as manager only for a just or lawful cause by the vote of the partners owning the controlling interest. VI. He may be removed as manager with or without just or lawful cause by the vote of the partner owing the controlling interest. VII. He may perform all acts of administrators despite the opposition of his partners provided he is in good faith. VIII. He may perform all acts of administration in good faith but opposing partners may resort to his removal if he persists. Based on the foregoing: a. I and III pertain to a partner appointed as manager in the articles of partnership. b. I and III pertain to a partner appointed as manager through a document after the formation of the partnership. c. II and III pertain to a partner appointed through a document after the formation as manager in the articles of partnership. d. I and IV pertain to a partner appointed as manager in the articles of partnership. Page 17 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 8. Campos, Urbano, Tamesis and Encanto are partners in CUTE Company each one contributing P300,000.00 except for Encanto who is an industrial partner. The partners agreed that Campos shall be exempted from liability to third persons. Three years of continued losses after the formation of the partnership resulted in unpaid partnership liabilities to third persons amounting to P500,000.00. Partnership assets have also been reduced to P200,000.00. From whom may third persons collect the partnership debts? a. From the partnership assets of P200,000.00; thereafter, from the partners for their separate assets at P100,000.00 each except Campos who was exempted from liability to third persons by agreement. b. From the partnership assets of P200,000.00; thereafter, from the partners for their separate assets at P100,000.00 each except for Encanto since an industrial partner does not share in the losses. c. From the partnership assets of P200,000.00; thereafter, from all the partners for their separate assets at P75,000.00 each including Campos and Encanto. d. From the partnership assets of P200,000.00; thereafter, from Urbano and Tamesis only for their separate assets at P150,000.00 since Campos was exempted from liability by agreement, while Encanto, being an industrial partner is not liable for losses. 9. The partnership will bear the risk of the loss of three of the following things. Which is the exception? a. Things contributed to be sold. b. Fungible things or those that cannot be kept without deteriorating. c. Things contributed so that only their use and fruits will be for the common benefit. d. Things brought and appraised in the inventory. 11. The change in the relation of the partners caused by a ceasing to be associated in the carrying on the business known as: a. Termination of the partnership. b. Winding up of partnership affairs. c. Liquidation of the partnership business. d. Dissolution of the partnership. 12. What is the order of payment of liabilities of a dissolved general partnership using the code number representing each liability? I. Those owing to partners other than for capital and for profits. II. Those owing to creditors other than partners’ capital. III. Those owing to partners in respect of profits. IV. Those owing to partners in respect of capital. a. I, II, III,IV b. II, I, IV, III c. II, I, III, IV Page 18 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK d. I, II, IV, III 13. In a limited partnership where there are 4 partners: a. All the partners must be limited partners. b. The number of limited partners must be equal to the number of general partner, that is, 2:2. c. The number of limited partners must be greater than the number of general partners, that is, 3:2. d. It is enough that there is one limited partner, rest may all be general partners. 14. A limited partner may contribute: a. Money and / or property. b. Money and /or services. c. Property and / or services. d. Services only. 15. A limited partner shall be liable as general partner in all of the following cases. Which one is the exception? a. When he is a general-limited partner as stated in the certificate. b. When he takes part in the control of the business. c. When he participates in the management of the business. d. When his surname which appears in the partnership name is also the surname of a general partner. 16. Which of the following omissions will make a partnership formed as a limited partnership liable as a general partnership? I. The certificate is not signed and sworn to by the partners. II. The certificate is not registered with the Securities and Exchange Commission. III. The partnership name does not include the word “Limited” or “Ltd.”, its abbreviation, in the certificate. a. I and II. b. II and III. c. I and III. d. I, II and III. 16. A person admitted to all the rights of a limited partner who has died or who has assigned his interest in the partnership is known as: a. An ostensible partner. b. A liquidating partner. c. A substituted limited partner. d. A general-limited partner. 17. If the assignee does not become the partner referred to in the preceding number, his rights do not include: Page 19 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK a. The receipt of the assignor’s share of the profits. b. The receipt of the assignor’s other compensation by way of income. c. The return of the assignor’s contribution. d. The inspection of the partnership books or account of partnership transactions. 18. What is the order of payment of liabilities of a dissolved limited partnership using the code number representing each liability? I. Those owing to general partners other than for capital or for profits. II. Those owing to creditors including limited partners, except those to limited partners account of their contributions and general partners. III. Those owing to limited partners by way of their share in the profits and other compensation by way of income. IV. Those owing to limited partners in respect to the capital of their contributions. V. Those owing to general partners in respect of capital. VI. Those owing to general partners in respect of profits. a. I, II, III, IV, V, VI. b. II, I, III, IV, V, VI. c. II, I, III, IV, V, VI. d. II, III, IV, I, VI, V. 19. Which of the following will not cause the automatic dissolution of a limited partnership? a. Death of a general partner. b. Death of a limited partner. c. Insolvency of a general partner. d. Insanity of a general partner. 20. One of the distinctions between a partnership and a corporation is that a partnership: a. May be formed by one person. b. Is created by operation of law. c. Acts through a board of directors. d. May exist for an indefinite period. Page 20 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK CORPORATION 1. 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 juridical personality. d. approved by the stockholders if adopted after incorporation. 2. The following may be the consideration of the shares of stock of corporation, except : a. actual cash paid to the corporation. b. previously incurred indebtedness of the corporation. c. amounts transferred from unrestricted retained earnings. d. service to be performed by a lawyer on the proposed increase in capital stock of the corporation. 3. A certificate of stock is distinguished from share of stock in that a share of stock : a. is the written evidence of a stockholder’s interest in the assets and management of a corporation. b. is tangible personal property. c. is one of the unit into which the capital stock is divided. d. may not be issued if the subscription has not been fully paid. 4. The articles of incorporation of Acme Corporation provide for the issuance of 100, 000 shares without par value and an issued price per share of P 10.00. At the time of incorporation, the subscription and paid-up capital should not be less than : a. P 250, 000 and P 62, 500, respectively. b. P 1,000, 000. 00 and P 250, 000.00, respectively. c. P 250, 000. 00 and P 250, 000.00, respectively. d. P 250, 000. 00 and P 125, 000. 00, respectively. 5. Their names are mentioned in the articles of incorporation as originally forming the corporation and are signatories thereof : a. Corporators Page 21 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK b. Stockholders c. Incorporators d. Members 6. A corporation acquires juridical personality : a. upon fiing of the articles of incorporation. b. upon filing of the by-laws. c. upon the issuance of certificate of incorporation. d. within 30 days from the receipt of the notice of the issuance of the certificate of incorporation . 7. A delinquent stockholder is not entitled to the following rights, except the right : a. to be voted. b. to vote or be represented in the meetings of stockholders. c. to dividends. d. He is not entitled to all the rights of a stockholder. 8. A, B, C, D, E, F and G are the duly elected directors for 2014 of Excellent Coporation whose articles of incorporation provide for 7 directors. On August 1, 2014, Directors A, B, C, D, and E met to fill two vacancies in the board brought 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, 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 is : 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. 9. In the meeting of the board of directors of Grand Corporation, a constuction company, held on August 31, 2014, directors A, B, C, D and E were present among the 9 directors. The meeting had for its agenda the following : I. The appointment of a new treasurer II. The approval of the contract for the purchase of cement worth P 50, 000.00 from X Construction Supplies. When the voting took place, directors A, B, C and D voted for the election of Y as the new treasurer ; and directors A, B and C voted for the approval of the contract with X Construction Supplies. a. Both corporate acts are valid. b. Both corporate acts are not valid. c. The election of Y as the new treasurer is valid ; the approval of the contractwith X Construction Supplies is not valid. d. The election of Y as the new treasurer is not valid ; the approval of the contract with X Construction Supplies is valid. 10. Under this theory, the nationality of a corporation is that of the under whose law it was formed. a. Control test. b. Incorporation test. c. Domiciliary test. d. Grandfather rule. Page 22 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK 11. A corporation created in strict compliance with all the legal requirements and whose right to exist as a corporation cannot be successfully attacked in a direct proceeding for that purpose by the State is a : a. de jure corporation. b. de facto corporation. c. corporation by estoppel. d. corporation by prescription. 12. Stock dividends differ from cash dividends in that stock dividends : a. do not increase the legal capital. b. involve disbursements of corporate funds. c. require the approval of both the board of directors and the stockholders. d. once received by the stockholders, are beyond the reach of corporate creditors. 13. The subscriber of unpaid shares which are not delinquent shall be entitled to the following rights, except the right to : a. vote. b. inspect corporate books. c. a stock certificate. d. dividends. 14. These statements pertaining to the right of a stockholder to inspect books and records of a corporation are presented to you for evaluation : I. The right maybe delegated to an agent. II. The right may be denied if in the past, the stockholder improperly used the information which he obtained from the books and records of another corporation of which he is also a stockholder. a. Both statements are true. b. Both statements are false. c. Statement I is true ; Statement II is false. d. Statement I is false ; Statement II is true. 15. Under this doctrine, the separate personality of a corporation may be disregarded if it is used for fraudulent or illegal purpose or to escape the faithful compliance of an obligation : a. Trust fund doctrine b. Doctrine of piercing the veil of corporate entity c. Doctrine of corporate oppurtunity d. Doctrine of limited capacity 16. Consolidation differs from merger in that in consolidation : Page 23 of 63 REGULATORY FRAMEWORK ON BUSINESS TRANSACTIONS TEST BANK a. The surviving corporation shall enjoy all the rights, powers, and attributes of a corporation under the Corporation Code. b. The existing liablities of the consituent corporations shall be assumed by the surviving corporation. c. The corporate existence of all the constituent corporations shall be extinguuished and a new corporation emerges. d. The surviving corporation shall possess all the rights, priveleges, immunities, and franchises of the constituent corporations. 17. The right of a stockholder to demand payment of the fair value of his shares when he dissents from certain corporate acts is known as : a. pre- emptive right b. appraisal right c. redemption right d. appreciation right 18. These statements pertaining to the meetings of directors are presented to you for evaluation : I. Directors or trusteemay attend or vote by proxy at board meetings. II. The articles of incorporation or the by-laws of a corporation may provide for a greater majority for its quorum during the meetings of the board of directors. a. Both statements are true. b. Both statements are false. c. Statement I is true ; Statement II is false. d. Statement I is false ; Statement II is true. 19. A stock that is issued without consideration or below par value or the issued price is known as : a. watered stock b. delinquent stock c. redeemable stock d. preferred stock 20. A non-voting stock may vote in the following corporate acts, except in case of : a. approval of the compensation b. merger or consolidation c. increase or decrease in capital stock d. sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of corporate property. [Show Less]