REGULATORY FRAMEWORK FOR BUSINESS AND TRANSACTIONS

NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

NATIONAL CAPITAL REGION
2017 Search for the NCR Frontliners
October 8, 2017

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____ 1. This requires a special power of attorney, except:

a. To accept or repudiate an inheritance
b. To effect novation
c. To enter into compromise
d. To lease real property for one year
____ 2.
If the agent has been empowered to borrow money he may himself be the lender at the
current rate of interest and if he has been authorized to lend money at interest, he can
borrow it.
Every agent is bound to render an account of his transactions and to deliver to the principal
whatever he may have received by virtue of agency even thought it may not be owing to the
principal.

a. Both are true

b. Both are false
c. Only the first statement is true
d. Only the second statement is true
____ 3. Which is not property right of a partner?
a. Right in specific partnership property
b. Interest in the partnership
c. Right to participate in the management
d. Right to require information on partnership affairs
____ 4. Every contract of partnership having a capital of three thousand pesos or more, in money or property, shall
appear in a public (notarized) instrument, which must be recorded in the
a. Officer of the Civil Registrar
b. Securities and Exchange Commission
c. Register of Deeds
d. Department of Trade and Industry
____ 5. A partnership that has for its object determinate things, their use of fruits, or specific undertaking, or the
exercise of a profession or vocation.
a. Particular
b. General
c. Limited
d. Universal
____ 6. A, B and C are capitalist partners, each contributed P10,000. After exhausting the assets of the firm, the
firm’s indebtedness amounts to P90,000. It was stipulated that A would be exempted from liability. Which is
correct?
a. A may recover his original capital of P10,000
b. The creditors may collect P30,000 each from A, B and C
c. A can recover P20,000 each from B and C should he be required to pay the creditors
d. The creditors can recover P45,000 each from B and C
____ 7. Partner who contributes both capital and industry
a. General
b. Limited
c. Managing
d. Capitalist-industrial
____ 8. Partner who winds up the affairs of the firm after it has been dissolved

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a. Liquidating
b. Managing
c. Industrial
d. Capitalist
____ 9.
If property has been promised by a partner as contribution to the partnership, the fruits arising
from the time the property should have been delivered should also be given provided prior
demand was made.
A partner who has undertaken to contribute a sum of money and fails to do so becomes a debtor
for the interest and damages from the time he should have complied with his obligation, without
the need of any demand.

a. Both statements are true

b. Both statements are false
c. Only the first statement is true
d. Only the second statement is true

____ 10. A contract where the fulfillment is dependent upon the chance, so the values may vary because of the risk or
chance.
a. Commutative
b. Aleatory
c. Remunerative
d. Gratuitous
____ 11. A contract where the cause with respect to each contracting party is the prestation or the promise of a thing or
service by the other is
a. An onerous contract
b. A gratuitous contract
c. An innominate contract
d. An aleatory contract

____ 12. 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
____ 13. A delivered his bracelet to B for B’s necklace. No written agreement was signed by the parties. Which of the
following is appropriate description of the contract between A and B?
a. Onerous and bilateral
b. Onerous and innominate
c. Bilateral and innominate
d. Aleatory and nominate
____ 14. D forced C to sign a promissory note where C promises to pay D P100,000. The correct amount should be
P60,000. Which is correct?
a. The contract is rescissible because there is lesion
b. The contract is unenforceable
c. D cannot demand payment from C because the contract is voidable
d. The contract is valid
____ 15. Which one is a negotiable instrument?
a. letter of credit
b. warehouse receipt
c. postal money order
d. certificate of time deposit
____ 16. The corporation may deny the exercise of the stockholder of his right to inspect over business secrets or
confidential matters based on the principle that
a. what ever person can do himself, he has a right to designate another person to do it for him

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b. the exercise of the power to inspect can be exercised only in consonance with or germane
to the proprietary rights of the stockholder pertaining to his shares of stock in the
corporation
c. the right to inspect being a common law right is absolute
d. the right to inspect should be for a legitimate purpose that is protective of the interest of
the corporation
____ 17. Feist Publication v. Rural teaches that
a. substantial effort confers copyright status on a work
b. originality plus modicum amount of creativity status on a work
c. originality confers copyright status on a work
d. modicum amount of creativity confers copyright status on a work

____ 18. A helicopter of Jurong Airlines collided with the water towering the logging concession of Kelantan Lumber
resulting in the destruction of the helicopter and the death of its pilot. Jurong had insured the helicopter for
P1,000,000 and taken out a P500,000 insurance on the life of the pilot from the Liberty Insurance. The latter
paid Jurong a total of P1,500,00 on the policies it issued. Is Liberty subrogated to the rights of Jurong against
Kelantan?
a. Liberty is subrogated to the rights of Jurong against Kelantan to the extent of the
P1,500,00 it paid to Jurong
b. Liberty is subrogated to the rights of Jurong against Kelantan only to the extent of
P1,000,000
c. Liberty is not subrogated to the rights of Jurong against Kelantan only to the extent of
P500,00
d. Liberty is not subrogated to the rights of Jurong against Kelantan

____ 19. X is not a partner of A, B and C. Without the consent or knowledge of C but with the implied consent of A
and B, X made T believe that he is a partner of A, B, and C. Who shall be liable for the payment of a debt of
P500,000 in favor of T who extended credit on the basis of the misrepresentation?
a. X, A and B pro rata
b. X, A and B solidarily
c. X, A, B and C pro rata
d. X, A, B and C solidarily
____ 20. “Either of us promises to pay X or order P1,000. (Signed) A and B” The liability of the makers is
a. joint
b. solidary
c. secondary
d. none, until the makers are furnished a notice of dishonor

____ 21. F, a widower math teacher, takes out a life insurance contract on his own life and names E, his beautiful wife
whom he married only after a whirlwind three (3)-day courtship, as irrevocable beneficiary. F later finds out
that his marriage to E is bigamous, since E is still married to A, who is a fugitive from justice since A and E
defrauded a “Russian” mobster and ran away with his money. Can F effectively revoke the designation of E
as a beneficiary, and on what ground?
a. Yes, on the ground that F and E are guilty of adultery or concubinage
b. No, because neither F or E has been convicted of adultery or concubinage
c. There is no need to revoke the designation of E as beneficiary since the marriage between
F and E is void ad initio and therefore F has no insurable interest in the life of E; hence,
the insurance contract is likewise void by operation of law
d. Yes, but only upon declaration of nullity of the marriage between F and E, on the ground
that E acted in bad faith
____ 22. A holograhpic will has no date except one found of the first page. Is the will valid?
a. Yes, because the law does not specify the place where the date should be placed
b. No, because the date should be after the signature of the testator
c. No, because it did not follow the requirements of law
d. Yes, because the intention of the testator must be respected

____ 23. May a real property be classified validly as personal property?

a. Yes provided it will not prejudice the direct parties
b. Yes, by implication
c. Yes by agreement between the parties

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d. No, real property is always a real property

____ 24. As a result of the benefit of excussion, the guarantor can insist that
a. The debtor liquidate all his property
b. The creditor seek the annulment of certain contract entered into by the debtor
c. The creditor to give notice to the guarantor in case of debtor’s default
d. The debtor to notify the guarantor that the debtor’s properties are insufficient
____ 25. Reggie, one of the partners of a detective/ security agency, owned a specially trained police dog which he
would lend to the agency when conducting risky nighttime operations. During one of those operations, the
dog was shot and killed by robbers. The risk of loss of the highly priced police dog should be governed by
this principle
a. the principle of just compensation
b. the principle of “delectus personae”
c. the principle of “res perit domino”
d. the principle of estoppel
____ 26. The owner sold his registered land to a first buyer who then registered the sale under Act 3344 (the law for
transactions involving untitled lands), and then sold the same to a second buyer who registered the sale under
P.D. 1529. The rightful owner now is the
a. first buyer because he registered first the sale in his favor
b. first buyer provided he was in good faith when he registered the sale in his favor
c. second buyer even if he was aware of the first sale
d. second buyer provided he was unaware of the first sale
____ 27. Three of the following are not authorized to issue no-par value shares. Which one is the exception?
a. trust companies
b. industrial companies
c. insurance companies
d. public utilities
____ 28.
I A de facto corporation is one which is not registered with the SEC.
II In corporation by estoppel, those who misrepresented themselves as forming a
corporation are liable as general partners.

a. False, false
b. False, true
c. True, true
d. True, false
____ 29. It constitutes the charter of a private corporation registered with the SEC.
a. Corporate by laws
b. Certificate of Incorporation
c. Article of Incorporation
d. Secondary Franchise

____ 30. A corporation cannot be an incorporator in the Philippines because only natural persons must become
incorporators, except
a. eleemosynary corporations
b. cooperative as incorporator of a rural bank
c. ecclesiastical organizations incorporated under Philippine laws.
d. international organizations operating in the Philippines
____ 31. If par value are now treasury shares, the following rules are applicable except one. The exception is
a. They are entitled to dividends.
b. They shall have no voting rights as long as they remain in the treasury.
c. They are not part of subscribed stock and not considered as outstanding share.
d. They may again be disposed of for a reasonable price even below par.
____ 32. Which of the following statements pertaining to treasury shares is correct?
a. Treasury shares are not part of issued capital stock.
b. Treasury shares once disposed of, entitle the purchaser or transferee the right to dividends
c. Treasury shares may not be disposed of at a price lower than the par or issued price even if
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it is reasonable and approved by the Board of Directors

d. Treasury shares are entitled to vote.
____ 33. Which of the following is not correct about director?
a. A person is disqualified to become a director if he is convicted by final judgment of an
offense punishable by imprisonment for a period exceeding 6 years.
b. A juridical person like partnership is allowed to be a director.
c. A director must be an owner of at least one share of stock.
d. The number of directors of stock corporation is not less than five but not more than fifteen.
____ 34. The number of the Board of Trustees of a non-stock nonprofit educational institution should be
a. 5 only
b. not less than 5 nor more than 10 in multiples of 5
c. any number for as long as it is not less than 5 and no more than 11.
d. any number in multiples of 5, for as long as it is not less than 5 and no more than 15.
____ 35. The articles of incorporation of ABC Corporation provides for 7 directors. In the monthly meeting of the
board of directors held on April 8, 2009, directors B, C, D and E were present and the following resolutions
were approved.

I A resolution for the purchase of a delivery truck from E Trading, a sole proprietorship
owned by E. B, C, D and E voted for the resolution.
II A resolution appointing T as the new corporate secretary where B, C, D and E voted for
the resolution

Which is correct?
a. Resolution I is not valid. Resolution II needs stockholders approval
b. Both resolutions are valid but need stockholders approval.
c. Both resolutions are valid and do not need stockholders’ approval.
d. Resolution I needs stockholders approval. Resolution II is valid.

____ 36. Which of the following statements is correct?

a. To issue stock dividends, majority vote of the quorum of the Board of Directors and
majority of the outstanding capital stock
b. To sell, lease, mortgage or otherwise dispose of all or some of the corporate assets,
majority vote of directors or trustees and majority of all the outstanding capital stock or of
the member is needed.
c. To enter into management contract, majority vote of the Board of Directors and majority
of the outstanding capital or of the members.
d. To invest corporate finds in another corporation or business majority vote of directors or
trustees and majority of the outstanding capital stock or of the members is needed.
____ 37. A subscribed to 100 shares of X Corporation, paying 25% of the amount thereof. The Corporation refuses to
issue to the former a stock certificate for his subscription despite the demand of A for a stock certificate
corresponding to 25 shares which he claims have been paid. Meanwhile, the Corporation has become
insolvent and A now refuses to pay for his unpaid balance on his subscription. Is the refusal of the corporation
to issue the certificate valid?
a. Not valid because there can be issued a stock certificate for the number of shares already
paid.
b. Valid because the stock certificate can only be issued after the full payment of the
subscription.
c. Not valid because only delinquent shares may be denied in a stock certificate
d. Valid with respect to the unpaid portion of the subscription.

____ 38. Martin Corporation and Marty Corporation have agreed to be merged into one corporation. To facilitate the
merger, both corporations agreed that the merger be made effective on May 31, 2016. The Securities and
Exchange Commission approved the Articles of Merger on June 30, 2016. Which statement is most accurate?
a. The stockholders and the Board of Directors can set the effective date of the merger
anytime after the approval of the SEC.
b. The effective date of the merger is always the date of the approval of the Articles of
Merger by the SEC.
c. The effective date of the merger is May 31, 2016, the date stipulated by the parties as the
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effective date.
d. The effective date of the merger would be the date approved by the Board of Directors and
the stockholders.

____ 39. All except one are instances when the right to vote by proxy is explicitly provided for
a. election of the board of directors or trustees
b. voting in a board meeting
c. voting in case of joint ownership of stock
d. pledged or mortgaged share
____ 40. Greggy, Greg, Grain, and George formed a general partnership. Their written partnership agreement provided
that the profits would be divided so that Greggy would receive 40%; Greg, 30%, Grain, 20%, and George,
10%. There was no provision for allocating losses. At the end of its first year, the partnership had losses of
P400,000. Before allocating losses, the partner’s capital account balances were: Greggy, P240,000; Greg,
P200,000; Grain, P150,000; and George, P22,000. George refuses to make any further contribution to the
partnership. Ignore tax effects. What would be George’s share of the partnership losses?
a. 18,000
b. 40,000
c. 78,000
d. 50,000
____ 41. Paolo contributed P50,000; Ronald contributed P75,000, and Paul contributed P25,000. Jay is the industrial
partner. There is no stipulation regarding profits and losses. The partnership suffered a P300,000 loss. The
loss shall be shared by the partners as follows:
a. P100,000, P100,000, P100,000 and P0
b. P75,000, P75,000, P75,000 and P75,000
c. P100,000, P150,000, P50,000 and P0
d. P100,000, P100,000, P100,000 and P100,000
____ 42.
I A partner will be liable to pay damages to the partnership if he will cause damage
or injury to the partnership and in violation of partners’ agreement, but his
obligation may be compensated if the partnership will realize extraordinary profits
from his transactions.
II Partnership books may be inspected at any reasonable hour by a nominal partner.

a. True, true
b. True, false
c. False, false
d. False, true
____ 43. On October 3, 2019, D requested for a loan of P10,000 from C and he offered to pledge his ring as security
for the loan. C granted his request and promised to give him the money on October 5, 2019. On October 5,
2019, C handed the amount of P10,000 to D and on October 6, 2019. D delivered his ring to C. Which of the
following statements is correct?
a. The contract of loan between them was perfected when C accepted the offer of D on
October 3, 2019.
b. The contract of loan was perfected when C gave the money to D on October 5, 2019.
c. The contract of pledge was perfected when C gave the money to D on October 5, 2019.
d. Both contracts of loan and pledge were perfected only on October 6, 2019.

____ 44. Without authority from P, A sold P’s car in P’s name. Contract is:
a. Void
b. Voidable
c. Valid
d. Unenforceable
____ 45. C is the creditor of D in the amount of P100,000. G is the guarantor of D. D paid C partially with P80,000. A,
not knowing the partial payment of D and against the will of D, paid C the amount of P100,000. What is the
effect of this payment in the obligation?
a. The obligation is extinguished. A cannot recover any amount from D, but A can demand
reimbursement from G in the amount of P100,000.
b. The obligation is extinguished. A can demand P20,000 because this amount benefited D,
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or, A having been subrogated into the rights of C, can proceed against G.
c. The obligation is extinguished. A’s payment being against the will of D does not
extinguish the obligation.
d. The obligation is extinguished. A can demand P20,000 from D, but if D cannot pay, A
cannot pay, A cannot ordinarily proceed against guarantor G because A is not entitled to
subrogation.
____ 46. X is obliged to give Y a specific car on July 15, 2015. X did not deliver the car on July 15, 2015. On July 20,
2015, an earthquake destroyed the building where the car was parked and the car was destroyed. Is X still
liable?
a. No. Considering that no demand to deliver was made by Y and the specific thing was lost
due to fortuitous event, hence the obligation is extinguished.
b. No. The obligation is extinguished, even if the debtor us already in default, because the
debtor can plead impossibility of performance.
c. Yes. X is already in legal delay, thus the obligation to deliver the lost specified thing is
converted into monetary claim for damages.
d. Yes. The creditor can instead demand for a substitute of equivalent value from the debtor.
____ 47. The following are attributes of a voidable contract. Which is not?
a. It is binding, valid and enforceable before annulment.
b. Damage is material to be voidable contract.
c. It can be ratified and ratification his retroactive effect.
d. The capacitated cannot allege the incapacity of the other party.
____ 48.
I Merger which takes place in the person of the principal debtor or creditor benefits the
guarantors.
II Confusion which takes place in the person of the guarantors does not extinguish the
obligation.

a. True, false
b. False, true
c. True, true
d. False, false
____ 49. Which of the following is false?
a. The voluntary acceptance by the creditor of a certified cashier’s check produces payment.
b. If the suspensive condition depends upon the chance or upon the will of a third person, the
obligation subject to it is valid.
c. The creditor, as a rule, is not bound to accept payment or performance by a third person,
unless such person has an interest in the fulfillment of the obligation.
d. Unless the application of payment is expressly stated, the payment shall be applied to the
obligation most onerous to the debtor.
____ 50. The obligation of the employer to pay death benefits and funeral expenses for his employee’s death while in
course of employment as sanctioned by the Workmen’s Compensation Act is one that arises from
a. law
b. quasi-contracts
c. contracts
d. delicts

____ 51. Compensation cannot take place except

a. When one debt arises from bank deposit.
b. When one debt arises from support be reason of a gratuitous title.
c. When one debt arises from an obligation of a depositary.
d. When one debt arises from the obligation of the bailee in a contract of commidatum.
____ 52. Asyong borrowed from Bosyo P1,000. Later Carl, Bosyo’s minor son borrowed P500 from Asyong for his
school tuition. However Carl spent it for school tuition. When the debt to Bosyo fell due, Asyong tendered
only P500, claiming compensation on the P500 borrowed by Bosyo’s son. Is there legal compensation?
a. Yes, because both obligations are payable in money.
b. Yes, Carl’s obligation is also Bosyo’s obligation.
c. No. Asyong and Bosyo are not principal debtors and creditors of each other.
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d. No, because Carl was a minor and is therefore not liable thereto.
____ 53. Damages which are adjudicated in order that a right of the plaintiff, which has been violated by the defendant
maybe vindicated.
a. moral
b. temperate
c. nominal
d. liquidated

____ 54. Three of the following are for dacion en pago, which is for cession?
a. What is delivered by the debtor is merely a thing to be considered as the equivalent of the
performance of the obligation.
b. The debtor is not necessarily in a state of financial difficulty.
c. The property is alienated by the debtor to the creditor in satisfaction of a debt in money.
d. The effect is to release the debtor for the net proceeds of the things ceded or assigned.
____ 55. May the suit filed by a passenger who was hurt against the operator of a public utility vehicle still prosper
even if the driver was acquitted by the court?
a. Yes, provided he can prove the negligence of the driver.
b. No, this will constitute double jeopardy which is violative of the Constitution
c. No, the acquittal means that the guilt of the accused was not proven by proof beyond
reasonable doubt.
d. Yes, it is sufficient for him to prove the existence of the contract of carriage and the
injuries suffered.
____ 56. When the delivery of a specific thing is subject to a suspensive condition and it is improved at the expense of
the debtor.
a. The debtor shall acquire the right over the thing.
b. The debtor shall have the right to enjoy the thing as well as its fruits.
c. The creditor shall enjoy the improvement only after the payment of just compensation.
d. The creditor shall have no other right than that granted to the usufructuary.

____ 57. When the fulfillment of the condition depends on chance or upon the will of a third person.
a. potestative
b. casual
c. mixed
d. void
____ 58. A, B, C and D are solidary debtors of Y for P80,000. Later, Y released D from the payment of his share of
P20,000. When the obligation became due and demandable, C, turned out to be insolvent. Would the share of
C be divided between A and B?
a. Yes, the remission of D’s share carries with it the total extinguishments of his obligation.
b. Yes, the civil code recognizes as a mode of extinguishing an obligation.
c. No, the rule is that the gratuitous acts should be restrictively construed, allowing only the
least transmission of rights.
d. No, as the release of the share of one debtor would then increase the burden of the other
debtors without their consent.
____ 59. A, B and C are solidary debtors sharing 1:2:3 of solidary creditors W and Y sharing at 1:2. The obligation is
P12,000. If B is a minor and C is insolvent and W condones the obligation of A without the consent of Y,
how much can W collect from A?
a. 8,000
b. 6,000
c. 2,000
d. 0

____ 60. The following contracts are qualified for reformation, except
a. onerous contract
b. gratuitous contract
c. renumeratory contract
d. consensual contract
____ 61. If a debtor gives a property to his creditor who accepts it in payment of an obligation in money, this will be
governed by
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a. cession
b. barter
c. exchange
d. sales
____ 62. The following are the requisites for mistake to vitiate consent except?
a. The error must be substantial regarding the object of the contract or the condition which
principally moved one or both parties to enter into the contract.
b. The error must be excusable and not cause by negligence.
c. The error must be of fact.
d. There must be an error to personal motive.
____ 63. A offered to sell her watch to B for P1,000. B offered to buy the watch for P800 but was rejected by A. When
B turned to go away. A called him and said she is now willing to sell the watch for P800. May B refuse to buy
said watch?
a. No, because B’s offer of P800 was accepted by A.
b. No, there is a meeting of the minds between the parties or the subject matter and the cause
of the contract.
c. Yes, because B made a counter offer which was rejected by A.
d. Yes, because the agreement is under the statute of frauds.
____ 64. Which of the following is wrong in alternative obligations?
a. The obligor shall completely perform one of them.
b. The oblige cannot be compelled to receive part of one and part of the other undertaking.
c. The right of choice belongs to the creditor, unless it has been expressly granted to the
debtor.
d. The debtor shall have no right to choose those prestations which are impossible.
____ 65. Payment by cession as distinguished from dation in payment
a. The debtor is not necessarily in a state of financial difficulty.
b. The effect is to release the debtor for the net proceeds of the things ceded or assigned.
c. The property is alienated by the debtor to the creditor in satisfaction of a debt in money.
d. What is delivered by the debtor is merely a thing to be considered as the equivalent of the
performance of the obligation
____ 66. Which of the following statement is not correct?
a. The validity and compliance of a contract cannot be left to the will of one of the parties.
b. In case of foreclosure and the price of the sale is less than the amount due, the ledge
cannot recover any deficiency.
c. Persons who are prohibited by law to enter into contract of donation cannot form universal
partnership.
d. Actions for fraud cannot be waived.
____ 67. The “Management Contract” entered into between two corporations which requires the separate Board
resolutions approving it to be ratified separately by stockholders of each of the corporations is that which
involves the management
a. by the managing corporation of the primary purpose business of the managed corporation
b. by the managing corporation of the non primary purpose business of the managed
corporation
c. by the managing corporation of all or substantially all of the business of the managed
corporation. Sec 44, Corporate Code
d. by the managing corporation of the investments and securities of the managed corporation
____ 68. During a voyage from Manila to Davao via Cebu and Cagayan de Oro, the vessel S/S Maligalig because of
the strong winds that buffeted it, was listing on its portside before reaching Cebu. Because the voyage was
already delayed, the captain and the sailing mate despite the condition of the vessel, ordered that they proceed
to Cagayan de Oro where the vessel could undergo repairs. The second mate, the chief engineer and the rest
of the crew felt that continuing the voyage until they reach Cagayan de Oro was unthinkable as it would place
everyone in danger. The second mate and the rest of the crew held the captain and the sailing mate in
captivity and thereafter changed the course and reached Cebu safely. What act was committed by the second
mate and the rest of the crew
a. Mutiny
b. Barratry

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c. Insubordination
d. Serious Misconduct
____ 69. Under this rule, the Monetary Board is authorized to pass rules providing for the qualifications and
disqualifications of individuals elected or appointed as bank directors or officers and to disqualify those found
not qualified after due notice
a. Arms length rule
b. Length arms rule
c. Fit and proper rule
d. Rules and regulations
____ 70. The non-disclosure of a matter/ fact/ information by the insured may be the basis for rescission of insurance
contracts in general regardless of whether
a. the information is of the insured’s own judgment upon the matters in question
b. the fact ought to be known by the insurer
c. the fact relates to a mater covered by a warranty
d. the non-disclosure is intentional, except if the fact tends to provide the falsity of a
warranty, in which case the non-disclosure must be both intentional and fraudulent
____ 71. x Shares of stock that have been issued by the corporation for consideration reflected as equal to the par or
issued value of the shares, when in fact the amount actually received was less, would technically be called
a. “Discounted stock”
b. “Premium stocks”
c. “Watered stocks”
d. “Void stocks”
____ 72. It is a written statement by the master of a vessel, attested by a proper judicial officer or a notary, to the effect
that damage suffered by the ship or her voyage was caused by storms or other perils of the sea, without any
negligence or misconduct on his part
a. Master’s Certificate
b. Bill of Lading
c. Affidavit of Desistance
d. Maritime Protest
____ 73. The essential distinction between a corporation de jure and a corporation de facto is that
a. a corporation de jure has a juridical personality; whereas, a corporation de facto has in fact
no juridical personality
b. the juridical personality of a de jure corporation cannot be subject to attack of any kind
that would dissolve its juridical personality; whereas, a de facto corporation’s juridical
personality may be attacked directly through a quo warrnto proceeding
c. the juridical personality of a de jure corporation cannot be subject to a direct attack
through a quo warranto proceeding; while the juridical personality of a de facto
corporation is subject to collateral subject
d. a de jure corporation’s juridical personality is without legal defect; whereas, a de facto
corporation personality is one with legal defect sufficient to be the subject of direct attack
through quo warranto proceedings
____ 74. A representation may be altered or withdrawn before the effectivity of an insurance contract but not
afterwards because
a. Representations are presumed to refer to the date of the date of effectivity of the contract
b. An oral representation cannot qualify any express provision of the contract
c. A representation cannot qualify a warranty
d. Representations re not part of the insurance contract
____ 75. Your clients wants to organize a corporation with the following capital structure: Authorized Capital Stock - P
10 million, divided into 5,000,000 no par value shares of preferred stock to be offered at an issue value of
P1.00 per share, and 5,000,000 shares of common stock with a par value of P1.00 per share. What features,
if any is not allowed by law?
a. Mingling in the capital structure of the same corporation common par value and preferred
no-par value shares
b. The issued value of P1.0 per share for preferred shares
c. 5,000,000 no-par value preferred shares
d. The P.10 par value of common shares

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 REGULATORY FRAMEWORK FOR BUSINESS AND TRANSACTIONS

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

Answer Key

1. ANS: D TOP: Agency

2. ANS: D TOP: Agency
3. ANS: D TOP: Partnership Law
4. ANS: B TOP: Partnership Law
5. ANS: A TOP: Partnership Law
6. ANS: B TOP: Partnership Law
7. ANS: D TOP: Partnership Law
8. ANS: A TOP: Partnership Law
9. ANS: D TOP: Partnership Law
10. ANS: B TOP: Contracts
11. ANS: A TOP: Contracts
12. ANS: A TOP: Contracts
13. ANS: A TOP: Contracts
14. ANS: D TOP: Contracts
15. ANS: D TOP: Negotiable instruments
16. ANS: D TOP: Corporation Law
17. ANS: B TOP: Insurance Law
18. ANS: B TOP: Insurance Law
19. ANS: A TOP: Partnership Law
20. ANS: B TOP: Obligations
21. ANS: D TOP: Insurance Law
22. ANS: D
23. ANS: B
24. ANS: D
25. ANS: A
26. ANS: A
27. ANS: B
SOL:
Banks, trust companies, insurance companies, public utilities, and building and loan associations shall not be
permitted to issue no-par value shares of stock.

TOP: Corporation Law

28. ANS: B TOP: Corporation Law
29. ANS: B TOP: Corporation Law
30. ANS: B
SOL:
A corporation cannot be an incorporator in the Philippines because only natural persons must become
incorporators.

TOP: Corporation Law

31. ANS: C TOP: Corporation Law
32. ANS: B TOP: Corporation Law
33. ANS: B TOP: Corporation Law
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 REGULATORY FRAMEWORK FOR BUSINESS AND TRANSACTIONS

34. ANS: D TOP: Corporation Law

35. ANS: D TOP: Corporation Law
36. ANS: C TOP: Corporation Law
37. ANS: B TOP: Corporation Law
38. ANS: B TOP: Corporation Law
39. ANS: B TOP: Corporation Law
40. ANS: B TOP: Partnership Law
41. ANS: C TOP: Partnership Law
42. ANS: C TOP: Partnership Law
43. ANS: B TOP: Contracts
44. ANS: D TOP: Contracts
45. ANS: D TOP: Contracts
46. ANS: A TOP: Contracts
47. ANS: B TOP: Contracts
48. ANS: C TOP: Contracts
49. ANS: A TOP: Contracts
50. ANS: A TOP: Contracts
51. ANS: A TOP: Contracts
52. ANS: C TOP: Contracts
53. ANS: C TOP: Contracts
54. ANS: D TOP: Contracts
55. ANS: D TOP: Contracts
56. ANS: B TOP: Contracts
57. ANS: B TOP: Contracts
58. ANS: D TOP: Contracts
59. ANS: B TOP: Contracts
60. ANS: B TOP: Contracts
61. ANS: D
SOL:
Cession is the act of cession is the assignment of property to another entity. In international law it commonly
refers to land transferred by treaty. Ballentine's Law Dictionary defines cession as "a surrender; a giving up; a
relinquishment of jurisdiction by a board in favor of another agency"[1] In contrast with annexation, where
property is forcibly given up, cession is voluntary or at least apparently so.

Barter usually replaces money as the method of exchange in times of monetary crisis, such as when the
currency may be either unstable (e.g., hyperinflation or deflationary spiral) or simply unavailable for
conducting commerce.

TOP: Contract of Sales

62. ANS: D TOP: Contract of Sales
63. ANS: C TOP: Contract of Sales
64. ANS: C TOP: Obligations
65. ANS: B TOP: Contract of Sales
66. ANS: D TOP: Contract of Sales
67. ANS: C TOP: Corporation Law
68. ANS: A TOP: Marine Law
69. ANS: C TOP: Corporation Law
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 REGULATORY FRAMEWORK FOR BUSINESS AND TRANSACTIONS

70. ANS: D TOP: Insurance Law

71. ANS: C TOP: Corporation Law
72. ANS: D TOP: Marine Law
73. ANS: D TOP: Corporation Law
74. ANS: A TOP: Insurance Law
75. ANS: C TOP: Corporation Law

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