Statement II - The nullity of the accessory obligation of the penal clause does carry with

MAY 1994 the nullity of the principal obligation which remains in force and demandable. Determine
whether
a. Statement I is true but Statement II is false.
1. A condition with, if imposed on an obligation will be disregarded and will therefore b. Both statements are false.
make the obligation immediately demandable c. Statement I is false but Statement II is true.
d. Both statements are true.
a. If Juan commits suicide
b. If Juan passes the bar examination
c. If Juan kills Pedro 6. The period when the minds of the seller and the buyer have met on the subject
d. If Juan will not rise from the dead matter and the cause of the interest is

a. Negotiation of the sale c. Consummation of the sale

2. “A sells to B his lot and house in the city if A decides to transfer and live in the b. Consensus of the sale d. Perfection of the sale
countryside” is an example of

a. Mixed condition c. Casual condition 7. One of the following is not a remedy granted to an unpaid seller:
b. Potestative condition d. Resolutory condition
a. Right of stoppage of goods in transit
b. Right of lien over the goods
3. It is a mode extinguishing an obligation when two persons in their own right are c. Right to resale
creditors of each other. d. Right to demand a security for the payment of the price

a. Confusion c. Compensation
b. Reformation d. Novation 8. Which of the following cases does not terminate the agency?

a. A issued a general power of attorney to B on February 10, 1993 and later issued
4. X, a minor sold to Y his parcel of land for P100,000. From the proceeds of the sale, another power of attorney to C after notifying B.
X deposited P30,000 in the bank, spent for clothing and other personal expenses b. A writes his principal giving the authority to C take delivery of sugar on
P20,000, joined a tour abroad costing P20,000, lost in gambling P20,000 and behalf of A without giving time limit for the authority.
loaned P10,000 to Z who became insolvent. Upon reaching the age of 21 years, X c. A the agent sues B the principal in court.
files an action of annulment which the court granted. Y was required to return the d. A writes his principal B that he could no longer administer to the latter’s property
land to X and X was made to return to Y the amount of and turn over the administration to C after rendering his account.

a. P30,000 c. P80,000
b. P40,000 d. P70,000 9. One of the following is not an alternative remedy available to a seller of personal
property on installment if buyer defaults.

5. Statement I - A contract whose cause or object did not exist at the time of the a. To go to court and ask the court to order delivery of the property
transaction is a defective contract which cannot be remedied by providing a b. To foreclosure the chattel mortgage
cause or object as the case may be in the contract c. To sue for specific performance
d. To take possession of the property and forfeit the amount paid by buyer
 d. It has a juridical personality separate and distinct from the partners.

10. If the principal sends a letter by mail appointing a certain person as his agent and 15. Can the partners stipulate that the newly admitted partner shall not be held liable for
the latter remains silent about it, such silence cannot be interpreted as the obligations of the partnership arising before his admission? Which of the following
acceptance of the appointment, an implied agency is created. The two answer is not correct?
statements are
a. No, because third persons are always protected by law.
a. First statement is true but second statement is false. b. NO, because the newly admitted should be deemed to have assumed all the debts of
b. Both statements ae false. the partnership upon his voluntary participation in the partnership.
c. First statement is false but second statemetn is true. c. No, because the subject of the stipulation is that the liability of the new
d. Both statements are true. partner should not be satisfied out of partnership property.
d. NO, because a newly admitted partner is liable with respect to his capital contribution
which forms part of the partnership.
11. One of the following is not a characteristic of pledge and mortgage
16. Statement I- Holding out by certain persons to the public that they are partners when
a. Accessory c. Gratuitous actually they are not leads to the legal existence of partnership by estoppels in which
b. Consensual d. Onerous case the liability that results in a partnership liability and since there may be no
partnership assets available the partners in estoppel are equally liable for the
12. In sale of the thing pledged at public auction, which of the following statements is partner’s debt with their separate properties.
not true and incorrect? Statement II- Consenting to or permitting another to act as partner of an actual
partnership although the persons consenting is not actually a partner of that existing
a. The sale of the thing pledged extinguished the obligation. partnership, in which case any of the actual partners consenting to another person
b. The pledgor or owner has a better right if he should after the same terms as the who is not member of the partnership is liable but not the partnership.
highest bidder. Which is correct?
c. If the price of the sale is less, the pledge is entitled to recover the
deficiency. a. First statement is true but second statement is false.
d. If the price of the sale is more than the principal, interest and expenses, the pledge b. Both statements are false.
is not entitled to the excess. c. Both statements are true.
d. First statement is false but second statement is true.
13. Co-ownership as distinguished from partnership
17. A corporation where vacancies in the Board of Directors, are filled only by the
a. It has juridical personality. remaining members of the Board, is
b. Created not only agreement of the partied but also by law.
c. Purpose is to make profits. a. Open corporation c. Eleemosynary corporation
d. Profits are divided in proportion to one’s interest, if there is no stipulation. b. Corporation sole d. Close corporation

14. The following, except one, are the legal characteristics of partnership, which is 18. The following are the requisites, except on for valid declaration and/or issuance of
the exception? stock dividend:

a. There is mutual agency among partners. a. Existence of original and unissued shares
b. The partners are liable pro-rata for the contractual liabilities of the partnership. b. Dividend declarations is made by the Board of Directors and approved by 2/3 of the
c. All the partners are liable after exhaustion of partnership assets to the outstanding capital stock.
extent of their personal property. c. It is issued to increase the authorized capital.
d. Existence of unrestricted retained earnings. 24. Which of the following instrument is not negotiable for the reasons that the
instrument is not payable at a determinable future time?
19. The authorized capital stock of a proposed corporation is P1, 000,000 divided into
10,000 shares with a par value of P100 each. The minimum amount of subscription a. “One week after X passes the CP|A Board Examination, promise to pay to
what must be paid up is the order of Y P10, 000. (Sgd) Z
b. “Thirty days after demand, Drawer Z directs Drawee X to pay Y or order
a. P50, 000 or 500 shares c. P75, 000 or 750 shares P10, 000.”
b. P87, 500 or 875 shares d. P62, 500 or 625 shares c. “Ten days after the death of X, I promise to pay to the order of Y P10, 000.” (Sgd) Z
d. “On or before October 31, 1993, I promise to pay Y or his order P10, 000.” (Sgd) Z
20. 1st Statement- NO dividends can be declared out of principal surplus as this could
amount to declaration of dividend of capital. 25. In the renunciation of holder of his rights against any party to the instrument, which
2nd Statement- If the surplus profits of the stock corporation reaches the level equal of the following statements is false?
to its paid-up capital, the SEC may compel the corporation to declare dividends
otherwise it will be liable for a surtax on improperly accumulated surplus. Which of a. If the instrument is delivered to the person primarily liable without collecting, it
the following is correct? constitutes oral renunciation.
b. If renunciation is made in favor of any party secondarily liable, all parties subsequent
a. 1st statement is false but 2nd statement is true. to him are discharged from liability.
b. Both statements are true. c. Renunciation will not affect the rights of a holder in due course without notice.
c. Both statements are false. d. If the renunciation is made in favor of the party primarily liable, it must be
d. 1st statement is true and 2nd statement is false. made before, at or after maturity date.

21. A bill of exchange to which no document is attached when presentment for payment October 1994
of acceptance is made: October 1994
1. The following, except one, are the qualifications of corporate directors:
a. Trade acceptance c. Clean bill of exchange
b. Bank acceptance d. Documentary bill of exchange a. Must continuously own ate least one share during their term as directors.
b. Must own at least one share of stock.
22. Which of the following does not discharge a negotiable instrument? c. Ownership of shares must be recorded in the books of corporation.
d. Majority are citizens of the Philippines.
a. Payment in due course by the accommodated party which the instrument’s made or
accepted for his accommodation. 2. In a corporation, two or more positions may be held concurrently by the same
b. Payment in due course by the principal debtor. person, except that no one person shall act as:
c. Intentional cancellation of the instrument by the maker.
d. Payment in due course by the accommodation maker. a. President and chairman of the board
b. Secretary and treasurer
23. Which of the following is an Example of Real Defense? c. Treasurer and director
d. President and secretary.
a. Acquisition of the instrument by force
b. Acquisition of the instrument for illegal consideration. 3. Which of the following is a disadvantage of forming a corporation:
c. Fraud in the endorsement
d. Fraud in factum a. The shareholders are not liable for the debts of the business.
b. The subservience of minority stockholders to the wishes of the
majority subject only to equitable restraints.
 c. Because of the power of succession the existence of the entirety is not b. The bill is merely assigned and not negotiated.
affected by the personal vicissitudes of the individual shareholders. c. C becomes a holder.
d. The free and ready transferability of ownership. d. The transfer vests in C such title as B had thereon.

4. 1st Statement- No dividends can be declared out of appraisal surplus as this could 9. A issued a negotiable promissory note to the order of B for P10, 000 payable after
amount to declaration of dividend out of capital. 30 days after date. Later B indorsed it to C. then X stole the note from C, forged
2nd Statement- If the surplus profits of the stock corporation reaches the level the signature of C and negotiated it to D, and D to E, E to F, the holder. On
equal to its paid- up capital, the SEC may compel the corporation to declare maturity of the note, which of the following statements is not correct and invalid?
dividends otherwise it will be liable for a surtax on improperly accumulated
surplus. Which of the following is correct? a. F can collect from either D or E, because their signatures are genuine and
the note is operative against them.
a. 1st statement is false, but 2nd statement is true. b. F can collect from A because A cannot put up forgery as his
b. Both statements are false. defense.
c. 1st statement is true, bit 2nd statement is false. c. F cannot collect from C because it was C’s signature which was forged.
d. Both statements are true. d. F cannot collect from B because B is a party prior to the forgery.

5. The following are instances when a drawee bank may refuse to pay checks drawn 10. An instrument is indorsed as follows: “PAY TO A, FOR B” (Sgd.) C. Then A indorsed
against it, except one: the instrument “Pay to D” (Sgd.) A, in payment of A’s personal loan to D, the
instrument was accepted by D as indorsed by A. Is D acting in good faith when he
a. If there is a stop payment issued by the drawer. accepted the instrument as indorsed?
b. When the bank receives notice of the drawer’s death.
c. If the drawer’s deposit is insufficient. a. Yes, because D is a holder in due course
d. If the drawer is insolvent. b. No, because D knew by prior indorsement that A is merely a
trustee for B and has no right to negotiate the instrument.
6. The following are functions of a negotiable instrument. Choose the exception: c. Yes, because D acquired the instrument for value.
d. No, because D did not get the consent of B.
a. It increases purchasing power in circulation
b. as a legal tender 11. A obliged himself to give B a car if B places among the top ten in the CPA Board
c. As a substitute for money Exam. Subsequently, they agreed that A will give B the car if B merely passes the
d. It increases credit circulation CPA Board. This is an example of:

7. A check drawn by the bank upon itself and payable to a third person: a. a. Mixed novation c. Implied novation
b. b. Real novation d. Personal novation
a. Certified check
b. Manager’s check 12. It is a mode of extinguishing an obligation when two persons in their own right are
c. Traveller’s check creditors of each other:
d. Crossed check
a. a. Reformation c. Compensation
8. A issues a bill payable to the order of B. Later B without endorsing the bill b. b. Novation d. Confusion
transfers for a consideration said bill to C. The following except one, are the valid
effects of the transfer: 13. In order that fraud may make a contract voidable:

a. C acquires the right to have the endorsement of B. a. It may be incidental but both parties should not be in pari delicto.
 b. It may be serious and the parties must be in pari delicto. d. No, because the subject of the stipulation is that the liability of
c. It may be incidental but should have been employed by both parties. the new partner should not be satisfied out of the partnership
d. it should be serious and should have not have been employed by property.
both contracting parties.
19. 1st Statement- The arrival of the term of a partnership with a fixed term or period
14. One is not a requisite needed in order that obligation shall be extinguished by loss shall not dissolve the partnership if the partners continue with the business of the
or destruction of the thing due: partnership but such partnership may be terminated anytime dependent on the
will of the continuing partners.2nd Statement- The general rule is that the loss of
a. When the thing is lost without the fault og the debtor. the specific thing contributed to the partnership dissolves the partnership when
b. When the thing lost is generic. only the use of the thing is contributed by the partner and such thing after its
c. When the thing lost before the debtor has incurred in delay. transfer to the partnership which used the same for some time was subsequently
d. When the thing lost is specific. lost, the partnership is not dissolved. Which is correct?

15. X obliged himself to pay Y the amount of P30, 000 days after May 31, 1993 plus a a. 1st Statement is true but 2nd statement is false.
penalty of P3, 000 if he fails to pay the obligation on due date. After demand for b. Both statements are true.
payment by Y, offered to pay on July 30, 1993. Y can demand from X: c. Both statements are false.
d. 1st statement is false but 2nd statement is true.
a. P30, 000 plus P3, 000 plus legal interest
b. P30, 000 plus legal interest. 20. The following are requisites of Pledge except:
c. P30, 000 plus P3, 000.
d. P30, 000 plus P3, 000 plus legal interest plus damages. a. The disposal of the property by the pledge.
b. Absolute ownership of the property pledged.
16. Which of the following is a characteristic of partnership as a contract? c. The thing pledged may be placed in the possession of a third person.
a. a. Formal c. Gratuitous d. To bind the third person, it must be recorded in the office of the
b. b. Innominate d. Preparatory Register of Deeds.

17. One who takes active part in the business, but is not known to be a partner by 21. The leviable properties of the debtor are transferred to the creditors to be sold
outside parties is: and from the proceeds, the creditors are paid:

a. Silent partner a. Pledge c. Dacion en pago

b. Dormant partner b. Cession d. Chatel mortage
c. Nominal partner
d. Secret partner 22. A characteristic of the Contract of Sale which involves exchange of value, it is

18. Can the partners stipulate that the newly admitted partner shall not be held liable a. Commutative c. Bilateral
for the obligations of the partnership arising before his admission? Which of the b. Nominate d. Consensual
following answer is not correct?
a. No, because the newly admitted partner should be deemed to have 23. The principal is not liable for expenses incurred by the agent:
assumed all the debts of the partnership upon his voluntary participation
in the partnership. a. When it was stipulated that the agent would only be allowed a
b. No, because a newly admitted partner is liable with respect to his capital certain sum.
contribution which forms part of the partnership. b. When the agent has complied with his obligations by acting according to
c. No, because third persons are always protected by law. the principal instructions.
 c. When the agent incurred them with the knowledge that an unfavorable 4. X, Y and Z, joint debtors owe P18, 000 to A, B and C, solidary creditors. How much
result would ensue and the principal was aware of it. can B collect from X?
d. When the expenses were incurred without the fault of the agent. a. P3, 000 c. P9, 000
b. P18,000 d. P6, 000

24. An assignor of credit warrants: 5. Which of the examples given below can legal compensation take place?
a. A owes B P1, 000 due on June 30, 1993. B owes A P1, 000 due on June 30,
a. Solvency of the debtor 1993 but C has filed and adverse claim against A.
b. Existence and legality of credit b. A owes B P1, 000 payable October 31, 1993. B owes A P1, 000 due on
c. Collectability October 31, 1993.
d. Assurance of payment c. A owes B P1, 000 with C as guarantor. B owes C P1, 000.
d. A owes B P1, 000 payable May 31, 1993. B to deliver to A 2 piculs of sugar
25. A appoints B to sell his land. worth P1, 000 on May 31, 1993.
Example 1- If the authority of B is oral and B sells the land in writing, the sale is
valid. 6. X and Y are solidary debtors of A, B and C, joint creditors to the amount of P30,
Example 2- If the authority of B is in writing and B sell the land orally, the sale is 000. How much can B collect from X?
valid. a. B can collect P30, 000 from X. B in turn has to give A and C P10, 000 each.
Which of the following is correct? b. B can collect P10, 000 from X.
c. B can collect P15, 000 from X.
a. Both examples are true. d. B can collect P30, 000 from X. X in turn can recover from Y the amount of P15,
b. Both examples are false. 000.
c. First example is true but the second example is false.
d. First example is false but the second example is true. 7. Lucy is a lessee of a store in a shopping mall. She orally sells/ assigns her right to
May 1995 Salome. She then allows Salome to occupy the stall. The delivery here is called
1. The obligation is demandable on the date of obligation and shall continue to be in a. Quasi- tradition c. Traditio longa manu
force up to the arrival of the day certain. b. Actual delivery d. Traditio brevi manu
a. Resolutory period c. Indefinite period
b. Suspension period d. Legal period 8. Which of the following is not a characteristic of sale?
a. Bilateral c. Consensual
2. A, B and C secured a loan from D. The promissory note which evidences the b. Gratuitous d. Nominate
obligation states: “I promise to pay D or order P10, 000 payable on demand.”
(Sgd.) A B C. The obligation is: 9. The following are the alternative remedies, except one available to the buyer in
a. Solidary c. Indivisible case of breach of warranty by the seller.
b. Divisible d. Joint a. Keep the goods and ask for damages.
b. Refuse to keep the goods and ask for damages.
3. Which of the following is not an element of legal compensation? c. Rescind the sale and retain the goods.
a. Debts to be compensated are due and demandable d. Keep the goods and set up against the seller by way of recoupment in price.
b. There is controversy or adverse claim over any debts to be
compensated 10. Which of the following statements is incorrect?
c. There are two or more debts of the same kind. a. In the Contract of Sale, the full payment of the price in the nature of
d. There are two persons who are creditors and debtors of each other suspensive condition in that the seller is obligated to transfer
ownership of the thing sold.
 b. The seller need not be the owner of the thing sold at the perfection of the d. A person who is both a general partner and a limited partner is deemed a
sale. limited partner only with respect to the return of his contribution.
c. There may be a transfer of ownership over the thing even the seller has not
delivered the thing sold to the buyer. 16. A is the managing partner in A & B Company. X is indebted to A for P20, 000 and
d. In a Contract of Sale the buyer becomes the owner of the thing sold to the partnership for P60, 000. When both debts mature, X pays A P20, 000 and
upon full payment of the purchase price. the latter issues a receipt for his personal credit. The payment for P20, 000 shall
be applied:
11. X, Y, Z were appointed by R as his agents to administer his building which were a. ¼ in favor of A and ¾ in favor of the partnership
rented by various tenants while R was abroad for three years. In the course of b. To the whole debt owing to A
management, X caused through his fault damage to the building which was c. ½ in favor of A and ½ in favor of the partnership
assessed at P30, 000. R can claim: d. To the debt owing to the partnership
a. P10, 000 from each of X, Y and Z.
b. P30, 000 from X. 17. One of the following does not require stockholders’ approval:
c. P30, 000 from Y and Z. a. Merger and consolidation
d. P30, 000 from either X, Y, Z. b. Change of corporate name
c. Investment of corporate funds for a purpose outside of the main purpose of
12. Pledge and mortgage are accessory contracts. Which of the following statement is the corporation
false? d. Declaration of cash dividends
a. They are meant to secure the fulfillment of a principal obligation.
b. They cannot exist if the principal obligation is void. 18. Under this test, a corporation is a national of the country pursuant to the whole
c. They can exist by themselves. laws it is incorporated:
d. They can secure fulfillment of rescissible obligation. a. Nationality test c. Control test
b. Capitalization test d. Incorporation test
13. May contribute money, property or industry to a common fund
a. General partner c. Limited partner 19. Which of the following statements is not correct?
b. Industrial partner d. Managing partner a. In the delinquency sale at public auction the highest bidder is one
who offers to pay the full amount of the balance of the subscription
14. A limited partner who takes active part in the management of the firm becomes: plus interest and expenses of the sale for the highest number of
a. A managing partner shares
b. Liable as a general partner b. The sale of delinquent stock at public auction can be stopped if the Board of
c. A general partner Directors stops the sale for valid reasons.
d. A general partner and a limited partner c. Payment of unpaid subscription may not be enforced by applying cash
dividends to delinquent stockholders
d. The Board of Directors shall order, by resolution, the sale of delinquent stock
15. Which of the following statements is not correct? specifying the amount due plus accrued interest, the place, time and date of
a. A limited partner in a limited partnership manages the business of the sale
the partnership but cannot perform acts of ownership without the
consent of all of the limited partners. 20. A stockholder who does not approve the action taken by the Board of Directors in
b. Valid contributions of a limited partner are money and property but not proposing to amend the Articles of Incorporation is not allowed to withdraw from
services. the corporation in one of the following instances:
c. Additional limited partners may be admitted into the limited partnership with a. Merger and consolidation
the consent of all the partners. b. Investment in corporate funds
c. Creating, incurring, increasing or decreasing any bond indebtedness
 d. Shortening or prolonging corporate existence 26. Manuel makes a promissory note for P3, 000 payable to the order of Pedro. Pedro
negotiates the note to Antonio who with the consent of Pedro raises the amount
21. 1st Statement- Membership in a non- stock corporation and all rights arising to P30, 000 and thereafter endorses it to Boy, Boy to Cris and Cris to Doy, who
therefrom cannot be transferred even if provided in the Articles of Incorporation is a holder in due course. In this case:
or by-laws, because membership and the rights arising therefrom are personal a. Doy can recover P30, 000 as against Manuel
and non- transferable. b. Doy can recover P3, 000 from Manuel
2nd Statement- Treasury stocks sold for less than their par or issued value are c. Pedro and Antonio are liable to Doy for P3, 000
considered “watered stock” and as such are prohibited by law. Which is correct? d. Boy and Cris are not liable to Doy
a. 1st statement is true but 2nd statement is false
b. Both statements are false 27. Atoy issued a bearer note to Boy. The note is negotiated by delivery by Boy to Cris
c. 1st statement is false but 2nd statement is true to Doc, by Doc to Ely, by Ely to Fe, the holder. Fe can hold liable:
d. Both statements are true a. Cris b. Atoy c. Doc d. Boy

22. Which of the following is non-negotiable? 28. 1st Statement- A holder for value is an endorsee who has both the legal title and
a. I bind myself to pay B or bearer P10, 000. (Sgd.) A the beneficial interest to the instrument and is subject to both real and personal
b. I acknowledge being indebted to B in the amount of P10, 000. (Sgd.) defense available against him.
A 2nd Statement- A holder in due course is one who possess both the legal and
c. I promise to pay to the order of B P10, 000. (Sgd.) A beneficial interest to the instrument but is subject to personal defense only.
d. I agree to pay B or order P10, 000 on demand. (Sgd.) A a. Both statements are false.
b. First statement is false, second statement is true.
23. X obtains the signature of Y for autograph purpose. X writes a negotiable c. Both statements are true.
Promissory note above Y’s signature. The note was validly negotiated to Z who is d. First statement is true, second statement is false.
a holder in due course. What kind of defense can Y avail against Z? October 1995- Type A
a. Personal defense c. Equitable defense 1. Case 1 – A hired B for P10, 000 to kidnap C, and he paid B in advance. Before B
b. Real defense d. Qualified defense could kidnap C, A relented and stopped B from performing the contract. The court
may not allow A to recover from B the P5, 000 he paid in advance.
24. Which of the following is not a personal defense? Case 2 – A at the point of a gun, compels B to marry him. Since the contract of
a. Absence of consideration marriage is voidable either A or B has the right to file the for annulment.
b. Forgery of a signature Determine whether:
c. Non- delivery of a complete instrument
d. Failure of consideration a. Both cases are false.
b. Case 1 is true but case 2 is false.
25. A issued a promissory note to the order of B for P10, 000 payable on September c. Case 1 is false and case 2 is true.
30, 1996 in payment of a TV set to A and instead transferred the note to C for d. Both cases are true.
value but without indorsement. Which of the effects of the transactions listed
below is valid? 2. ABC are solidary creators of X for P10, 000. A makes a will giving the P10, 000
a. C is deemed a holder in due course when B transferred the note to him. debt to X as legacy. The obligation is extinguished by:
b. C becomes a holder in due course when B indorsed the note to C on October
4, 1996. a. Confusion of debt c. Remission of debt
c. C has no right to compel B to make the proper indorsement to him. b. Novation of debt d. Payment of debt
d. C cannot collect from A because of A’s defense of lack of
consideration. 3. Which of the following is not a special form of payment?
 a. Cession c. Consignation 8. A is authorized by B to sell ten books for P100 each at 10% commission. A sells
b. Application of payment d. Dacion of payment books to C on credit but for a prize of P120 each. After ratifying the sake on credit,
B can collect cash payment from C.
4. Mr. Gamboa owes Mr. Evangelista P100, 000. Gamboa knows that on maturity
date, he will not be able to pay Evangelista, and in order to prevent attachment of a. P1,000 c. P1,080
his property by Evangelista, Gamboa, before maturity of his debt, executes a b. P1,200 d. P900
contract pretending to sell to Mr. Sandiego his property. Which of the following
statement is correct? 9. The vendor is bound to transfer the ownership of and deliver as well as warrant
the thing which is the object of the sale. Payment of prize is essential to delivery
a. The contract is not valid for lack of consideration. of the thing sold.
b. The contract is binding between Gamboa and Sandiego.
c. The contract being simulated and executed to defraud Evangelista is void. a. Both statements are true.
d. Mr. Evangelista can seek rescission of the fictitious contract. b. Both statements are false.
c. First statement is true, second statement is false.
5. A owes solidary creditors XYZ P10, 000. There is remission of the debts when: d. First statement is false, second statement is true.

a. X borrows P10, 000 from A. 10. Three of the following are essential requisites of a contract of mortgage. Which
b. X waives partially the obligation of P10, 000 to A. one is not?
c. Z makes a will giving the P10, 000 debt to A as legacy.
d. Y tells A that instead of paying P10, 000, A shall just deliver a ring to Y. a. The person instituting the mortgage has the free disposal of his property.
b. The contract must be in writing.
6. Mr. Ayco offered to sell his land to Mr. Cruz for P300, 000. Mr. Cruz accepted the c. The mortgagor is the absolute owner of the thing mortgaged.
offer and paid Mr. Ayco the purchase price. Mr. Ayco delivered the owner’s d. The mortgage is constituted to secure the fulfillment of a principal
duplicate of the Transfer Certificate of title of the land. Mr. Cruz wants to register obligation.
the land in his name but the Register of Deeds asks Mr. Cruz for the Deed of Sale.
What can Mr. Cruz do? 11. In real mortgage, the following rules are valid, except one:

a. He may occupy and use the land as a buyer in good faith. a. A stipulation in the mortgage contract prohibiting the owner from
b. He cannot compel Mr. Ayco to return the payment because the contract is alienating the immovable mortgaged is valid.
unenforceable. b. The mortgagee may alienate the mortgage credit or assign to a third
c. He may compel Mr. Ayco to execute the Deed of Sale because the person in whole or in part.
contract is valid. c. Any stipulation allowing the mortgage creditor to appropriate the property
d. He may sue Mr. Ayco to return the purchase price under the legal principle mortgaged is null and void.
that no one may enrich himself at the expense of another. d. If alienation of mortgage credit is not registered, it is still valid between
the parties.
7. Pacto de Retro sale as distinguished from mortgage:
12. Which of the following is an essential element of partnership?
a. There is redemption when the principal debt is paid.
b. There is no transfer of possession of the thing sold. a. There must be contribution of money, property, or industry to a common
c. There is no foreclosure unless it is declared as an equitable fund.
mortgage. b. It must be an association for profit with the intention to divide the profits
d. There is no transfer of ownership of the thing sold. among themselves.
c. There must be a valid and voluntary agreement.
 d. All of them. c. A stockholder may cumulate his vote for one candidate or may distribute them
13. A and B are partners. On June 15, 1992 when the total obligation of the partnership among as many candidates but he cannot cast more than the shares outstanding
totals P80,000. C was admitted as a new partner. At the time of C’s admission, the in his name times the number of directors to be elected.
partnership creditors were M for P50,000 and N for P30,000. After June 15, the d. Members of the Board of Directors are voted by stockholders by means of
partnership borrowed from O P20,000 and P40,000 from P. On December 15, 1992, cumulative voting.
the partnership becomes insolvent leaving an obligation totalling P140,000 and 17. A corporate doctrine which holds the stockholders are not personally liable for
partnership assets amounting to P30,000. The creditors are going after the separate corporate debts:
properties of the partners to satisfy their remaining claims. How are the creditors’
claims satisfied? a. Separate legal entity
Answer 1 – M and N can go after the separate properties of A and B but C’s separate b. Piercing the veil of corporate fiction
properties are not answerable to their claims. c. Right of succession
Answer 2 – O and P can go after the separate properties of A, B, and C. d. Trust fund doctrine
Which of the following is correct?
a. Both answers are wrong. 18. 1st Statement – A director is removed from office by a vote of the stockholders
b. Answer 1 is wrong, but answer 2 is correct holding or representing at least 2/3 of outstanding capital stock. The vacancy
c. Both answers are correct. occasioned by such removal can be filled by the vote of at least a majority of the
d. Answer 1 is correct, but answer 2 is wrong. remaining directors if still constituting a quorum.
14. A and B are capitalist partners with C as industrial partner. A and B contributed 2nd Statement – Treasury shares sold for less than par or issued value are considered
P20,000 each to the capital of the partnership. A contractual liability of P50,000 was watered stocks and as such are prohibited by law.
incurred by the partnership in favor of X. The assets of the partnership has been a. 1st statement is false, 2nd statement is true
exhausted still leaving an unpaid liability of P12,000. What are the rights and the b. Both statements are true
obligation of the partner, if any? c. Both statements are false
a. A, B, And C are liable to X, and C after giving his share may ask d. 1st statement is true, 2nd statement is false
reimbursement from A and B, unless otherwise stipulated. 19. One of the following is a ground for the suspension or revocation of the Certificate of
b. A and B only. Incorporation by the SEC.
c. C only a. If the corporation has commenced its business transactions and
d. A, B and C has no right for reimbursement from A and B unless expressly afterwards ceased operations continuously for a period of at least 5
stipulated. years.
b. If the corporation fails to commence and start to operate and the failure is due to
15. Which of the following liabilities of the partnership shall rank first in the order of causes beyond its control.
payment? c. If the corporation does not formally commence its business transactions within 2
a. Those owing to creditors other than partners. years from date of incorporation.
b. Those owing to partners in respect to profits. d. If the corporation has commenced its operations and subsequently become
c. Those owing to partners in respect to capital. continuously inoperative for two years.
d. Those owing to partners other than for capital and profits. 20. P appointed A as his agent to buy sugar. Thereafter, A drew a bill of exchange for the
price of the sugar in favor of S, the seller. P accepted the bill. After the acceptance of
16. Which of the following statements is not correct? P, A negotiated the bill to H, a holder in due course. When the sugar was delivered, P
a. A stockholder is entitled to cast such number of votes as the number of shares refused to pay the bill on the ground that the sugar was deteriorated. Is P liable?
outstanding entitled to vote in his name times the total number of directors to be a. No, the sugar was defective.
elected shall equal. b. No, there is an absence of consideration.
b. Outstanding shares although with voting rights but have not been fully c. No, because there is failure of consideration.
paid cannot be voted. d. Yes, even if the consideration failed because H is a holder in due course.
21. Which of the following is not a secondary party?
 a. Acceptor for honor 3. Which of the following is not a special form of payment?
b. Drawer
c. Payor for honor a. Cession
d. Endorser b. Application of payment
c. Consignation
22. “I promise to pay to the order of B P 10,000 30 days after sale” (Sgd.) A. Which of the d. Dacion in payment
following indorsements of the above promissory note is not valid?
a. “Pay to C and D.” (Sgd.) D 4. Mr. Gamboa owes Mr. Evangalista P 100,000. Gamboa knows that on maturity
b. “Pay to C P 5,000, balance of this Note” (Sgd.) B if P 5,000 has been paid by A. date, he will not be able to pay Evangelista, and in order to prevent attachment of
c. “Pay to C P 5,000 to D P 5,000” (Sgd.) B. his property by Evangelista, Gamboa, before maturity of his debt, executes a
d. “Pay to C and D, partners” (Sgd.) B. contract pretending to sell to Mr. Santiago his property. Which of the following
23. M makes a P 10,000 note payable to the order of O who indorses it to A. F obtains statements is not correct?
possession of the note fraudulently, forges A’s signature, alters the amount of P
70,000 and endorses it to B who in turn endorses it to C. In this case: a. The contract is not valid for lack of consideration.
a. C can enforce the note against A. b. The contract is binding between Gamboa and Santiago.
b. C cannot enforce the note against any person. c. The contract being simulated and executed to demand Evangelista is void.
c. C can enforce the note against M and O. d. Mr. Evangelista can seek rescission of the fictitious contract.
d. C can enforce the note against B.
24. “PAY TO MARIA IN TRUST FOR JESUS” (Sgd.) Jose, is the example of 5. A owes solidary creditors XYZ P 10,000. There is remission of the debts when:
a. Conditional endorsement
b. Qualified endorsement a. X borrows P 10,000 from A.
c. Facultative endorsement b. X waives the whole obligation of P 10,000 to A.
d. Restrictive endorsement c. Z makes a will giving the P 10,000 debt to A as legacy.
Type B d. Y tells A that instead of paying P 10,000, A shall just deliver a ring to Y.
1. Case 1 – A hired B for P 10,000 to kidnap C, and he paid P 5000 in advance.
Before B could kidnap C, A relented and stopped B from performing the contract. 6. Mr. Ayco offered to sell his land to Mr. Cruz for P 100,000. Mr. Cruz accepted the
The court may allow A to recover from B the P 5,000 he paid in advance. offer and paid Mr. Ayco the purchase price. Mr. Ayco delivered the owner’s
Case 2 – A, at the point of a gun, compels B to marry him. Since the contract of duplicate of the Transfer Certificate of Title of the land. Mr. Cruz wants to register
marriage is voidable, either A or B has the right to file the action for annulment. the land in his name but the Register of Deeds asks Mr. Cruz fr the Deed of Sale.
Determine whether: What can Mr. Cruz do?

a. Both cases are false a. He may occupy and use the land as a buyer in good faith.
b. Case 1 is true, but case 2 is false b. He cannot compel Mr. Ayco to return the payment because the contract is
c. Case 1 is false, and case 2 is true unenforceable.
d. Both cases are true c. He may compel Mr. Ayco to execute the Deed of Sale because the
contract is valid.
2. ABC are solidary creditors of X for P 10,000. A makes a will giving the P 10,000 d. He may sue Mr. Ayco to return the purchase price under the legal principle
debt to X as legacy. The obligation is extinguished by: that no one may enrich himself at the expense of another.

a. Confusion of debt 7. Pacto de retro sale is distinguished from mortgage:

b. Novation of debt
c. Remission of debt a. There is redemption by payment principally of the debt.
d. Compensation of debt b. There is no transfer of possession of the thing sold.
 c. There is no foreclosure unless it is declared as an equitable b. All of them.
mortgage. c. It must be an association for profit with the intention to divide the profits
d. There is no transfer of ownership of the thing sold. among themselves.
d. There must be a valid and voluntary agreement.
8. A is authorized by B to sell the latter’s books for P 100 each at 10% commission.
A sells 10 books to C on credit but for a price of P 120 each. After ratifying the 13. A and B are partners. On June 15, 1992 when the total obligation of the
sale on credit, B can collect cash payment from C. partnership totals P 80,000, C was admitted as a new partner. At the time of C’s
admission, the partnership creditors were M for P 50,000 and N for P 30,000. After
a. P 1,000 June 15, the partnership borrowed from C P20,000 and P10,000 from P. On
b. P1,200 December 15, 19992, the partnership became insolvent leaving an obligation
c. P1,080 totalling P140,000 and partnership assets amounting to P30,000. The creditors
d. P 900 are going after the separate properties of the partners to satisfy their remaining
claims. How are the creditors’ claims satisfied?
9. The vendor is bound to transfer the ownership of and deliver as well as warrant Answer 1 – M and N can go after the separate properties of A and B but C’s
the thing which is the object of the sale. separate properties are not answerable to their claims.
Answer 2 – O and P can go after the separate properties of A, B, and C.
a. Both statements are true.
b. Both statements are false. Which of the following is correct?
c. First statement is true, second statement is false.
d. First statement is false, second statement is true. a. Both answers are wrong.
10. Three of the following are essential elements of a mortgage contract. Which one b. Answer 2 is wrong, but answer 1 is correct.
is not? c. Both answers are correct.
d. Answer 1 is correct but answer 2 is wrong.
a. The person instituting the mortgage has the free disposal of his property.
b. The contract must be in writing. 14. A and B are capitalist partners with C as industrial partner. A and B contributed
c. The mortgagor is the absolute owner of the thing mortgaged. P20,000 each to the capital of the partnership. A contractual liability of P50,000
d. The mortgage is constituted to secure the fulfilment of a principal obligation. was incurred by the partnership in favor of X. The assets of the partnership has
been exhausted still leaving an unpaid liability of P10,000. X can recover the
11. In real mortgage, the following rules are valid, except one: amount from:

a. A stipulation in the mortgage contract prohibiting the owner from a. A, B and C and C can recover by way of reimbursement from A and B
alienating immovable mortgaged is valid. unless stipulated otherwise.
b. The mortgagee may alienate the mortgage credit or assign to a third in whole b. A and B only.
or part. c. C only.
c. Any stipulation allowing the mortgage creditor to appropriate the property d. A, B, and C and C has no right for reimbursement from A and B unless
mortgaged is null and void. expressly stipulated.
d. If alienation of mortgage credit is not registered, it is still valid between the
parties. 15. Type of partnership in which the partners enjoy practically all the profits:

12. Which of the following is an essential element of partnership? a. General Partnership

b. Universal Partnership
a. There must be a contribution of money, property, or industry to a common c. Limited Partnership
fund. d. De facto Partnership
 20. The following are corporate acts in which a stockholder of a corporation shall
16. The following are ways of enforcing payment of unpaid subscription, which is the have the right to dissent and demand payment of the fair value of his shares of
exception? stock, except one:

a. Sale at public auction of delinquent stocks a. In case of an amendment to the Articles of Incorporation which has the effect
b. Denying delinquent stock cash dividends of changing or restricting the rights of any stockholder.
c. Filing a court action to recover unpaid subscription b. In case of merger or consolidation.
d. Denying delinquent stock the right to vote and be voted upon c. In case of sale, lease, mortgage or other disposal of all or substantially all of
the corporate assets.
17. May a director enter into a contract with another corporation of which he is also a d. In case of incurring, creating or increasing bonded debts.
partner?
21. “I promise to pay to the order of X P10,000 30 days after date” (Sgd.) Y, dated
1st Answer – No, if the vote of such director is not necessary for the approval of blank.
the contract.
2nd Answer - Yes, if the presence of the director concerned is not necessary to “Pay to the order of X P10,000 30 days after sight” to Y (Sgd.) Z, dated 10/15/95
constitute quorum and he does not participate in the board approval of the
contract which is deemed fair and reasonable under the circumstances. 1st Rule: The maturity date of the above promissory note will be counted 30 days
from the date of the instrument.
a. 1st answer wrong, 2nd answer correct
b. Both answers are correct 2nd Rule: The maturity of the above bill of exchange will be counted 30 days from
c. 1st answer correct, 2nd answer wrong the date the instrument is accepted by Y.
d. Both answers are wrong
a. Both rules are wrong.
18. As a rule, any provision or matter stated in the Articles of Incorporation may be b. Both rules are correct.
amended by the Board of Directors or Trustees by: c. 1st rule correct, 2nd rule wrong
d. 1st rule wrong, 2nd rule correct
a. Unanimous vote
b. Majority vote 22. The following, except one, are the requisites of acceptance for honor on a bill:
c. ¼ vote a. The bill must be previously protested for dishonour by non-acceptance or
d. 2/3 vote protested for better security.
b. The bill is overdue.
19. Subscriber X has a total 1,000 delinquent shares at P10 par value, to be sold at c. The holder must give his consent.
public auction sale. Total amount recoverable includes: Total amount of the d. The acceptor for honor must be a stranger to the bill.
delinquent shares, P10,000 and total expenses of the sale, P5,000. Who will be
declared the highest bidder among the following bidders in the public sale? 23. Which of the following is not a real defense?

a. N who is willing to pay the P15,000 for 970 shares a. Fraud in factum
b. P who is willing to pay the P15,000 for 900 shares b. Incomplete and undelivered instrument
c. O who is willing to pay the P15,000 for 920 shares c. Insertion of a wrong date
d. M who is willing to pay the P15,000 for 950 shares d. Forgery of a signature

24. Under the Negotiable Instruments Law, a certificate of stock is not a negotiable
instrument because it lacks the requisites of:
 d. dacion in payment
a. It must contain an unconditional promise or order to pay a sum certain
in money. 4. Mr. Gamboa owes Mr. Evangelista P100,000. Gamboa knows that on maturity
b. It must be payable on demand or at a fixed or determinable future time. date, he will not be able to pay Evangelista, and in order to present attachment of
c. It must be payable to order or bearer his property by Evangelista, Gamboa, before maturity of his debt, executes a
d. It must be in writing and signed by the maker or drawer. contract pretending to sell to Mr. Santiago his property. Which of the following
statements is not correct?
25. A makes a promissory note payable to B or order. B indorses the note to C, then C
to D, D to E, and E to F, the holder in whose hands the note is dishonoured. F a. The contract is not valid for lack of consideration.
notifies B, C, D and E about the dishonour of the note and subsequently indorses b. The contract is binding between Gamboa and Santiago.
it to G. Which is not correct? c. The contract being simulated and executed to defraud Evangelista is void.
d. Mr. Evangelista can seek rescission of the fictitious contract.
a. The notice to C inures to the benefits of D, E and G.
b. The notice given by F to B inures to the benefits of C, D, D and G. 5. A owes solidary creditors XYZ P10,000. There is remission of the debts when:
c. The notice to E inures to the benefit of D.
d. The notice to D inures to the benefit of E and G. a. X borrows P10,000 from A.
Type C b. X waives partially the obligation of P10,000 to A.
1. Case 1 – A hired B for P10,000 to kidnap C, and he paid B P5,000 in advance. c. Z makes a will giving the P10,000 to A as legacy.
Before B could kidnap C, A relented and stopped B from d. Y tells A that instead of paying P10,000, A shall just deliver a ring to Y.
performing the contract. The court may not allow A to recover from B the P5,000
he paid in advance. 6. Mr. Ayco offered to sell his land to Mr. Cruz for P300,000. Mr. Cruz accepted the
Case 2 – A, at the point of a gun, compels B to marry him. Since the contract of offer and paid Mr. Ayco the purchase price. Mr. Ayco delivered the owner’s
marriage is voidable either A or B has the right to file action for annulment. duplicate of the Transfer Certificate of Title of the land. Mr. Cruz wants to register
Determine whether: the land in his name but the Register of Deeds asks Mr. Cruz for the Deed of Sale.
What can Mr. Cruz do?
a. Both cases are false.
b. Case 1 is true but case 2 is false. a. He may occupy and use the land as a buyer in good faith.
c. Case 1 is false but case 2 is true. b. He cannot compel Mr. Ayco to return the payment because the contract is
d. Both cases are true. unenforceable.
c. He may compel Mr. Ayco to execute the Deed of Sale because the
2. ABC are solidary creditors of X for P10,000. A makes a will giving the P10,000 contract is valid.
debt to X as legacy. The obligation is extinguished by: d. He may sue Mr. Ayco to return the purchase price under the legal principle that
no one may enrich himself at the expense of another.
a. Confusion of debt
b. Novation of debt 7. Pacto de retro sale as distinguished from mortgage:
c. Remission of debt
d. Payment of debt a. There is redemption by payment principally of the debt.
b. There is no transfer of possession of the thing sold.
3. Which of the following is not a special form of payment? c. There is no foreclosure unless it is declared as equitable mortgage.
d. There is no transfer of ownership of the thing sold.
a. cession
b. application of payment
c. consignation
8. A is authorized by B to sell the latter’s books for P100 each at 10% commission. A c. It must be an association for profit with the intention to divide the profits
sells the books to C on credit but for a price of P120 each. After ratifying the sale among themselves.
on credit, B can collect cash payment from C. d. There must be a valid and voluntary agreement.
13. A and B are partners. On June 15, 1992 when the total obligation of the
a. P1,000 partnership totals P80,000, C was admitted as a new partner. At the time of C’s
b. P1,200 admission, the partnership creditors were M for P50,000 and N for P30,000. After
c. P1,080 June 15, the partnership borrowed from C P20,000 and P10,000 from P. On
d. P900 December 15, 1992, the partnership became insolvent leaving an obligation
totaling to P140,000 and partnership assets amounting to P30,000 . The creditors
9. The vendor is bound to transfer the ownership of and deliver as well as warrant are going after the separate properties of the partners to satisfy their remaining
the thing which is the object of the sale. claims. How are the creditors’ claims satisfied?
Answer 1: M and N can go after the separate properties of A and B but C’s
Payment of price is essential to delivery of the thing sold. separate properties are not answerable to their claim.
Answer 2: O and P can go after the separate properties of A,B and C.
a. Both statements are true. Which of the following is correct?
b. Both statements are false. a. Both answers are wrong.
c. First statement is true, second statement is false. b. Answer 2 is wrong but answer 1 is correct.
d. First statement is false, second statement is true. c. Both answers are correct.
d. Answer 1 is correct but answer 2 is wrong.
10. Three of the following are essential requisites of a contract of mortgage. Which 14. A and B are capitalist partners with C as industrial partner. A and B contributed
one is not? P20,000.00 each to the capital of the partnership. A contractual liability of
P50,000.00 was incurred by the partnership in favor of X. The assets of the
a. The person instituting the mortgage has the free disposal of his property. partnership has been exhausted still leaving an unpaid liability of P10,000.00. X
b. The contract must be in writing. can recover the amount from:
c. The mortgagor is the absolute owner of the thing mortgaged. a. A, B and C and C can recover by way of reimbursement from A and B
d. The mortgage is constituted to secure to secure the fulfillment of a principal unless stipulated otherwise.
obligation. b. A and B only
c. C only
11. In real mortgage, the following rules are valid, except one: d. A, B and C and C has no right for reimbursement from A and B unless expressly
stipulated.
a. A stipulation in the mortgage contract prohibiting the owner from 15. Which of the following liabilities of the partnership shall rank first in the order of
alienating the immovable mortgaged is valid. payment?
b. The mortgagee may alienate the mortgage credit or assign to a third person in a. Those owing to the creditors other than partners .
whole or part. b. Those owing to partners in respect to profits.
c. Any stipulation allowing the mortgage creditor to appropriate the property c. Those owing to partners in respect to capital.
mortgaged is null and void. d. Those owing to partners other than for capital and profits.
d. If alienation of mortgage credit is not registered, it is still valid between the 16. Which of the following statements is correct?
parties. a. A stockholder is entitled to cast such number of votes as the number of shares
outstanding entitled to vote in his name times the total number of directors to be
12. Which of the following is an essential element of partnership? elected shall equal.
b. Outstanding shares although with voting rights but have not been
a. There must be a contribution of money, property or industry to a common fund. fully paid cannot be voted.
b. All of them.
 c. A stockholder may cumulate his vote for one candidate or may distribute them b. Drawer
among as many candidates but he cannot cast more than the shares outstanding c. Payor for honor
in his name times the number of directors to be elected. d. Endorser
d. Members of the Board of Directors are voted by stockholders by means of 22. “ I promise to pay to the order of B P10,000 30 days after sale” (Sgd.) A. Which of
cumulative voting. the following indorsements of the above promissory note is not valid?
17. A corporate doctrine which holds the stockholders are not personally liable for a. “Pay to C and D”. (Sgd.) B
corporate debts: b. “Pay to C P50,000, balance of this Note” (Sgd.) B if P5,000 has been paid by A.
a. Separate legal entity c. “ Pay to C P5,000 to D P5,000” (Sgd.) B
b. Piercing the veil of corporate fiction d. “Pay to C and D, partners” (Sgd.) B
c. Right of succession 23. M makes a P10,000 note payable to the order of O who indorses it to A. F obtains
d. Trust fund doctrine possession of the note fraudulently, forges A’s signature, alters the amount to
18. 1st Statement- A director is removed from office by a vote of the stockholders P70,000 and endorses it to B who in turn endorses to C. In this case:
holding or representing at least 2/3 of outstanding capital stock. The vacancy a. C can enforce the note against A.
occasioned by such removal can be filled by the vote of at least a majority of the b. C cannot enforce the note against any person.
remaining directors if still constituting a quorum. c. C can enforce the note against M and O.
2nd Statement- Treasury shares sold for less than par or issued value are d. C can enforce the note against B.
considered watered stocks and as such are prohibited by law. 24. “PAY TO MARIA IN TRUST FOR JESUS” (Sgd.) Jose, is the example of
a. 1st statement is false, 2nd statement is true. a. Conditional endorsement
b. Both statements are true. b. Qualified endorsement
c. Both statements are false. c. Facultative endorsement
d. 1st statement is true, 2nd statement is false. d. Restrictive endorsement
19. One of the following is a ground for the suspension or revocation of the Certificate
of Incorporation by the SEC. October 1996
a. If the corporation has commenced its business transactions and BUSINESS LAW October
afterwards ceased operations continuously for a period of at least 5 1996
years. CPA Examination
b. If the corporation fails to commence and start to operate and the failure is due
to causes beyond its control. MULTIPLE CHOICE
c. If the corporation does not formally commence its business transactions within
2 years from date of incorporation. 1. When the characters of the creditor and the debtor are merged in one and the same
d. If the corporation has commenced its operation and subsequently become person, there is extinguishment of the obligation by
continuously inoperative for two years.
20. P appointed A as his agent to buy sugar. Thereafter, A drew a bill of exchange for a. Compensation c. Novation
the price of the sugar in favor of S, the seller. P accepted the bill. After the b. Merger of rights d. Remission
acceptance of P, A negotiated the bill to H, a holder in due course. When the
sugar was delivered, P refused to pay the bill on the ground that the sugar was 2. The process of intentionally deceiving others by producing the appearance of a
deteriorated. Is P liable? contract which is different from the true agreement is:
a. No, the sugar was defective.
b. No, there is an absence of consideration. a. Relative simulation of a contract
c. No, because there is failure of consideration. b. Absolute simulation of a contract
d. Yes, even if the consideration failed because H is a holder in due course. c. Annulment of a contract
21. Which of the following is not a secondary party? d. Misrepresentation
a. Acceptor for honor
3. There shall be no reformation of contract in the following cases, except: a. Ratification c. Operation of Law
b. Estoppel d. Consent of the Principal
a. In testamentary wills
b. Simple donation intervivos with no condition being imposed 8. A case where Contract of Sale must not necessarily be in writing.
c. Contract of mortgage executed as a contract of lease
d. A contact of sale fraudulently made as a contract of lease. a. Sale of 100 piculs of sugar at P 400 per picul when there is partial
delivery.
4. X and Y and Z solidarily owe A, B, C, D joint creditors P30, 000. How much can A b. Sale where by its term cannot be performed within one year from the making
collect from X ? thereof.
c. Sale of land
a. P 7,500 only d. Sale of public auction
b. P 20,000, A in turn has to give P 5,000 to B, C, and D.
c. P 10,000, A in turn has to give P 2,500 each to B, C, And D. 9. A sold and delivered her diamond ring to B. It was agreed upon that within 10 days B
d. P 5,000 only. will sate and fix the price. On the 10 th day, B called up by telephone A and stated the
price at P 20,000 which A agreed. Is the sale perfected?
5. A, B, and C solidarily bound themselves to deliver X a Honda Motorcycle. The
obligation was not fulfilled through the fault of A. Thereupon, X filed an action in court a. No, at the time of the sale the price was not fixed.
against C and the court awarded P 36,000 to X. Which of the following situations is b. Yes, at the time of the sale the price was already known.
valid? c. Yes, the price stated and fixed by the buyer was accepted by the
seller.
a. If C pays X the P 36,000, C can collect from A P 26,000 and B P d. No, the price was left to the discretion of one of the parties.
12,000. Later, B can ask for reimbursement from A P 12,000.
b. X has to collect P 12,000 each from A, B, and C to satisfy the court’s award of 10. Which of the following statements regarding contract of pledge is NOT correct?
P 36,000.
c. If C pays X the P36,000, C can collect from B P 10,000 and from A P 16,000. a. A pledge cannot be constituted unless the thing pledged be placed in the
d. X cannot collect the whole amount of P 36,000 from C. possession of the creditor.
b. Pledge is a real contract because it is perfected by delivery of the thing
pledged.
6. Which of the following statements is NOT correct? c. Pledge is an accessory contract because it needs a principal obligation to
exist.
a. Actual delivery of the thing or payment of the price is not required for the d. A pledge cannot be constituted to secure the performance of a
perfection of the sale. voidable or unenforceable or even a natural obligation.
b. A stipulation that even when the object is delivered to the buyer,
ownership will not pass until the price is fully paid is not valid.
c. A sale is consummated upon delivery of the thing and the payment of the
purchase price. 11. When the mortgage is due and remains unpaid, can the Mortgage appropriate the
d. Sales through letters or telegrams are deemed perfected only when mortgaged property?
acceptance by the buyer has been received by the seller.
1st Answer : No, the only right of the mortgagee – creditor is foreclose the
7. An appointed S to be his agent to administer his farms while A was in world tour but S mortgage.
died leaving his son of legal age to take care of the farm until A arrived. This is an 2nd Answer : Yes, if there is a stipulation in the mortgage contract allowing the
example of agency created by: mortgagee – creditor to appropriate the properly mortaged.
 a. 1st answer correct; 2nd answer wrong
b. 1st answer wrong; 2nd answer correct a. Those owing to creditors other than partners.
c. Both answers are wrong. b. Those owing to partners in respect to profits.
d. Both answers are correct c. Those owing to partners in respect to capital.
d. Those owing to partners other than for capital and profits.
12. The common property of a universal partnership shall be:
16. Which of the following is not correct?
a. All the properties which shall belong to each of the partners after the
constitution of the partnership. a. A stockholder is entitled to cast such number of votes as the number of shares
b. All of the properties which belong to each of the partners at the time of the outstanding entitled to vote in his name times the total number of directors to
constitution of the partnership. be elected shall be equal.
c. All of the properties which belong to each of the partners t the time b. Outstanding shares although with voting rights but have not been
of the constitution of the partnership as well as the profits which fully paid cannot be voted.
they may acquire therewith. c. A stockholder may cumulate his vote for one candidate or may distribute
d. All the properties which belong to each of the partners at the time of the them among as many candidates but he cannot cast more than the shares
constitution of the partnership as well as properties which may acquire outstanding in his name times the number of directors to be elected.
thereafter. d. Members of the Board of Directors are voted by stockholders by means of
cumulative voting.

13. X, Y and Z are partners and contributed to the partnership P40,000, P30,000 and 17. A corporate doctrine which holds the stockholders are not personally liable for
services respectively. The partnership was later liquidated and after payment of the corporate debts:
partnership indebtedness, only P20,000 worth of assets remained. How much is the
share of Z? a. Separate legal entity c. Right of succession
b. Piercing the veil of corporate fiction d. Trust fund doctrine
a. Zero c. Equal to share of Y
b. Equal to share of X d. P6,000 18. 1st Statement – A director is removed from office by a vote of the stockholders
holding or representing at least 2/3 of outstanding capital stock.
14. Anton, Ben and Cris are partners in a joint venture engaged in real estate and land The vacancy occasioned by such removal can be
development. Anton, without the knowledge of Ben and Cris, offered to sell to Don all filled by the vote of at least a majority of the remaining directors if
the remaining unsold lots at a price very much higher than the prevailing market still constituting as a quorum.
prices. Awhile later, Anton bought out Ben and Cris from the partnership and
thereafter finally sold all the lots at a very big profit. 2nd Statement – Treasury shares sold for less than par or issued value are considered
1st Conclusion : When Anton bought out Ben and Chris from the partnership, the watered stocks and as such are prohibited by law.
partnership was dissolved so Ben and Cris have no more share in
the profit of the sale. a. 1st statement is false; 2nd statement is true.
2nd Conclusion: The sale of the lots between Anton and Don is void because it was b. Both statements are true.
without the knowledge and consent of Ben and Cris. c. Both statements are false.
a. Both conclusions are correct. d. 1st statement is true; 2nd statement is false.
b. Both conclusions are wrong.
c. 1st conclusion wrong; 2nd conclusion correct.
d. 1st conclusion correct; 2nd conclusion wrong.
15. Which of the following liabilities of the partnership shall rank first in the order of
payment?
 b. C cannot enforce the note against any person.
19. One of the following is a ground for the suspension or revocation of the Certificate of c. C can enforce the note against M and O.
Incorporation by the SEC. d. C can enforce the note against B.

a. If the corporation has commenced its business transactions and 24. “PAY TO MARIA IN TRUST FOR JESUS” (Sgd.) Jose, is the example of:
afterwards ceased operations continuously for a period of at least 5
years. a. Conditional endorsement
b. If the corporation fails to commence and start to operate and the failure is due b. Qualified endorsement
to causes beyond its control. c. Facultative endorsement
c. If the corporation does not formally commence its business transactions d. Restricted endorsement
within 2 years from date of incorporation.
d. If the corporation has commenced its operations and subsequently become MAY 1997- Folesterio, Rehoy, Seredena
continuously inoperative for two years.
October 1997
20. P appointed A as his agent to buy sugar. Thereafter, A drew a bill of exchange for the 1. Which of the following contracts is not void ab initio?
price of the sugar in favor of S, the seller. P accepted the bill. After the acceptance of
P, A negotiated the bill to H, a holder in due course. When the sugar was delivered, P a. That whose object is outside the commerce of men
refused to pay the bill on the ground that the sugar was deteriorated. Is P liable? b. That whose object did not exist at the time of transaction
c. That which contemplates an impossible service
a. No, the sugar was defective. d. That which is undertaken in fraud of creditors
b. No, there is an absence of consideration.
c. No, because there is failure of consideration. 2. Contracts which cannot be sued upon unless ratified, thus it is as if they have no
d. Yes, even if the consideration failed because H is a holder in due effect yet are
course.
a. Voidable
21. Which of the following is not a secondary party? b. Rescissible
c. Void
a. Acceptor for Honor c. Payor for Honor d. Unenforceable
b. Drawer d. Endorser
3. Which of the contracts is valid?
22. “I promise to pay to the order of B P10,000 30 days after sale” (Sgd.) A. Which of the
following indorsements of the above promissory note is not valid? a. Oral contract of agency giving authority to an agent to sell the land belonging
to the principal
a. “Pay to C and D”, (Sgd.) B b. Oral partnership agreement where immovable property entered into by an
b. “Pay to C P5,000, balance of this Note” (Sgd.) B if P5,000 has been paid by A. agent who was given authority orally by the principal
c. “Pay to C P5,000 to D P5,000” (Sgd.) B. c. Oral contract of sale of an immovable property entered into by an agent who
d. “Pay to C and D, partners” (Sgd.) B. was given authority orally by the principal
d. Oral agreement to answer all expenses for the wedding reception of
23. M makes a P10,000 note payable to the order of O who indorses it to A. F obtains if A marries B
possession of the note fraudulently, forges A’s signature, alters the amount to
P70,000 and endorses it to B who in turn endorses to C. In this case: 4. A, B and C solidarily owe X and Y P30, 000. X remitted the entire obligation in
favor of A. The effect is
a. C can enforce the note against A.
 a. The obligation is not extinguished until A collects from B and C
b. The obligation is not yet extinguished until Y is paid by X of Y’s share of the 9. 1st Statement: If the thing should have been sold to different buyers, the
credit. ownership shall be transferred to the person who may have been in possession
c. A cannot recover from B and C because remission in his favor extend thereof in good faith, if it should be immovable property
to the benefit of B and C 2nd Statement: The seller is responsible to the buyer for any hidden defects or
d. A can recover from B and C their respective share of the debt faults in the thing sold only if he was aware thereof.

5. When the debtor binds himself to pay when his means permit him to do so, the a. 1st Statement true, 2nd Statement false
obligation is b. Both statements are false
c. 1st Statement false, 2nd Statement true
a. Conditional d. Both statements are true
b. Pure
c. Simple 10. When does the buyer of a thing has the right to the fruits of the thing bought?
d. With a period
a. From the time the fruits are delivered
6. When A voluntarily takes charge of the neglected business of B without the b. From the time the obligation to deliver the thing bought arises
latter’s authority where reimbursement must be made for necessary and useful c. From the time the sale is perfected
expenses, there is a d. From the time the thing bought is delivered

a. Quasi-delict 11. One known to be acting for and in behalf of the principal either because the latter
b. Quasi-contract presented him to be his agent or the people believe him to be acting on behalf of
c. Negotiorum gestio the principal is
d. Solution indebiti
a. Ostensible agent
7. Mr. Gamboa sold his car for P200, 000 to Mr. Ramos. There was no fixed date for b. Implied agent
the performance of the obligations of both parties. The obligation of Mr. Gamboa c. Special agent
as vendor is d. Universal agent

a. To wait for Mr. Ramos to pay P200, 000 and deliver the car 12. Chattel mortgage as distinguished from Pledge.
b. To deliver the car immediately as this is a perfected contract
c. To deliver the car immediately because the seller’s obligation is pure a. The excess over the amount due after foreclosure goes to the debtor.
d. To rescind the contract because no time or date is fixed for the performance of b. The sale of the object in an auction extinguishes the obligation.
their respective obligations c. The delivery of the personal property is necessary.
d. The registration of the property in the Registry of Property is not necessary.
8. M, N and O are co-owners of a parcel of land pro-indiviso. M sold his 1/3 share in
the land to N in an absolute deed of sale. Which is correct? 13. The following are essential requisites common to the Contract of Pledge and
Mortgage except one:
a. The deed of sale between M and N is void because it was not made in favor of a. That they are constituted to secure the fulfillment of a principal obligation
a third party b. That the pledgor or mortgagor is the absolute owner of the thing pledged or
b. O may exercise his right of redemption on the interest sold by M to N mortgaged
c. O may redeem only ½ of the interest sold by M to N c. That the contract is registered with the Register of Deeds
d. O cannot exercise the right of redemption because the sale was d. That the person constituting the contract has free disposal of his property or
made in favor of a co-owner that he is authorized legally for the purpose
14. 1st Statement: In all cases of extrajudicial foreclosure, the right of redemption can be a. Partnership creditors
exercised by the mortgagor within one year from and after the judicial registration of the b. Partner’s contribution in the partnership
sale. c. Separate creditors of the debtor
2nd Statement: In judicial foreclosure, the mortgagor may still exercise his equity of d. Pro-rata between the separate creditors and the partnership’s creditors
redemption after the confirmation of the sale by the court.
a. Both statements are wrong. 19. The following except one, are common characteristics of partnership and corporation.
b. 1st statement correct, 2nd statement wrong Which is the exemption?
c. Both statements are correct.
d. 1st statement wrong, 2nd statement correct a. The individuals composing both organizations have little voice in the
conduct of
15. Cesar pledged his Toyota car to Dan for P100,000. Cesar was unable to pay the the business.
obligation became due and demandable. Therefore, Dan sold the car at public auction for b. Both can act only through agents.
P80,000. Can Dan recover the deficiency of P20,000 from Cesar? c. Both are business organizations composed of a number of individuals.
d. Both have juridical personality separate and distinct from that of individuals
1st Answer: No, he cannot recover the deficiency even if there is a stipulation he can. composing it.
2nd Answer: Yes, he can recover the deficiency even without stipulation.
20. Which of the following is not a requisite prescribed by law in order that a partnership
a. 1st answer correct, 2nd answer wrong may be held liable to a third party for the acts of one of its partners?
b. Both answers are wrong.
c. 1st answer wrong, 2nd answer correct a. The partner binds the partnership by acquiescence for obligations he
d. Both answers are correct. may have contracted in good faith.
b. The partner must have the authority to bind the partnership.
16. Which of the following is not correct? In a limited partnership compose of A, B, and C, c. The contract must be in the partnership name or for its account.
the contribution may be as follows: d. The partner must act on behalf of the partnership.
a. A-cash (limited partner); B-cash (general partner); C-services(general partner)
b. A- property (limited partner); B-services (general partner) C- services (general 21. X, Y, and Z are partners in Able Co. W represented himself as a partner in Able Co. to
partner) B, who, on the faith of such representation, granted P300,000 loan to the partnership.
c. A-services (limited partner); B- cash (general partner) C- services Assuming only X and Y consented to such representation, who shall be liable to B?
(general partner)
d. A-cash (limited partner); B-property (general partner); C- services (general a. Since the partnership benefited from the credit extended by B, all partners X, Y,
partner) and Z are liable.
b. Only X, Y, and W who are partners by estoppel are liable prorata to B.
17. A and B orally agreed to form a partnership two years from today, each one to c. Since the loan was extended to the partnership, all the partners and W are
contribute P10,000. If at the arrival of the period, one refuses to go ahead with the liable.
agreement, can the other enforce the agreement? d. Only W who made the representation shall be liable to B.
a. Yes, since the agreement is to be enforced after one year from the making
thereof, the same should be in writing to be enforceable. 22. When the preferred shares are issued by a corporation with a fixed annual dividend
b. Yes, because the prior agreement was voluntary made. on the face thereof, the effect is
c. Yes, because the partnership contract is not governed by the statute of frauds. a. The contract of subscription between the corporation and stockholders
d. No, because the agreement was merely oral. subsists.
b. The stockholder is a creditor of the corporation.
18. If a partner is insolvent, the first order of preference in the distribution of his assets is c. The shares of stock become negotiable instruments.
 d. The stockholder is a plain investor who may benefit or suffer with the 29. Which is not correct? The acceptor by accepting a negotiable instrument:
financial success or failure of the corporation. a. Admits the existence of the payee and his capacity to endorse.
b. Admits the existence of the drawer, the genuineness of his signature and his
23. Three of the following corporations are not authorized to issue no-par value shares capacity to draw the instrument.
of stock. Which one is the exception? c. Admits the existence of the endorser, the genuineness of his signature
a. Industrial companies c. Trust companies and his authority to draw the instrument.
b. Insurance companies d. Public utilities d. Admits that he will pay it according to the tenor of his acceptance.
24. The corporation has a nine-member board. Two of the members of the board have 30. 1st Statement: A check must be presented for payment within a reasonable time
sold their shares while two others are abroad. To have a quorum, this number is after its issue or the drawer will be discharged from liability thereon.
required. 2nd Statement: Where the holder of a check procures it to be accepted or certified,
a. Seven c. Three the drawer and all indorsers are discharged from liability.
b. Five d. Four a. Only 1st statement is true.
25. 1st Statement: A majority of the directors or trustees of all corporations organized in b. Only 2nd statement is true.
the Phil. must be citizen of the Phil. c. Both statements are not true.
2nd Statement: Any two (2) or more positions may be held concurrently by the same d. Both statements are true.
person, except that no one shall act as president and secretary or as secretary and 31. A makes a note payable to B or order. The following are the indorsers of the note in
treasurer at the same time. the order of their indorsements: B, C, D, E, F (holder), and G (subsequent holder). The
a. Both statements are not true. note is dishonored in the hands of F, who notifies B, C, D, and E. Which is not correct?
b. Only 1st statement is true. a. The notice given by F to B operates to the benefit of C, D, E, and G.
c. Only 2nd statement is true. b. The notice to C inures to the benefit of D, E and G.
d. Both statements are true. c. The notice to C inures to the benefit of B.
26. 1st Statement: When par value shares are issued above par, the premium or excess d. The notice to D inures to the benefit of E and G.
is to be considered as part of the legal capital. 32. Which of the following instruments is negotiable?
2nd Statement: Shares issued without par value shall be deemed fully paid and non- a. Pay to bearer C P10, 000. Reimburse yourself out of the rental of my house in
assessable and the holder of such shares shall not be liable to the corporation or its Manila. To B; (Sgd.) A
creditors in respect thereto. b. Pay to C P10, 000 or his order out of the rental of my house in Manila. To B; (Sgd.)
a. Only 1st statement is true. A
b. Only 2nd statement is true. c. Pay to C P10, 000 and reimburse yourself out of the rental of my house in Manila.
c. Both statements are not true. To; (Sgd.) A
d. Both statements are true. d. Pay to order of C P10, 000. Reimburse yourself out of the rental of my
27. Which of the following corporate acts requires the approval of the majority of the house in Manila. To B; (Sgd.) A
outstanding capital stock or of the members of the private corporation? 33. Which of the following is a negotiable bill of exchange?
a. To invest corporate funds in another corporation or business a. Pay to the order of Y the sum of P30, 000 (Sgd. X) To A or in his absence, to B
b. To adopt by-laws b. Pay to the order of X the sum of P20, 000 (Sgd. X) To A or B
c. To dissolve the corporation c. Pay to the order of X or Y the sum of P40, 000 (Sgd. C) To A or B
d. To amend or repeal by-laws d. Pay to the order of Y the sum of P50, 000. (Sgd. X) To A and B.
28. A holder not in due course has the following rights, except:
a. He may receive payment and if the payment is in due course the instrument is September 2007
discharged. September 2007
b. He may sue on the instrument, in his own name. 1. The underlying reason for this source of obligations is the prevention of unjust
c. He cannot recover on the instrument. enrichment on the part of one person at the expense of another.
d. He is entitled to the instrument but holds it subject to the same defense as if it a. Obligation ex lege
were non-negotiable. b. Obligation ex contractu
 c. Obligation ex quasi contractu to T in the amount of P4, 000, 000. The partnership is insolvent and the only asset
d. Obligation ex delicto is the original capital of P3, 000, 000 plus the newly contributed capital of P1,
e. Obligation ex quasi delictu 000, 000 by W.
2. D is under obligation to pay C P100, 000 on December 15, 2008. Who is entitled a. W is not liable for the obligation of P4, 500, 000 in favor of C since he was not
to the benefit of the period? yet a partner when it was incurred,
a. D only c. Both D and C b. W is liable for the obligation of P4, 500, 000 although contracted before he
b. C only d. Neither D or C became a partner but only up to the extent of his contribution.
3. A, B and C are joint debtors to X and Y solidary creditors in the amount of P90, c. W is liable for the obligation of P4, 500, 000 although contracted before he
000. How much can X hold liable A? became a partner up to the extent of his personal property.
a. P90, 000 c. P30, 000 d. W is liable for the obligation of P4, 500, 000 although contracted
b. P45, 000 d. P15, 000 before he became a partner up to the extent of his contribution. With
4. A, B and C are solidary debtors to X and Y joint creditors in the amount of P90, respect to the P4, 000, 000 debt in favor of T, W will be liable for its
000. On due date, how much can Y collect from B? payment and subsidiarily up to the extent of his personal property
a. P90, 000 c. P30, 000 because it was incurred when he was already a partner in XYZ
b. P45, 000 d. P15, 000 partnership.
5. S and B agreed on the sale of opium valued at P10, 000, 000. B has already paid 8. A, B, C and D are partners where D is an industrial partner. Without the consent of
to S the P10, 000, 000 but the latter has not as yet delivered the opium. Which of A, B and C, D engaged I another business for his personal interests where he
these statements is correct? made a profit of P2, 000, 000.
a. B can go to court and compel S to deliver the opium. a. The partnership can only avail itself of D’s profit in his separate business with
b. If B cannot compel S to deliver the opium at least he can ask the court to damages.
return the P10, 000, 000. b. The partnership can only oust D from the partnership with damages.
c. Under the situation only S the seller can be criminally prosecuted. c. The partnership can only avail itself of D’s profit plus oust him from
d. Neither S nor B can be compelled to return what was received. partnership.
Moreover, both S and B shall be criminally prosecuted and the effects d. The partnership can either avail itself of D’s profit in separate
and instruments shall be escheated in favor of the government. business or oust him from the partnership with damages.
6. A, B, C and D are partners where A contributed P400, 000, B and C P200, 000 9. Which of these partners is not entitled to direct access to books and records of
each and D is an industrial partner. ABCD partnership became indebted to T in the the partnership or to ask for formal accounting dissolution, etc..
amount P1, 800, 000. a. General partner c. Substituted limited partner
a. T can hold A, B and C liable for P1, 800, 000 for being the capitalist partners. b. Assigned limited partner
b. T must first exhaust the partnership assets amounting to P800, 000 and then 10. The contract between corporations with interlocking directorates is generally
hold A, B and C as the capitalist partners liable jointly for the payment of P1, considered as;
000, 000. a. Valid d. Unenforceable
c. T must first exhaust the partnership assets amounting to P800, 000 and then b. Rescissible e. Void
hold A, B, C, and D jointly liable for the balance of P1, 000, 000. c. Voidable
d. T must first exhaust the partnership assets amounting to P800, 000 11. P the president of X corporation, by virtue of a resolution of the stockholders
and then hold A, B, C and D jointly liable for the balance of P1, 000, empowering him to enter into a contract with T corporation for the purchase of
000. D after paying T P250, 000 can hold A, B and C for certain machineries, actually did so. Such contract is;
reimbursement so that in the end as industrial partner he does not a. Valid d. Unenforceable
become liable for losses among themselves. b. Rescissible e. Void
7. X, Y and Z are partners in a business with a total capital contribution of P3, 000, c. Voidable
000. In the course of operating the business, the partnership became indebted to 12. The right of appraisal on the part of stockholders applies in this corporate, except;
C in the amount of P4, 500, 000. Subsequently, W was admitted as a new partner a. Sale of all assets and properties
with a contribution of P1, 000, 000. Much later, the partnership became indebted b. Merger or consolidation
 c. Amendment of Articles of Incorporation discriminating against certain shares D. I promise to pay B or order P1, 000, 000 on or before December 15, 2005. If
d. Increase or decrease of authorized capital stock on said date this instrument is not paid, I further bind myself to pay all costs
13. The voting requirement in this corporate act is a majority of the outstanding of collection and attorney’s fees incurred.
shares; Sgd. A
a. Adoption of by-laws a. A d. D
b. Delegation of powers to the Board of Directors to amend or repeal the by- b. B e. None of the above
laws. c. C
c. Appointment of another corporation to manage its business. 17. D borrowed from C P500, 000 and by way of chattel mortgage delivered his car
d. All of the above. which transaction was recorded in the chattel mortgage registry. The contract
e. None of the above. between D and C is
14. The business of this corporation can be managed by the stockholders. a. Pledge
a. Close d. None of the above b. Chattel mortgage
b. Open e. All of the above. c. Both pledge and chattel mortgage
c. Eleemosynary d. Either pledge or chattel mortgage at the choice of C
15. The following instruments are negotiable – chose the exception. 18. S sold to B a car valued at P600, 000 where the consideration consisted of a
A. I promise to pay B or order $5, 000 on or before December 15, 2005. diamond ring worth P400, 000 and P200, 000 cash. The transaction between S
Sgd. A and B is –
B. To Mr. X / i a. Barter because the value of the thing exceeds the money.
123 Rizal Avenue, Manila b. Sale because it is the manifest intention of the parties.
Pay to Y or bearer P100, 000 or to deliver 100 sacks of rice at your c. Both barter and sale because the transaction has the characteristics of both
selection. contracts.
Sgd. Z d. None of the above.
C. To Mr. X 19. A made a promissory note payable to the order of B but delivered it to C. Who
123 Rizal Avenue, Manila between B and C may be considered the holder?
Pay to Y or order P100, 000 or to deliver 100 sacks of rice at the election of a. B c. Neither B nor C
the holder. b. C d. Both B and C
Sgd. Z 20. P appointed A, his agent, for the purpose of selling his car for P600, 000 with a
D. I promise to pay B or bearer P100, 000 and to deliver 100 sacks of rice on or commission for the agent amounting to 5%. Through the ingenuity of A, the car
before December 15, 2005. was sold to T for P800, 000. How much should A give to P?
Sgd. A a. P600, 000 c. P800, 000
a. A d. D b. P570, 000 d. P760, 000
b. B e. Both B and D 21. D, for a loan P100, 000, pledged to C his diamond ring. On due date, the P100,
c. C 000 was not paid whereupon C resorted to notary public for the sale at public
16. Which of these instruments is negotiable? auction of the diamond ring. The highest bid was P70, 000 giving rise to a
A. I promise to pay the bearer Jose Santos P100, 000 on demand. deficiency judgment of P30, 000.
Sgd. Manuel Cruz a. C cannot recover from D the deficiency.
B. I promise to pay B or order P100, 000 on December 15. b. C cannot recover from D the deficiency even if there is a stipulation
Sgd. A to that effect.
C. To Mr. X c. C can recover the deficiency of P30, 000 from D.
123 Rizal Avenue, Manila d. None of the above.
Pay to Y or bearer P100, 000 for ten installments. 22. S and B entered into a contract of sale involving a car where the fixing of the
Sgd. A price was entrusted solely to B. B accordingly fixed the price at P600, 000 and
transmitted the same to S who agreed.
 a. The sale is null and void because the law does allow the fixing of the price to c. Where after the rescission of a sale of goods, in the event of a resale for in
be left to the sole will of a party only. excess of the contract price, the seller becomes entitled to the excess, the
b. The sale can be considered valid provided the price is fixed by the courts. buyer does not become liable for the balance.
c. The sale is valid because the price fixed by B was agreed to by S. d. If the book of O is stolen by S and then sold to B, as between B and O, it is the
d. S and B should renegotiate their agreement. former who has a better right.
23. P in writing appoint A his agent stipulating that he is allowing A absolute and e. None of the above.
unlimited powers of management and that he is not withholding any power from 27. In which of these situations does the right of legal redemption not apply?
him. Accordingly, A enters into a contract of sale of a house and lot with T; a. Where real property is undivided and owned in common by A, B and C
another contract with W leasing an apartment unit for 12 months and still another and C donates his 1/3 interest to T.
with X involving the lease of P’s car for a period of five years. b. Where real property is undivided and owned in common by A, B and C and B
a. The contracts of A with T, W and X are all valid. sells his 1/3 interest to X.
b. The contract of A with T is valid, with W unenforceable and with X also c. Where rural property is one hectare or less and the owner sells the same to a
unenforceable. third person, the adjoining owners have a right of legal redemption provided
c. The contracts of A with T, W and X are all unenforceable. the buyer has other lands.
d. The contract of A with T is unenforceable; with W valid and with X d. Where the urban property is so small and so situated that it cannot be
also valid and enforceable. devoted to any practical purpose, if the same is sold the adjoining owners
24. Statement 1: Under the Corporation Code, there is an unreasonable accumulation may exercise legal redemption.
of unrestricted retained earnings if they are equal to 100% of the paid-up capital 28. Where a stranger makes an alteration on the amount of the instrument, this is
of the corporation. known as –
Statement 2: Treasury shares if sold by the board of directors at a price less than a. Forgery c. Spoliation
its par value become automatically watered stock. b. Material alteration d. Felicitation
a. Both statements are false. 29. In a pacto de retro sale where the parties did not actually fix the period of
b. Both statements are true. redemption, the Civil Code assumes it to be –
c. Statement 1 is false but statement 2 is true. a. Ten years c. Two years
d. Statement 1 is true but statement 2 is false. b. Four years d. One year
25. Which of these is not an essential requisite common to both pledge and 30. These corporations are allowed to declare dividends out of capital –
mortgage? a. Mining corporations which are a kind of wasting asset corporations.
a. That the pledge or mortgage be constituted to secure the fulfillment of a b. Industrial corporations
principal obligation. c. Public utility corporations
b. That the pledger or mortgagor be the principal debtor in the d. Educational corporations
obligation. 31. On February 5, 2007, Emong Corporation declares 20% stock dividend and issued
c. That the pledger or mortgagor has the free disposal of their properties or in shares of stocks amounting to P100, 000. On March 20, 2007, the corporation
the absence thereof, that they be lawfully authorized. redeemed the stock dividend by virtue of which the stockholders surrendered
d. That it is the essence in pledge or mortgage that if the principal obligation is their certificates in return for the cash paid to them by Emong Corporation in the
not paid, the thing which the pledge or mortgage consists may be alienated amount of P100, 000.
for the payment of the debt. a. The stock dividends declared are taxable because generally, stock dividends
26. Which of these statements is correct? are subject to income tax.
a. Where the agency is orally made for the purpose of selling a piece of land, the b. The dividends are taxable to the stockholders because they are actually
sale will be considered valid provided it is in a public instrument. property dividends.
b. Where S sells to B a residential lot measuring 1, 000 sq. meters and upon a c. The redemption of the stock dividend is essentially equivalent to the
survey it I found to be containing only 950 sq. meters, B can ask for a distribution of a taxable dividend. Hence, the amount distributed in
rescission of the sale. redemption shall be considered as taxable income.
 d. The distribution and the redemption of stocks are not taxable because stock 37. Your client owns a row of apartments. He complains to you that he is being
dividends are exempt from the income tax. required to pay four (4) kinds of taxes on this of business alone. From the list
32. Ocampo Corporation which commenced business operations in 1995 has a gross given by your client, which of the following taxes has been wrongly imposed on
income of P632, 000 and allowable deductions in 2007. The journal entry in 2007 him?
to record excess MCIT is – a. Real estate tax on land and building
a. Deferred charges – MCIT 750 b. Value-added on gross receipts from rent
Income tax payable 750 c. Community tax based on the assessed value of the apartment house
b. Deferred charges – MCIT 13, 000 d. Income tax on income from rent
Income tax payable 13, 000 38. Which of the following constitute objectionable double taxation?
c. Deferred charges – MCIT 11, 200 a. A license fee and a tax imposed on the same business or occupation for
Income tax payable 11, 200 selling the same articles.
d. Income tax payable 13, 000 b. A tax imposed both on the occupation of fishing and fishpond operation
Cash 13, 000 c. .Persons engaged in leasing or selling real property are subject to real estate
33. One of the following expenses is deductible form gross income dealers tax and their sales are also subject to 10% VAT.
a. Personal, living and family expenses d. A tax of 1% is imposed for bank reserve deficiency while a penalty of
b. Amount paid out for new building or for permanent, made to increase the 1/10 of 1% is also imposed as a consequence of such reserve
value of the property or estate deficiency.
c. Premiums paid on a life insurance policy covering the life of the 39. Which of the following is not true about the waiver of statute of limitations under
employee when member of the family of the employee is the direct the tax code
beneficiary under such policy. a. It must be accepted by the Commissioner of Internal Revenue or his duly
d. Any amount expended in restoring property or in making good exhaustion authorized representative, and the date of acceptance must be duly indicated.
thereof for which an allowance is or has been made. b. It is a derogation of taxpayer’s right to security against prolonged and
34. The following are examples of corporate expenses deductible from gross income, unscrupulous investigations.
except one: c. It is a bilateral act of the Bureau of Internal Revenue and the taxpayer.
a. Representation expenses designed to promote business d. It is a waiver of the right to invoke the defense of prescription.
b. Contributions to drum up business like contribution of soft drinks to 40. 1st Statement: In case tax-exempts products are sold domestically to a VAT
barrio fiestas. registered person, the VAT otherwise due on that product shall be considered as
c. Expenses paid to an advertising firm in order to create a favorable image for input tax creditable against his output tax payable.
the corporation. 2nd Statement: Export sales by a VAT registered person are subject to zero-rating
d. Premiums on life insurance covering the life of an employee if the beneficiary and so he can claim and enjoy credit for the tax invoiced to him on his purchases.
is his heirs. If he is not a VAT registered, his export sales are exempt, but he is not entitled to
35. Generally, sales of real property are subject to tax. Which of the following sales is tax credits for inputs.
not allowed by the law to be subjected to tax? a. Both statements are true.
a. Land sold by the church b. 1st statement is false, 2nd statement is true
b. Land foreclosed by the bank c. Both statements are false
c. Land sold to government corporation d. 1st statement is true, 2nd statement is false
d. None of the above 41. Transaction 1: An agricultural food producer sells his products in their original
36. When a refund of a tax supposedly due to the taxpayer has already been barred state to a food processor who also buys packaging materials and containers from
by prescription, and the said taxpayer is assessed with a tax at present, the two a manufacturer / supplier.
taxes may be set-off with each other. This doctrine is called Transaction 2: The food processor transforms the food products into processed
a. Set-off doctrine c. Tax sparing doctrine and sells to wholesalers / exporters.
b. Doctrine of reciprocity d. Equitable recoupment Transaction 3: The exporter sells the goods to foreign buyers.
Transaction 4: The wholesaler delivers the merchandise to retailers.
 Transaction 5: The retailers sell the goods to households to ultimate consumers. 48. Which of the following losses is deductible?
Which of the above transactions is VAT exempt? a. Destruction of a house by an earthquake, which killed the decedent.
a. Transaction 1 c. Transaction 3 b. Shipwreck, which occurred before the death of the decedent but was only
b. Transaction 2 d. transaction 4 discovered after his burial.
42. In which of the following cases may refund of input tax be allowed? c. Total wreckage of a car in an accident but was fully compensated by a
1st case: For input tax on purchases of capital goods. comprehensive insurance.
2nd case: For input tax on purchases of goods and services by exporter. d. Theft, which occurred during burial of the decedent.
a. In both cases c. Neither in the 1st nor in 2nd 49. Which of the following properties of FPJ who died December 4, 2007 is subject to
b. Only in the first case d. Only in the 2nd case vanishing deduction?
st
43. 1 Statement: Courts can review or inquire into the wisdom advisability of a tax Property 1: Car purchased 3 years ago from Honda Motors, Laguna City
law and Power in Judicial Review Taxation. Property 2: Land inherited from his mother in 2004 the estate thereon has not
2nd Statement: Our Constitution does not contain any provision granting tax been paid.
exemption to the government. Property 3: Donation from a friend 2002.
a. True, True c. False, True Property 4: Community property inherited December 2, 2001 or 5 days before
b. False, False d. True, False marriage.
44. 1st Statement: A taxpayer’s tax-exempt status justifies the keeping of book Property 1 Property 2 Property 3 Property 4
accounts and other accounting records. a. No No Yes Yes
2nd Statement: The salaries of the Chief Justice and associate justice of the b. No No Yes No
Supreme Court are tax-exempt. c. Yes No No Yes
a) True, True c. False, True d. Yes Yes No No
b) False, False d. True, False 50. Domingo Namayapa died on November 20, 2007. Some of the properties he left
45.In 2007, Valdez gave a cash of P80, 000 as a birthday gift to his son John. Valdez are the following:
has not given any other gifts or donation in 2007 but made a donation to his Market Value
daughter in the same amount in 2008. Based on the above information in 2007, Assets Mode of Date of Date Death of
Valdez is Domingo
a. Liable to pay donor’s tax. Acquisition Acquisition Acquired Namayapa
b. Liable to pay donee’s tax. Land Donation 7-3-03 P500, 000 P350, 000
c. Exempted from paying donor’s tax. Car Purchase 10-2-06 P800, 000 P980, 000
d. Exempted from paying donee’s tax. Other information:
46.One of the following is not an attachment to the donor’s tax return  The gross estate of the decedent amounts to P3, 000, 000.
a. Sworn statement of the relationship of the donor to the done.  The land was mortgaged for P50, 000, which was deducted in estate and
b. Certified true copy of the Certificate of Title of the donated property. Domingo Namayapa paid the same before he died.
c. Income of donated property.  The allowable deductions total P125, 000, which includes expenses of P30,
d. Proof of claimed deductions. 000. It excludes bequests to a charitable institution in the amount of P50,
47. Estate tax is – 000.
a. A property tax because it is imposed on the property transmitted by the The vanishing deduction is –
decedent to his heirs. a. P58, 100 c. 67, 783
b. An indirect tax because the burden of paying tax is shifted on the executor or b. 51, 800 d. 67, 083
any of the heirs of the decedent. 51. A stockbroker remitted P11, 250 to the BIR representing collection of withheld
c. An excise because it is imposed on the privilege exercised by the from clients. The peso volume of his stock transactions from which the tax was
decedent to transfer ownership over the state. withheld is
d. A poll tax because it is also imposed on residents of the Philippines whether a. 281, 250 c. 3, 000, 000
Filipino citizens or not. b. 2, 250, 000 d. 3, 375, 000
52. A corporation paid P40, 000 stock transaction tax on initial public offering of 500, Value per Bureau of Customs P340,
000 shares. After the IPO, there were 800, 000 shares outstanding. IPO selling 000
price per share was Customs Duties 35, 000
a. 5 c. 10 Freight and Insurance 17,
b. 8 d. 15 000
53. A race track bettor won on the following bets: Brokerage Fee 5, 000
 On forecast, a bet of P1, 000 and dividend of P100 per P20-ticket Processing fee 3,
 On ordinary, a bet of P500 and dividend of P1, 000 per P50-ticket 500
 On double, a bet of P200 and dividend of P200 per P20-ticket Purchases from VAT registered persons 264, 000
Total percentage tax due from the winings was Purchases from non-VAT registered persons 126,
a. 682 c. 1, 280 500
b. 1, 182 d. 1, 530 Revenue from rent of equipment to other contractor 22,
54. Frank is a real estate dealer. During the month of November, 2007, he sold 3 lots 000
under the following terms (VAT exclusive): The VAT on importation is –
Lot 1 Lot 2 Lot 3 a. 51, 840 c. 52, 260
Selling Price 250,000 200, 000 300, 000 b. 47, 640 d. 48, 060
Cost 150, 000 130, 000 175, 000 57. In No. 56, the VAT payable for the month of May 2007 by Robert Construction
Gain/loss 100, 000 70, 000 125, 000 Company is-
Terms: a. 24, 300 c. 24, 720
Downpayment-Nov. 5 25, 000 50, 000 40, 000 b. 11, 760 d. 12, 180
Due – Dec. 5 25, 000 20, 000 20, 000 58. Roy, a newly VAT registered taxpayer is a lessor of poles of telephones and cable
Jan- Dec. 2006 200, 000 130, 000 240, 000 companies. During the month of January 2007, Roy had the following receipts
The VAT in November is – form customers (VAT inclusive):
a. 31, 800 c. 75, 000
b. 26, 500 d. 6, 500 Security deposit from Customer C P112,000
55. Based on the information given in No. 54, the VAT for the month of December is – Rent income for January from various customers 89,600
a. 4, 500 c. 7, 800 Prepaid rentals received form Customer C 134,000
b. 5, 400 d. 6, 500 (February to June)
56. Robert Construction Corporation, is a VAT registered general construction Loan to Roy from Customer B 84,000
company. Its data for the month of May, 2007 are revealed below (VAT exclusive) :
Contract 1 – Residential House During the month, a portion of the security deposit for the faith compliance by
Contract price – P1, 200, 000 Customer A of its obligations to the lessor was applied rental for January in the amount of
Collections during the month 605, P11,200.
000 At the beginning of the year, Roy had P52,000 worth of inventory supplies and
Contract 2 – Warehouse materials for use in the business. VAT paid on the beginning inventory was P3,500.
Contract price 1, 000, 000 The output tax of Roy in January is-
Percentage of completion 70 % a. P45,000 c. P25,000
Collections during the month 275, b. P33,000 d. P46,000
000
Importation of construction equipments 59. In question 58, the VAT payable of Roy is-
From Japan: a. P41,000 c. P42,700
Invoice cost, ($1 : P50) $7, 500 b. P21,700 d. P29,500
 60. Mongolia Company, a VAT registered business has the following data on July 2007
( VAT exclusive): 63. Eugene had the following data during the year:
Gross income from business 1,000,000
Domestic Sales P709,500 Capital gain 50,000
Sales Returns 26,400 Capital loss 20,000
Goods shipped on consignment: Deductions 400,000
Units Unit Price Donation to an accredited NGO 30,000
July 5 25 P22,000 Donation to Church 20,000
June 5 20 22,000
May 5 12 22,000 The taxable income of Eugene if he is an individual taxpayer, single, a
compensation income during the year of P40,000-
Goods withdrawn for use by the company 38,500 a. 550,000 c. 560,000
Goods taken as payment to creditors 26,950 b. 600,000 d. 543,000
Freight and insurance of goods 4,675
Purchases, inclusive of VAT: 64. JR sold a vacant lot to her sister, Jennie. The details of which are as follows:
Raw Materials 484,000 Acquisition cost of land, March 15, 2004 450,000
Cash Payments:
Supplies 61,600 Date of sale, December 15, 2006 100,000
Capital Goods 60,500 Payment, January 15 100,000
Salaries of employees 235,000 Mortgage assumed by Jennie 500,000

During the month, one consignee remitted cash net of 20% commission
representing the payment for 5 units delivered on June 5. The final tax payable in 2007 is-
Another consignee remitted cash of P220,000, gross of 20% commission, a. 42,000 c. 9,000
representing payment for 10 units sold from June 5-July 5. Other than the commission b. 25,200 d. None
Mongolia Company gave 5% discount/rebate to the consignee for selling 10 units in one
month period. 65. The Income Tax Return (ITR) of Jessie, single, for taxable year 2007, reported a
taxable income of P520,240. A careful scrutiny revealed that some of the items
The output tax in July is- included as income and expenses are the following:
a. 129,426 c. 161,106
b. 120,186 d. 151,866 Income:
Compensation income 180,000
61. In number 60, the input tax is- Cash Dividend 122,000
a. 101,493 c. 73,293 Stock Dividend 73, 500
b. 67,133 d. 88,467 Property Dividend 27,000
Gambling winnings 23,100
62. Allowance Corporation is engaged in sales/net revenue of P400,000 and 200,00 Donation received 16,000
respectively. July actual entertainment, amusement and recreation expense for Gain on sale of capital assets- 15 months 8,000
taxable quarter amounted to P6,000. Allowance Corporation can an Gain on sale of his vacant lot 120,000
entertainment, amusement and recreation expense on the said goods and Income on rice land 60,000
services, respectively, of- Total 630,400
a. 4,000 and 4000 c. 2,000 and 2,000
b. 4,000 and 2,000 d. 2,000 and 2,000 Expenses:
 Real estate tax 3,500 4. Compensation is not proper when the debt arises in the following, except:
Community tax 945
Surcharge for late filling of 2005 income 12,000 a. Depositum
Tax return b. Obligation of a depositary
Interest on personal loan 24,000 c. Contract of Mutuum
Gambling losses 32,000 d. Commodatum
Personal and living expenses 50,000
Loss on sale of capital assets- 8 ½ months 5,000 5. Carlito offered by letter on January 1, 2008 to sell his only Canon printer to Malou
Loss on crops due to flood 27,250 for P10,000. Malou received the letter of offer on January 10, 2008 ad sent a letter
Total 154,695 of accepted on the same date. The letter of acceptance was received by Carlito
on January 20, 2008. However, on January 12, 2008, Malou had already written a
The correct amount of Jessie’s taxable income is- letter revoking the acceptance. The letter of revocation was received by Carlito on
a. 46,940 c. 66,040 January 19, 2008.
b. 6,840 d. 256,840
a. There is a meeting of mind upon the thing which was the subject matter of the
April 2008 contract of sale and as to the cause which is the price.
b. There is no meeting of mind because the acceptance was already
1. This are adjudicated in order that a right of the plaintiff, which has been violated revoked by Malou and it was received by Carlito ahead of the letter
or invaded by the defendant, may be vindicated or recognized: of acceptance.
c. There is already meeting of mind since there is already acceptance made by
a. Moral damages c. Nominal damages Malou hence, the subsequent revocation is immaterial.
b. Temperate damages d. Actual damages d. There is no meeting of mind because there is revocation and therefore it
constitute non willingness to be bind in a contract.
2. A and B are debtors of C for P2,000,000. A’s consent was obtained by C thru
fraud.

a. C can collect the entire P2,000,000 from B 6. Which of the following is a consensual contract?
b. C can collect the entire P2,000,000 from B but the latter can recover from A
P1,000,000 a. Contract of partnership with capital contribution of real property amounting to
c. A is liable only to C for P1,000,000 because he can interpose his defense of P100,000.
fraud b. Oral donation of personal computer worth P15,000.
d. B is liable to C for his share of P1,000,000 c. Stipulation of interest in a contract of loan.
d. Contract of agency.
3. Statement 1: The nullity of the principal obligation carries with it that of the
penal clause 7. Caloy the guardian of Martinez bought a fertilizer for land cultivation from Jonas
Statement 2: Payment means not only the delivery of money but also the for P400,000 but the market value is only P320,000. The contract is:
performance, in any other name, of an obligation.
a. Rescissible c. Unenforceable
a. First statement is true; second statement is false. b. Voidable d. Valid
b. First statement is false; second statement is true.
c. Both statements are true. 8. Which of the following is not a characteristic of partnership contract?
d. Both statements are false.
a. Consensual c. Onerous
 b. Principal d. Innominate elected Secretary and Treasurer of the said corporation at the same time. Some
stockholders of the corporation questioned the legality of the election of Sam and
9. 1st Statement: Ina universal partnership where its nature is not specified, the Juan.
presumption id that the a universal partnership of all profits is formed.
2nd Statement: When the contribution to the partnership consists of a. The election of Sammy is illegal because being an American national he is not
personal property amounting to P20,000 and the contract is entered verbally, the qualified to hold the position of President of a domestic corporation.
partnership contract is void. b. The election of Sammy is legal because the President of a corporation need
not be a citizen of the Philippines except in 100% nationalized corporation but
a. Both statements are true the election of Juan is illegal because the positions of Secretary and Treasurer
b. Both statements are false cannot be held by a single individual simultaneously.
c. 1st statement is true and 2nd statement is false c. There is nothing illegal with the election of Sammy and Juan because
d. 1st statemet is false and 2nd statement is true the same does not violate any provision of the Corporation Code of
the Philippines.
10. The following are the property rights of a partner, which one is assignable? d. The election of Juan is legal because an officer except the President can hold
two positions in the corporation in a concurrent capacity but the election of
a. Right in specific partnership property Sammy is invalid because he is not a Filipino citizen.
b. Interest in the partnership
c. Right to participate in the management 14. The following documents below are negotiable instruments:
d. Right to formal account a.) Postal money order c.) Quedan
e. Right to use the partnership property b.) Trust receipt d.) Bill of lading

11. Amor is the capitalist partner and Burgos the industrial partner. Amor engaged a. Only letter B c. Letter A, B and C
personally in the same kind of business the partnership is engaged in b. Letter B and C d. None

a. If there are losses, the partnership will bear the losses 15. I promise to pay to the order of X P100,000 in two equal installment. The 2 nd
b. If there are profits, the profits will be shared by Amor and the partnership payment is on January 5, 2008. (Sgd: Y)
c. If there are profits, Amor will give the profits to the partnership
d. Amor will be excluded from the partnership and pay damages a. The instrument is non negotiable because the payment of 1 st installment was
not fixed and therefore indeterminate.
12. Arnold, Borneo and Carlito executed an article of co-limited partnership in a b. The instrument is negotiable because the 1 st payment is considered
private instrument stating all the requirement of the law to be stated in the payable on demand and the 2nd payment was fixed on January 5,
certificate of Co-limited partnership. The certificate states that Arnold is a limited 2008.
partner and Borneo and Carlito as general partners. Which of the following id c. The instrument is non negotiable because the instrument is payable on
true: installment and the date of payment of both 1 st and 2nd installment was not
stated.
a. Arnold is liable only to the extent of his capital contribution d. The instrument cannot be determined whether it is negotiable or non
b. A Limited partnership is created negotiable.
c. Only General partnership is created under the given facts
d. It cannot be ascertained whether the partnership is limited or a general 16. Juan de la Cruz signs a promissory note payable to Pedro Lim or Bearer, and
partnership delivers it personally to Pedro Lim. The latter somehow misplaces the said note
and Carlos Ros finds the note lying around the corridor of the bulding. Carlos Ros
13. Samy, an American national, was elected President of Eagle Transport, Inc., a endorses the promissory note to Juana Bond, for value, by forging the signature of
corporation organized under Philippines laws. Likewise, Juan, a Filipino citizen was Pedro Lim. May Juana Bond hold Juan de la Cruz liable on the note?
 21. The term of office of Mr. Carlito as member of the board is about to expire on
a. No, because forgery is a real defense December 10,
b. Yes, because the forge signature is not necessary for the negotiation 2007. On December 12, 2007 a special meeting was called to fill up the vacancy in
of the instrument. the board.
c. No, because Juana Bond cannot become a holder because the indorsement is Mr. Vladimir got the highest number of votes; however Mr. Vladimir is not a
forged. shareholder.
d. Yes, because forgery is not a personal defense. a. Mr. Carlito is no longer a director because Mr. Vladimir is qualified to be a
director.
17. In case of a delinquent stockholder, the following rights are not given to him b. Mr. Vladimir is the new director because he got the highest number of
except: votes.
c. Mr. Vladimir is entitled to office because he got the highest number of
a. Right to receive dividends in accordance with the provisions of the votes and the term of Mr. Carlito is already expired.
law d. Mr. Carlito is entitled to hold office despite that his term is already
b. Right to vote expired because Mr. Vladimir is not qualified to be a director not
c. Right to be voted for being a shareholder. Hence, the incumbent director Mr. Carlito
d. Right of representation of any stockholders’ meeting shall serve until his successor is elected and qualified.
e. Correct answer not given
22. Who among the following are liable for warranties as well as secondary liability?
18. It is one brought by one or more of the stockholder or members in the name and a. Drawer c. Qualified indorser
on behalf of the corporation to redress wrongs committed against it or to protect b. Maker d. Unqualified indorser
or vindicate corporate rights, whenever the officials of the corporation refuse to
sue, or are the ones to be sued or hold control of the corporation 23. Monaliza makes a promissory note payable to bearer and delivers the same to
Pokwang, who
a. Mandamus d. Derivative suit negotiates it to andok by indorsing it without recourse. If the note is dishonored in the
b. Quo warranto e. Individual suit hands
c. Appraisal right ofAndok due to insolvency of Monaliza.
a. Andok cannot recover from Philipp because he does not
19. Statement I: Majority of the Incorporators must be a citizen of the Philippines warrant Monaliza’s solvency.
Statement II: Corporate officer are those who are identified as such in the b. Andok can recover from Philipp because he is secondary liable on the
corporation Code, the articles of incorporation or the By-laws of the corporation. instrument as indorser.
a. Both statements are true. c. Andok can recover from Philipp because of breach of warranty.
b. Both statements are false. d. Andok cannot recover from Philipp because his indorsement is
c. Statement I is true, but statement II is false. conditional.
d. Statement I is false, but statement II is true.

20. A corporation commences its existence from the issuance of the certificate of 24. X represented himself as the agent of P in the sale of a car allegedly owned by P. R,
incorporation, a
which one is the exception? prospective buyer issued a crossed check upon request of X for P60,000 payable to P on
a. Close corporation d. Non-stock corporation the
b. Widely-held corporation e. Educational corporation understanding that the check was to be shown only to P as evidence of R’s good faith to
c. Religious corporation purchase the car. X instead paid the check to P for the hospital bill of X’s wife in P’s clinic
and was given P1, 560.25 as change. In this case, Is P deemed a holder in due course?
 a. Yes, because there law presumed that every holder are deemed a d. Yes. A is liable to H. Under the Negotiable Instrument Law, lack of
holder in due course. consideration is a real defense and it is not a valid defense against a
b. No, because under the fact of the case P was guilty of gross holder in due course like H.
neglect amounting to legal absence of good faith.
c. Yes, because P has no actual knowledge of the irregularity affecting the 27. Which of the following cannot be object of sale:
instrument. a. Right of redemption c. Usufruct
d. No, because P has actual knowledge of the irregularity affecting the b. Scientific works d. Future inheritance
instrument.
28. Paul granted Joven the right to sell as an “agent” Paul bags in Luzon. Joven was
25. Statement I: A person cannot be convicted of a crime of BP 22 when the check is obliged
presented under the contract to pay for the bags, at a discount of 10% as commission on the sale.
more than 90 days from the date of the check. The
Statement II: Prejudice or damage to the complainant is not a requisite for the payment had to be made whether or not Joven was able to see the bags. The contract is
conviction of a one
crime under BP 22 (Bouncing check law). of:
a. First statement is true; second statement is false. a. Sale c. Agency to buy
b. First statement is false; second statement is true. b. Agency to sell d. Trust agreement
c. Both statements are true.
d. Both statements are false. 29. B bought a particular Honda CRV 2008 on instalment plan for P 1,000,000 payable as
follows: a. Down payment: P200,000
26. To accommodate M, drawer of promissory note, A signed an indorser thereon, and b. Balance: Payable in 60 equal installment
the As a requirement by the seller, the buyer was required execute a chattel mortgage
instrument was negotiated to H, a holder for value. At the time H took the instrument, he on the
knew A to be only an accommodation party. When the promissory note was not paid, and thing sold. The buyer failed to pay his first installment. The seller can:
H a. File an action for exact fulfillment
discovered M to be without funds, he sued A. A pleads in defense the fact that he had b. Cancel the sale
indorsed the instrument without receiving value therefore, and the further fact that H c. Foreclose the chattel mortgage on the thing sold
knew at d. All of the above in alternative at the option of the seller.
the time he took the instrument that A had not received any value or consideration of
any 30. Jun Corporation ordered twenty (20) computers from Dallas Computer Ltd., The
kind for his endorsement. Is A liable? Computer
a. No. A is not liable because he may raise a defense of lack of was received by the guard of Jun corporation on January 5, 2008. Five days later, the
consideration. building including the 20 computers was totally burned. Shortly after, the seller sent a
b. No. A is not liable because he merely accommodate M and based on bill
the fact stated, at the time H took the instrument, he has knowledge covering the cost of the typewriter. The Board of directors of Jun Corporation adopted a
that A is only an accommodation party. Hence his knowledge resolution requesting the Dallas Computer Ltd. denied the request.
amounted to such notice of infirmity of defect of title. a. Jun Corporation is not required to pay the purchase of the 20
c. Yes. A is liable to H. Under the Negotiable Instrument Law, an computers because the same loss by fortuitous event.
accommodation party shall be liable to a holder for value b. Jun Corporation must pay the price because the ownership of
although the latter may have known that he was merely an the 20 computers was already transferred upon delivery.
accommodation party. Hence, it must suffer the loss based in the principle of res perit
domino.
 c. Dallas Computer Ltd. must suffer the loss of the 20 computers being (c) Share of stock in San Miguel Corporation P100,000
the owner based on the principle of res perit domino. Lisuya Property (a) Share of stock in ABS-CBN P250,000
d. Dallas Computer Ltd cannot compel Jun Corporation to pay the price (b) Money market placement P300,000.
because the 20 computer was loss without the fault of the latter. Yingpu can enforce to Jumong the sum of:

31. Which of the following transactions or contracts involving the sale or financing of real a. P550,000 c. P2,000,000
estate b. P 950,000 d. P1,050,000
oninstallment payments is not covered by Maceda law:
a. Residential c. Apartment 36. I. Tax assessment is a process of taxation which involves the passage of tax laws and
b. Condominium d. Commercial Building ordinances through legislature.
II. When the power to tax is delegted to the local government, only the legislature
32. The redhibitory action, based on the faults or defects of animals, must be brought branch of the local government can exercise the power.
within
a. Forty days from the date of their delivery to the vendee a. First statement is correct c. both statements are correct
b. Forty days from the date of perfection of the contract b. Second statement is correct d. both statements are
c. Thirty days from the date of their delivery to the vendee incorrect
d. Thirty days from the date of perfection of the contract

33. The bailee is liable for the loss of the thing, even if it should be through a fortuitous 37. I. Benefits from taxation have to be experienced to justify the legitimacy of collection
event. of taxes from the people.
Which is the exception? II. All government entities regardless of their functions are exempted from taxes
a. If he devotes the thing to any purpose different from that for which it because it would be impractical for the government to be taxing itself.
has been loaned.
b. If he keeps it longer than the period stipulated. a. First statement is correct c. both statements are
c. If he lends or leases the thing to his household member. correct
d. If the thing loaned has been delivered with appraisal of its value. b. Second statement is correct d. both statements are incorrect

34. An interest at 5.5% per month or 66% per annum, stipulated upon by the parties in 38. I. Taxes may be used as a tool and weapon in relations and protect trade relations.
the II. The substance of tax laws is a matter of the government policy
promissory note is:
a. Perfectly Valid a. First statement is correct c. both statements are
b. Void being contrary to morals and public policy correct
c. Void being contrary to law b. Second statement is correct d. both statements are incorrect
d. Voidable at the instance of the lender.
39. I. The primary requisite of equity principle is that progressive tax rate shall be
35. Deiso borrowed P2,000,000 from Yingpu and Lisuya as the guarantor. Jumong applied equally to all personal transactions placed in similar classifications and
guarantee the obligation of Lisuya as guarantor. On the maturity date, Deiso default to situations.
pay the P2,000,000. Yingpu proceed to Jumong to collect the entire P1,000,000. II. The state can still exercise its taxing powers over its outside territory.
However, Jumong set up the right of excussion against Yingpu and points out to the latter
the property of Deiso and Lisuya as follows: a. First statement is correct c. both statements are
Deiso property (a) Parcel of land located in Nevada USA worth P500,000 correct
(b)Toyota Vios 2000 model with plate # 14344 located in the Bocaue b. Second statement is correct d. both statements are incorrect
Bulacan P300,000
40. I. the power of legislative review in taxation is limited of the interpretation and II. The Tax Code is a special law. It prevails over the civil but subservient to the Rules
application of tax laws. of Court.
II. Taxes can be set off or compensated against obligations arising from contracts for
as long as both obligations are due and demandable. a. First statement is correct c. both statements are correct
b. Second statement is correct d. both statements are
a. First statement is correct c. both statements are incorrect
correct
b. Second statement is correct d. both statements are incorrect

41. I. The law on prescription being a remedial meacure should be interpreted liberally in 46. Which of the following budgetary conditons is/are correct?
order to protect the taxpayer. i. revenue < expenditures = borrowings
II. Tax exemptions are not presumed ii. revenue > expenditures = surplus
iii. Increase in tax collection will increase Government revenue
a. First statement is correct c. both statements are iv. All government revenues are taxes
correct
b. Second statement is correct d. both statements are incorrect a. i, ii and iv c. i and ii only
b. i, ii, iii only d. i only
42. I. There is no prohibition against the government taxing itself.
II. The doctrine of equitable recoupment is applicable to cases where the taxes 47. Which of the following statement is not correct?
involved are totally unrelated. a. The government automatically possesses the power to collect taxes from its
inhabitants
a. First statement is correct c. both statements are b. The government can enforce contribution only when the state grants it
correct c. Taxation power exist inseperably with the state
b. Second statement is correct d. both statements are incorrect d. The State has the supreme power to command contribution from the people within
its jurisdiction
43. I. Only the BIR Commissioner is expressly authorized by the Tax Code to enter into
compromise for both civil and criminal liabilities subject to certain conditions. 48. One of the following is not among the basic justification of taxation.
a. Taxation is based on necessity
a. First statement is correct c. both statements are correct b. Taxation is the lifeblood of the government
b. Second statement is correct d. both statements are c. Taxation is the bread and butter of the government
incorrect d. Taxation is voluntary contribution for benefit received

44. I. The tax treaties or international agreements with foreign countries regardinf tax 49. Which of the following is/are element/s of impact of taxation
enforcement and exemptions have the force and effect of law. i. Levy
II. Revenue regulations which are inconsistent with the law have the effect and force ii. Assessment
of law if they are useful and reasonable. iii. Collection

a. First statement is correct c. both statements are correct a. i,ii and iii c. ii and iii only
b. Second statement is correct d. both statements are incorrect b. i and ii only d. iii only

45. I. Special assessment is an imposition on foreign exchange designed to curb the 50. Which of the aspects of taxation is/are administrative in nature?
excessive demands upon the international reserves. i. Levy
ii. Assessment
 iii. Collection
56. I. if the advanced payment is received from a customer delivery a commodity, such
a. i,ii and iii c. ii and iii only receipts should be reported income when received.
b. i and ii only d. iii only II. When stock dividends received are of a different classes of shares previously
acquired, the stock dividends are taxable income.
51. Which of the following is not correct?
a. In the absence of specific tax provision, taxes in general are not in cancelable. a. First statement is correct c. both statements are correct
b. Prescriptive period for assessment and collectioon is applicable to returnable assets. b. Second statement is correct d. both statements
c. The law on prescription being a remedial measure should be interpreted liberally in are incorrect
order to protect the taxpayer.
d. The prescriptive period should be the shorter between the required filing date and 57. I.When the lessee build improvements on the lease property of which the lessor
the actual date of filing. upon the expiration of the lease shall pay its remaining value, the value of the
improvements should be reported as income of the lessor.
52. One of the following is incorrect regarding tax exemption. II.If the improvement is destroyed before the expiration of the lease, the lessor is
EXPRESSED IMPLIED entitled to deduct as a loss for the year when such destruction takes place, the amount
Exemption Exemption previously reported as income less any salvage value, to the extent that such loss was
a. 13th month pay of P30,000 & below YES not compensated for by insurance.
YES a. First statement is correct c. both statements are correct
b. Inter-corporate dividend YES NO b. Second statement is correct d. both statements are incorrect
c. Non-taxability of government units NO NO
d. Separation pay due to sickness YES NO 58. Which of the following is/are generally not included in the returnable (reportable)
income?
53. One of the following situs of taxation is not true. I. Compensation income
a. Taxable income of nonresident citizen II. Business income
b. Taxable estate of resident alien III. Passive income
c. Taxable donation of resident donation IV. Capital gain
d. Taxable sale
A. I, II, and IV C. I and III only
54. One of the following is a true classification of tax. B. I and II only D. III and IV only
As to object As to who bears the
burden 59. Which of the following is incorrect?
a. Income tax Personal Indirect Taxable Income
b. Value-added tax Excise Direct Year 1
c. Donor’s tax Excise Direct Year 2
d. Estate tax Property Indirect A. Rent for year 2 collected in year 1 No
Yes
55. I. If income earned is taxable and subject to final tax, income is needed to be B. Income from year 1 sales collected in year 2 Yes
reported in the annual income return. No
II. The excess of actual expenses over advances made consitute taxable income if C. Services for year 1, collected in year 2 No
such is not returned to the employer. Yes
D. Income from year 2 sales, collected in advance in year 1 No
a. First statement is correct c. both statements are correct Yes
b. Second statement is correct d. both statements are incorrect
 60. Which of the following statement is true? the cost of the lessee, and the ownership will belong to the lessor at the end of 5
A. Individual taxpayer are allowed to deduct his net loss against ordinary income year lease contract. The construction of improvements which was completed at
B. A general commercial partnership is allowed to holding period its capital asset the end of the 3rd month of the contract amounted to P240,500. The improvement
transactions. has an economic life of 8 years and estimated scrap value of P560. The rent
C. A corporation is allowed to carry over its net capital loss deduct from capital gain income on improvements for year 1 under each method is
the following taxable year. Outright Spread-out
D. An Individual taxpayer is allowed only to claim net loss carry over that is A. P240 500 19 672
not exceeding his income to exemption when such loss was incurred. B. P147 620 22 143
61. Which of the following capital assets transactions is subject to final income tax? C. P239 940 14 754
A. Sale of movable property D. P240 500 15 479
B. Investment in shares of stock sold outside stock market
C. Investment in equity securities sold inside stock market 66. X is beneficiary for P100000 payable in 3 equal payments at 12% interest per
D. Investment in 7-year bonds sold at a gain year. The P100000 is payable in the following annuity table:
Year Annual Pay Interest Principal
62. I. Investment of substantial amount in long term debt security is an improper Balance
accumulation of in earnings. 1 P41 635 P12 000 P29 635 P100 000
II. In computing the surtax, NOLCO is to be added in the income per income tax 2 41 635 8443.80 3 3191.20 37 635
return. 3 41 635 4461.20 37 173.80 37 173.80
A. First statement is correct
B. Second statement is correct The income earned by the beneficiary in year 3 is?41
C. Both statements are correct A. 41635
D. Both statements are incorrect B. 37173.80
C. 24905
63. The simple proprietorship reported the following changes during the year: D. 4461.20
Increase in total assets 250 000
Decrease in total liabilities 160 000 67. The real property with cost of P400000 was sold for P1000000. P120000
Additional investment to the business 50 000 down payment and P500000 under mortgage assumed by the buyer. The
Drawings during the year 20 000 balance, payable at P95000 every December 31 for next 4 years. The
The business income for the year is reported income under installment method in year of sale is?
A. P60 000 C. P430 000
B. P380 000 D. P450 000 A. P120000
B. P183333
64. For the year, the following amounts were received from the lessee: C. P220000
Rent income D. P372000
360000
For the year’s real property tax assumed by the lessee 10 000 68. A citrus farm reported the following:
For the year’s insurance, reimburse to lessee 20 000 Year Cost Harvest at selling price
Unrestricted advance rent 60 000 1 P100000 0
How much is the taxable gross receipt? 2 P200000 0
A. P450 000 C. P420 000 3 P50000 P500000
B. P430 000 D. P370 000 4 P50000 P400000

65. The lease dated January 1, 2008 provided for construction of improvements at How much should be the amount of reportable income in year 3?
 a. D is to pay C P1,000,000 if he finishes his LL.B at the V.P. College of
A. P150000 Law.
B. P250000 b. D will pay C P500,000 as soon as his financial means will
C. P450000 permit him to do so.
D. P500000 c. D is to pay C P2,000,000 ten days after his 80th birthday.
d. D will pay C P1,000,000 twenty days after he passes the CPA exams for
69. In addition to his business as construction materials dealings Mr. Espiritu had the October 2008.
following capital asset transaction on 2008: e. None of the above.
F. In the following cases, the debtor shall lose the benefit of the period – choose the
exception.
SOLD D. When after the contraction of the obligation the debtor
ACQUIRED becomes insolvent but he gives collateral security or guaranty.
Capital Asset Date Selling Price Date Selling E. When the debtor fails to furnish the collateral securities which he has
Price promised.
Jewelry 8/15/08 80 000 5/10/08 10 000 F. When the collateral security is impaired whether through the debtor’s
M. Benz car 5/16/08 400 000 5/15/03 350 fault or by fortuitous events.
000 G. When the debtor attempts to abscond.
Refrigerator 9/5/08 6 000 2/9/08 5 H. None of the above.
000 G. A, B, and C, joint debtors to X and Y, solidary creditors in the joint amount of
Ford car 12/5/08 12 000 1/10/08 20 P120,000. On due date, how much can X collect from A?
500 C. P120,000 c. P40,000
D. P60,000 d. P24,000
The net taxable capital gain of Mr. Espiritu in 2008 is? H. A, B, and C obligated themselves to deliver to X a specific and determinate car
A. P76500 valued at P600,000. Due to the fault of A, the car was not delivered to X causing
B. P42000 the latter damages in the amount of P9,000.
C. P27000 E. By specific performance, X can compel B and C to deliver 1/3 each of
D. P26500 the car and H to pay damages.
F. The action of X is converted into one for damages where he can hold
70. A domestic corporation has the following data: liable, A, B and C for P203,000 each.
Excess tax credits from 2007 P15000 G. The action of X is converted into one for damages where he can
For year 2008: 1ST Quarter 2nd hold B and C liable for P200,000 each and A for P209,000.
Quarter H. The action being solidary and indivisible only A can be held liable by X
Income, net of 1% withholding tax P495 000 P792 000 for P609,000.
Deductions P480 000 P700 000 I. D borrowed from C P100,000 with a penalty of 20% if not aid on time. On due date,
D was able to pay C the borrowed amount. How much should D pay C?
How much is the income tax still due and payable in the second quarter? a. P100,000 only c. P100,000 + 20% + interest
A. P 14 440 b. P100,000 + 20% d. P100,000+20%
B. P23 400 +interest+damages
C. P10 400 J. Which is the correct order of application of the rules in connection with solution of
D. P29 440 problems involving in nominate contracts?
1. The provisions of the Civil Code; then stipulation of the parties; then
September 2008 provisions of the most analogous nominate contract and lastly custom or
E. Which of these is not a conditional obligation? usage of the place.
 2. Custom or usage of the place; then stipulation of the parties; then the N. A is a manager with authority to collect of ABC Partnership to which T is indebted
provisions of civil Code and lastly provision of the most analogous for the amount of P100,000. T is indebted to A in his personal capacity for
nominate contract. P50,000. Both sums are due and demandable. A collects from T P45,000 and
3. The stipulation of the parties; then the provisions of the Civil gives T a receipt in his own name.
Code; then the provisions of the most analogous nominate 1. A should give to ABC partnership the entire collection of P45,000 as an
contract and lastly the custom or usage of the place. agent of the partnership to which he must be loyal.
4. The provisions of the most analogous nominate contract; then the 2. A should keep for himself the entire collection of P45,000 because he gave
stipulation of the parties; then the provisions of the Civil Code and lastly a receipt in his own name.
the custom or usage of the place. 3. A should share with ABC partnership the P45,000 at P22,500 each.
K. Which of the conclusion is correct? 4. A should give a proportionate sum to ABC partnership which is
1. D who is indebted to C in the amount of P100,000 conveys to C ownership P30,000 and P15,000 for himself.
of his jeep which later on was found out to have a value only of P70,000. D O. A, B, and C are partners in a bakery business where A tends the store. B is the
still owes C P30,000. baker and C is the driver of the delivery van which distributes the products to the
2. D, who is indebted to C in the amount of P100,000, conveys to C various areas in Metro Manila. Due to the criminal negligence of C in driving the
the ownership of his jeep with an agreed appraisal value of delivery van, he ran over T who was physically injured in the amount of P90,000.
P150,000. C is now obligated to pay D P50,000. In this case –
3. F, a father, is indebted to C, a creditor, in the amount of P15,000,000. F 1. T can only sue partner C who is only one in fault.
dies leaving to his only son S a house and lot valued at P10,000,000. If S 2. T can hold solidarily liable A or B or C or ABC partnership for the
voluntarily pays C P15,000,000 he can recover the excess payment of entire amount of P90,000.
P5,000,000. 3. T can hold liable A, B, and C jointly for P30,000 each.
4. S offered the sale of a house and lot to B for P10,000,000 giving to the 4. Correct answer is not indicated.
latter an option of 60 days. B paid S P10,000 as an option money. There is P. A, B, and C are partners in ABC Co. to which T is indebted in the amount of
already as between S and B, a perfected contract of sale. P300,000. A, B, and C agreed that they will just divide equally the partnership
L. In a universal partnership of all present property, the partners contribute – credit of P300,000. A and B were able to collect P100,000 each from T, but when
1. Only their income from work or industry and fruits or income from assets; C was collecting T had already become insolvent.
2. All present property which belong to each of the partners at the time of 1. A and B will just be allowed to retain what they had collected.
constituting the partnership together with all the properties that they may 2. To equalize the situation C will be allowed to withdraw P100,000 from the
acquire in the future; partnership funds.
3. All present properties which belong to each partners at the time 3. A ad B will share with C the P200,000 already collected.
of constituting the partnership together with all the profits that 4. A ad B will return to the partnership capital the P200,000.
they may be acquired therewith; Q. A and B are partners in buying and selling automobiles. A, by the partner’s
4. All present properties together with whatever may be acquired later by agreement, was authorized to buy any immovables on a cash basis, never on the
donation, legacy, or inheritance. installment plan. One day A bought on installment plan a parcel of land with
M. Statement 1: Where the contribution to the common fund is P3,000 or more in improvements from X, a client. X did not know of A’s lack of authority. A’s
money or personal properties and the partnership contract is not in a public purchase was made on behalf and in the name of the partnership. Is the
document, the contract is null and void. partnership bound?
Statement 2: Where a limited partnership is only orally agreed upon, no 1. No, because A was not really authorized to buy on installment
partnership whatsoever is created. plan and the same is not “apparently carrying on in the usual way
1. Both statement are true the business of the partnership.”
2. Both statement are false 2. No, because A failed to obtain the consent of all the partners although he
3. Statement 1 is true, but statement 2 is false was authorized to buy any immovables.
4. Statement 1 is false, but statement 2 is true
 3. Yes, because although A was not really authorized, still for “apparently 20. Juan de la Cruz signs a promissory note payable to Pedro Lim or bearer, and delivers
carrying on in the usual way the business of the partnership” A is implicitly it personally to Pedro Lim. The latter somehow misplaces the said note and Carlos Ros
authorized and X did not know of A’s lack of authority. finds the note lying around the corridor of the building. Carlos Ros endorses the
4. Yes, because all transaction made by any partners with third person is promissory note to Juan Bond, for value, by forging the signature of Pedro Lim. May Juana
valid provided the latter acted in good faith. hold Juan de la Cruz liable on the note?
R. Corporation as a rule is not entitled to this kind of damages? 63. No, because forgery is a real defense
1. Actual damages c. Moral damages 64. Yes, because the forge signature is not necessary for the negotiation of
2. Exemplary damages d. liquidated damages the instrument
S. In case of a delinquent stockholder, the following rights are not given to him 65. No, because Juana Bond cannot become a holder because the endorsement id
except: forged
1. Right to receive dividends in accordance with the provisions of 66. Yes, because forgery is just a personal defense
the law 21. Statement 1: An overdue or dishonored instrument may still be negotiated either by
2. Right to vote endorsement or by delivery to the same extent as before maturity.
3. Right to be voted for. Statement 2: An instrument is dishonored only by nonpayment.
4. Right of representation of any stockholders’ meeting E. First statement is true, second statement.
5. Correct answer not given. F. First statement is false, second statement is true.
T. One of the following does not require stockholders’ approval: G. Both statements are true.
1. Merger or consolidation H. Both statements are false.
2. Change of corporate name 22. Marie makes a promissory note payable to bearer and delivers the same to Polido,
3. Investment of corporate fund for a purpose outside of the main purpose of who negotiates it to Arman by indorsing it without recourse. If the note is dishonored in
the corporation. the hands of Arman due to insolvency of Marie,
4. Declaration of cash dividend. E. Arman cannot recover from Polido because the latter does not warrant
U. Which of the following cannot be included as a valid provision under the By-laws: Marie’s solvency.
1. The time, place and manner of calling and conducting regular or special F. Arman can recover from Polido because the later is secondarily liable on the
meetings of the directors or trustees. instrument as indorser.
2. The time, place, and manner of calling and conducting regular or G. Arman can recover from Polido because of breach of warranty.
special meetings of the stockholders or members. H. Arman can recover from Polido because his indorsement is conditional.
3. The penalties for violation of the by-laws. 23. A is the maker of promissory note payable to the order of Bunag and then
4. The time for holding the annual election of the directors or trustees and successively negotiated to Carlos to Dante to Elain to Ferdy to Grego who is the holder.
the mode or manner of giving notice thereof. Grego strikes out intentionally the indorsement of Carlos.
V. Mercy subscribed 10,000 shares of Rosario Corporation and paid 25% of the total a. Only Carlos is discharged.
subscription. During the stockholders’ meeting how many votes on subscribed b. Carlos and Dante are discharged but not Elaine and Ferdy.
shares does Mercy have? c. All of Carlos, Dante, Elaine and Ferdy are discharged; Carlos by the
1. 2,500 shares c. 10,000 shares striking out of his indorsement and Dante,Elaine, and Ferdy by the
2. 7,500 shares d. not entitled to vote discharge of a prior party.
19. A corporate stockholder sold his share to another, but the sale has not been recorded d. No one is discharged because the problem does not say that the striking out of
in the books of the corporation. The sale is: the indorsement was before or after the maturity of the instrument.
E. The sale is void because it was not registered in the corporate book. 24. A promissory note states as follows:
F. The sale is perfectly valid as between the buyer and the seller. “I, Melody A. Aquino after date January 5, 2008 promises to pay to the order of Jun Matias
G. The sale is void because the corporation has no consent in the sale of shares of fifty thousand pesos (P60,000.00) or a laptop computer at your option, for value received
stock. with 12% interest per annum.”
H. The sale is valid only if the same be registered in the corporate book. The note was on a printed form, and the words underscored were in the
handwriting of Melody Aquino.
 a. The instrument is not negotiable because it was not signed by the maker Melody without interest and to have such full payment of the purchase price annotated in the
A. Aquino. certificate of title covering the property, even if there is a stipulation prohibiting the
b. The instrument is negotiable because all the requisites under section 1 buyer to do so.
of the negotiable instrument law are present. Statement 2 – In installment sale of real property, if the contract is cancelled, the
c. The instrument is not negotiable because on the face of the instrument it does seller shall refund to the buyer the cash surrender value on the payments of the
not contain an unconditional promise to pay a sum certain in money. property equivalent to the fifty percent of the total payments made provided there is
d. The instrument is not negotiable because the signature of Melody A. Aquino does already payment of at least five (5) years.
not appear at the end thereof. a. Both statement are true
25. A promissory note states as follows: b. Both statements are false
February 1, 2008 c. Statement 1 is true, but statement 2 is false
“I hereby acknowledge that I owe Mr. P the amount of P1, 000.00” (Sgd. X) d. Statement 1 is false, but statement 2 is true
a. The instrument is not negotiable because it does not contain a promise 30. Special powers of attorney are necessary in the following cases except:
to pay a sum certain in money. E. To submit question to arbitration
b. The instrument is negotiable because all the requisites under section 1 of the F. To enter into any contract by which the ownership of an immovable is transmitted
negotiable instrument law are present. or acquired either gratuitously or for a valuable consideration.
c. The instrument is not negotiable because it is not payable on demand or at a G. To loan money which are urgent and indispensable for the preservation of the
fixed or determinable future time. things which are under administration
d. The instrument is negotiable because the instrument need not use the word H. To borrow money which are urgent and indispensable for the
“promise” but any word like “acknowledgement” is sufficient. preservation of the things which are under administration
26. This is common on sales on installment plan. Stipulation that “ownership in the thing 31. In agency, the agent represents:
shall not pass to the purchaser until full payment of the price” 71. A person who is capacitated
a. Pacta sunt servanda 72. A person who is incapacitated
b. Pactum reservati Dominii 73. Heirs and creditors of the estate of the debtor
c. Pactum commissorio 74. Judicial court
d. Tacita reconduccion 32. Bears risk of collecting from the buyer the price of the sale.
27. Arnold exchange at the Bangko Central his P100, 000.00 Philippine Pesos for $2,225 62. Commission agent
U.S. Dollar. The contract is to be characterized as: 63. Delegacion
a. Barter 64. Quasi-tradition
b. Sale 65. Agente del credere
c. Do ut facias 33. Statement 1 – future property cannot be the subject of mortgage or pledge
d. Contract of exchange Statement 2 – future property cannot be the subject of contract of sale
28. In a contract entered into between Jude Electric International Company and Lileth E. First statement is true, second statement is false
Corporation referred here as the distributor, the former consigned to the latter Electric F. First statement is false, second statement is true
fan to be sold by the distributor. Prior to such sale, Jude Electric International would G. Both statement are true
remain the owner of the electric fan. However, the contract expressly stated the Lileth H. Both statements ate false
Corporation was not being made as agent, and could not bind the Company between the 34. A and B borrowed P1,000,000 from C. to secure the loan, A pledge his necklace
two entities there is: worth P250,000, while B pledge his ring worth P750,000. If B paid P750, 000
a. Contract of sale a. B can demand for the return of his ring because he is now release from his
b. Contract of agency to sell obligation
c. Contract of partnership b. B cannot ask for the return of his ring although their obligation is joint
d. Trust agreement and proportionate because of the indivisibility of the pledge.
29. Statement 1 – In installment sale of real property, the buyer shall have the right to c. B cannot demand for the return of his ring unless A agreed.
pay in advance any installment or the full unpaid balance of the purchase price any time
 d. B can demand for the return of his ring because he already paid his proportionate E. If a taxpayer is acquitted in a criminal violation of the Tax Code, this acquittal does
share of P500, 000 being a joint obligation. not exonerate him from his civil liability to pay the taxes.
35. Statement 1 – It is possible that the debtor is not the pledgor or the mortgagor. F. A conviction for tax evasion is not a bar for collection of unpaid taxes.
Statement 2 – A pledge is valid even if the thing pledge does not belong to the G. A tax assessment is necessary to a criminal prosecution for willful
pledgor. attempt to defeat and evade payment of taxes.
66. First statement is true, second statement is false. H. Criminal proceedings under the Tax Code are now a mode of collection of internal
67. First statement is false, second statement is true. revenue taxes, fees or charges.
68. Both statements ate true 39. Taxation is an inherent power because:
69. Both statements are false. A. It is the lifeblood of the government.
36. On April 15, 2008 Madam Rasta filed her income tax return for her 2007 income and B. It is about the protection and benefit theory.
paid the tax due thereon. In year 2009, when Madam Rasta hired a new CPA to prepare C. It co-exists with the existence of the state.
her income tax return, she was informed that she made an overpayment in her income D. It is exercised for the general welfare of the people.
tax return filed in 2008, Convinced that she erroneously computed here tax in favor of 40. A tax is invalid in all of the following, EXCEPT:
the government, Madam Rasta engaged the services of a lawyer and filed a written claim C. Theory of taxation and its purpose are disregarded.
for refund of tax erroneously collected with the BIR Commissioner on Dec. 15. 2009. On D. Basis of taxation is not recognized.
April 10, 2010 without receiving a reply or decision on her claim for refund, Madam E. Inherent and constitutional limitations are not observed.
Rasta’s lawyer filed in Court of Tax Appeals a petition for review on her claim for refund F. It results to double taxation.
erroneously collected. Did the Court if Tax Appeals acquire jurisdiction over the petition 41. The government may not do all EXCEPT one:
for review over Madam Rasta’s case? A. Tax itself
1st answer: No, because the appeal is premature, there being no decision yet on said B. Delegate its power to tax to private agencies
claim for refund. The Court of Tax Appeals did not acquire jurisdiction over the appeal C. Impose tax arbitrarily
because its jurisdiction is to review n=by appeal decision of BIR Commissioner. D. Disregard uniformity in taxation
2nd answer: Yes, because while the BIR Commissioner has not yet rendered a decision on 42. The theory which most justifies the necessity of taxation is.
said claim for refund, preemptory period of two years within which to claim for refund of A. Protection and benefits theory
taxes erroneously collected may be filed is about to expire on April 15, 2010 and the B. Revenue purposes theory
failure of the commissioner to act on the claim for refund is tantamount to denial of the C. Lifeblood theory
taxpayer’s claim, hence, an appeal was made to the court of Tax Appeals. D. Ability to pay theory
a. 1st answer wrong, 2nd answer correct 43. 1st statement: Tax imposed outside the situs of taxation is void.
b. 1st answer correct, 2nd answer wrong 2nd statement: International Comity is an exception to territoriality doctrine.
c. Both answers are correct A. True; false
d. Both answers are wrong B. False; true
37. Which of the following rules is NOT applicable on the construction of tax laws? C. True; true
58. Provisions intended for the security of the taxpayer or to insure equality or D. False; false
uniformity of taxation are mandatory 44. Lola Barbie, aged 70 years old, who lives with her unmarried son Ivan, received P60,
59. If the intent of the tax law is not clear as to whether the taxpayer is covered by 000 which was used for her support during the year. The sources of support were as
the Tax obligation, the law shall be construed against the government and follows:
liberally in favor of the taxpayer. Social Security benefits P24, 000
60. If the law is repealed taxes assessed before repeal of the law may no Ivan 20, 000
longer be collected. Pepot, an unrelated friend 4, 000
61. Where the intent to tax is clear and the taxpayer claims he is exempt from the Roan, son of Lola Barbie 5, 000
tax obligation, the tax shall be construed against the taxpayer and in favor of the Bakla, Lola Barbie´s sister 7, 000
government. Total P60, 0000
38. Which of the following statements is NOT TRUE?
Who can claim head-of-family status based on Lola Barbie´s dependency exemption? 66. Both answers are incorrect
60. Ivan 67. Only answer 1 is correct
61. Roan 68. Only answer 2 is correct
62. Bakla
63. None 50. Which of the following statements is NOT CORRECT?
45. The President of the Philippines and the Prime Minister of Malaysia entered into an A. Income from a general professional partnership constructively received by a
executive agreement in respect to the loan facility to the Philippines from Malaysia partner when his share in net income is credited to his capital account
whereby it is stipulated that interest on loans granted by private Malaysian financial B. Income from a taxable partnership is constructively received by a partner in the
institutions in the Philippines shall not be subject to Philippine income taxes. What basic, same taxable year that partnership determined its net income after tax
characteristic of taxes has been violated by this agreement? C. Any distribution of dividend made to individual shareholders of a
A. Inherent limitation corporation shall be considered dividends and income of the taxpayer
B. Theoretical justice subject to basic tax in year received effective January 1, 1998
C. Legislative in character D. Any distribution of dividend made to shareholders of corporation shall be deemed
D. Administrative feasibility to have been made from most recently accumulated earnings or surplus and
46. Which of the following statements constitute tax avoidance? income of the recipient in the year received.
67. Deliberate failure of a taxpayer to pay the taxes due to the government 51. One of the following losses CANNOT be deducted from gross income.
68. Connotes fraud through the use of pretenses and forbidden devices to lessen or C. To construct a bigger warehouse, a corporation demolished an old warehouse
defeat taxes which had a construction cost of P 3, 000, 000 and a book value of P500, 000.
69. Punishable by law D. Demolition of a building existing on a land purchased where the
70. Maybe contrary to the intent of the legislature but nevertheless do not violate the corporation has no use for the building at the time of purchase and it
law was its intention to remove the building in order to build its factory.
47. The books of accounts or records of the taxpayer must not be kept in the following E. A corporation retired its machinery from the business because of the increase in
language: the cost of production and failure of the machinery to meet the desired number of
A. Filipino units of production.
B. Chinese F. A corporation ascertained that its B Corp. stocks are worthless because of the total
C. English insolvency of B Corporation.
D. Spanish 52. If an individual is on the cash basis of accounting, will it be paid in advance be
48. In which of the following instances may a taxpayer include his income as part of allowed as a deduction?
gross income subject to basic tax at his option? First answer: No, it is a deduction in the year in which the indebtedness was
A. When it involves a gain from sale of shares of stock held as capital assets, is not paid and not in the year that the allowance was paid.
traded in the stock exchange and the gain does not exceed P100,000 Second answer: Yes, if the indebtedness is payable in periodic amortization, the
B. When a real property held as capital asset is sold to the government or amount of the interest which corresponds to the amount of the principal amortized or
any of its political subdivision. paid during the year shall be allowed as a deduction in such taxable year.
C. When it involves a gain from sale of shares of stock held as capital assets and is
traded in the stock exchange A. Both statements are true
D. When the sale involves a real property held as capital asset. B. Both statements are false
49. For what year may a taxpayer deduct his expenses for income tax purposes? C. First statement is true, second is false
Answer 1: If he keeps his books on the cash receipts basis, the expenses are D. First statement is false, second is true
deductible in the year they are paid. 53. In which of the following transactions may gains and losses is NOT recognized?
Answer 2: If the taxpayer keeps his books on the accrual basis, the expenses are 61. Exchange of property where the property received is not substantially different
deductible in the year they are incurred. from the property disposed.
62. Exchange of property solely in kind in pursuant of corporate mergers and
65. Both answers are correct consolidations
 63. Exchange by a person of his property for stock in a corporation as a result of b. Claims against the estate may include unpaid medical expenses of the decedent.
which said person alone or together with others not exceeding four (4) persons, c. Claims against insolvent person, to be deductible, require that the claim must be
gains control of said corporation notarized.
64. All of these d. The ½ share of the surviving spouse on the net conjugal property is not
54. Which of the following is an EXCEPTION to the accrual basis of keeping books? a direct deduction from gross estate.
B. When the lessor reported income on improvements erected by the lessee
C. Where the taxpayer reports his income on the installment basis or long-term- 58. Following are statements about the deduction from gross gift. Which one is not true?
construction-contracts on the basis of completed-contracts a. To be deductible, dowry should be given by a parent to a child on account of
D. Where contributions are deducted, such must be paid or made during the taxable marriage before celebration of marriage or within one year from celebration of
year marriage.
E. All of these b. Mortgage loan on the property donated is a deduction from gross gift if
55. One of the following statements is WRONG: Because accounts are required to be assumed by the donee.
kept, as follows: c. Family home is not one of the allowable deductions from gross gift.
A. Where the quarterly gross sales, earnings, records and output do not exceed P50, d. Donation to the national government does not require that it be for
000, a simplified bookkeeping records public purpose to be deductible
B. Where the quarterly gross sales, earnings, records and output do not exceed P50,
000 journal and ledger, of equivalent. 59. Premium on life insurance policy is subject to percentage tax on insurance at a rate
C. Where the gross quarterly sales, earnings or output exceed P150, 000, the books of 5%. Following are exempt from tax on insurance, except:
shall be examined and audited by independent Certified Public Accountants a. Premium on life insurance returned within 6 months.
D. May be in a language other than native, English or Spanish as long as it b. Reinsurance premium on life insurance where the original insurance was
is in the language of the taxpayer. subjected to tax on insurance.
56. Statement 1: The books of accounts, including subordinate books and the vouchers c. Portion of the premium of variable contract of insurance in excess of what is
and receipts supporting therein, should be made available to the Bureau of Internal necessary to insure the life of the owner of the variable contract of the owner.
Revenue: d. Premium on the life insurance collected by a foreign branch of domestic
1) When any tax return of the taxpayer arising from transactions recorded in insurance company where such foreign country does not impose tax on
such books, is being audited by the Bureau of Internal Revenue premium of life insurance.
2) When a taxpayer retires from the business;
60. Gross income from within the Philippines of a resident subject to withholding tax at
Statement 2: There shall be submitted to the Bureau of Internal Revenue source.
inventories of goods or stocks; a. Dividend income from a resident foreign corporation.
 When an individual paying a business tax dies, and the business is continued by b. Share from the net income after tax of a domestic general partnership in
the person or persons intended in his estate; trade.
 When there is a change in ownership or change of place of a business c. Interest income from investment in bonds.
establishment; d. Gain from sale of capital assets.
 When a taxpayer becomes liable to the value-added tax for the first time;
61. The improperly accumulated earnings tax or IAET is important on the earnings of a
A. The first statement is true while the second statement is false corporation held beyond its reasonable needs. Which of the following is reasonable need
B. The first statement is false while the second statement is true for purpose of IAET?
C. Both statements are true a. Allowance for increase in retained earnings intended reserve to maintain the
D. Both statements are false same level of dividend payment.
57. Which of the following statement on deductions from gross estate is true? b. Earnings held pursuant to loan covenant.
a. Funeral expenses may be allowed to exceed the limit under meritorious condition c. Earnings for retention as required by a resolution of board of directors for future
subject to approval by the BIR Commissioner. commitments;
 d. Earnings reserved for the early retirement program of corporation.
The net income before the income tax of Oscar Corporation is:
a. P 280,000 c. P 330,000
b. P 260,000 d. P 340,000
62. Nanay, Abeth, a Filipino died April 1, 2008, survived by husband. At the date of
death, she has P 2,000,000 cash in bank and 100, 000 shares holding of Madam Toosia at
the date of death. On January 15, she made a gift of P 3,000,000 (real property) to her
husband. She is insured for P1, 000 by designating her estate as beneficiary. The
premium was from her exclusive property.
65. Basty, Bank, Inc. is a domestic bank operating in Polilo, Quezon. From the following
The last will and testament of Nanay Abeth reveals that shares of stock in Toosia data in a month:
Corporation shall be contributed to the local government of Infanta, Quezon. The Rentals from safety deposit boxes and real property acquired P 80,000
maintenance of public market, and the balance shall be given to her husband. through foreclosure proceeding for bad loans
Net foreign exchange gains (difference between the value of 22,000
Nanay Abeth’s executor filed and paid the following tax return: foreign currencies sold and purchased)
Net trading gains from trading of securities, commercial 66.000
Donor’s tax for gift of her husband P 204,000 papers and other financial instruments(difference between the
Estate tax 34,840 yield or selling price and the cost of obtaining the same)
Trust fees 11,000
The transfer tax still due for the estate tax on the estate tax of Nanay Abeth. Dividends from domestic corporations 3,000
a. P 116,160 c. P 356,160 Other service fees 22,000
b. P 160,160 d. P 560,160 Interest income from lending activities from instruments with remaining
terms of:
63. Tammy Corporation is engaged in sales of goods and services with net sales/ net Five years and less 70,000
revenue of P 400,000 and P 200,000 respectively. The actual entertainment, amusement More than five years 80,000
and recreation expense on the sale of goods and services, respectively, of-
a. P 4,000 and P 4,000 c. P 2,000 and P 4,000 The percentage tax (gross receipts tax) for the month:
b. P 4,000 and P 2,000 d. P 2,000 and P 2,000 a. P 0 c. P 43,000
b. P 189,300 d. P 104,500
64. The following were taken from the income statement of Oscar Corporation for the
taxable year 2008: 66. Passive income from within the Philippines:
Gross Profit on Sales P 800,000
Less: Deductible expenses P 440,000 Monetary yield from money market placement, net of tax
Provision for bad debts 80,000 520,000 Interest Income from deposit under FCDU, gross
Net Income before income tax 280,000 Dividend income from a domestic corporation, gross
Dividend income from resident foreign corporation
Additional Information: Taxpayer is non-resident alien not engaged in business. Final tax on passive income is?
a. Accounts written-off during the year and change to allowance for bad debts- P a. P 32,500 c. P 87,500
50,000. b. P 68,000 d. P 95,000
b. Recoveries on accounts receivable previously written off in 2007 and credited to
allowance for bad debts. 67. An employee received the following fringe benefits for a taxable year:
Allowed as deduction by the BIR- P 30,000. 13th month pay P 20,000
Disallowed by the BIR as deduction – P 20,000. Christmas bonus 15,000
 Clothing allowance 8,000
Laundry allowance 4,000 During the month, one consignee remitted cash net 20% commission
Rice subsidy 10,000 representing the payment for the five units delivered on June 5. Another consignee
Monetized sick leaves, 18 days 18,000 remitted cash of P 220,000 gross of 20% commission, representing payment for 10 units
sold in July. Other than the commission Mongolia company gave 5% discount/ rebate to
Employee is rank and file, exclusions from gross income would amount to? consignee for selling ten (10) units in one period.
a. P 20,000 c. P 57,600 BONUS The amount of VAT payable is:
b. P 30,000 d. P 46,600
a. P 87,813.00 c. P 66,525.00
b. P 69,350.00 d. P 78,404.46
68. A real property used in business was sold on July 1 of the year by installment as
follows: 70. Meo sold his stock investment in 2008 as follows:
1. Enteng Company shares, not traded in the stock exchange:
Selling Price 4,000,000 Selling P 300,000
Cost of Real Property 1,800,000 Cost 120,000
Zonal Value 4,500,000 Net Gain P 180,000
Mortgage loan on the property assumed by buyer 2,000,000 2. Sebastian Company shares, not traded in the stock exchange:
Down payment, upon sale 2,000,000 Selling P 400,000
Balance is covered by a note with a rate of P 10% payable in four equal annual Cost 340,000
installment beginning in the year of sale. Interest is computed on the outstanding Net Gain P 60,000
balance and installment is due at the end of the year. 3. May Company shares, traded in the stock exchange:
Selling P 150,000
In the year of sale, gross income to be recognized is? Cost 230,000
a. P 850,000 c. P 1,800,000 Net Gain P 80,000
b. P 940,000 d. P 2,000,000 Total withholding taxes due on the sales is:
a. P 21,000 c. P 16,000
69. Faye Company, a VAT registered business has the following data in its books on July, b. P 21,375 d. P 16,750
2008:
Domestic Sales Rates of Income Tax
Sales Returns
Goods shipped on consignment (net of tax): Over But Not Over Tax Plus Of the
Units Unit Price Excess Over
July 5 25 P 22,000 0 10,000 - + 5% -
June 5 20 22,000 10,000 30,000 500 + 10% 10,000
May 5 12 22,000 20,000 70,000 2,500 + 15% 30,000
Goods withdrawn for use by the company 70,000 140,000 8,500 + 20% 70,000
Goods taken as payment to creditor 140,000 250,000 22,500 + 25% 140,000
Freight and insurance of goods 250,000 500,000 50,000 + 30% 250,000
Purchases: 500,000 - 125,000 + 32% 500,000
Raw Materials
Supplies Rates of Donor Tax
Capital Goods
Salaries of employees Over But Not Over The tax shall be Plus Of the Excess
 Over b. Equivalent performance in terms of damages.
- P 100,000 Exempt c. Specific performance by compelling X to go on painting Y’s portrait.
P 100,000 200,000 0 2% P 100,000 d. Substitute performance by allowing a third person to do his portrait with
200,000 500,000 2,000 4% 20P,000 expenses therefor charged to X.
500,000 1,000,000 14,000 6% 500,000
1,000,000 3,000,000 44,000 8% 1,000,000 4. Which of the following is not an obligation with a period?
3,000,000 5,000,000 204,000 10% 3,000,000 a. “Payable soonest”
5,000,000 10,000,000 404,000 12% 5,000,000 b. An obligation payable little by little
10,000,000 1,004,000 15% 10,000,000 c. Payable “within 2 years from today”
d. None of the above
Rates of Estate Tax
5. He reason why an obligation exists:
Over But Not Over The Tax Shall Be Plus Of the Excess
a. Active subject d. Prestation
Over
b. Passive subject e. All of the above
c. Vinculum juris
P 200,000 Exempt
P200,000 500,000 0 5% P 200,000 6. In a restaurant, a waiter falls on a lady customer, spills drinks on her, and causes
500,000 2,000,000 P 15,000 8% 500,000 her to go to the comfort room and take off her clothes and remain naked, without
2,000,000 5,000,000 135,000 11% 2,000,000 the restaurant offering her an apology. The clothes of the lady customer were
5,000,000 10,000,000 465,000 15% 5,000,000 damaged. The lady customer is entitled to:
10,000,000 And Over 1,215,000 20% 10,000,000 a. Actual damages d. Actual and moral damages
b. Moral damages e. Liquidated damages
September 2009
1. Argos died leaving his estate as follows: Total properties, P 1,000,000 and 7. A, B, and C are bound to deliver to X 90,000 sacks of sugar in Y’s warehouse on
indebtedness to Yolly amounting to P 1,200,000. Mr. Zeta the legal heirs of Argos January 5, 2009. On January 6, 2009, X demanded from A to deliver the sugar.
voluntarily paid Yolly P 1,200,000. The heirs of Argos cannot recover the excess However on January 8, 2009, a fire broke out on Y’s warehouse because of
payment of P200,000 because it constitutes a: lightning and the entire 90,000 sacks of sugar was totally lost.
a. Quasi Contract c. Moral Obligation a. X can hold each of them (A, B and C) liable for 30,000 sacks of sugar because
b. Civil obligation d. Natural Obligation they are already in delay before the object was lost by fortuitous event.
b. X can hold any of them (A, B and C) liable for 90,000 sacks of sugar because
2. “I’ll give you my car one year after my death.” The obligation is they are already in delay before the object was lost by fortuitous event.
a. Valid, because the event is sure to come c. A, B and C is not liable because the loss was due to fortuitous event.
b. Valid, the obligation is conditional d. A is liable for 30,000 sacks of sugar because he was already in delay
c. Valid, but disregard the condition but B and C obligation is extinguished because they are not in legal
d. Void, not legally possible delay and the loss was due to fortuitous event.

3. Amazed by the skill of X who can paint portraits using brushes inserted in his 8. Under the following contracts the rights and obligation are transmissible except:
right armpit, Y entered unto a contract with the former to have his own portrait a. Contract of lease c. Contract of partnership
done and P 50,000 as full payment thereof. After he has started the portrait but b. Contract of agency d. contract of commodatum
before its completion, X was sideswiped by a speeding car while he was drunk
and walking beside the way causing the doctors to have is right arm amputated. 9. A, B and C formed a universal partnership of all present property on February 14,
In this case that is the remedy of Y? 2009. A contributed P 500,000, B a car worth P 500,000 and C contributed
a. Nothing, as the service became impossible by reason of an act equipment worth P 500,000. The partners executed an article of co-partnership in
independent of the will of the debtor.
 a private instrument. After operation for 5 months, A and B got married. Did the X is correct as which of these rights?
marriage dissolve the partnership? a. 1 and 3 c. 2 only
a. Yes, the partnership dissolved by marriage, because there is a chance in b. 3 only d. 2 and 3
equity among partners.
b. No, the marriage did not dissolved the partnership. 14. Which of the following is not a property right of a partner?
c. No, because the spouses can enter into a universal partnership. a. His rights in specific partnership property
d. Yes, because it becomes unlawful for the business of the partnership b. His interest in the partnership
to be carried on for the members to carry it on in partnership. c. His right to participate in the management
d. To demand true and full information of all things affecting the
10. An incidental element of a contract partnership
a. Implied warranty against eviction
b. Payment of interest in a loan 15. B and C formed a limited partnership, with A as a general partner, while B and C
c. Delivery of an object in a contract of pledge as limited partners, with the following contributions:
d. All of the above 1. A contributed a specific parcel of land
2. B contribute P 10,000, the first P 5,000 upon formation, and the last P 5,000,
11. A conferment of a direct benefit in a contract between two persons in favor of a 10 days after formation.
third person who must accept such benefit before the same is withdrawn is known 3. C contribution a specific car as was stated in the article of partnership, when
as: in fact it was not contributed.
a. Stipulation por autrui c. Pactum reservati domini If the partnership was dispossessed of the land contributed by A after delivery to
b. Policitation d. Counter-offer the partnership by the real owner, the effect will be:
a. A is considered a debtor of the partnership
12. Unless otherwise provided in the general partnership agreement which of the b. A is considered a trustee of the land for and in behalf of the partnership
following statements s correct when a partner dies? c. The partnership will dissolved
d. A is to answer for warranty against eviction.
The deceased
The deceased partner’s estate 16. 1st Statement: In a universal partnership where its nature is not specified, the
partner’s executor would be free from The partnership presumption is that a universal partnership of all profits only is formed.
would automatically any partnership would be 2nd Statement: When the contribution of the partnership consists of personal
dissolved property amounting to P 1,000,000 and real property amounting to P 20,000 and
become a partner liabilities the contract is entered into verbally, the partnership contract is void.
automatically a. Both statement are true
a. Yes Yes Yes b. Both statements are false
b. Yes No No c. 1st statement is true and 2nd statement is false
c. No Yes No d. 1st statement is false and 2nd statement is true
d. No No
Yes
17. Which of the following is (are) valid consideration for the purpose of stocks of a
13. C, a partner in “C” partnership, assigns his interest in “Y” partnership to X, who is corporation?
not made a partner. After assignment X asserts right to I. Real Estate
1. Participate in the management of Y partnership II. A negotiable promissory note in money
2. C’s share in the surplus profit III. Monetary consideration for services to be performed
3. May compel the other partners that he (X) becomes a partner.
a. I only c. Both I and II
 b. II only d. Both II and III
23. Which off the following is or are valid:
18. Which of the following instances wherein non-voting shares is not allowed to A. Sale of future property
vote? B. Donation of future property
a. Issuance of additional Capital Stock C. Sale of future inheritance
b. Payment of Bonded indebtedness D. Sale of a losing ticket for a sweepstakes already run to be use as collector’s item
c. Mortgaging substantially all of the corporate property a. A and B
d. Investment of corporate fund in another corporation not for primary purpose b. A and C
of the corporation. c. A and D
d. A,C and D
19. In 2006, Corporation “A” passed a board resolution removing “X” from his position
as manager of said corporation. The by-laws of “A” corporation provides that the 24. Andy orally bought two pens from Bernard each worth P300.00. The sale is
officers are the president general-manager, treasurer and secretary. Upon divisible, and Andy is willing to buy one pen without the other. The contract is?
complaint filed with the SEC, it held that the general manager could be removed a. Unenforceable
by mere resolution of the board of directors. On motion for reconsideration, “X” b. Valid
alleged that he could only be removed by the affirmative vote of the stockholders c. Voidable
representing 2/3 of the outstanding capital stock. Is “X’s” contention legally d. Rescissible
tenable?
a. No, the vote required is majority of the board and 2/3 OCS consenting 25. P wrote a letter authorizing A to sell his parcel of land situated in Bulacan. The
b. Yes, the voting requirement is only 2/3 of the outstanding capital stock. land was purchased by X, but the agent (A) did not give the money to P, the sale
c. No, the required vote is MBD consented by MOCS. of A to X is:
d. No, the voting requirement is only majority of the Board of Directors. a. Void because the authority of A is not in a public instrument
b. Unenforceable because the authority of A is not in a public instrument
20. Is a by-law provision of provision of “X” Corporation “rendering ineligible if c. Inexistent because the authority of A is in a private writing
elected, subject to removal, a director if he is also a director in a corporation d. Valid and enforceable
whose business is in competition with antagonistic to said corporation” valid and
legal? 26. The following statements pertain to either a commission agent or a broker.
a. Yes, under the principle of “corporate opportunity” I. He has a relation not only with his principal, and the buyers or sellers, but also with the
b. No, under the principle of “separate entity” property which is object of the transaction
c. Yes, provided it is approved by 2/3 of the outstanding capital stock. II. Maintains no relation with the thing he purchases or sells.
d. Yes, under the principle of “vested interest” III. The goods are placed in his possession and disposal.
IV. He is merely an intermediary whose function is to bring the parties to the transaction.
21. Which of the following is true Determine whether the above statements pertain to commission agent or
a. Delinquent stock can be voted broker.
b. Unpaid stock is necessarily delinquent a. I and III pertain to a commission agent.
c. Delinquent stock cannot be sold at a public auction b. I and IV pertain to a commission agent.
d. Un paid stocks are entitled to payment of cash dividend c. II and III pertain to a broker.
d. I and IV pertain to a broker.
22. Which of the following is not term as sale:
a. Venditio 27. B bought a particular Honda CRV 2008 on installment plan for P1,000,000 payable
b. Vente as follows:
c. Venta a. Down payment: P200,000
d. Benta b. Balance: payable in 60 equal installment
 As a requirement by the seller, the buyer was required to execute a chattel d. “To Joven Mariano and another drawee named Paul Macapinlac.”
mortgage on the thing sold. The buyer failed to pay his first installment. The
seller has the remedy of: 32. Manager’s check maybe treated and considered a promissory note because
a. File an action for exact fulfillment a. The drawer and drawee are the same person.
b. Cancel the sale b. The drawee is fictitious.
c. Foreclose the chattel mortgage c. The instrument is ambiguous.
d. All of the above d. All of the above

28. Contracts of sale with a right of repurchase are presumed equitable mortgage 33. Any holder may insert the date under the following:
under the followings: I. “30 days after date, pay to the order of X, P100,000.” (Sgd) Y
I. The purchaser retains for himself a part of the purchase price. II. “30 days after sight, pay to the order of X P100,000.” (Sgd) Y to Z
II. When the vendee binds himself to pay the taxes on the thing sold III. Date: _________
III. The price of the sale with right to repurchase is fairly valued I promise to pay to the order of X, P100,000 (Sgd) Y
a. I only a. I, II and III
b. I and II b. I and III
c. I and III c. II and III
d. I, II and III d. I and III

29. P delivered to A 10,000 pieces of Cebu fabricated shell craft jewelry for the 34. Which of the following describes a negotiable instrument?
purpose of selling them at P1 each. Out of the proceeds of the expected sale, A is a. The subject is goods
to receive a 10% commission. After 3 days, however, A sold all the items at P1.50 b. This is a mere evidence of title
each to B, but on 30 day credit. Under the situation: c. It is in itself property with value
a. A must pay P10,000 immediately. d. The intermediate party is not secondary liable if the document is dishonored
b. A cannot be compelled to pay at all.
c. A must pay P15,000 immediately. 35. The crime of BP 22 or the bouncing check law which penalizes the act of making
d. A must pay P5,000 immediately and P10,000 after 60 days. or drawing and issuing a check without sufficient fund or credit is:
e. All of the above. a. Malum in se
b. Malum prohibitum
30. Which of the following contracts is essentially gratuitous: c. Neither Malum in se nor Malum prohibitum
I. Commodatum d. Both Malum in se and Malum prohibitum
II. Precarium
III. Deposit 36. 1st Statement- The power of taxation must first be expressly granted, either by
IV. Mutuum law or the Constitution, before the state may validly exercise it.
a. I and II 2nd Statement- The Philippine government may subject the land where embassies
b. I and III of foreign governments are located to real property taxes.
c. I, II and III a. Both statements are false
d. I, II, III and IV b. 1st statements is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false
31. Which of the following is a valid address to a drawee so as to make the d. Both statements are true
instrument negotiable?
a. “To Joven Mariano or Paul Macapinlac.” 37. 1st Statement- A taxpayer who fails or refuses to pay his taxes cannot be
b. “To Joven Mariano and Paul Macapinlac.” imprisoned for nonpayment of the same.
c. “To Joven Mariano, or in his absence, Paul Macapinlac.”
 2nd Statement- A government that imposes more direct taxes than indirect taxes clear from all Philippine taxes which may be imposed ______. Is the stipulation
is said to have managed to evolve a progressive system of taxation. valid?
a. Both statements are false
b. 1st statements is false while 2nd statement is true a. Yes, based on international comity
c. 1st statement is true while 2nd statement is false b. Yes, based on the doctrine of non-taxability of government
d. Both statements are true c. No, violative of the inherent limitations.
d. No, violative of the constitutional limitations.
38. 1st Statement- The progressive system of taxation to be evolved by congress as
mandated by the constitution is to be interpreted as permissive, rather than a
mandatory, provision.

2nd Statement- There is no constitutional limitation if Congress will pass a law 42. 1st Statement- Failure of any person to register as an entity shall result to his
subjecting the Armed Forces of the Philippines to taxation. being temporarily closed for the duration of not less than five days and shall be
lifted upon compliance with whatever requirement prescribed by the
a. Both statement are false Commissioner in the closure order.
b. 1st statement is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false 2nd Statement- The period to register as a Vat-entity to the appropriate Revenue
d. Both statement are true District Officer shall be within ten days from date of employment.

39. 1st Statement- A person may refuse to pay tax on the ground that he receives no a. Both statement are false
personal benefit from it. b. 1st statement is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false
2nd Statement- There can only be a tax if there is a law imposing the tax. d. Both statement are true

a. Both statement are false 43. Which statement is false about succession:
b. 1st statement is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false a. The successor inherits all the transmissible property of the decedent including
d. Both statement are true his liabilities.
b. The successor can be made liable for the obligation of the decedent
40. 1st Statement- taxation and police power may be exercised simultaneously beyond the value of the asset he received.
c. In succession, fruits and credits maturing after the death of the decedent pass
2nd Statement- In the exercise of taxation, the state can tax anything at anytime to the heirs even if they were subjected to estate tax.
and at any amount. d. In succession, the successor can repudiate the inheritance.

a. Both statement are false 44. The City Government imposed taxes on the steam boiler of an electric company.
b. 1st statement is false while 2nd statement is true The Department of labor and Employment also imposed fees on the said steam
c. 1st statement is true while 2nd statement is false boiler.
d. Both statement are true There is no conflict between the two impositions on the same subject matter
because:
41. In a loan agreement between the Bangko Sentral ng Pilipinas (as borrower) and a. The former is exercising the power of taxation while the latter is exercising the
private international banks (as lenders), it is stipulated that all payments of police power.
interest by the Bangko Sentral ng Pilipinas to the lenders shall be made free and b. The purpose of the former is to raise revenue while the purpose of the latter is
regulation.
 c. There is no direct double taxation since there are two different taxing b. The share of stock sold and then reacquired and repurchased are identical
authorities: the national government and the local government/ stock or securities.
d. All of the above. c. The share of stock sold and then reacquired with a period beginning 30 days
before the date of sale or disposition.
45. Holy Cross College, a non-stock, non-profit educational institution, rented the d. The shares of stock sold and then reacquired with a period ending 30 days
3,000 square-meter lot of Mr. Bombeo, a wealthy businessman. Holy cross after such sale or disposition.
College then utilized the 2,500 square-meter portion of the lot as parking space
whereby the students were charged parking fees for the use thereof. A bungalow 48. The taxpayer inquires whether or not the cost of educational assistance to the
was constructed on the remaining 500 square-meter portion of the lot to serve as employee and/or his dependent s which are born by the employer be taxable.
official residence of the college president. Which of the following statements is 1st Statement- A scholarship grant to the employee by the employer shall not be
true? treated as taxable fringe benefit ___ education or study involved is directly
connected with __ employer’s trade, business or profession and then ___ written
a. The entire lot and the bungalow are exempt from real property taxes. contract between them that the employee is ___ obligation to remain in the
b. Only the 500 square-meter lot and the bungalow are exempt from real employ of the employer ___ period of time that they have mutually agreed upon.
property taxes. 2nd Statement- The cost of educational assistance __ by an employer to the
c. Only the 2,500 square-meter lot is exempt from real property taxes. dependents of an employee__ treated as taxable fringe benefits of the employee
d. None of the real properties is exempt from real property taxes. unless the assistance was provided through a competitive scheme under the
46. Jesusa (lessor) leased his lot to Roberta (lessee) under the following terms and scholarship program of the company
conditions: a. Both statement are false
#1: The term of the lease is 10 years effective July 1, 2009; b. 1st statement is false while 2nd statement is true
#2: Roberta shall pay Jesusa a monthly rental of P10,000; c. 1st statement is true while 2nd statement is false
#3: Roberta shall pay the real property tax on the lot at P5,000 a year; and d. Both statement are true
#4: Roberta shall construct a commercial building on the lot which shall belong
to Jesusa upon the expiration of the lease. 49. Jen made the following interest payments during the taxable year:
Interest on loan from sister used to buy office furniture P 10,000
The construction of the building was completed on 2011 at a cost of P2,000,000 Interest on bank loan of Jen’s secretary secured by Jen’s 15,000
with an estimated useful life of 20 years. Land
Interest in Promissory note issued to supplier 5,000
Assuming that the building was gutted by fire on December 31, 2012. The Interest paid in advance on commercial bank loan 20,000
salvage value was ___ to recover from the fire insurance policy taken ___ property
in the amount of P1,000,000. Note: The principal amount of the bank loan is P 200,00 out of which P 50,000
amortization was paid during the taxable year. Jen used cash basis in reporting
Jesusa may claim a deductible loss for the taxable year ___ in the amount of: income.
Jen received the following interest during the same taxable year:
a. P 225,000 Interest on bank deposit, net of withholding tax P 8,000
b. P 125,000 Interest on note receivable from client 2,000
c. P0 The deductible interest expense of Jen for the taxable year amounts to:
d. P 200,000 a. P 36,200
b. P 21, 960
47. Losses from wash sales of stock of securities shall not be deductible except: c. P 20,800
d. P 21,200
a. The taxpayer is a dealer of securities or stock and ___ in the course of
business of such dealer.
 50. 1st Statement- An exchange solely in kind in a merger means that all property of a. Both statement are false
the absorbed corporation are exchanged for the shares of stock of the absorbing b. 1st statement is false while 2nd statement is true
corporation. c. 1st statement is true while 2nd statement is false
2nd Statement- Where the agreement in a merger calls for the distribution of the d. Both statement are true
casj received by the absorbed corporation to its stockholders, any gain resulting
from the exchange shall be exempt from income tax. 53.A corporation sold its idle land. This land was acquired five years ago for P
a. Both statement are false 6,000,000 and was mortgaged at the local bank for P 1,000,000. It had a fair
b. 1st statement is false while 2nd statement is true market value of P 8,000,000 in 2009. The terms of the sale are as follows:
c. 1st statement is true while 2nd statement is false Cash downpayment- 2009 P 500,000
d. Both statement are true Mortgage assumed by vendee 1,000,000
Promissory note due 2009 500,000
51. Data relative to ordinary gains/losses and capital gains/losses are shown below for Promissory note due 2010 2,750,000
the Promissory note due 2011 2,750,000
taxable year 2009: Promissory note due 2012 2,500,000
The promissory notes are secured by a real estate mortgage executed by the
Gross Income P 700,000 vendee on the land for P 7,500,000.
Operating Expenses 300,000
Gain on sale of business equipment, held for 15mos. The final capital gains tax due for the taxable year 2009 under the installment
100,000 method is:
Gain on sale of lot not used in business held for 3 yrs.
(Gross Selling Price: P 340,000; cost: P 300,00; P 150,000
FMV: P 400,000) P 142,875
Gain on sale of furniture not used in business held for 6 mos. P 71,429
Loss on sale of vehicle not used in business held for 2 yrs. P 600,00
Loss on sale of shares of stock listed/traded
at stock exchange (Gross selling price: P 70,000 54.A corporate taxpayer has the following income and expenses for the taxable year
Cost: P 75,000) 2009:
Net capital gain from sale of shares of stock not Gross Income- Phil P 500,000
listed/traded at stock exchange (Capital gains: P 30,000 Operating expenses- Phil 200,000
Capital losses: P 20,000) Gross Income- Hong Kong 350,000
Assuming the taxpayer is a single individual with no qualified dependent, his Operating Expenses- Japan 250,000
income tax tax due and payable for the year 2009 is: Interest- peso deposit BDO 75,000
a. P 128,200 Interest- dollar deposit at Allied Bank 25,000
b. P 125,000 Interest- Hong Kong doller deposit in Hong Kong 30,000
c. P 122,000 Domestic cash dividend received 20,000
d. P 116,000 Sale of blg. No longer used in operations (Sale price:
P500,000; Book Value: P300,000; FMV: P450,000)
52. 1ST Statement- The sale of a computer used by the ___ in its office is a casual sale Sale of listed and traded shares of stock (Sales price:
that may be __ installment even if the company is primarily engaged in selling of P30, 000; Cost: 40,000)
computers to the public. Sale of unlisted and untraded shares of stock (Sales
2nd Statement- In mortgage assumed by buyer, “the ___ is the mortgagor of the price: P50,000; Cost: P75,000)
property sold in installment,__ in excess of mortgage over cost” the vendee is the Sale of delivery van (Sales price: P200,000; Cost:
mortgagor of the said property. P800,000; Accum dep’n: P500,000)
 Net loss- 2007: P300,000;
Net Income- 2008: P250,000 2nd statement – A resident Alien is entitled to claim a tax credit on the foreign gift
tax paid to his country from his Philippine gift tax.
The income tax due for the taxable year 2009 of a domestic corporation is:
a. P 115,500 c. P 89,600 a. Both statements are false
b. P 98,000 d. P 84,000 b. 1st statement is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false
55. Xman died on October 1, 2009 leaving behind the following income from his d. Both statements are true
estate:
58. Enteng imported certain equipment from China. He paid its value plus customs
Monthly interest from bank deposits (net of withholding tax) duties and charges in the amount of P 1,500,000 exclusive of VAT. He then sold
Monthly income from taxicabs this equipment to Basty Company, an enterprise registered with the Clark
Monthly rentals from apartments (net of withholding tax) Development Authority for P 2,000,000, exclusive of VAT. The VAT output tax on
Monthly expenses include the following: the sale of the equipment is:
Maintenance – taxicabs a. P 240,000 c. P 60,000
Depreciation – taxicabs b. P 180,000 d. Zero
Maintenance – apartments
Depreciation – apartments 59. One of the following statements in incorrect
Legal heirs (children) of Xman are: a. Imported goods which are subject to excise tax are no longer subject
Hubert, jobless married to Winnie with 1 dependent child; and to VAT
Jason, single, employee with monthly gross salary of P22,500 (tax withheld for the year: b. VAT on importation is paid to the Bureau of Customs before the imported
P50,000) goods are
released from its custody
Income of the estate distributed to the heirs during ___ amounts to P50,000 each for c. Expenses incurred after the goods are released ___ Customs custody are
Hubert and Jason. disregarded in computing ___ on importation
The taxable income of Xman’s estate for the taxable year 2009 is: d. When a person who enjoys a tax- exemption importation subsequently sells in
a. P 280,000 c. P 180,000 the Philippines__ imported articles to a non-exempt person, the pu__ non-
b. P 200,000 d. P 150,000 exempt person shall pay the VAT on such importation

56. 1st statement – Aside from the estate tax, the income derived by the estate of the 60. 1st statement – A jeopardy assessment is an unaut___ assessment aimed at
decedent is also subject to income tax. harassing the taxpayer

2nd statement – The shares of stock issued by a foreign corporation are intangible 2nd statement – a tax due from the taxpayer whose __ does not justify the
personal property within if these shares have acquired a business situs in the expenses to be incurred in collection may be abated or cancelled by the CIR.
Philippines.
a. Both statements are false
a. Both statements are false b. 1st statement is false while 2nd statement is true
b. 1st statement is false while 2nd statement is true c. 1st statement is true while 2nd statement is false
c. 1st statement is true while 2nd statement is false d. Both statements are true
d. Both statements are true

57. 1st statement – The donee must express his acceptance of the gift in order to
make the donation a valid transfer.
61. 1st statement – In cases of false or fraudulent return _ intent to evade the tax,
assessment may be validly m_ the 10th year from discovery thereof and collection
_ effected within 5 years thereafter 65. Which of the following statements is true?
a. A compromise can be imposed on the taxpayer without his consent
2nd statement – where the tax withheld as shown on _ return and the actual tax b. The amount of a compromise penalty need not conform to the schedule of
remitted by the withholding _ the BIR do not match, a final notice of the compromise penalties as long as the taxpayer agrees to pay the same.
assessment _ issued without need of pre-assessment notice. c. The BIR must exert reasonable efforts to settle tax _ extra- judicially
instead of instituting court act_ enforce the same
a. Both statements are false d. None of the following
b. 1st statement is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false 66. Which of the following is correct?
d. Both statements are true
a. In case of failure to file a return, the BIR may _ collection case in
62. 1st statement – The taxpayer must pay the tax under _ as a condition precedent court without any assessment _ within 10 years from the discovery
for filing a written claim refund or credit. from the omission _ the return
b. In case of tax evasion, the BIR may assess the tax _ 10 years from the due
2nd statement – The 2-year prescriptive period for filing a claim for tax refund or date of the tax.
tax credit is not interrupted by any supervening cause. c. An agreement in writing between the CIR and the taxpayer setting the time
for payment of the tax_ three (3) years cannot be extended by a subsequent
a. Both statements are false written agreement between the parties
b. 1st statement is false while 2nd statement is true d. None of the foregoing
c. 1st statement is true while 2nd statement is false
d. Both statements are true 67. 1st statement - Where a taxpayer was entitled to a tax _ regarding his prior taxes
and the same is already bam_ prescription, he may nevertheless offset such
63. 1st statement – The CIR does not need any court order in inquiring into the bank refund w_ current tax liability
deposits of the taxpayer for the purpose of determining the gross income of the
decedent’s undivided estate. 2nd statement – Prescription shall begin to run from the _ the commission of the
violation of the law, even _ offender is outside the Philippines.
2nd statement – The CIR may examine the bank records of the deceased in order
to determine the latter’s taxable net estate. a. Both statements are false
b. 1st statement is false while 2nd statement is true
a. Both statements are false c. 1st statement is true while 2nd statement is false
b. 1st statement is false while 2nd statement is true d. Both statements are true
c. 1st statement is true while 2nd statement is false
d. Both statements are true 68. For a finding of “filing a fraudulent return” by the prosper”
1st statement: Fraud must be intentional, consists deception willfully and
64. Which of the following cases does not justify the CIR’s acceptance of the deliberately done or resorted order to avoid payment of the tax.
taxpayer’s offer to compromise on the ground of reasonable doubt as to the
validity of the assessment? 2nd statement: Fraud cannot be presumed but must be proved. Fraudulent intent
a. Jeopardy assessment cannot be deducted from mistakes however frequent they may be, especially if
b. Arbitrary assessment lacking in legal and/or factual basis such mistakes emanate from erroneous classification of items in accounting
c. Assessment notice failed to comply with the formalities prescribed by the NIRC methods utilized for determination of tax liabilities.
d. None of the foregoing
 a. Both statements are false b. II and III d. All of them
b. 1st statement is false while 2nd statement is true 4. S sold to B P900,000 worth of opium which the latter has already paid, but S has not
c. 1st statement is true while 2nd statement is false delivered the opium.
d. Both statements are true a. B can compel S by specific performance to deliver the opium.
69. 1st statement – The taxpayer may claim his defense of prescription while the case b. If B cannot compel S to deliver the opium he can at least have the return
is pending before the BIR or in the CTA of his P900,00
c. The government can only prosecute S and B for violation of the Dangerous
2nd statement – A compromise is not permitted in cases finally decided by the Drugs Act;
courts as there is no longer any necessity or reason for the exercise of power d. The government can criminally prosecute S and B and also
confiscate the opium and the P900,000 as the instrument and
a. Both statements are false fruit of the crime respectively.
b. 1st statement is false while 2nd statement is true 5. The following are either joint or solidarily liability:
c. 1st statement is true while 2nd statement is false I. Liability of the principal and the agent when the former allowed the agent to act
d. Both statements are true as though he had full powers.
II. Liability of two or more persons who have appointed an agent for a common
70. Which of the following is not a requisite to toll the a collection of tax to be made transaction or undertaking.
by the BIR, upon proof of the following to the Court of Appeals III. Liability of two or more bailees to whom a thing is loaned in the same contract.
IV. The responsibility of two or more agents who are appointed simulatneously by
a. It will jeopardize the interest of the taxpayer the principal.
b. It will jeopardize the interest of the government V. Responsibility of two or more officious managers.
c. Filing of a bond for at least double the amount of the tax assessed a. The liability under I, II, III, IV, and V are solidary.
d. The case is not dilatory b. The liability under I, II, III, and V are solidary.
c. The liability under II and IV are joint.
d. The liability under I, II, III, and IV are solidary.
6. As security for a loan, Sonia mortgaged his house and lot to Belinda. Both parties
April 2010 intended to enter into a mortgage contract but the instrument as written states that the
house and lot is sold by Sonia to Belinda with right of repurchase. In this case, the proper
1. Culpa levissima under the Roman Law means: remedy is:
a. Grave negligence c. Slight negligence a. Annulment c. Reformation
b. Ordinary negligence d. Super negligence b. Rescission d. Reconstruction
2. When A voluntarily takes charge of the neglected business of B with the latter’s 7. A, B, C, D, and E decided to create a partnership. All of them orally promise to
authority where reimbursement must be made for necessary and useful expenses, there contribute sixty thousand pesos, P60, 000 each for the creation of the partnership. They
is a: orally agreed that A and B are the managing partners and that the partnership existence
a. Contract of agency c. Negotiorum Gestio would commence only after 15 months from today to give the other partners sufficient
b. Quasi contract d. Solutio Indebiti time to prepare for their capital contribution. What is the status of the partnership?
3. Which of the following stipulation is void? a. Valid and enforceable between the parties
Stipulation I. Any stipulation exempting the vendor from the obligation to answer b. Valid but rescissible
for eviction even if he acted in bad faith. c. Valid but unenforceable
Stipulation II. Stipulation exempting the agent from the obligation to render an d. Valid until annulled
account. 8. The following are juridical persons. Which one is not?
Stipulation III. A stipulation which excludes capitalists partners from any share in a. Partnership c. Corporation
the profits. b. Political Subdivision d. Co-ownership
a. I and II c. I and III
9. Statement I-In a contract of partnership, two or more persons bind themselves to a. No because A was not really authorized to buy on installment plan
contribute money, property and industry to a comman fund, with the intention of and the same is not apparently “carrying on in the usual way the
dividing the profit among themselves. business of the partnership”
Statement II- One or more persons may form a partnership for the exercise of b. No because A failed to obtain the consent of all partners although he was
profession. authorized to buy any immovables.
a. Both statements are true. c. Yes because although A was not really authorized, still for “apparently
b. Bothe statements are false. carrying on in the usual way of business of the partnership” A is implicitly
c. 1st statement is true and 2nd statement is false authorized and X did not know of A’s lack of authority.
d. 1st statement is false and 2nd statement is true. d. Yes because all transactions made by any partner with a third person is
10. Which is not a ground for the automatic dissolution of a partnership? valid provided the latter acted in good faith.
a. by the death of any partner 14. The certificate shall be cancelled when:
b. by the civil interdiction of an partner a. There is change in the name of the partnership
c. by the incapacity of any partner to perform his part of the partnership b. Additional limited partner is admitted.
contract c. All limited partners cease to be such.
d. by the insolvency of any partner or of the partnership d. There is a false or erroneous statement in the cerficate.
11. Pinong, Ondoy, Gabby and Isaac are partners of POGI Enterprises. Not having 15. Statement I. A corporation is said to be a “going private” when it would restrict
established yet their credit standing, the four partners requested Xerex, a well- the shareholders to a certain group.
known investor and businessman, to help them to negotiate a contract of loan Statement II. A corporation may be composed of 1,000 corporators.
from Crisostomo, a money lender. With the consent of Pinong, Ondoy, Gabby and a. Both statements are true.
Isaac, Xerex represented himself as partner of POGI Enterprises. Thereafter, b. Both satements are false.
Crisostomo granted a loan of P500,000 in favor of POGI Enterprises. What kind of c. Statement I is true, statement II is false.
partner is Xerex? d. Statement I is false, statement II is true.
a. dormant partner c. Ostensible partner 16. Which of the following shares of stock cannot vote on any corporate matter?
b. secret partner d. Nominal partner I. Non voting redeemable shares
12. A, B, and C formed a universal partnership of all present property on February 14, II. Non voting preferred shares
2009. A contributed P500,000, B a car worth P500,000 and C contributed III. Treasury Shares
equipment worth P500,000. The partners executed an article of co-partnership in IV. Common Shares
private instrument. After operation for 5 months, A and B got married. Did the a. I and II c. III only
marriage dissolve the partnership? b. II and III d. I, II and III
a. Yes, the partnership is dissolved by the marriage, because there is a 17. Which of the following corporation commences to have corporate existence and
change in equity among the partners. juridical personality and is deemed incorporated from the date the SEC issues a
b. No, the marriage did not dissolve the partnership. certificate of incorporation under the official seal:
c. No, because spouses can enter into a universal partnership. I. Public corporation
d. Yes, because it becomes unlawful for the business of the II. private corporation
partnership to be carried on or for the members to carry it on in III. Foreign Corporation
partnership. IV. Corporation Sole
13. A and B are partners in buying and selling automobiles.A, by the partner’s a. I and II c. II only
agreement, was authorized to buy any immovable’s on a cash basis, never on the b. II and III d. II and IV
installment basis plan. One day A bought on installment plan a parcel of land with 18. A Chinese national is not allowed to become:
improvements from X, a client. X did not know of A’s lack of authority. A’s a. treasurer c. director
purchase was made on behalf and in the name of the partnership. Is the b. secretary d. President
partnership bound? 19. Which of the following meetings may be held outside the Philippines?
I. Board of Directors meetings
 II. Members meetings of a non stock corporation checkbook on his desk so that he could not put up the defense of forgery or want of
III. Stockholders meeting of a corporation going public. authority under the Negotiable Instrument Law.
a. I only c. I and III The facts disclose that even to the naked eye, there were marked differences between
b. I and II d. I, II and III Placido’s signature and the one in the checked forged by the visitor. As between Placido
and the bank, who should bear the loss?
20.Statement 1: The Negotiable Instrument provides that a holder not in due course a. The bank should bear the loss because the bank warrants the
cannot recover on the instruments. genuineness of the signature of its current depositor.
Statement 2:A holder in due course who acquires a bearer instrument from a thief or b. The bank is not liable because the sole cause of loss is due to the negligence of
finder will have a superior right over the previous holder from whom it is stolen or who Placid in leaving his check book on his desk at his house.
has lost it. c. Placid must suffer the loss because he is negligent in keeping his check book.
a. Only 1st statement is true. d. Placid should bear the loss because the bank exercised reasonable diligence in
b. Only the 2nd statement is true. determining that the signature is not forged.
c. Both statements are not true.
d. Both statements are true. 24. The following statement are the warranties and admission:
I. Admit the existence of the payee and his capacity to indorse.
21. Instrument 1: I promise to pay Kristina or bearer the sum of P100, 000.(Sgd:Katrina) II. That the instrument is at the time of indorsement valid and subsisting.
Instrument 2: I promise to pay bearer Kristina the sum of P100, 000. (Sgd. Katrina) III. That all prior parties had capacity to contract.
a. 1st instrument - Negotiable; 2nd Instrument - Negotiable IV. He engages that, on due presentment, it shall be accepted or paid, or both, as
b. 1st instrument - Non Negotiable; 2nd Instrument - Non Negotiable the case may be, according to its tenor, and if it be dishonoured and the necessary
c. 1st instrument - Negotiable; 2nd Instrument - Non Negotiable proceedings or dishonour be duly taken, he will pay the amount thereof to the holder, or
d. 1st instrument - Non Negotiable; 2nd Instrument - Negotiable to any subsequent indorser, who may be compelled to pay it.
Statement 1: The drawr admits and warrants I, II and IV.
22. Jose Reyes signed a blank check, and his haste to attend a party, left the check on Statement II: The General Indorser admits and warrants I, II, III and IV.
the top of his executive desk in his office. Later, Nazareno forced open the door to Reyes’ a. First statement is true; second statement is false.
office, and stole the blank check. Nazareno immediately filled in the amount of P50, 000 b. First statement is false; second statement is true.
and a fictitious name as payee on the said check. Nazareno then endorsed the check in c. Both statements are true.
the payee’s name and passed it to Roldan. Thereafter, Roldan endorsed the check to d. Both statements are false.
Dantes. Can Dantes enforce the check against Jose Reyes?
a. Dantes cannot enforce the check against Jose Reyes, who can raise the 25. The crime of BP 22 or the bouncing check law which penalize the act of making or
defense that the check was incomplete and not delivered, when only stolen drawing and and issuing a check without sufficient fund or credit is:
and filled up by Nazareno. a. Malum in se
b. Dantes can enforce the check against Jose Reyes because Dantes is presumed to b. Malum Prohibitum
be a holder in due course. c. Neither Malum in se nor Malum Prohibitum
c. Dantes enforce the check against Jose Reyes because Jose Reyes is presumed to d. Both Malum in se and Malum Prohibitum
be negligent and therefore must suffer the lost.
d. Dantes cannot enforce the check against Jose Reyes because Jose Reyes can set 26. Which of the following is valid:
up a personal defense. A. Sale of future property
B. Donation of future property
23. Placido, a bank depositor, left his checkbook on his desk at his house. Unknown to C. Sale of future inheritance
him, a visitor at the time, noticing the same, took a check therefrom, filled it up in the D. Sale of a losing ticket for a sweepstakes already runs as collector’s item
amount of P3,000 and succeeded in encashing the check on the same amount. a. A and B c. A and D
Discovering the erroneous debit, Placido demanded that the bank credit him with a like b. A and C d. A, C and D
amount. The bank refused on the ground that Placido was negligent in leaving his
27. This is common in sales on instalment plan. Stipulation that “ownership in the thing b. Only the 2nd statement is true.
shall not pass to the purchaser until full payment of the price” c. Both statements are not true.
a. Pacta sunt servanda c. Pactum commissorium d. Both statements are true.
b. Pactum reservati dominie d. Tacita reconduccion
28. Statement I – In auction sale, the general rule is that the seller is allowed to bid even 33. One of the following acts requires a special power of attorney granted by the
without reservation of this right because the right to bid is an inherent right of the seller. principal to his agent. Which is it?
Statement II – In auction sale, before fall of the hammer, the auctioneer may still a. To make gifts to employees in the business managed by the agent.
withdraw the goods from the sale but the bidder can no longer retract hid bid without b. To borrow money which is urgently needed to preserve the property of the principal
consent of the auctioneer. under the administration of the agent.
a. First statement is true; second statement is false. c. To make payments for purchases in the ordinary course of the business.
b. First statement is false; second statement is true. d. To repudiate an inheritance
c. Both statements are true.
d. Both statements are false. 34. Which of the following contracts is essentially gratuitous:
I. Commodatum
29. The price is certain under the following: II. Precarium
I - The parties fixed the price. III. Deposit
II – When the price fixed refers to another thing certain IV. Mutuum
III – The price is left to the judgment of buyer or the seller a. I and II c. I, II and III
IV – The price is left to the judgment of 3rd person. b. I and III d. I, II, III and IV
a. I, II and III c. I and II
b. I, II, and IV d. I, II, III and IV 35. In contract of commodatum, this attribute of ownership is transferred:
a. Jus abutendi c. Jus fruendi
30. Which of the following causes extinguishes contract of sale? b. jus utendi d. Jus vindicandi
I – Loss of Object
II – Novation of the principal condition of the contract 36. The following are motives of taxpayer that preclude transfer in contemplation of
III – Legal redemption death except one,
IV – Condonation of the price by the seller. a. To relieve the taxpayer of the burden of management
a. I, II and IV c. I, III and IV b. To save income and property taxes
b. I, II, and III d. All of the above c. To avoid payment of estate taxes
d. To make dependents financially independent
31. Which of these agencies is not revocable at the will of the principal?
a. If a bilateral contract depends upon the agency 37. Why tax credit is allowed to be availed of by certain taxpayers?
b. If the agency is the means of fulfilling an obligation already contracted.
c. Where the agency is coupled with an interest. a. To provide incentive thus including these taxpayers to report income derived from
d. All of the above abroad
b. To provide relief from the burden of taxation
32. Statement 1: The agent is not liable in the instrument if he signed for the principal c. In compliance with commitment to international agreement
and adds words to his signature indicating that he signs as an agent, that is, for or on d. For citizen doing business outside the Philippines to become competitive
behalf of a principal, or in a representative capacity and he is authorized.
Statement 2: If the agent signs a note or bill in his own name and discloses no principal, 38. One of the following compensation income of an individual taxpayer is NOT an
he is personally bound, and evidence to the contrary may not be admitted to relieve him exclusion from gross income:
from personal liability.
a. Only 1st statement is true. a. Monetized vacation leaves not exceeding 10 days a year;
b. Separation pay of an employee who resigned from his employment; 1st statement: The exemption is limited to revenues and assets derived from strictly
c. Retirement benefits of an employee who has worked for an employer for at least 10 school operations like income from tuition and other miscellaneous fees such as
years, who at the time of retirement is not less than 50 years of age, and who avails of matriculation, library, ROTC, etc.
retirement for the first time; 2nd statement: The use of the school’s income or assets must be in accordance with the
d. All of these. purposes for which the school is created.
a. 1st statement is correct, 2nd statement is wrong.
39. Panday, single, and Pandak, married with two children, are partners in the following b. 1st statement is wrong, 2nd statement is correct.
partnerships: holds a 60% interest while 40% belongs to Panday (Note: d maklaro ang c. Both statements are wrong.
question sa photocopy) Number 39 is bonus d. Both statements are correct.
The partnership income and expenses are given below: 42. Double taxation is defined as taxing the same property twice when it should be taxed
Partnership Gross Income Expenses Withdrawal Panday but once. But there is no constitutional prohibition against double taxation in the
Prof. Part. A P400, 000 P250, 000 P60, 000 Philippines. Which of the following statements is/are true?
Prof. Part. B 300, 000 500, 000 ------ I. A license tax may be levied upon a business or occupation although the land or
Bus. Part. C 500, 000 200, 000 40, 000 property used in connection therewith is subject to property tax.
Bus. Part. D 200, 000 300, 000 ------ II. Both a license fee and a tax cannot be imposed on the same business or occupation
The partnership remitted to the BIR the corresponding withholding taxes on the for selling the same article.
withdrawals of Panday and ___________. The partner’s personal income and expenses are a. I c. I & II
given below: b. II d. neither I nor II
43. Situation of tax exemption. A condonation of unpaid tax liabilities is the nature of a
Panday tax exemption. Which statement is/are correct?
Gross Income from sole proprietorship P400, 000 1st statement: If there is no clear-cut provision in the law condoning such liabilities that
Business Expenses 250, 000 taxes are already paid are also condoned.
Other Income: 2nd statement: No refund of the paid taxes is authorized because exemptions must be
Rent, net of 5% withholding tax 57, 000 sustained only when expressed in explicit terms.
Royalty ---- a. I c. I & II
Dividend from Domestic Company 30, 000 b. II d. neither I nor II
The income tax due of Panday is_______ 44. 1st statement: An attempt to minimize one’s tax con-------------------fraud, taxpayer
a. P 28, 125 c. P 50, 000 may diminish his liability by any means which the law permits.
b. P 11, 500 d. P 59, 000 2nd statement: To avoid is legal but to evade is illegal. The legal rights of a taxpayer
40. Uniformity in taxation means that all taxable articles of property of the same class to decrease the amount of -------------- otherwise would be his taxes, altogether avoid
shall be taxed at the same -----. It “operates with the same force and effect in the---- means which the law permits, cannot be doubted.
everywhere the subject of it is found. a. 1st statement is correct, 2nd statement is wrong.
1st statement: Different articles may be taxed at any amounts provided that the rate is b. 1st statement is wrong, 2nd statement is correct.
uniform on the same----everywhere with all people at all times. c. Both statements are wrong.
2nd statement: Uniformity in taxation means that all belongings to the same class shall d. Both statements are correct.
be taxed alike. 45. The following powers of the commissioner shall not be delegated except:
a. 1st statement is correct, 2nd statement is wrong
b. 1st statement is wrong, 2nd statement is correct. a. prescribe, provide and distribute to the proper official the requisite used
c. Both statements are wrong. in administering the laws falling within the jurisdiction of the Bureau.
d. Both statements are correct. b. recommend the promulgation of rules and regulation to the secretary of finance.
41. Tax exemption of revenues and assets, including grants and endowments, donations c. issue of first impression or to reverse, revoke or ------- any existing rules in the
or contributions to educational institutions: Bureau.
d. assign or reassign internal revenue officers in establishments where articles b. P120, 000 d. P96, 000
subject to excise tax are produced or kept. 51. Which statement is wrong?
46. All of the following statements are false, except:
a. A donation mortis causa is a testamentary disposition
a. for married individual, the husband and wife shall file a return on their aggregate b. Properties donated which are collated to determine legitimes of compulsory heirs,
total taxable income. and cannot be inofficious, shall remain with the donees;
b. interest, royalties, prizes and other winnings subject to 20% final tax. c. A person without any relative can donate all his property to whomsoever,
c. cash and/or property dividends received by s non-resident alien engaged in not related to him, he pleases;
business in the Philippines is subject to 15%. d. A donor’s tax wrongly paid on a donation mortis causa cannot be offset against the
d. the tax liability, if any, on gains from sales or other dispositions of real estate tax due when dies.
property to the government or any of its political subdivisions or agencies 52. Which of the following properties of FPJ who died December 4, 2008 is subject to
or to GOCC shall be determined either under Section 24 (A) or 6% based on vanishing deduction?
gross selling price or FMV, whichever is higher, at the option of the Property 1 – Car purchased 3 years ago from Honda World in Laguna City
taxpayer. Property 2 – Land inherited from her mother in ----- in estate tax thereon has not
47. Which of the following is subject to 15% tax rate, except: been paid.
Property 3- Donation from a friend in 2003
a. alien individual employed by regional or area headquarters of multinational Property 4 – Community property inherited December 2002 or five (5) days before
companies. marriage
b. alien individual employed by petroleum services contractor and subcontractor. Property 1 Property 2 Property 3 Property 4
c. dividends received by a non-resident alien engaged in business in the a. No No Yes Yes
Philippines. b. No No Yes No
d. dividends from domestic corporation received by non-resident corporation. c. Yes No No Yes
48. Other income may be derived from the following, except: d. Yes Yes No No
53. Domingo Namayapa died on November 20, 2010. Some of the properties he
a. Compensation left are the following:
b. Business or profession Market value
c. Sale or exchange of property which is covered by capital gain tax Assets Mode of Date of Date Acquired Death of
d. Incidental sources, such as interest or dividend, considered as not passive Acquisition Acquisition Domingo
49. Income from deferred payment sales may be reported under installation method Namayapa
in the following cases, except: Land Donation 7-3-06 P 500, 000 P 350, 000
Car Purchase 10-2-09 800, 000 980, 000
a. Installation sale by a dealer of personal property regularly selling on installment
b. Casual sale or casual disposition on installment of property other than inventory Other Information:
where: the initial payments do not exceed twenty five (25%) of the selling price  The gross estate of the decedent amounts to P 3, 000, 000
c. Sale or other disposition of real property on installment where the initial  The Land was mortgaged for P50, 000, which was deducted in prior
payments exceeded twenty five (25%) of the selling price estate and Domingo Namayapa paid the same before he died.
d. Casual sale or casual disposition on installment of property other than inventory  The allowable deductions total P125, 000 which includes medical
where: the selling price exceeds one thousand pesos (P1, 000) expenses of P30, 000. It excludes bequest to a charitable institution in
50. Sinbad, a resident and citizen of Australia was employed in Multinational Corp. to the amount of P50, 000.
finish a job, which took him 120 days in America and 80 days in the Philippines. He
received a payment of P30, 000 (P1-P40), is 2007. The income tax due to Sinbad is: The vanishing deduction is-
a. P58, 100 c. P67, 783
a. P72, 000 c. P163, 200 b. P57, 500 d. P67, 083
54. A stockholder remitted P11, 250 to the BIR representing collection of tax withheld Sales of shares of stocks held as inventory P1,000,000
from the clients. The peso volume of his stock transactions from which the tax was Sales of shares of stocks held as investment 500,000
withheld is- Cost of the shares sold (shares held as inventory) 300,000
Cost of the shares sold through local stock exchange (shares held as 600,000
a. P281, 250 c. P3, 000, 000 investments)
b. P2, 250, 000 d. P3, 375, 000 How much is stock transaction tax?
55. A corporation paid P40, 000 stock transaction tax on initial public offering of 500, 000 a. P7,500 c. P1,500
shares. After the IPO, there were 800, 000 shares outstanding. IPO selling price per b. P2,500 d. P0
share was 60. 1st Statement – The power of taxation must first be expressly granted, either by
law or the Constitution, before the state may validly exercise it.
a. P5 c. P10 2nd Statement – The Philippine government may subject the land where
b. P8 d. P15 embassies of foreign governments are located to real property taxes.
a. Both statements are false
56. A race track bettor won on the following bets: b. 1st statement is false while 2nd statement is true
On forecast, a bet of P1,000 and dividend of P100 per ticket c. 1st statement is true while 2nd statement is false
On ordinary, a bet of P500 and dividend of P1,000 per ticket d. Both statements are true
On double, a bet of P200 and dividend of P200 per P20 61. 1st Statement – A taxpayer who fails to pay or refuse to pay his taxes cannot be
Total percentage tax due from the winnings was? imprisoned for nonpayment of the same.
a. P682 c. P1,280 2nd Statement – A government that imposes more direct taxes than indirect taxes
b. P1,182 d. P1,530 is said to have managed to evolve a progressive system of taxation.
57. Frank is a real estate dealer. During the month of November 2010, he sold three a. Both statements are false
lots under the following terms exclusive: b. 1st statement is false while 2nd statemnet is true
c. 1st statement is true while 2nd statemnet is false
Lot 1 Lot 2 Lot 3 d. Both statements are true
Selling price P250,000 P200,000 P300,000 62. 1st Statement – Taxation and Police Power may be exercise simultineously
Cost 150,000 130,000 175,000 2nd Statement – In the exercise of taxation, the state--------------- anything at
Gain/loss 100,000 70,000 25,000 anytime at any amount.
a. Both statements are false
Terms:
b. 1st statement is false while 2nd statement is true
Down payment, Nov 5 25,000 50,000 40,000 c. 1st statement is true while 2nd statement is false
Due – Dec. 5 25,000 20,000 20,000 d. Both statements are true
Jan. to Dec., 2006 200,000 130,000 240,000 63. Jen made the following interest payments during the taxable year:

The value added tax in November is? Interest on loan from sister used to buy office furniture P---------------
a. P31,000 c. P75,000 Interest on bank loan of Jen’s secretary secured by Jen’s land -----------------
b. P26,500 d. P90,000 Interest on promissory note issued to suppliers -----------------
58. Based on the information given in No. 57, the value added tax for the month of Interest paid in advance on commercial bank loan -----------------
December is?
a. P4,500 c. P7,800 Note: The principal amount of the bank loan is P200,000 of which P50,000
b. P5,400 d. P6,500 amortazation was paid during the taxable year. Jen uses cash basis in reporting
59. A VAT taxpayer has the following data for a particular quarter during the current income.
year:
Jen received the following interest during the same taxable year:
 b. 1st statement is false while 2nd statement is true
Interest on bank deposit, net of withholding tax P-------------- c. 1st statement is true while 2nd statement is false
Interest on note receivable from client --------------- d. Both statements are true
69. Which of the following is not a requisite to toll the collection of tax to be made by
The deductible interest expense of Jen for the taxable year amounts to: the BIR, upon proof of the following to the Court of Tax Appeals?
a. P36,200 c. P20,800 a. It will jeopardize the interest of the taxpayer.
b. P 21,960 d. P21,200 b. It will jeopardize the interest of the government.
64. 1st Statement – The donee must express his acceptance of the gift in order to c. Filling of a bond for at least double the amount of the assessed.
make the donation a valid transfer. d. The case is not dilatory.
2nd Statement – A resident alien is entitled to claim a tax credit on the foreign gift 70. A coporation sold its idle land. The land was acquired 5 year ago for P6,000,000
tax paid to his country from the Philippine gift tax. and was mortgaged at the bank for P1,000,000. It had a fair market value of
a. Both statements are false P8,000 in 2009. The terms of sale are as follows:
b. 1st statement is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false Cash downpayment-2009 P500,000
d. Both statements are true Mortgage assumed by vendee 1,000.000
65. Enteng imported certain equipment from China. He paid its value plus customs Promissory note due 2009 500,000
duties and charges in the amount of P1,500,000, exclusive of VAT. He then sold Promissory note due 2010 2,750,000
these equipment to Basty Company, an enterprise registered with the Clark Promissory note due 2011 2,750,000
Development Authority for P2,000,000, exclusive of VAT. The VAT output tax on Promissory note due 2012 2,750,000
the sale of the equipment is?
a. P240,000 c. P60,000 The promissory notes are secured by real estate mortgage executed by the
b. P180,000 d. P0 vendee on the land for P7,500,000.
66. 1st Statement – A jeopardy assessment is an unauthorized assessment aimed at
harassing the taxpayer. The final capital gains tax due for the taxable year 2009 under the installment
2nd Statement – A tax due from the taxpayer whose amount does not justify the method is?
expenses to be incurred in collecting it may be abated or cancelled by the CIR. a. P150,000 c. P71,429
a. Both statements are false b. P142,857 d. P600,000
b. 1st statement is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false September 2010
d. Both statements are true
67. Which of the following cases does not justify the CIR’s acceptance of the September 2010
taxpayer’s offer to compromise on the ground of reasonable doubt as to the 1. Who among these is a party secondarily liable on the instrument?
validity of the assessment? a. Maker d. Acceptor for honor
a. Jeopardy assessment b. Acceptor e. Both C and D
b. Arbitrary assessment lacking in legal and /or factual basis. c. Drawer
c. Assessment notice failed to comply with the formalities prescribed by the
NIRC. 2. P in writing A, his agent, stipulating that he is allowing A absolute and unlimited
d. None of the foregoing. powers of management and that he is not withholding any power from him.
68. 1st Statement – The taxpayer may claim his defense prescription while the case is Accordingly A enters into A contract of sale of a house and lot with T; another
pending before the BIR on CTA. contract with W, leasing an apartment unit for twelve months and still another
2nd Statement – A compromise is not permitted in cases decided by the courts as with X involving the lease of P’s car for a period of five years.
there is no longer any necessary reason for the exercise of the power. a. The contracts of A with T, W and X are all valid.
a. Both statements are false
 b. The contract of A with T is valid, with W unenforceable and with X also d. Insurance and education
unenforceable. 8. A, as maker, made a promissory for P100, 000.00 payable to the order of B as
c. The contacts of A with T, W and X are all unenforceable. payee. B negotiated to C who altered the amount form P 100, 000.00 to P 400,
d. The contract of A with T is unenforceable, with W valid and with X 000.00 without the assent of A and B. C then negotiated to D, then D to E, E to F
also valid and enforceable. and finally from F to G. Which is a correct statement?
3. An agency is generally revocable at the will of the principal. Which of the a. If G is a holder in due course, he can recover from B P400, 000.00.
following is an exception? b. If F is not a holder in due course, he can recover from A P100, 000.00
a. If a bilateral contract depends on the agency. c. Even if E is not a holder in due course, he can recover from D P400,
b. If the agency is the means of fulfilling an obligation already contracted. 000.00
c. Where a partner is appointed manager in the articles of partnership. d. None of the above.
d. An agency coupled with an interest. 9. Where a stranger makes an alteration on the amount of the instrument, there is-
e. None of the above. a. Forgery
4. The following are corporations which are not allowed by law to issue no- par b. Material Alteration
shares. Choose the exceptions: c. Spoliation
a. An industrial corporation d. Insertion of wrong amount.
b. Banks 10. This mode of special payment arises when the debtor conveys to the creditor the
c. Insurance companies ownership of a thing as the accepted equivalent of performance-
d. Loan and building associations a. Dacion en pago, also known as dation in payment
e. Public utility corporations b. Cession en pago, also known as payment by cession.
5. Which of these is not an essential requisite common to both pledge and c. Tender of payment and consignation
mortgage? d. Application of payment
a. That the pledge and mortgage may constitute to secure the fulfillment of a 11. Statement 1: Under the law on sale, the vendor is required to be owner of the
principal obligation. thing, sold at the time of sale.
b. That the pledge or mortgagor be the principal debtor in the Statement 2: in antichresis, if the amount of the principal and the interest is not
obligation. made in writing the contract of antichresis becomes null and void.
c. That the pledger or mortgagor has the free disposal of their properties or the a. Both statements are true
absence thereof, that they be lawfully authorized. b. Both statements are false
d. That it is the essence in pledge or mortgage that if the principal obligation is c. Statement 1 is true, statement 2 is false
not paid, the thing in which the pledge or mortgage consist may alienated for d. Statement 1 is false, statement 2 is true
the payment of the debt. 12. In which of these situations dies the rights of legal redemption not apply?
6. Statement 1: Under the corporation code, there is an unreasonable accumulation a. Where real property is undivided and owned in common by A, B,
of unrestricted retained earnings if they equal to one hundred percent of the paid- and C and C donates his 1/3 interest to T.
up capital of the corporation. b. Where real property is undivided and owned in common by A, B and C and
Statement 2: Treasury shares, if sold by the board of directors at a price less than B sells 1/3 interest to X.
its par value become automatically watered stock. c. Where rural property is one hectare or less and the owner sells the same
a. Both statements are false to a third person, the adjoining owners have a right of legal redemption
b. Both statements are true. provided the buyer has no other rural land.
c. Statement 1 is false, but statement 2 is true. d. Where urban property is so small and so situated that it cannot be devoted
d. Statement 1 is true, but statement 2 is false. to any practical purpose, if the sane is skid the adjoining owners may
7. Which of these two special purposes can be legally combined in one corporation? exercise legal redemption.
a. Education and banking 13. This mode of delivery occurs where at the time of the sale the buyer is already in
b. Insurance and railroad possession of the thing sold.
c. Bank and trust a. actual delivery
 b. Tradition brevi manu D. I promise to pay B or order P 1, 000, 000 on or before December 15, 2005. If on
c. Tradition constitutum possessorium said date this instrument is not paid, I further bind myself to pay all costs of collection
d. Legal tradition and attorney’s fees incurred.
a. A d. D
14. The following instruments are negotiable. Choose the exception. b. B e. None of the above.
A. I promise to pay B or order S5, 000 on or before December 15, 2010. c. C
Sgd. A
B. To Mr. X 17. The judicial personality of a corporation begins-
123 Rizal Avenue, Manila a. From the notarization of the Article of Incorporation
Pay to your bearer P 100, 000 or to deliver 100 sacks of rice at your election. b. From the filing of the Articles of Incorporation with the Securities and
Sgd. Z Exchange Commission
C. To Mr. X c. From the payment of the required filing fee
123 Rizal Avenue, Manila d. From the issuance of the Certificate of Incorporation by the
Pay to Y or order P 100, 000 or to deliver 100 sacks of rice at the election of the Securities and Exchange Commission
holder
Sgd. Z 22. Which of these is not a qualification of a director of a corporation?
D. I promise to pay B or bearer P 100, 000 and to deliver 100 sacks of rice on or a. That he must own at least one share of stock.
before December 15, 2010. b. That a majority of the directors must be citizens of the Philippines
Sgd. A c. That he must not have been convicted of a crime where the penalty of
imprisonment exceeds or must have violated the provision of the Corporation
a. A d. D code with 5 years from his election or appointment as such
b. B e. Both B and D d. None of the above.
c. C
23. A and B are the solidary creditors of X, Y and Z joint debtors for the amount of P 120,
15. A borrowed from C and by way pf chattel mortgage delivered his car which 000. On due date, how much can A collect from X?
transaction was recorded in the chattel mortgage registry. The contract between a. a. P120, 000 c. P 40, 000
D and C is b. b. P 60, 000 d. P 20, 000
a. Pledge
b. Chattel mortgage 24. The stockholders of X Corporation delegated to its board of directors the power to
c. Both pledge and chattel mortgage amend or repeal its by- laws. What is the voting requirement for the revolution of the
d. Either pledge or chattel mortgage at the choice of C delegation of power?
a. Majority vote of the directors plus the vote or approval of a majority of the
16. Which of these instruments are negotiable? outstanding shares.
A. I promise to pay the bearer Jose Santos P 100,000 on demand. b. Majority vote of the directors plus the vote of 2/3 of the outstanding shares.
Sgd. Manuel Cruz c. 2/3 of the outstanding shares.
B. I promise to pay B or order P 100, 000 on December 15. d. Majority vote of the outstanding shares.
Sgd. A
C. To Mr. X 25. P appointed A his agent for the purpose of selling his car for P 600, 000 with a
123 Rizal Avenue, Manila commission for the agent amounting to 5%. Through the ingenuity of A, the car was sold
Pay to Y or bearer P 100, 000 in ten installments. to T for P 800, 000. How much should A give to P?
Sgd. Z a. a. P 600, 000 c. P 800, 000
b. b. P 570, 000 d. P 760, 000
26. S and B entered into a contract of sale involving a car where the fixing of the price 31. S sold to B a refrigerator for P 60, 000 on the installment basis as follows: P 20, 000
was entrusted solely to B. B accordingly fixed the price at P 600, 000 and transmitted the down payment and P 1, 000 monthly installments. B was unable to pay the 11 th
same to S who agreed. installment. Which of these is a correct statement?
a. The sale is null and void because the law does not allow the fixing of the price to a. S can exact fulfillment for the total amount of P 30, 000.
be left to the b. Or S can choose to cancel the sale
a. sole will of a party only. c. If b was also unable to pay the 12th installment, S can foreclose on the chattel
b. The sale can be considered valid provided the price is fixed by the counts. mortgage if any was constituted and if sold a public auction for less than the
c. The sale is valid because the price fixed by B was agreed to by S. unpaid balance- S can recover the deficiency from B.
d. S and B should renegotiable their agreement. d. Under the same circumstances stated in the preceding answer, S cannot
recover the deficiency from B and any stipulation to the contrary is null
27. S sold to B car valued at P 600, 000 where the consideration consisted of a diamond and void.
ring worth P 400, 000 and P 200, 000 cash. The transaction between S and B is –
a. Barter because the value of the ring exceeds the money 32. Which of these statements is correct?
b. Sale because it is the manifest intention of the parties. a. Where the agency is orally made for the purpose of selling a piece of land, the
c. Both barter and sale because the transaction has the characteristics of both sale will be considered valid provided it is in public document.
contracts. b. Where S sells to B a residential lot measuring 1,000 sq. meters and upon a
d. None of the above. resurvey it is found to be containing only 950 sq. meters, B can ask for a
rescission of the sale,
28. A made a promissory note payable to the order of B but delivered it to C. Who c. Where after the rescission of the sale of goods, in the event of a resale for price in
between B and C may be considered theholder? excess of the contract price, the seller becomes entitled to the excess of the
a. B c. Neither B nor C buyer does not become liable for the balance.
b. C d. Both B and C d. If the book of O is stolen by S and then sold to B, as between B and O, it is the
former whao has a better right.
29. D, for a loan P 100, 000, pledged to C his diamond ring. On due date, the P 100, 000 e. None of the above.
was not paid whereupon C resorted to a notary public for the sale at public auction of the
diamond ring. The highest bid was P 70, 000 giving rise to a deficiency judgment of P 30, 33. In this kind of indorsement the indorser becomes merely an assignor of his title to
000. the instruments –
a. C cannot recover from D the deficiency. a. Special indorsement c. Qualified indorsement
b. C cannot recover from D the deficiency even if there is a stipulation to b. Restrictive indorsement d. Conditional indorsement
that effect.
c. C can recover the deficiency of P 30, 000 from D 34. In the following cases, the Corporation code provides for the exercise of the right of
d. None of the above. appraisal. Choose the exception:
a. When the Article of Incorporation are amende, lengthening or shortening
30. A, B and C are partners where C as a capitalist partner engaged in the same business corporate life.
in which the partnership is engaged in the same business in which the partnership is b. Incurring, creating or increasing bonded indebtedness.
engaged in. In this situation- c. In mergers or consolidations of corporations.
a. The partnership can avail of C’s profit in the separate business d. In the sale of all or substantially all of the corporate assets of properties.
b. The partnership can oust C from the partnership e. None of the above.
c. The partnership can oust C from the partnership and at the same time avail itself
of C’s profit in his separate business. 35. This instrument is inherently non- negotiable
d. The partnership cannot do anything to C since it is his right to engage in any a. a. A promissory note d. A check
busuiness for himself. b. b. A bill of exchange e. None of the above
c. A treasury warrant