CUP- REGULATORY FRAMEWORK FOR BUSINESS TRANSACTION

EASY

1. The subscriber of shares even if not fully paid but Who is not delinquent is entitled to the following
rights, except
a. Rights to receive dividends
b. Right to vote in stockholders meetings
c. Right to demand his stock certificate
d. Rights to inspect corporate books and records.
2. His warranty extends in favor only of the immediate transferee and to no other holder
a. Qualified endorser
b. General endorser
c. person negotiating by delivery
d. Person negotiating by blank endorsement
3. M issued to P, accommodated party, a negotiable promissory note for P10,000. P endorsed it to A, A
to B and B to C. Which one of the following is incorrect?
a. M can collect from P, if M will Pay C
b. P may directly pay C
c. Between M and P, M is not liable while P is principally liable
d. P can collect from M, if P will pay C
4. Which one of the following is not a requisite to make an instrument negotiable?
a. If addressed to a drawee, he must be named or otherwise indicated therein with
reasonable certainty.
b. It must contain an unconditional promise or order to pay a sum certain in money
c. Where the instrument is payable to bearer, the payee must be named or otherwise
indicated therein with reasonable certainty .
d. Where the instrument is payable to order, the payee must be named or otherwise
indicated therein with reasonable certainty.
5. This vacancy in the board of directors may be filled by the board of directors if the remaining
directors still constitute a quorum.
a. Removal of a director
b. Death of a director
c. Increase in the number of directors
d. Expiration of the term of a director
6. Any director of a corporation maybe removed from the office by a vote of
a. Majority of the members of the board
b. Majority of the stockholders present
c. 2/3 of the stockholders present
d. 2/3 of the outstanding capital stock
7. Delectus personae is an element of a partnership which means
a. Right to choose his partners
 b. Confidence and trust in his partners
c. Obligation to remain loyal to his partners
d. Distribution of profits among the partners
8. The following are instances of pledge created by operation of law, except:
a. Hotel keeper retains the things brought into the hotel by the guest who cannot pay his hotel
bills
b. A depository retains the thing deposited until he is paid the charges due him
c. A mechanic retains the car he repaired until he is paid
d. An agent retains in pledge the thing which is the object of the agency regarding his
commission
9. A, B and C secured a loan from D. The promissory note which evidence the obligation states; I
promise to pay D or order P10,000 payable on demand (Sgd.) A B C. The obligation is:
a. Indivisible
b. Solidary
c. Divisible
d. Joint
10. The following are the rights of an unpaid seller, except:
a. A right of lien over the thing sold while he is still in possession
b. In case of insolvency on the part of the buyer, the right of stoppage in transit
c. Right to resell the things sold
d. Right to interest on the price of the sale

AVERAGE

1. Which of the following statement pertaining to treasury shares is correct?

a. Treasury shares are not part of issued capital stock
b. Treasury shares may not be disposed of at a price lower than the par or issued price even if
it is reasonable and approved by the board of directors
c. Treasury shares are entitled to vote
d. Treasury shares, once disposed of, entitle the purchaser or transferee the right to
dividends
2. Which of the following is not a negotiable instrument?
a. “Pay to B or order P1,000 in 4 equal monthly installments."
To: X Sgd. A
b. “Pay to B or order Pl,000 and debit my account thereafter"
To: X Sgd. A
c. “Pay to the older of B within 6 months from date the sum of P1,000 at 12% per annum"
To: X Sgd. A
d. "Pay to B or bearer P1,000 one year after date. If not paid when due, I agree to pay
collection and attorney's fees"
To: X Sgd. A
3. Holder H altered the amount of a negotiable note from P10,000 to P110,000 then negotiated the
note to P. as a result
a. If P is a holder in due course, he can require the maker to pay P110,000
b. If P is not a holder in due course, he can require the maker to pay only the original sum of
P10,000
c. P cannot require the maker to pay because of alteration whether or not he is a holder in due
course.
d. If P is a holder for value, he can collect P110,000 from H.
4. The following statements pertain to a voting trustee except
a. The representative acquires legal title to the shares
b. It is good only for the meeting for which it was intended
c. It is generally irrecoverable and the representative may vote even in the presence of the
stockholder.
d. The agreement giving the representative the power to vote must be duly notarized and a
copy therefore must be submitted to the SEC to be effective and enforceable
5. Raphael and Gabriel agreed on a profit sharing ratio in their partnership. Raphael, being the
industrial partner and Gabriel as capitalist partner. It was also stipulated that Raphael shall also
share in the same ratio as to the losses is liable for losses?
a. Yes, even in the absence of stipulation
b. No, because the partners cannot stipulate that the industrial partner shall be liable for
losses
c. No, because the law exempts the industrial partner losses
d. Yes, because it was so stipulated
6. A contract where the creditor acquires the right to receive the fruits of an immovable of his debtor,
with the obligation to apply them to the payment of interest if owing and thereafter to the principal
of his credit is.
a. Antichresis
b. usufruct
c. real estate mortgage
d. Commodatum
7. A pledge his ring to B for P20,000. A failed to pay his obligation. B sold it at a public auction for
P18,000. Can B recover the deficiency?
a. Yes, even without stipulation
b. Yes, only if there is stipulation
c. No, even if there is stipulation
d. No, unless there is a stipulation
8. P1 and P2 are co-owners of a piece of land and they named and authorized A to sell their land. Who
will be liable to A for the payment of his commission?
a. Both P1 and P2 jointly
b. Both P1 and P2 solidarily only if stipulated
c. Both P1 and P2 solidarily even without stipulation
d. 50% from P1 and 50% from P2
9. P appoints A1 and A2 as his agents . A1 and A2 agreed to be bound solidarily. Suppose A1 performed
the agency negligently which caused damaged to P, can P hold A2 liable for damages?
Statement 1: Yes, if A1 acted within the scope of his authority
Statement 2: No, if A1 acted beyond the scope of his authority
a. Both statements are true
b. Both statements are false
c. Only statement 1 is true
d. Only statement 2 is true
10. When a real property is contributed to the partnership
a. A real contract is perfected
b. A written instrument is required
c. A public instrument complete with inventory is required
d. A partner can make important alteration if beneficial to the partnership

DIFFICULT

1. M, makes a negotiable promissory note payable to the order of P. P made a special endorsement to
A. A made a qualified endorsement to B, a minor. Subsequent endorsement are from B to C, C to D
and D to E, all by special endorsement, then E made a qualified endorsement to F. Which of the
following statements is correct?
a. The endorsement made by B transfers title to C, hence B is liable as an endorser.
b. F can hold E liable if M dishonors the instrument
c. In case M dishonors the instrument, F can hold all endorsers liable except B
d. The qualified endorsers A and E and minor B are not liable to F
2. A sold his piano to B for P200,000 payable in installment. A chattel mortgage was constituted on the
piano. B defaulted in two installment payments. A demand of the unpaid obligation amounting to
P120,000 and a writ of attachment was issued and the piano was sold for P100,000. Can A still
recover the deficiency?
Statement 1: No, the foreclosure of the piano extinguishes B’s obligation
Statement 2: Yes, if stipulated that in case of foreclosure the buyer will pay any deficiency.
a. Both statements are true
b. Both statements are false
c. Only statement 1 is true
d. Only statement 2 is true
3. Statement 1: Novation of contract may be presumed and need not be proven
Statement 2: Whoever pays for another may demand from the debtor what he has paid, except that
if he paid without the knowledge or against the will of the debtor he cannot recover anything.
a. First true, second false
b. First false, second true
c. Both statements are true
d. Both statements are false
4. A is maker and H is payee of a negotiable promissory note payable to order. There is no valuable
consideration for the note. B delivers the instrument to C, without endorsement, under
circumstances that otherwise would have made C a holder in due course such, that C did not know
of the absence of consideration. May C recover from A?
a. Yes, because A's personal defense cannot be used against C
b. Yes, because the promissory note is negotiable
c. No, because A has a real defense which can be used even against a holder in due course
d. No, because C acquires only B's rights and A can set up against B the defense of absence of
consideration
5. S sold to B a thing with the waiver of warranty against eviction. Eviction took place subsequently. Is
S still liable for breach of warranty against eviction?
a. No, if it were waiver consciente
b. Yes, even if it was waiver intencionada
c. No, provided the seller was in good in faith in entering into the contract of waiver of
warranty against eviction
d. No, if it was waiver intencionada
6. Statement I - A majority of the number of directors or trustees as fixed in the articles of
incorporation shall constitute a quorum for the transaction of corporate business, and every
decision of at least a majority of the directors or trustees present at a meeting at which there is a
quorum shall be valid as a corporate act, except for the election of the officers which shall require
the vote of a majority of all the members of the board
Statement II - No person convicted of final judgment of an offense punishable by imprisonment for
a period exceeding five years or a violation of the corporation code committed within six years prior
to the date of his election or appointment, shall qualify as a director, trustee or officer of any
corporation.
a. True, true
b. True, false
c. False, true
d. False, false
7. Juan promised his dog to James on June 1, 2020 to be delivered on June 30, 2020. While still in the
possession of Juan, the dog gave birth o puppies on June 25, 2020. Supposing Juan sold his dog to
James for P 10,000 and the puppies were born on June 25, 2020?
a. Juan is entitled to the puppies as Francisco has not paid the price
b. Juan is entitled to the puppies because they were born before his obligation to deliver the
dog arises
c. James in order to be entitled to the puppies, should pay additional cost for the puppies to
be agreed upon by both parties
d. James is entitled to the puppies which were born after the perfection of the contract
8. Which is not a requisite in the Condonation or remission of debt
a. The parties must have capacity
b. It must be accepted by the debtor
c. None of the answers are correct
 d. It must not be gratuitous
9. A is the drawer of a check. B is the payee and X is the drawee bank. Y fraudulently gets hold of the
check and forges the signature of the payee, B. Y then deposits it in C bank. C bank indorses the
check to X, drawee bank and collects from said X drawee bank through the clearing house. Then Y,
forger withdraws from C bank the proceeds of the check and disappears. Which of the following is
not correct?
a. The drawer A has the right to recover from collecting bank C
b. The drawer's account cannot be charged by the drawee bank
c. The payee, B can recover from drawer A
d. The drawee bank can recover from the collecting bank
10. A, B, and C are solidary debtors of D in the amount of P30,000. D remitted A’s share. B paid D
P20,000. How much can B demand from A if B will ask for reimbursement and C is insolvent?
a. P20,000
b. P10,000
c. P2,500
d. P5,000