Take the Commercial Law Review MCQs – Set 1 Quiz.
Commercial Law Review - Set 1 [25 items]
Question 1 |
A | Pay to X or his order P50,000 and deliver 10 sacks of rice. |
B | I promise to pay to the order of P P50,000 and such other sums he may be entitled to. |
C | I promise to pay O or bearer P50,000 with interest. |
D | I promise to pay Pedro Santos P50,000 |
Question 2 |
A | it is indorsed to Jose in trust for my child. |
B | it is indorsed to Jose or bearer. |
C | it is indorsed to the order of Jose. |
D | it is indorsed to Jose. |
Question 3 |
A | Both are false. |
B | No. 1 is true; No. 2 is false. |
C | No. 1 is false; No. 2 is true. |
D | Both are true. |
Question 4 |
A | Acts of directors or trustees who are guilty of gross negligence or bad faith in directing the affairs of the corporation; |
B | An attempt by a director to acquire or actual acquisition of any interest adverse to that of the corporation in respect of any matter reposed upon him in confidence; |
C | Acquisition of a business opportunity which should belong to the corporation, thereby acquiring profits which should belong to the corporation. |
D | Acts of directors constituting an approval of patently unlawful acts; |
Question 5 |
[CLR0124] Drawer issues a check to the order of P drawn against O Bank. Through illegal means, F gets hold of the check, indorses the check to himself by forging P’s signature, and deposits it in his account in M Bank which indorses the check for clearing with the words” All prior indorsements guaranteed”.Which is correct?
A | M Bank is liable to O Bank as an indorser. |
B | O Bank is liable to Drawer for reimbursement of the amount deducted from the account of Drawer. |
C | P can still collect from Drawer. |
D | All choices |
Question 6 |
A | Indorsement and delivery of an instrument payable to the order of Jose |
B | Delivery to the payee of an instrument payable to bearer Jose |
C | Delivery of an instrument payable to the order of Superman |
D | Delivery to the payee of an instrument payable to bearer |
Question 7 |
A | The acquisition must be for the sole purpose of acquiring shares in order to eliminate fractional shares. |
B | The corporation must have unrestricted earnings in its books to cover the purchase of shares. |
C | The corporation must have unrestricted earnings in its books to cover the purchase of the shares except in the case of redeemable shares. |
D | The acquisition must be for a legitimate purpose. |
Question 8 |
[CLR0105] ABC Corporation, a private corporation engaged in the business of importing used cars from Japan was issued a certificate of incorporation by virtue of R.A. 27890. Because of a failed business transaction, ABC Corporation sued Mr. X for a damage arising from the latter’s alleged breach of its contractual obligations.
A | Attacking the existence of ABC Corporation may be done through a motion to dismiss because its creation is void. |
B | ABC Corporation is a de jure corporation and its existence can be attacked only through a quo warranto proceeding. |
C | Mr. X cannot allege “lack of legal capacity” in its motion to dismiss because it is not allowed to attack the existence of the corporation collaterally. |
D | Mr. X cannot allege “lack of legal capacity to sue’ of ABC Corporation in its motion to dismiss because it has a legal personality conferred by law. |
Question 9 |
A | If there are only ten (1) directors elected although the articles of incorporation provide for fifteen (15) directors, the quorum in a board meeting is eight (8). |
B | The members of the board are liable whenever they vote for unlawful acts. |
C | A director may be removed by the vote of all the stockholders in any meeting. |
D | The secretary of a corporation must be a citizen of the Philippines and a resident of the Philippines. He must be also a member of the board. |
Question 10 |
[CLR0114] No. 1 – Holders of delinquent shares are not entitled to dividends. No. 2 – A transfer of shares to a non-stockholder is binding to the corporation as long as the transfer is in a public document.
A | Both statements are false. |
B | Both statements are true. |
C | No 1 is true; No. 2 is false. |
D | No. 2 is true; no. 1 is false. |
Question 11 |
A | Only to new issues of shares arising out of an increase of the capital stock. |
B | To all issues or dispositions of shares of any class other than redeemable or treasury shares. |
C | To all issues of shares or dispositions of shares of any class |
D | Only to the issuance of previously unissued portions of the outstanding capital stock. |
Question 12 |
A | it is payable to the order of the King of the Philippine Islands. |
B | it is payable to cash. |
C | it is payable to the order of cash. |
D | it is payable as in all of the above. |
Question 13 |
A | None of the choices |
B | XYZ Bank, Inc. may issue no-par value shares as long as the consideration thereof is not less than P5.00. |
C | The incorporators are not disqualified by reason of their nationality. |
D | The incorporators must all be Philippine residents. |
Question 14 |
[CLR0113] X subscribed to 1,000 shares of stock in ABC He paid 50% of the subscription but such subscription was later on declared delinquent. The total liability of X, including the balance, accrued interest, costs and other expenses amounted to P50,000. Which bidder is considered the highest bidder in the delinquency sale?
A | A bid of P40,000 for 300 shares; |
B | A bid of P45,000 for 500 shares; |
C | A bid of P43,000 for 504 shares; |
D | A bid of P50,000 for 900 shares; |
Question 15 |
[CLR0104] When the articles of incorporation provide for non-voting shares, the holders of such shares shall nevertheless be entitled to vote on the following matters, except:
A | None of the choices |
B | Dissolution of the corporation. |
C | Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of corporate property. Amendment of the articles of incorporation. |
D | Incurring, creating, increasing or assignment of bonded indebtedness. |
Question 16 |
A | If B cannot collect from the maker, B can never collect from X. |
B | If B cannot collect from the maker because of forgery of the latter’s signature, B can collect from X. |
C | If B cannot collect from the maker because of forgery of the latter’s signature, B cannot collect from X. |
D | If B cannot collect from the maker, B can collect from X after giving him a notice of dishonor. |
Question 17 |
A | To D. Pay to the order of P P50,000 out of my money in your hands. Sgd DR. |
B | To D. Pay to the order of P P50,000. Sgd. DR. |
C | None of the choices is conditional. |
D | I promise to pay P or his order P30,000 on the day his father passes away. |
Question 18 |
A | A cannot negotiate the note any further. |
B | A may negotiate to B by delivery alone. |
C | A is an assignee. |
D | A may negotiate to B by indorsement completed by delivery. |
Question 19 |
[CLR0115] No. 1 – A foreign corporation intending to sue in Philippine courts must always have a license to engage in business n the Philippines. No. 2 – A foreign corporation engaged in business in the Philippines may sue and be sued n the Philippines.
A | No. 1 is true; No. 2 is false. |
B | No. 1 is false; no. 2 is true. |
C | Both statements are false. |
D | Both statements are true. |
Question 20 |
[CLR0106] No 1 - Within five (5) years from issuance of its certificate of incorporation, the newly-formed corporation must formally organize and commence business operations. Failure to do so within such period is a ground for dissolution. No. 2 - Every member of the board of every corporation must own at least one (1) share of stock standing in his name in the books of the corporation.
A | The second statement is true; the first is false. |
B | The first statement is true; the second is false. |
C | Both statements are true. |
D | Both statements are false. |
Question 21 |
A | Shareholders cannot maintain a suit in their own names to recover corporate property. |
B | The separate personality of a corporation may be disregarded when an incorporator dominates and controls the outstanding capital stock. |
C | A corporation has a right against self-incrimination. |
D | A corporation does not fall within the constitutional protection against unreasonable searches and seizures. |
Question 22 |
A | The corporate obligations are, as a rule, not the obligations of the corporate officers as long as the absence of liability of the latter is reflected in the corporate by laws. |
B | Private corporations under the Corporation Code may either be de facto or de jure. |
C | Private corporations under the Corporation Code are created by law. |
D | A private corporation may always be held civilly liable for negligent acts committed by its employees. |
Question 23 |
A | All dividends are taxable as income of the stockholder. |
B | Dividends are profits but not all profits are dividends. |
C | The declaration of any kind of dividend requires the assent of at least 2/3 of the outstanding capital stock. |
D | Dividends may be declared out of a reappraisal surplus or revaluation increment because they constitute profits. |
Question 24 |
[CLR0119] X wants to lend money to third persons but asks his friend, B to sign promissory notes of the borrowers as the lender/ payee. As payee, B indorses the notes to X. B receives no consideration for lending his name.
A | B is not an accommodation party. |
B | X is a party accommodated. |
C | B is an accommodation party. |
D | B is not a party to the note, but X is. |
Question 25 |
[CLR0107] A corporation was formed by fifteen (15) incorporators and its certificate of incorporation was duly issued. A year after its attainment of juridical personality, the stockholders, who are themselves the members of the board adopted a resolution, providing for the following (i) That all of the corporation’s issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding twenty (20); (ii) That all of the issued stock of the corporation shall be subject to certain specified restrictions; and (iii) That the corporation shall not list in any stock exchange or make any public offering of any of its stocks of any class.
A | The corporation is a close corporation because the resolution contains the elements of a close corporation; |
B | None of the choices |
C | The corporation is an open corporation. The corporation is a corporation by estoppel because although it operates as a corporation, it did not comply with certain legal requirements for the establishment of a close corporation. |
D | The corporation is de facto because although it has a certificate of incorporation, the provisions in the resolution should have been contained n the articles. |
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