LAW ON BUSINESS TRANSACTIONS

Sources of obligations and their concepts - Assessment

When A voluntarily takes charge of the neglected business of B without the latter’s authority where
reimbursement must be made for necessary and useful expenses, there is a: (Phil CPA, 97-2)

-Negotiorum gestio

Y sold his horse to Z for P50,000. No payment has yet been made and the sales document does not provide the
date of delivery. Before delivery and payment, the horse gave birth to a baby horse. (Phil CPA, 88-1)

-Z is entitled to the baby horse which was born after the perfection of the contact

The obligation of the employer to pay death benefits and funeral expenses for his employer’s death while in the
course of employment as sanctioned by the Workmen’s Compensation Act is one that arises from: (Phil CPA,
91-1)

-Law

Unless the law or the stipulation of the parties required another standard of care, the obligation to give a thing
carries with it the obligation to take care of it with: (Phil CPA, 91-1)

-Diligence of a good father of a family

The buyer of a thing has the right to the fruits of the thing: (Phil CPA, 89-2)

-From the time the obligation to deliver the thing bought arises

Kinds of obligations in general under the Civil Code - Assessment

A solidary obligation is one in which each of the debtor is liable for the entire obligation or debt and each of the
creditors is entitled to the entire credit. Obligations shall also be considered solidary under the following three
exceptions. Which does not belong to the exception? (Phil CPA, 87-1)

-When the prestation is indivisible and there are two or more debtors and creditors

When the debtor binds himself to pay when his means permit him to do, the obligation is considered as one:
(Phil CPA, 91-1)

-With a period.

A promissory note signed by Martiniano and dated March 15, 1991 is worded as follows: “I promise to pay
Juanita the sum of Fifty Thousand Pesos (P50,000) provided that if she should fail in the October, 1991 CPA
Examination, she shall return to me said amount.” The above note gives rse to an obligation with: (Phil CPA,
91-2)
-Resolutory condition

A, B, and C solidarily bound themselves to deliver to X a Honda Motorcycle. The obligation was not fulfilled
through the fault of A. Thereupon, X filed an action in court against C and the court awarded P36,000 to X.
Which of the following situations is valid? (Phil CPA, 96-2)

-If C pays X the P36,000, C can collect from A and B P12,000 each representing their proportionate share in
the value of the prestation

The creditor shall have a right to indemnity for damages when, through the fault of the debtor, all the things
which are alternatively the object of the obligation have been lost or compliance of the obligation has become
impossible. The indemnity shall be fixed as a basis: (Phil CPA, 87-1)

-The value of the last thing which disappeared

A, B, C and D are joint creditors of E and F, solidary debtors in the amount of P40,000. How much can A, B
and C collect from E? (Phil CPA, 90-1)

-A, B, C and D could collect all the P40,000 from E

A, B and C are solidary debtors of X in the amount of P12,000. X then made a demand from A but was able to
collect P8,000 only because X was remitting A’s share of P4,000. How much can A collect each from B and C?
(Phil CPA, 87-2 modified)

-P4,000

X obliged himself to pay Y the amount of P30,000 30 days after May 31, 1993 plus a penalty of P3,000 if he
fails to pay the obligation on due date and after demand for payment by Y, offered to pay on July 30, 1993. Y
can demand from X: (Phil CPA, 94-2)

-P30,000 plus P3,000 plus legal interest

This is the promissory note: We promise to pay A, B and C the sum of ONE HUNDRED EIGHTY
THOUSAND (P180,000) PESOS within 60 days. Signed X, Y and Z”: (Phil CPA, 89-2)

-X is obliged to pay A P20,000

A, B and C secured a load 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: (Phil CPA, 95-1)

-Solidary

Payment of the obligation by a solidary debtor shall not entitle him to reimbursement from his co-debtors: (Phil
CPA, 87-1)

-If such payment was made after the obligation has prescribed or become illegal

A, B and C borrowed P36,000 from X and Y. The three (3) debtors signed a promissory note January 10, 1988
promising to pay the creditors on or before July 10, 1988. How much can X collect from C? (Phil CPA, 89-1)

-P6,000
An obligation where only the presentation has been agreed upon but the debtor may render another in
substitution is: (Phil CPA, 98-1)

-facultative obligation

Mr. AB owes Mr. CD P150,000 due on August 31, 1987. Mr. AB executed a mortgage in favor of Mr. CD on
Mr. AB’s building to guaranty the obligation. On August 10, 1987 the mortgaged building was totally lost due
to a strong typhoon. On August 12, 1987, Mr. CD demanded payment from Mr. AB. Is Mr. CD’s demand valid?
(Phil CPA, 88-1)

-Yes. The debt becomes due at once because the guaranty was lost even through a fortuitous event unless the
debtor can mortgage another property that is equally satisfactory

Which of the following statements is not correct? (Phil CPA, 96-2)

-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

X and Y and Z solidarily owe A, B, C, D, joint creditors P30,000. How much can A collect from X? (Phil CPA,
96-2)

-P7,500 only

In this case, advance payment by the debtor is recoverable: (Phil CPA, 90-1)

-If the debtor was unaware of the period

In three (3) of the following cases advanced payment by the debtor is not recoverable. Which is the exception?
(Phil CPA, 89-2)

-The debtor was not aware of the period

Carlito, Alfredo and Francis owed in solidum P15,000 to Ricardo as evidenced by a promissory note due on
September 30, 1981. The note prescribed on September 30, 1991. On October 10, 1991, Carlito paid Ricardo. In
this case, Carlito is: (Phil CPA, 91-2)

-Not entitled to reimbursement from his co-debtors for the shares of the latter
Mr. Santos secured and Mr. Dizon granted a loan of P100,000 due for payment on December 31,1988. Mr.
Santos executed a first mortgage of his residential house in favor of Mr. Dizon to guaranty the P100,000 loan.
On October 19, 1988 the residential house was totally destroyed by typhoon Unsang. On October 31, 1988 Mr.
Dizon demanded payment of the loan from Mr. Santos. Is the demand of Mr. Dizon for payment valid. (Phil
CPA, 89-1)

-Yes. The obligation became due at once because the guaranty was lost through a fortuitous event

A-1 and A2 are solidary debtors of B-1, B-2 and B3, joint creditors in the amount of P90,000. How much can B-
3 collect from A-2? (Phil CPA, 90-2)

-B-3 could collect P30,000 from A-2

A obliges himself to pay X P100,000 in 30 days plus a penalty of P20,000 if A fails to pay the obligation in due
time. A failed to pay the obligation in 30 days. X can demand from A: (Phil CPA, 90-2)

-The principal of P100,000 plus P20,000 penalty

X and Y are solidary debtors of A, B, C and D joint creditors to the amount of P8,000. How much can A collect
from X? (Phil CPA, 88-1)

-A could recover P2,000 only from X

In a Joint obligation, A,B, and C are debtors of joint creditors D, E, and F, in the amount of P180,000. A’s
obligation is: (Phil CPA, 96-1)

-Pay D P20,000.00

A and B are joint creditors mancomunados of X and Y, joint debtors for a total sum of P9,000. A owns 1/3 of
the credit; B owns 2/3 of it. But X owns 2/5 of the debts; Y owes 3/5 of the debt. In this case: (Phil CPA, 87-2)

-A can only collect from X, P3,600 and from Y, P5,400

The obligation is demandable on the date of the obligation and shall continue to be in force up to the arrival of
the day certain: (Phil CPA, 95-1)

-Suspensive period

Specific circumstances affecting obligations in general - Assessment

This person is liable for the loss of the subject matter by fortuitous event: (Phil CPA, 85-2; 88-1; 89-1)

-None of them

A condition with, if imposed on an obligation will be disregarded and will therefore make the obligation
immediately demandable: (Phil CPA, 94-1)

-If Juan will not rise from the dead

A to sell B his lot and house in the city if A decides to transfer and live, in the countryside” is an example of:
(Phil CPA, 94-1)

-Potestative condition

A borrower who uses the thing for a purpose different from that intended, delays its return, receives the thing
under appraisal, lends it to a third person, or saves his property instead of the thing borrowed shall be liable even
in case of fortuitous event, because: (Phil CPA, 91-1)

-The law so expressly provides

It is not a source of liability which will entitle the injured party to damages: (Phil CPA, 93-2)

-Culpa Aquiliana or negligence committed in the performance of a spontaneous act

When the characters of creditors and debtor are merged on the same person, the mode of extinguishing an
obligation is called: (Phil CPA, 86-2)

-Confusion or merger

Mr. Montecillo entered into a contract with Mr. Villarojo by which Mr. Montecillo promised to deliver 1,000
cases of glassware of the class and at the price stipulated in the contract. Such delivery was to be made during
the months of February and March, 1991. In this case, no further demand or notice by Mr. Villarojo on Mr.
Montecillo was necessary because: (Phil CPA, 91-1)

-Answer not given

If the obligor binds himself to perform his obligation as soon as “he shall have obtained a loan from a certain
bank, this obligation is: (Phil CPA, 93-1)

-void

Mr. ABC is obliged to give Mr. XYZ his only car on July 15, 1987. Mr. ABC did not deliver the car on July 15,
1987. On July 20, 1987 an earthquake destroyed the building where the car was in garage and the car was
destroyed. Is Mr. ABC still liable? (Phil CPA, 88-1)

-No. Considering that no demand to deliver was made by Mr. XYZ and the specific thing was lost due to
fortuitous event, the obligation is extinguished

X is under obligation to deliver his Toyota car to Y. However, before delivery Z destroys the car. Which one of
the following is not correct? (Phil CPA, 98-1)

-X’s obligation to give his car to Y is extinguished

On July 1, 1989 A signs a promissory note and binds himself to pay X P100,000 plus 15% per annum interest
on June 30, 1991: (Phil CPA, 90-2)

-Because the period is for the benefit of the debtor and creditor, X can refuse any tendered payment before June
30, 1991

Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of:
(Phil CPA, 98-1)

-both the creditor and the debtor

When the debtor binds himself to pay when means permit him to do so, the obligation is: (Phil CPA, 97-2)

-With a period

Extinguishment of obligation - Assessment

This special form of payment is the conveyance of the ownership of a thing as accepted equivalent of
performance. (Phil CPA, 85-2)

-Dation in payment or dacion en pago

When two person in their own rights are reciprocally creditors and debtors of each other and extinguishes both
debts to the concurrent amount, what takes place is known as: (Phil CPA, 91-1)

-Compensation

Which of the examples given below can compensation take place? (Phil CPA, 95-1)

-A owes B P1,000 due on June 30, 1993. B owes A P1,000 due on June 30, 1993 but C has filed an adverse
claim against A
X, a minor sold to Y his parcel of land for P100,000. From the proceeds of the sale, X deposited P30,000 in the
bank spent for food, clothing and other personal expenses P20,000, joined a tour abroad costing P20,000, lost in
gambling P20,000 and loaned P10,000 to Z who became insolvent. Upon reaching the age of 21 years, X files
an action for annulment which the court granted. Y was required to return the land to X and X was made to
return to Y the amount of: (Phil CPA, 94-1)

-P70,000

One of the following statement is not true: (Phil CPA, 93-1)

-The purchasing power of value of money or currency depends upon, can come into being can be created or
brought about by a law enacted by the legislative department of the Government

This mode of extinguishment of obligations is when two (2) persons, in their own rights, are creditors and
debtors of each other. (Phil CPA, 90-1)

-Compensation

The following shall produce the effect of payment of debts: (Phil CPA, 91-1)

-Tender of Central Bank Notes

This special form of payment is the conveyance of the ownership of a thing as accepted equivalent of
performance. (Phil CPA, 85-2)

-Dation in payment or dacion en pago

If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall
be released from responsibility by: (Phil CPA, 91-1)

-Consignation of the thing or sum due

When two (2) persons are reciprocally debtors and creditors, there is: (Phil CPA, 88-2, 89-1)

-Compensation
An act of liberality whereby a creditor condones the obligation of the debtor: (Phil CPA, 98-1)

-Remission

Takes place when two persons in their own right, are creditor and debtor of each other: (Phil CPA, 98-1)

-Compensation

The distinction between conventional subrogation and assignment is that in conventional subrogation: (Phil
CPA, 91-1)

-An obligation is extinguish and another appears

When an obligation is extinguished because of the passage of time, this is: (Phil CPA, 90-2)

-Prescription

The leviable properties of the debtor are transferred to the creditors to be sold and from the proceeds, the
creditors are paid: (Phil CPA, 94-2)

-Cession

On October 4, 1987, A is indebted to B for P50,000 for a 20 day period. A proposed to B that X will pay A’s
debt and that A will be free from all liabilities. B and X agree to the proposal. On October 25, 1987, X became
insolvent. At the time of delegation, X was already insolvent but this was not known to A. The insolvency is not
of public knowledge. So B sues A on the ground that it was A who made proposal that A guaranteed X’s
solvency. Decide: (Phil CPA, 87-2)

-A is not liable, because A does not know the insolvency of X at the time of delegacion and neither was the
insolvency of public knowledge

A obliged himself to give B a car if B places among the top ten in the CPA Board Exam. Subsequently, they
agreed that A will give B the car if B merely passes the CPA Board. This is an example of: (Phil CPA, 94-2)

-Real novation

When the debtor abandons or transfers all his properties to the creditors so that the creditors may sell the
properties and out of the net proceeds the creditors recover their claims this is called: (Phil CPA, 90-2)

-Payment of cession

It presupposes not only that the obligor is able, ready, and willing, but more so, in the act of performing his
obligation. (Phil CPA, 93-1)

-Tender of payment

A executes promissory note in favor of B and that promissory note is negotiated by B and subsequently
indorsed in favor of A. The obligation to pay the said promissory note is thereby extinguished because there is:
(Phil CPA, 91-1)

-Confusion or merger
The P1,000 bills issued by the central bank and in circulation are considered: (Phil CPA, 93-1)

-Legal tender

A owes B P10,000. With consent of both, C pays B P5,000. Now B and C are the creditors of A to the amount
of P5,000 each. Suppose A has only P5,000. Which is correct? (Phil CPA, 98-1)

-B should be preferred

When the debtor abandons and assigns all his properties in favor of his creditors for the latter to sell to satisfy
his credits, this is: (Phil CPA, 90-1)

-Payment by cession

Sale is distinguished from dation in payment in that in sale: (Phil CPA, 91-2)

-The cause is the price

C is the creditor of D in the amount of P50,000. C is the guarantor of D paid C partially with P20,000. A not
knowing the partial payment of D and against the will of D paid C the amount of P50,000. What is the effect of
this payment in the obligation: (Phil CPA, 89-2)

-The obligation is extinguished. A can demand P30,000 from D, but if D cannot pay, A cannot ordinarily
proceed against guarantor C because A is not entitled to subrogation

A thing is not deemed lost when it: (Phil CPA, 98-1)

-deteriorates

Which of the following is not an element of Compensation: (Phil CPA, 95-1)

-There is controversy or adverse claim over any debts to be compensated

Mr. Debtor owes Mr. Creditor who has two (2) legitimate emancipated children, P50,000.00 payable on
December 31, 1991. (Phil CPA, 92-2)

-If both Mr. Debtor and Mr. Creditor die, the heirs of Mr. Creditor can collect from the heirs of Mr. Debtor

A owes X P50,000 payable on or before June 30, 1990. S who is not a party to the contract and without the
consent and against the will of A paid 1990 when the prevailing rate of interest was 12% per annum. (Phil CPA,
90-2)

-S can ask reimbursement from A in the amount of P50,000

Concepts and classification - Assessment

These are the basic principles or characteristics of a contract. Which is the exception? (Phil CPA, 90-1)

-Binding on third parties.

An innominate contract which means “I give that you may do”

-Do ut facias

This is a real contract:

-All of them

It takes place when the parties do not intend to be bound at all by their agreement: (Phil CPA, 93-1; 96-1; 97-1)

-Absolutely simulated contract

The mere liberality of the benefactor is the cause in:

-Contract of pure beneficence

Strictly speaking, which of those should not anymore be considered an innominate contract?

-Do ut des or I give that you give;

Essential Requisites of a contract:

-all of them

This is not always an essential element of a contract

-Form;

DO UT FACIAS:

-I give that you make

Elements and stages - Assessment

A contract is in the stage of conception when: (Phil CPA, 92-1)

-Negotiations are in progress.

The stage of “conception” of a contract is:

-When the negotiations are in progress.

S offers to sell his car to B for P125,000 cash. B accepts the offer but is willing to pay only P120,000.

-The contract was not perfected because the acceptance by B was qualified and it constituted a counter-offer.

Which of these is proof of the perfection of a contract of sale?

-Earnest money

This is not always an essential element of contract:

-Terms and conditions imposed by the parties

Freedom from contract and limitation - Assessment

Contracting parties are free to enter into all kinds of pacts, terms or stipulations provided they are not contrary to
law, morals, good customs, public policy or public order. The above is a description of the characteristic of a
contract known as:

-autonomy of contracts

The principle that the contracting parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order or public
policy.

-Principle of liberty of contract.

The contract must bind both contracting parties, its validity or compliance cannot be left to the will of one of
them, and this is

-Mutuality of contract
The characteristic of a contract to the effect that a contract binds not only the contracting parties, but also the
heirs or assigns is called:

-Relativity of contracts

Persons bound - Assessment

These persons are bound by contracts except:

-Third persons

These persons are bound by contracts.

-All of them
Eianne signed a promissory note in favor of Flor promising to pay P10,000 30 days after sight. Who can sue on
this note and enforce the obligation? (Phil CPA, 93-1)

-Only Flor

The person called to the succession either by the provision of the will or by operation of the law. (Phil CPA, 94-
2)

-Heir

These persons are bound by contracts. (Phil CPA, 85-2; 88-2)

-All of them

Contracts are effective and binding only between the parties, their assigns and their heirs. Three of the following
enumerations are exceptions as provided by law. Which does not belong to the exception? (Phil CPA, 87-1)

-Where the obligations arising from contract are not transmissible by stipulation or by provision of law.

Consent - Assessment

When there is concurrence of offer and acceptance, there is:

-Consent

S offered to sell his house and lot to B for P5,000,000 giving to him an option of 60 days within which to decide
whether or not to buy. After only 15 days, S met T who offered to buy the same house and lot for P8,000,000. S
then notified B of the withdrawal of the option and proceeded to sell to T. B files an action for damages against
S.

-B can recover damages from S because the latter violated the option given to the former.

Mr. A. Santos signed a letter addressed and delivered to Mr. S. Aguas. The terms of the letter are:

1. An offer to sell a 500 sq. m. lot for P300,000.00.

2. An option time up to October 31, 1991 for Mr. S. Aguas to raise the P300,000.00.

3. Upon payment of the P300,000.00, Mr. A. Santos will execute and sign a Deed of Sale.

On October 31, 1991, Mr. A. Santos sent a letter to Mr. S. Aguas asking for a new price of P350,000.00 for the
500 sq. m. lot. Can Mr. S. Aguas compel Mr. A. Santos to accept the P300,000.00 and make him sign and
execute a Deed of sale? (Phil CPA, 92-2; 96-1 (name modified))

-No. Mr. S. Aguas did not accept the offer of Mr. S. Santos
On June 1, 2012, S offered to sell his only car to B for P100,000. B accepted the offer by mailing his letter of
acceptance of June 10, 2012. On June 12, 2012, B revoked his letter of acceptance and mailed his letter of
revocation on the same date. S received the letter of acceptance on June 14, 2012 and the letter of revocation on
June 15, 2012.

-The contract was not perfected because at the time the acceptance was received, the parties were no longer of
one mind.

Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. Which of the following constitutes an offer: (Phil CPA, 91-1)

-An offer made through an agent

Mr. AB offered in writing to sell his house and lot for P750,000 to Mr. CD on July 1, 1989. Mr. CD requested
Mr. AB to give him 60 days within which to raise the P750,000. On August 15, 1989 Mr. AB informed Mr. CD
that the price is raised and now at P1,000,000. Can Mr. CD compel Mr. AB to sell his house and lot at P750,000
which was offered in writing by Mr. AB? (Phil CPA, 90-1)

-No, because Mr. CD has not accepted the offer of Mr. AB.

Mr. Santos offered to sell his land to Mr. Calma for P100,000. Mr. Calma accepted the offer and paid Mr.
Santos P100,000and Mr. Santos delivered the owner’s duplicate of the Transfer Certificate of Title of the land.
Mr. Calma wishes to register the land in his name but the Register of Deeds asked Mr. Calma for the Deed of
Sale. What can Mr. Calma do? (Phil CPA, 88-2)

-Mr. Calma may compel Mr. Santos to execute the Deed of Sale because the contract is valid.

Mrs. Gomez sold and delivered her diamond ring to Mrs. Pangan. It was agreed upon that after ten (10) days
Mrs. Pangan will name and fix the price. On the tenth (10th) day, Mrs. Pangan called up by telephone Mrs.
Gomez and stated the price at P10,000. Mrs. Gomez agreed. Is the sale perfected? (Phil CPA, 88-2)

-Yes. The price stated and named by one of the contracting parties was accepted by the other.

S offered to B the sale of his house and lot for 10,000,000 by means of a letter. At the same time, B offered to
buy from S the same house and lot by way of telegram for P10,000,000 also. B has received the offer of S and S
has also received the telegram of B. Is there a perfected contract of sale between S and B?

-No, because what occurred was not a concurrence of offer and acceptance but a crisscrossing of offers.

Three of the following are option money. Which is the earnest money? (Phil CPA, 89-2)

-Given when contract of sale is perfected.

S in Manila offered to sell to B in Cebu his house and lot for P10,000,000 giving the latter 60 days within which
to decide. B accepted the offer of S by a letter. While the letter was on its way to Manila, B changed his mind
and sent to S another letter withdrawing his acceptance 2 days after his first letter.

-B can withdraw the acceptance because such withdrawal was made before S received his first letter of
acceptance.
Mr. Reyes and Mr. Vitug are good friends. Mr. Reyes sold and delivered his car to Mr. Vitug. It was agreed and
understood that on Sunday Mr. Reyes will name and fix the price of the car. Sunday came. Mr. Reyes called Mr.
Vitug by telephone and stated and fixed the price at P150,000. Is the sale perfected? (Phil CPA, 89-1)

-No. The price fixed by the seller was not accepted by the buyer

A wrote a letter to B wherein A offered to sell a piece of land to B for P200,000. B signified his desire to buy
the land. In A’s letter, B was given a period of two (2) months within which to produce the P200,000. After 45
days, A told B that price of the land is now P250,000. Can B compel A to accept the P200,000 first offered by A
and execute the deed of sale? (Phil CPA, 88-1)

-No, for B did not signify his acceptance of A’s offer.

Objects of contracts - Assessment

Valentina orally promised to many Pedro as consequence of which the latter contracted the Manila Cathedral as
the venue of the marriage, the whole of the Fiesta Pavilion of the Manila Hotel the bridal gown to be made by
Pitoy Moreno, spending all in all about P1,000,000. On the date of the marriage, Valentina did not appear:

-While Pedro cannot compel Valentina to marry him, he can collect from Valentina damages.

Three (3) of the following may be valid objects of a contract, except: (Phil CPA, 89-2)

-Impossible things or services

Mr. Gambino owes Mr. Eglesia P100,000. Gambino knows that on maturity date, he will not be able to pay
Eglesia, and in order to prevent attachment of his property by Eglesia, Gambino, before maturity of his debt,
executes a contract pretending to sell to Mr. Santos his property. Which of the following statements is not
correct? (Phil CPA 95-2)

-The contract is binding between Gambino and Santos

A has a daughter B; X has a son Y. A, B, X and Y agree together that Y will marry B. The agreement is oral. If
B latter on refuses to marry Y who has spent for the necessary wedding preparations and X and Y bring an
action against A and B, will the action prosper? Decide: (Phil CPA, 87-2)

-The action of X and Y against A and B will prosper because the agreement is based on the consideration of
marriage other than mutual promise to marry.

Requisites of a valid cause:

-All of them

Requisites of a valid object or subject matter:

-Both a and b
Considerations of contracts

X sold his car to Y for P50,000. No date was fixed for the performance of the obligations of the seller and the
buyer. The obligation of X is: (Phil CPA, 86-2)

-To deliver the car after Y pays X the P50,000.

Mr. Gamboa sold his car for P200,000 to Mr. Ramos. There was no fixed date for the performance of the
obligations of both parties. The obligation of Mr. Gamboa as vendor is: (Phil CPA, 97-2)

-To wait for Mr. Ramos to pay P200,000 and deliver the car.

X, after the death of his father, sold his inheritance though its amount has not yet been determined to B, for a
consideration of P50,000.

-The contract is void if nothing remains of the inheritance to be turned over to B.

Mr. Guzman sold his owner type jeep to Mr. Montano for P100,000. There was no date fixed for the
performance of the obligation of Mr. Guzman and Mr. Montano. The obligation of Mr. Guzman is: (Phil CPA,
89-1)

-To wait for Mr. Montano to pay P100,000 and deliver the jeep.

Three of the following are void contracts. Which is the exception?

-contracts with valid consideration but with unlawful motives.

Mr. Santos sold his car to Mr. Garcia for P150,000. No date is fixed by the parties for the performance of their
respective obligations. The obligation of Mr. Santos is: (Phil CPA, 88-1)

-To deliver the car upon the payment by Mr. Garcia of P150,000.

P.A.U sold to R.D.E the former’s car on April 1, 1992 for P300,000. P.A.U. promised to deliver the car on April
15, 1992 but A.D.E. did not make any promise as to when to pay. (Phil CPA, 92-1)

-R.D.E. will be obliged to pay only at or after delivery.

O agreed to transfer to I, verbally, a residential lot in consideration of a service or benefit already rendered by
the latter in favor of the former. Which of these is correct?

-The verbal agreement is enforceable because it is not covered by the Statute of Fraud.

Formalities of contracts - Assessment

Three of the following contracts must be in writing to be valid. Which is the exception?

-Contract where the amount involved exceeds five hundred pesos.

Which of these is a formal contract?

-Both of (a) and (b)

Mr. Burgos sold a parcel of land to Mr. Javier for P200,000. Mr. Burgos delivered the transfer Certificate of
Title of the land to Mr. Javier. Later, Mr. Javier wanted to registers the land to his name and he needed a Deed
of Sale. What can Mr. Javier do? (Phil CPA, 89-1)

-Mr. Javier can compel Mr. Burgos to execute Deed of Sale

These novations take place automatically or by operation of law. Choose the exception:

-None of the above.

X alleged that Y promised to give X one hectare of land. This is in consideration of X’s meritorious service to
Y. Y pleads in defense that since the promise was not in writing, it is unenforceable under the Statute of Frauds.
Decide. (Phil CPA, 87-2)

-To deliver the car after Y pays X the P50,000.

In a written contract of sale between S and B the true intention of the parties was not incorporated due to the
mistake of S but where B is innocent. Assume that there was a meeting of the minds between S and B. Who can
bring the action for reformation?

-Both B and S

Statement 1: S orally sold to B a piece of land P1,000,000 where the latter made a down payment of P500,000 to
the former, B can compel S to execute a public document containing the sale.

Statement 2: In reformation of contracts, where the mistake, fraud or accident prevented a meeting of the
minds, the remedy remains to be reformation and not annulment.

-Statement 1 is true, but statement 2 is false.

X enter into a contract with Y whereby X sold his land orally to Y. The land has been delivered and the money
has been paid. Is the oral sale of the land valid? (Phil CPA, 87-2)

-The contract is valid because the contract is already perfected and executed.

A loan for P800 was orally contracted. May the lender recover the sum lent?

-Yes, because the contract is enforceable.

A sold a residential land to B. B paid the consideration. When B wanted to register the sale at the Register of
Deeds, the latter refused to register it and required the presentation of the certificate of capital gains tax
payments. What can B do? (Phil CPA, 92-1; 96-1)

-B may compel A to pay capital gains tax and secure the Certificate of Capital Gains Tax payment.
Interpretation and reformation of contract - Assessment

There shall be no reformation of contract in the following cases, except: (Phil CPA, 96-2)

-A contract of sale fraudulently made as a contract of lease

Which of the following contracts may be cured by reformation?

-A Contract of Mortgage fraudulently made as a Contract of Sale

Which of the following instrument is not subject to reformation?

-All of the above

Which of these is not subject to reformation?

-All of the above

Which of the following is not a rule in the interpretation of contracts? (Phil CPA, 87-1)

-Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless the debtor
proves the contrary.

Cecilio had Ricardo kidnapped and tortured Eduardo for refusing to sell his (Eduardo’s) laid to Cecilio. Eduardo
who could no longer bear the physical pains inflicted upon him signed a document of sale in favor of Cecilio.
This sale is: (Phil CPA, 91-2)

-Voidable

Defective contracts - Assessment

Which of these constitutes fraud?

-An expression of opinion which did not turn out to be true if made by an expert and the other party relied on it.

When the object of the contract is outside the commerce of man, the contract is: (Phil CPA, 86-2)

-Void

Which of the following contracts is valid? (Phil CPA, 97-2)

-Oral contract of agency giving authority to an agent to sell the land belonging to the principal.

A voidable contract:

-All of the above

A guardian of B sold B’s house and lot worth P480,000 for P240,000. (Phil CPA, 87-2)

-The contract can be rescinded because of inadequacy of price.

Contracts which cannot be sued upon unless ratified, thus it is as if they have no effect yet, are: (Phil CPA, 97-2)

-unenforceable

A and B who are both unemancipated minors entered into a contract. The contract entered into by and between
them is: (Phil CPA, 87-1)

-unenforceable

S sometime in 1996 sold to B a house and lot where the former committed fraud. The deed of sale which was in
a public document was registered with the Register of Deeds in 1997. In 1999, the fraud was discovered by the
heirs of B. Under the Law, the action to annul a contract based on fraud must be filed within four (4) years from:

-1997 the date of registration with the Register of Deeds.

On July 15, 1986, X entered into a contract with Y. On February 10, 1987, X discovered that fraud was
committed at the time he entered into the contract a fraud that vitiated his consent. The action for annulment
shall be brought. (Phil CPA, 87-2)

-Within four years from February 10, 1987

Statement 1: A contract whose cause or object did not exist at the time of the transaction is a defective contract
which cannot be remedied by providing a cause or object as the case may be in the contract.

Statement 2: The nullity of the accessory obligation or of the penal clause does carries with it the nullity of the
principal obligation which remains in force and demandable. Determine whether: (Phil CPA, 94-1)

-Statement I is true but statement II is false.

To defraud his creditors, A contracted B by selling a land to B. B now seeks to register the land with the
Register of Deeds. X a creditor of A seeks to prevent the registration on the ground that the contract is
rescindable. Despite X’s objection may the land be registered based on the contract in B’s name. (Phil CPA, 87-
2)

-The land can be registered based on the contract because the contract is not yet rescinded.

When one of the parties to a contract is compelled to give his consent by a reasonable and well grounded fear of
an imminent and grave evil upon his person or property, or upon the person or property of his spouse,
descendants or ascendants, there is: (Phil CPA, 91-1)

-Intimidation
An oral contract of guaranty:

-Unenforceable

The following, except one, are the characteristics of void or inexistent contract. Which is the exception? (Phil
CPA, 93-2)

-The defense of illegality of the contract is available to third persons whose interest is not directly affected.

In order that fraud may make a contract voidable: (Phil CPA, 87-1)

-It should be serious and should not have been employed by both contracting parties.

Contracts which cannot be sued upon unless ratified, thus it is as if they have no effect yet, are: (Phil CPA, 97-2)

-unenforceable

Mr. Esguerra, a former government employee, suffered from severe paranola and was confined in the mental
hospital in 1981. After his release he was placed under the guardianship of his wife to enable him to get
retirement pay. In 1984 he became a mining prospector and sold some mining claims. In 1987 he sued to annul
the sale claiming that he was not mentally capacitated at the time of sale. The sale in question was: (Phil CPA,
93-1; 97-1)

-Valid

The following is considered fraud or fraudulent: (Phil CPA, 90-1)

-Failure to disclose facts when there is duty to reveal them.

This results in the ratification of a contract violative of the Statute of Fraud:

-Both (a) and (b)

S offered to sell to B his house and lot for P10,000,000. In order to pressure B into buying said house and lot, T,
a very good friend of S, threatened B with death as a result of which B accepted the offer of S. It turns out now
that the market value of the house and lot is P15,000,000. Is the contract of S and B valid?

-The contract is voidable because the consent given by B is anyway vitiated even if the intimidation was
employed by a third person.

Contracts entered into a state of drunkenness or during a hypnotic spell are: (Phil CPA, 93-1; 97-1)

-Voidable

Three (3) of the following contracts are void. Which is not? (Phil CPA, 92-2)

-Oral partnership agreement when capital is more than P3,000.00

In a written contract the true intention of the parties was not reflected therein through the fraud committed by
one of them, which fraud prevented a meeting of the minds. The applicable remedy would be

-Annulment of the contract

Choose the contracts which are voidable. (Phil CPA, 92-1)

-Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

Factor vitiating consent

-Dolo causante

M, minor, owns a house and lot valued at P1,000,000 and G is his guardian , M sold said house and lot to B, a
capacitated person, for P600,000 in a private writing. The contract between M and B is:

-Voidable

The following agreements are covered by the Statute of Fraud. Choose the exception.

-An oral contract of partnership where the contribution in money or personal property amounts to P3,000 or
more

The stipulation in a contract to the effect that the debtor should remain as a servant in the house and in the
service of her creditors so long as she had not paid her debt, is void because it is: (Phil CPA, 91-1)

-Contrary to law and morality

Three (3) of the following contracts are void. Which one is not? (Phil CPA, 89-2)

-Oral contract of Partnership of three (3) partners and capital contribution is more than P3,000 in cash.

In order that fraud may make a contract voidable: (Phil CPA, 94-2)

-It should be serious and should have not have been employed by both contracting parties.

Contracts entered into during lucid interval are: (Phil CPA, 89-2)

-Answer not given

M is minor who owns a house and lot valued at P1,000,000. G is the guardian who sold the house and lot to B
for only P600,000 but with the approval of the court. The contract between G and B is ?

-Valid;

On September 1, 1987, A entered into a contract with B, whereby A sells to B 5,000 sacks of sugar to be
delivered on the 15th and to be paid in full on the 30th. There was no agreement for rescission based on non-
payment. A did not deliver on the 15th but on the 30th he was willing and offering to deliver. But B did not
make payment on said date and so A did not like and refused to make the delivery. Decide. (Phil CPA, 87-2)

-A can rescind the contract for nonpayment of the price.

One of the parties to a contract is unemancipated:

-Voidable
Nature, forms and requisites - Assessment

Quezon Bed Company (QBC) granted to Happy Sleep Incorporated (HSI) the exclusive right to sell in North
Luzon a certain number of beds which the company was manufacturing at the invoice price of the beds in
Manila, with a discount of 20%, the price to be paid at the end of 60 days. What contract is perfect here?

-Contract of Agency

Bo decided to buy a condominium in Bonifacio Global City and pays a reservation fee of P100,000. Is the
reservation fee earnest money or option money?

-Option money

A contract of sale is except

-None of the above

What is an option contract?

-All of the above

A sum of money paid or a thing deliverd upon the making of a contract for thesale of goods to bind the bargain
the delivery and acceptance of which makes the final assent of both parties to the contract

-Earnest money

Mrs. Lim agrees to sell his watch to Mr. Lomotan for P10, 000 in cash, and places the timepiece inside the car
of Mr. Lomotan, while he goes to an ATM to withdraw money. Before Mr. Lomotan returns, Mr. Co arrives
and claims ownership of the watch presenting a document signed by Mr. Lomotan selling the time piece to
him. Mrs. Lim discards the claim asserting that she is still the owner. In this situation, who is the rightful owner
of the watch?

-Mrs. Lim, because Mr. Lomotan has not yet paid the agreed price

Bo decided to buy a condominium in Bonifacio Global City and pays a reservation fee of P100,000. If Bo is
suddenly in a financial bind, is she still bound to pay the balance of her condominium after her reservation?

-No, because a reservation can be considered an option money for the reason that it may not be refundable but it
can be forfeited

Earnest money means

-All of the above

Effect of price fixed by third person can be considered void excepts

-Third person adhere to the instructions laid down by parties involve

The contract of sale must always have

-All of the above

The following are characteristics of a contract of sale aside from

-Unilateral

A contract of sale is

-Where title passes to the vendee upon delivery of the thing sold

One has the right to transfer ownership if he/ she with the exception of

-Paid half of the total price

Option money is explained by the statements below except

-Part of the purchase price

Pedro has a land under litigation and agrees to sell it to Renel for 500,000 if he wins the case and recovers said
property. When the verdict was given, Pedro’s case lost and was not able to recover his property. Is Pedro
required to provide a replacement property to be sold to Renel?

-No, because their agreement is on the condition that he will only sell if he wins his the case

Under the Statute of Frauds, the following contracts must be in writing, otherwise they cannot be enforced in
court litigation except

-Sale of personal property at a price not less than P300.00

Alabang Shoe Store Incorporated (ASSI) entered into separate contracts with 2 movie stars, Kimi and Honesto.
With Kimi, the agreement was that the shoe store shall deliver at a specified date for a price of P2,000 a pair of
shoes of a specified brand which the store had been manufacturing for the general public but which at the time
of the contract had already been sold out, and with Honesto, the arrangement was that the shoe store shall
deliver at a specified date for a price of P3,000 a pair of shoes to be made specifically for him, in accordance
with a design submitted by him.

What is the nature of the contract between Honesto and ASSI?

-Contract for a piece of work

One of the following is not a requisite of the object of a contract of sale. Which is it?

-Vendor must have the right to transfer the ownership of the thing at the time of sale.

Ronald transferred to Vincent a parcel of land for the price of P15,000,000. It was stipulated in the
contract that Vincent will pay P5, 000,000 in cash and for the balance, we will give a boat, valued at
approximately P10, 000,000. What kind of contract is this?

-Contract of barter
It refers to the money paid by the offeree to the offerer to bind the latter in case the offerer grants the offeree the
privilege to accept an offer within a certain period of time.

-Option money

Goods which form the subject of a contract of sale may be except

-Illicit goods

A thing can be considered determinate when

-B and C are correct

The following are examples of illicit things “by chance”n except

-Expired medicine

A contract whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing and the other to pay therefore a price certain in money or its equivalent is a contract of:

-Sale.

As to the presence or absence of conditions, a sale may be

-Conditional

Earnest money as distinguished from option money - Assessment

Bo decided to buy a condominium in Bonifacio Global City and pays a reservation fee of P100,000. If Bo is
suddenly in a financial bind, is she still bound to pay the balance of her condominium after her reservation?

-No, because a reservation can be considered an option money for the reason that it may not be refundable but it
can be forfeited

It refers to the money paid by the offeree to the offerer to bind the latter in case the offerer grants the offeree the
privilege to accept an offer within a certain period of time.

-Option money

Earnest money means

-All of the above

Rights / obligations of vendor and vendee - Assessment

An unpaid seller’s right to resell the goods is available in the following cases, except:

-When the seller has lost his lien on the goods.

When goods are delivered to the vendee on ________________ to give him/her an option to return goods
instead of paying, the ownership passes to the buyer on delivery, but he/she may revest, the ownership in the
vendor by tendering the goods within the time fixed in the contract.

-Sale on satisfaction

Which of the following statement is false

-Stoppage in transitu can be exercised by the unpaid seller if the buyer is insolvent and the vendor has not yet
parted with the thing sold

The principal obligations of the vendee are except

-To maintain the unit pending delivery

In Art 1490, a husband and wife, during marriage cannot sell property to each other except

-When separation of property was agreed upon in the marriage settlements

This mode of delivery Is the opposite of traditio brevi manu. This takes place when the vendor continues in
possession of the property sold not as owner but in some other capacity.

-Traditio constitutum possessorium

It is a contract by which property is sold but the buyer, who becomes the owner of the property on delivery, has
the option to return the same to the seller instead of paying the price.

-None of the above

Gelo sold his Honda Civic to Jules, who immediately paid the price. Because the vehicle was at the repair shop
at the time, the contract was perfected but no delivery was made. Before delivery could be made, Anton, a
creditor of Gelo, who has filed a suit against him, attached the car.

Between Gelo, Jules & Anton, who is the rightful owner of the Honda Civic, during the time of lawsuit?

-Jules, because he had already paid for the car

What title is acquired by the buyer if the object which he bought was sold by someone who is not the owner
thereof and who was not authorized to sell it?

-The buyer in such a case acquires no better title to the object the vendor had

What situations can be the buyer is exempted and in turn still acquire the object and claim ownership?

-All of the above

In Art 1491, the following cannot acquire by purchase even at a public auction, either in person or through the
mediation of another, except

-Agents who was given consent by the principal

In Art. 1493, if at the time the contra ct of sale is already perfected but the thing sold was entirely lost? What are
the options of the vendee?

-Vendee has no option available because the contract shall be without any effect

The principal obligations of the vendor are

-All of the above

Gelo sold his Honda Civic to Jules, who immediately paid the price. Because the vehicle was at the repair shop
at the time, the contract was perfected but no delivery was made. Before delivery could be made, Anton, a
creditor of Gelo, who has filed a suit against him, attached the car.

What right has Jules over the Honda Civic?

-Jules’s acquired a personal right over the car. However, such right has become useless because of the
attachment of the vehicle by Anton, a creditor of Gelo

This mode of legal delivery happens when the vendee has already the possession of the thing sold by virtue of
another title as when the lessor sells the thing leased to the lessee

-Traditio brevi manu

Contracts of sale or return can be considered when

-All of the above

In Art. 1493, if at the time the contra ct of sale is already perfected but the thing sold was partially lost, what
options does the vendee have over the vendor?

-Vendee may withdraw from the contract with the vendor

In Art 1490, a husband and wife, during marriage cannot

I. Donate property to each other

II. Sell property to each other

III. Borrow proper from each other

-I and II are correct

Warranties (in relation to consumer laws) - Assessment

This refers to the implied warranty on the part of the seller that he has the right to sell the thing at the time when
ownership is to pass, and that the buyer from that time shall have and enjoy legal and peaceful possession of the
thing.

-Warranty against eviction.

This is not an essential element of a contract of sale

-Warranty against eviction

These are common forms of document of title except

-Promissory memo

What are the implied warranties of the person who negotiates a document of title by delivery?

-All of the above

Installment sales - Assessment

In a contract of sale of personal property the price of which in payable in instalments, what are the possible
remedies available to the vendor in case of breach?

-All of the above

At a mortgage foreclosure, a sale was carried out as a result of a judicial proceeding. Tessa, an attorney for
the mortgage creditor, bought the mortgaged property.

If Tessa bought the property for her client, did she violate the absolute terms of Art.1491 of the NCC?

-No, because she would be merely acting as agent of her client

The Recto Law applies to which of the following examples of sale?

-Sale of a piano on installments where the buyer constituted a chattel mortgage on the piano.

One of the following is not an alternative remedy available to a seller of personal property on installment if
buyer defaults

-To take possession of the property and forfeit the amount paid by the buyer

At a mortgage foreclosure, a sale was carried out as a result of a judicial proceeding. Tessa, an attorney for
the mortgage creditor, bought the mortgaged property. If she bought it for herself, is the sale void or
voidable?

-Yes, because is it prohibited by the law

Paul sold a second hand car to Trish for P150, 000. The deal between Paul and Trish was the 50% of the
purchase price, of P75,000, shall be paid upon delivery of the car to Trish and the balance of P75,000 shall
be paid in 3 equal monthly instalments of P25,000 each. The car was delivered to Trish, and she paid the
amount of P75, 000 to Paul. Two weeks after, the car was stolen from Trish’s garage with no fault on Trish’s
part and was never recovered. Is Trish legally bound to pay the unpaid balance of P75,000 to Paul?

-Yes, because ownership was already acquired by Trish the moment the car was delivered to her

Mike sold a motorcycle to Powee for P50,000 to be paid as follows: P30,000 upon delivery of the motorcycle to
Powee, and the balance at the rate of P5,000 per month until paid in full. The motorcycle, however, was burned
in the possession of Powee without his fault, before the balance was paid in full. Is Powee obliged to pay the
balance?

-Yes, given that the ownership was already transmitted to him upon delivery

LAW ON CREDIT TRANSACTIONS

Nature and requisites - Assessment

If the principal obligation is voidable, unenforceable or merely natural, the pledge or mortgage is:

-valid;

A contract where the collateral must be placed in the possession of the creditor or third person:

-pledge;

A contract where one of the parties delivers to another, either something not consumable so that the latter may
use the same for a certain time and return it:

-commodatum or loan for temporary possession;

Statement 1 - Pledges and mortgages are accessory contracts.

Statement 2 - Their consideration is the same as the consideration of the principal obligation.

-Statement 1 and 2 are correct;

A thing pledged—

-All of the above.

Real property mortgaged---

-All of the above.

In commodatum, the bailee acquires:

-jus utendi or right to use;

A characteristic of a real mortgage:

-principal;

A similarity between pledge and chattel mortgage:

-constitute a lien on the property;

A common requisite to the contracts of pledge and mortgage:

-that the persons constituting the contract have the free disposal of their property or legally authorized for the
purpose;

It is one where a person who receives a loan of money or any fungible thing acquires the ownership thereof, and
is bound to pay to the creditor an equal amount of the same kind and quality:

-mutuum;
It is the delivery of property by one person to another in trust for a specific purpose upon a contract to perform
the trust and carry out such object, and thereupon either to return or account for the property when the special
purpose is accomplished or to keep it until the giver reclaims it:

-bailment;

It is a form of commodatum where the bailor may demand the thing at will:

-precarium;

Pledges created by operation of law refers to:

-right of retention;

A pledge created by operation of law;

-legal;

Requirements to bind the parties and third persons - Assessment

A pledge to be binding on third persons must be registered in the Registry of Property.

The pledge may be in any form as in fact the mere delivery of the object is sufficient to bind the parties.

-False, True

A pledge may take effect only against third persons if the following formalities are followed:

-it must be in a public instrument containing the description of the thing pledged and the date of the pledge;

To bind the parties in a contract of:

a. Pledge. – The contract may be oral or written, provided the property is delivered to the pledgee.

b. Chattel Mortgage. – The contract must be written in a public document and registered at the Chattel
Mortgage Register.

c. Real Mortgage. – The contract must be in writing, whether it be public or private instrument.

Which of the above statements is correct?

-All statements

The following are requisites of pledge except

-To bind a third person, it must be recorded in the office of the Register of Deeds.
Obligations and rights of pledgor and pledge - Assessment

Which of the following cannot be secured by a pledge or mortgage?

-none of the above.

Julia borrowed P10,000 from Alex secured by the pledge of laptop worth P7,500 and watch worth P2,500.
Subsequently, Julia paid half of the obligation, what is her right?

-she cannot demand the cancellation of the pledge until the loan is fully paid;

An obligation of the pledgee:

-to answer for the loss of the thing pledged in case of negligence;

An obligation of the pledgor:

-to reimburse the pledgee for expenses made for its preservation;

The creditor is not entitled to recover any deficiency in case the price of sale of the thing pledged is less than the
amount due, what is the reason?

-to compel creditor to hold an honest public sale;

Effect of sale on the thing pledged if it is less than the principal obligation.

-Creditor cannot recover the deficiency even if there is stipulation.

All movables which are within commerce may be pledged, provided they are susceptible of possession, which
of the following cannot be pledged?

-none of the above.

What is the obligation of the pledgee when the pledge earns or produces fruits, income, dividends, or interests?

-to compensate them with those which owing to him, or insofar as the amount mayexceed that which is due, he
shall apply it to the principal;

Mr. Borrowie pledged his SMC bond with a face value of P100,000.00 to secure his loan from Mr. Lendy in the
amount of P50,000.00. The bond was due on January 30, 2013 while the loan is due on February 3, 2013. In this
case the bond becomes due before it is redeemed, which of the following statements is correct?

-Mr. Lendy may collect and receive the amount due from the bond and apply the same to the payment of his
claim and deliver the surplus to Mr. Borrowie;
A borrowed from B P50, 000. An offered his specific ring by way of pledge. It was expressly stipulated that
upon non-payment of the debt on time, the ring would be belong to B. This forfeiture clause, which has ring
would traditionally not been allowed is called a

-Pacto commisorium

If there is danger of destruction, impairment, or diminution in value of the thing pledged, what is the duty of the
pledgee without fault?

-he may cause the same to be sold at a public sale;

Obligations and rights of mortgagor and mortgagee - Assessment

It is a remedy available to mortgagee where he subjects the mortgaged property to the satisfaction of the
obligation through the sale of the property at public auction and the application of the proceeds thereof to the
payment of his claims:

-foreclosure;

The following are the kinds of real estate mortgage, except;

-contracts of sale with right of repurchase;

Nora mortgaged his farmland to Vilma. The farmland has a fair market value of P50,000 while the loan is only
P10,000. Thereafter, Nora sold the farmland to Boyet. What is the legal effect of the sale to Boyet.

-the sale is valid but it does not affect the mortgage;

Which of the following is not a principal right of the mortgagee?

-to free the property from the encumbrance once the obligation is fulfilled;

Mr. Gor borrowed P2 Million from Mr. Gee. The parties agreed that Mr. Gor would execute a mortgage on his
land to secure the obligation. However, Mr. Gor failed to execute a mortgage. Which of the following is the
remedy of Mr. Gee?

-demand the constitution of the mortgage;

X borrowed money from Y and gave a piece of land as security by way of mortgage. It was agreed between the
parties that upon nonpayment of the loan, the land would already belong to Y. If X failed to pay the debt, would
Y now become the owner of the land?

-Y would not become the owner because the agreement is against the law.

Which of the following is not a principal obligation of the mortgagor?

-to continue in the ownership and possession of the mortgaged property;

The contract of mortgage extends to and includes the following except:

-proceeds of insurance received from insurance of the property;

It is the right of the mortgagor to redeem the mortgaged property after his default but before the auction sale:

-equity of redemption.

An affidavit of good faith refers to an oath in a contract of chattel mortgage wherein the parties severally swear
that:

-the mortgage is made for the purpose of securing the obligation specified in the conditions thereof and for no
other purpose, and that same is valid obligation and one not entered into for fraud;

Effect of pactum commissorium - Assessment

Pactum commissorium or pacto comisorio refers to:

-a stipulation in a contract where the mortgaged property shall become the property of the mortgagee upon
failure to pay the debt;

Statement A: The mortgage credit may be alienated or assigned by the mortgagee to a third person.
Statement B: The alienation of the thing mortgaged is a matter of right on the part of the mortgagor.

-both are true;

Negotiability of instrument - Assessment

A promissory note as distinguished from a bill of exchange.

-The one who issues it is primarily liable

The following are negotiable instrument, except:

-Pay to the order of A P1,000 subject to the terms and conditions of the sales contract between him and the
undersigned.
To B Sgd.C

The promise is conditional rendering the instrument non-negotiable

- An order or promise to pay out of a particular fund

A certificate of stock is not a negotiable instrument under the “Negotiable Instruments Law” because it lacks the
requirements of

-It must contain an unconditional promise or order to pay a sum certain in money.

This is not a negotiation of a negotiable instrument;

-Assignment

Which is not negotiable?

-Pay to B or order P1,000 within 10 days if he marries D on June 12, 2009. Sgd. A to C

The negotiable character of an instrument otherwise negotiable is affected by this provision which:

-Gives the maker an election to require something to be done in lieu of payment of money

Which one of the following instruments is negotiable?

-“I promise to pay B or order P20,000, 30 days after the death of his father”. (Sgd. A)

A issues a bill payable to the order of B. Later B without endorsing the bill transfers for a consideration said bill
to C. The following except one, are the valid effects of the transfer.

-C becomes a holder.

Which of the following does not apply to a non-negotiable instrument?

-The transfer of the instrument does not give the transferee the right to collect

One is not negotiable

-A promises to pay to the order of B P1,000 with 12% interest thereon where the period from which interest is to
be counted is not specified.

The instrument is rendered non-negotiable if it:

-Contains a conditional promise or order to pay a certain sum of mone

Payable to the order of the drawee.

-Pay to yourself or order P8,000

The instrument is payable to order when

-Drawn payable to the order of a specified person or to him or his order

A letter of credit lacks negotiability becauseA letter of credit lacks negotiability because

-It is in favor of a specified person and not to order

Which of the following instruments is negotiable?

-“Good to B or order, P20,000” (Sgd.A)

An instrument is payable at a determinable future time, which is expressed to be payable, except:

-Upon a contingency and the contingency actually happens.

Which of the following is not a feature of a negotiable instrument?

-Represents title to goods

A bill of lading is beyond the scope of the negotiable instruments law because:

-It is without an unconditional promise or order to pay a sum certain in money

The following instruments are negotiable, exceptThe following instruments are negotiable, except

-Pay to A or order P1,000 or deliver a cow at the option of the holder.

a.To B Sgd.C gd.C

Negotiation - Assessment

A personal defense

-Want of delivery of an incomplete instrument

An indorsement “Pay to A without recourse”. Sgd. B is a

-Qualified indorsement

One is not a condition to be a holder in due course

-That at the time it was negotiated to him it has no infirmity or defect in the title of the person negotiating it

In case of a qualified indorsement, which is not correct?

-At the time of his indorsement, the instrument is valid and subsisting

One of the following indorsement is a valid negotiation

-Pay to A and B P10,000

One who has signed the instrument as maker, drawer, acceptor, or indorser without receiving value thereof, and
for the purpose of lending his name to some other person is a (an)
-Accommodation party

Three of the following are warranties of a qualified indorser; which is not?

-Instrument is valid and subsisting

A issues a bill payable to the order of B. Later B, without indorsing the bill transfers for a consideration said
bill to C. As a result, one of the following is not correct.

-C is an assignee with the rights of a holder in due course

A personal defense may be used against

-Holder for value

An indorsement “Pay to A only” Sgd. B is a

-Restrictive indorsement

An indorsement payable to the order of A is indorsed by A by merely affixing his signature without specifying
the indorsee is a:

-Blank indorsement

An indorsement “Pay to A for collection only” Sgd.B is a

-Restrictive indorsement

One of the following is not a restrictive indorsement

-Payable to the indorsee where the indorser is not liable

I. If an authorized agent signs for and on behalf of his principal, the latter will be liable, as a rule
II. A person who signs a trade or assumed name will be liable to the same extent as if he had signed in his own
name

-True; True

A makes a note payable to bearer and delivers it to B. In turn, B negotiated it by mere delivery to C, who
indorses it specially to D. D negotiates it by special indorsement to E, who negotiates it to F by mere delivery.
A did not pay. One is not correct?

-F can hold B and C liable because they are parties prior to F

Maker makes a note payable to the order of payee. It is indorsed successively as follows:
1. Pay to A Sgd. Payee
2. Pay to B Sgd.A

3. Pay to C Sgd. B
4. Pay to D Sgd. C
5. Pay to B Sgd.D
6. Pay to E Sgd. B
Which of the following is not correct?

-The re-issue and further negotiation to E is not allowed because there is confusion when the instrument was
negotiated back to B

An instrument payable to the order of A bears the following indorsement at the back thereof: A, B, C and D.
The present holder is E. Which is correct?

-E may recover payment from any of said indorsers

A real defense may be used against

-Both A and B

A real defense

-Minority

An indorsement “Pay to A if he tops the CPA board exams”. Sgd. B is a

-Conditional indorsement

A makes a note payable to the order of B. The note is indorsed successively by B to C, C to D, D to E, and E to
F, the present holder. Suppose the note is dishonored in the hands of F, which of the following is correct?

-If F gives notice to E, E may notify B, C and D

An indorsement “Pay to A, notice of dishonor waived” Sgd. B is a

-Restrictive indorsement

An indorsement “Pay to A at his own risk” Sgd. B is a

-Qualified indorsement

A made a promissory note payable to the order of B. A delivered it to B who negotiated it to C. C indorsed the
note to D who is 16 years old. D indorsed it to E who later indorsed it to F, the holder. F presented the note to A
who dishonored the instrument. Which is correct?

-F can hold all indorsers liable except D

Which of the following is not correct in so far as the rights of a holder not in due course are concerned?

-He cannot recover on the instrument

An instrument which is originally negotiable ceases to be negotiable when

-Restrictively indorsed
Abnormal negotiable Instruments - Asssessment

A delivers to B a promissory note payable to the order of B without specifying the amount but A authorized B to
place the amount of P500 in the promissory note which was signed by A. B, in violation of the instruction of A
placed P5,000 as the amount payable. Later B indorsed the note to C. The holder C

-Cannot recover from A but can recover from B if he knows the defect

An indorsement “Pay to A only” Sgd. B is a

-Restrictive indorsement

A issued a negotiable promissory note to B with the amount in blank, but with authority given to B to fill up the
blank for P100,000. B filled it up for P400,000 and negotiated it to
C. If C is a holder in due course, he:

-Can collect P400,000 from A or P400,000 from B

A promissory note reads:

“ I promise to pay to the order of B P10,000, 30 days after date”. Sgd. A
A issued the promissory note to B who indorsed it to C. Then X stole the note from C, forged the signature of C
and negotiated it to D and D to E and E to F, the holder.
Questions
:Q1 : Can F collect from A on maturity?
Q2: If after giving the proper notice of dishonor to all the parties secondarily liable, can F collect from B?

-Both answers are correct

The following rules of construction apply where the language of the instrument is ambiguous or there are
omissions therein, except:

-Where the sum payable is expressed in words and also in figures and there is discrepancy between the two, the
sum denoted by the figures is the sum payable; but if the figures are ambiguous or uncertain, reference may be
had to the words to fix the amount.

A forged signature may transfer title if

-Unnecessary to one’s title as when a bearer instrument contains a forged indorsement.

An indorsement payable to the order of A is indorsed by A by merely affixing his signature without specifying
the indorsee is a:

-Blank indorsement

A promissory note reads:“ I promise to pay to the order of B P10,000, 30 days after date”. Sgd. A A issued the
promissory note to B who indorsed it to C. Then X stole the note from C, forged the signature of C and
negotiated it to D and D to E and E to F, the holder.
Questions:
Q1: Can F collect from C?
Q2: Against whom can F collect?
-Both answers are correct

A promissory note reads:

“ I promise to pay to the order of B P10,000, 30 days after date”. Sgd. A
A issued the promissory note to B who indorsed it to C. Then X stole the note from C, forged the signature of C
and negotiated it to D and D to E and E to F, the holder.
Questions
:Q1 : Can F collect from A on maturity?
Q2: If after giving the proper notice of dishonor to all the parties secondarily liable, can F collect from B?

-Both answers are correct

A executes a check drawn against XYZ bank and payable to the order of B. Later C, stole the check and forged
the endorsement of B. C deposited the check in ABC bank by way of savings deposits. When the check was
cleared, C withdrew the money from ABC bank. Who shall bear the loss?

-XYZ, because the indorsement of the payee was forged

Consideration of a Negotiable Instrument - Assessment

1. I. A buys a diamond for P50,000 for which A issued a check. The diamond turned out to be an ordinary
glass.II. B obtained the signature of C for autograph purpose. B wrote a promissory note above the signature,
then indorsed the note to E, a holder in due course

-Personal defense, real defense

A issued a negotiable promissory note to B. There was a total failure of consideration. B indorsed the note to
C, a holder in due course. C indorsed the note to D who knew of the failure of consideration. Which is correct?

-D may collect from A

A promissory note is indorsed to C who has knowledge of the illegal consideration between A, maker and B,
payee. Later C negotiates the note to D under circumstances which would make D a holder in due course. D in
turn indorses it to E and E back to C. Which is correct?

-C cannot be considered a holder in due course

Payment of Negotiable Instrument - Assessment

A promissory note reads:
“I promise to pay B P100,000. Sgd. A” B assigned the note to C, later Y stole the note from C. Which of the
following statements is correct?

-If A pays Y in good faith, A’s obligation is extinguished

A negotiable promissory note is given by A to B; B indorsed it to C; C to D and D to E. E negotiated back the

note to A. A re-negotiate the note to F. As a result:

-If A later on pays the instrument, he cannot go after B, D, C, E and F

A is induced through simple fraud (fraud in inducement) committed by B to issue a promissory note in favor of
B. B indorsed the note to C. C has notice of fraud but did not take part in it. C indorsed the note to D, a holder
in due course. D indorsed the note to E who knows how the note was obtained but without being a party to the
fraud. Which is correct?

-E is a holder in due course having derived his title from D, a holder in due course

The note reads as follows:

I promise to pay B or order P200,000, 30 days after date. Sgd. A. The above promissory note was issued by A
to B on Feb. 8, Year 2 for the Lancer car sold by B to A. A few days later, Feb.15, Year 2, A was deprived of
the car because it turned out to be a stolen car and the true owner was able to recover it from A. On Feb. 25,
Year 2, B negotiated the promissory note to C. Terms – 50% payable on Feb.25, Year 2 and the balance of
P100,000 payable on Feb.28, Year 2, C paid the P100,000 on Feb. 25, Year 2 as agreed upon. On Feb.27, Year
2, C learned of the unlawful consideration between A and B. Despite such knowledge, C paid the P100,000
balance on Feb. 28, Year 2. On maturity of the instrument:

-C can collect only the first P100,000 to A

Liabilities of Parties in a Negotiable Instrument - Assessment

When the person not otherwise a party to the instrument places thereon his signature in blank before delivery he
is liable as indorser, and
If the instrument is payable to the order of a third person,

-He is liable to the payee and to all subsequent parties

A executed a bill of exchange in favor of B or order for P10,000 and writes the name of A as drawer. Later B
negotiates the bill to C who presented the bill to D, the drawee who accepted the bill. Thereafter the bill was
negotiated by C to E. Which is correct?

-The drawee by accepting the bill is liable according to the tenor of his acceptance
When the person not otherwise a party to the instrument places thereon his signature in blank before delivery he
is liable as indorser, and
If he signs for accommodation of the payee

-He is liable to all parties subsequent to the payee

Which is not correct? The acceptor by accepting the instrument:

-Admits the existence of the indorsers, the genuineness of his signature and his capacity and authority to indorse
the instrument

Not primarily liable on the instrument

-Drawer of a bill

Statement I. If a bill of exchange is accepted at the instance of the holder, the drawers and indorsers are
discharged.Statement II. If a check is accepted at the instance of the holder, the drawers and indorsers are
discharged.

-True; True

When the person not otherwise a party to the instrument places thereon his signature in blank before delivery he
is liable as indorser, and
If the instrument is payable to the order of the maker or drawer, or its payable to bearer

-He is liable to all parties subsequent to the maker or drawer

When the person not otherwise a party to the instrument places thereon his signature in blank before delivery he
is liable as indorser, and
A issues a promissory note payable to the order of B. B indorsed it to C, then by C to D, By D to E, and by E to
F. In the hands of F, the note was dishonored by A. Which is not correct?

-F should notify only D, the latter may notify B, C or E

Alteration of Instuments - Assessment

A makes a note payable to the order of B. B indorses it to C. X obtains possession of the note fraudulently and
indorses it to D and D to E. Which of the following is not correct?

-E cannot enforce the note against D who derived his title through the forged signature of C which is wholly
inoperative

A delivers a promissory note to B for P3,000. B increases the amount to P8,000 and indorses the note to C and
by C to D. D took the note for value and satisfied the requirements of the holder in due course. Which is
correct?

-D can recover P3,000 from A and P5,000 from C

When a negotiable instrument which has been materially altered is in the hands of a holder in due course who is
not a party to the alteration

-He may enforce payment thereof according to its original tenor

Upon request of A, B makes a note to accommodate A. Then A indorses the note to C, when C presented the
note to B, the latter dishonor it. Which is correct?

-As an accommodation party, A will be liable even if notice of dishonor is not given to him.

Bill of Exchange - Assessment

Which of the following is not negotiable under the negotiable instruments law?

-Pay to P or order P20,000 (Sgd. J) To: C – Accepted if P tops the CPA board exams

Where the drawee to whom a bill is derived for acceptance destroys the same, or refuses within 24 hours after
such delivery, or within such other period as the holder may allow, to return the bill accepted or not accepted to
the holder, he will be deemed to have

-Accepted the bill

The holder of the bill presenting the same for acceptance may require that the acceptance be written on the bill
and if such request is refused may treat the bill as:

-Dishonored

Statement No. 1: Where to show displeasure over a bill of exchange addressed to him, the drawee destroys the
same, under the law he is deemed to have accepted it.
Statement No. 2: Where the drawer and drawee are the same person, the bill of exchange can be regarded as a
promissory note.

-Both statements are true

A bill which is, or on its face purports to be both drawn and payable within the Philippines is a (an)

-Inland bill

Which of the following is not a characteristic of a bill of exchange?

-Drawer is primarily liable

A bill drawn by A against B with C, D, E, and F as successive indorsers is presented by the holder G for
acceptance to B who dishonor it and G has the bill protested for non-acceptance. If the bill is accepted by X
with the consent of G for the honor of E, X will not
-Be liable to A, C, D and E

A draws a bill payable to B or order with C as the drawee and D, E, F and G as successive indorsers and H as
holder. C did not pay and H has duly protested for non-payment and X offers to pay supra protest for the honor
of F while Y for D.
If H refuses to receive payment supra protest from Y for the honor of D, H loses his right or recourse against,
except:

-D

Statement I. Instruments falling due or becoming payable on Saturday are to be presented for payment, at the
option of the holder, on the next succeeding business day or before 12:00 noon on Saturday when the entire day
is not a holiday
Statement II. A waiver of protest, whether in the case of a foreign bill of exchange or other negotiable
instruments is deemed to be a waiver only of a formal protest and not of presentment and notice of dishonor.

-False; False

Which is not the effect of certification of a check?

-It discharges person secondarily liable regardless of who procured the certification

Check as distinguished from bill of exchange

-Need not be presented for acceptance

After presentment, the drawee should decide whether or not he will accept the bill within

-24 hours

The party named by the drawer in his bill or by an indorser in his indorsement against whom the holder may
collect in case the bill is dishonored by non-acceptance or non-payment is

-Referee in case of need

who shall be given preference

-Y as his payment will discharge most parties

After presentment, the drawee should decide whether or not he will accept the bill, if acceptance is given, the
instrument is deemed accepted:

-Upon presentation

A bill of exchange drawn on a bank and payable on demand

-Check

Where in a bill the drawer and the drawee are the same person or where the drawee is a fictitious person, or a
person not having capacity to contract, the holder at his option may treat the instrument as
-Promissory note

Payment for honor as distinguished from acceptance for honor

-The protest is for dishonor by non-payment

Which of the following is not allowed

-2 drawees as C or D

A issued a negotiable promissory note to B or order P100,000. B altered it to P400,000 and indorsed it to C. If
C is a holder in due course, he:

-Can collect P100,000 from A and P300,000 from B

An acceptance which reads- Accepted, payable at the Philippine National Bank is a

-Qualified acceptance

This is not allowed

-Pay to the order of A and B P10,000 To C or D Sgd. E

Accepted, if Dave tops the CPA board examination is

-Qualified acceptance

Maturity of an undated negotiable instrument issued payable 60 days after sight is computed from

-Date of first presentation for acceptance

Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable
certainty. This requirement is applicable to?

-Bills of exchange but not promissory notes

LAW ON BUSINESS ASSOCIATIONS

Nature and as distinguished from corporation - Assessment

The following except one, are common characteristics of partnership and corporation. Which is the exception?

-The individuals composing both organizations have little voice in the conduct of the business.

The following except one, are common characteristics of partnership and corporation. Which is the exception?

-The individuals composing both organizations have little voice in the conduct of the business.

Which of the following is not a requisite prescribed by law in order that the partnership may be held liable to a
third party for the acts of one of the partners.

-The partner must have the authority to bind the partnership.

Elements and kinds

Partner who is both a secret and silent partner

-Dormant

Partner who is liable beyond the extent of his contribution

-General

May contributed money, property or industry to the common fund

-General partner

Partner whose connection with the firm is concealed or kept a secret

-Secret

May be required to make additional contribution in case of imminent loss:

-Capitalist partner

May contribute money, property or industry to a common fund.

-General partner

Partner who is liable only to the extent of his contribution

-Limited

A partner in a partnership who is not really a partner not being a party to the partnership agreement but is made
liable as a partner for the protection of innocent third persons is known as:

-Partner by estoppel
Partner who is not really a partner but who may become liable as such insofar as third persons are concerned

-Ostensible

Partner who winds up the affairs of the firm after it has been dissolved

-Liquidating

Partner who contributes both capital and industry

-Capitalist-industrial

Partner whose connection with the firm is known to the public

-Ostensible

May contribute money, property or industry to the common fund

-General partner

1st Statement - A corporation cannot enter into a partnership contract with natural person but with a juridical
person it can.
2nd Statement - A general partner is always the capitalist in a limited partnership.

-Both statements are false

The following are disqualified to form a universal partnership, except one:

-Brother and sister

Partner who manage actively the firm’s affairs

-Managing

The following are instances, except one, when a partnership is unlawful. Which is the exception?

-A partnership formed for the purpose of buying lands.

Partner who does not participate in the management though he shares in the profits or losses

-Silent

Formalities required - Assessment

A partnership which must be in public instrument to be valid is:

-Contribution immovables or real rights therein regardless of the value thereof.

Spouses A and B formed a limited partnership to engage in real estate business and A contributed P1M only. Is
the partnership between the spouses valid?
-The partnership is valid because spouses are prohibited to enter into a universal partnership only.

1st Statement - Co-ownership or co-possession does not in itself establish a partnership, except when such co-
owners or co-possession share in the profits made by the use of the property.
2nd Statement - The sharing of gross returns does not of itself established a partnership, except when the
persons sharing them have a joint or common right or interest in any property from which the returns are
derived.

-both statement are false

1st Statement - Every partner may associate another person with him in his share, but the associated shall not be
admitted in the partnership without the consent of all the other partners, even if the partner having an associate
should be a manager.
2nd Statement - Articles of universal partnership, entered into without specification of its nature, only constitute
universal partnership of profits.

-both statement are true

Which of the following persons are not disqualified to form a universal partnership?

-Brother and sister

A partnership which comprises all that the partners may acquire by their work or industry during the existence
of the partnership is:

-Universal partnership of profits

A and B orally entered into a partnership with each of them contributing P3, 000.00 each and some personal
properties in the amount of P1, 000.00 each. The partnership contract is:

-Valid

1st Statement -A person who represents himself as a partner, when in fact he is not, shall be liable as a partner
by estoppel even if third person has knowledge that he is not.
2nd Statement -A partnership is always created by agreement of the parties

-First is false, second is true

1st Statement - The receipt by a person of a share of the profits of a business is conclusive evidence that he is a
partner in the business
2nd Statement - A partnership of all present property is where the partner contribute all the property which
actually belong to them to a common fund, with the intention of dividing the same among themselves, as well as
all the profits which they may acquire therewith.

-only the second is true

A and B orally agreed to form a partnership two years from today, each one to contribute P10, 000.00. At the
arrival of the said date, if one refuses to go ahead with the agreement, can the other enforce the agreement?

-No, because the agreement was merely oral.

A, B and C are general partners in ABC partnership. G is debtor to the partnership in the amount of P15, 000. A
received from the debtor G the sum of P5, 000 and issued a receipt identifying the amount collected as P5, 000.

-A cannot be compelled to share the P5, 000 with B and C.

1st Statement -A universal partnership entered into without designation is considered one of profits.
2nd Statement -A limited partner’s surname cannot appear in the partnership name if it is also the surname of a
general partner to prevent misrepresentation to third persons.

-First is true, second is false

1st Statement - In a universal partnership of all present property, the property which belong to each of the
partners at the time of constitution of the partnership becomes a common fund of all partners and all profits
which they may acquired therewith. A stipulation for the common enjoyment of any profits may also be made.
But properties which they may acquired through inheritance, legacy, or donation cannot be included in such
stipulation, except the fruits thereof.
2nd Statement -The universal partnership of profits comprises all that the partners may acquire by industry or
work during the existence of the partnership. Movable or immovable property which each may possess at the
time of the celebration of the contract shall continue to pertain exclusively to each, only the usufruct passing to
the partnership.

-both statement are true

1st Statement -If a person shares in the gross returns by the use of a property he is deemed to be a partner.
2nd Statement -If co-owners shared in the profits derived from the use of the property owned in common, there
is partnership.

-Both are false

The common property of a universal partnership shall be

-All the properties which belongs to each of the partners at the time of the constitution of the partnership as well
as the profits which they may accrue.

B and Y orally agreed to form a partnership. Each contributed cash and properties worth P10, 000 to common
fund. But they did not register the partnership with the Securities and Exchange Commission.

-The partnership is still valid

Which of the following statements is not correct?

-A partnership contract is not covered by the Statute of Frauds

Which of the following is not correct?

-A- service (Ltd.); B – cash (Gen.);

C – service (Gen)

1st Statement -If a person receives a share in the profits of a business, he is a prima facie presumed to be a
partner in business.
2nd Statement -In partnership there is agency, co-ownership and co-possession of partnership property.
-First is true, second is false

Rules of management - Assessment

A is a capitalist partner and B the industrial one. B engages in business on his own account but different from
that of the partnership.

-B may be excluded from the partnership with damages.

A is a capitalist partner and B the industrial one. A engaged personally in the same kind of business as that of
the partnership:

-If there are profits, A shall give them to the partnership.

A is the managing partner of A and B company. X is indebted to A for P20, 000 and the partnership for P60,
000. When both debts mature, X pays A P20, 000 and the latter issues a receipt for his personal credit. The
payment for P20, 000 shall be applied:

-¼ in favor of A and ¾ in favor of partnership.

W, X, Y and Z organized a general partnership with W and X as industrial partners and Y and Z as capitalist
partners. Y contributed P.5 M and Z contributed P.2 M to the common fund. By a vote of the partners, W and X
were appointed managing partners, without specification of their duties and powers. A applied as secretary and
B applied as accountant of the partnership. Suppose the hiring of B was decided upon by W and Z, but was
opposed by X and Y, whose decision shall prevail?

-The decision of X and Y because in case of tie in the decision of managing partners, that of the controlling
interest shall prevail.

W, X, Y and Z organized a general partnership with W and X as industrial partners and Y and Z as capitalist
partners. Y contributed P.5 M and Z contributed P.2 M to the common fund. By a vote of the partners, W and X
were appointed managing partners, without specification of their duties and powers. A applied as secretary and
B applied as accountant of the partnership. The hiring of A was decided upon by W and X but was opposed by
Y and Z. Whose decision shall prevail?

-The decision of W and X shall prevail because the hiring is an act of management and as managers they can do
so.

Distribution of profits and losses - Assessment

Suppose instead of profit, the partnership suffered loss in the same amount of P21,000.00 the share of the
capitalist partners in the loss shall be:
-In proportion to their capital contribution.

C and P are capitalist partners while I is industrial partner. There is no agreement as to the profits and losses.
The partnership realized profit in the amount of P21, 000.00.
How much is the share in profit of I?

-Just and equitable under the circumstances.

A, B and C are partners contributed the following: A - P6, 000.00; B – P4, 000.00; and C – service. No
agreement was made as to the sharing of profits and losses. How shall the loss of P10, 000.00 be distributed?

-A – P6, 000.00; B – P4, 000.00; C – none

A, B and C are partners contributed the following: A - P6, 000.00; B – P4, 000.00; and C – service. They agreed
that the profits and losses shall be distributed as follows to wit: A – 35%; B- 25% and C – 40%. How shall the
profit of P10, 000.00 be distributed?

-A – P3, 500.00; B – P2, 500.00; C – P4, 000.00

A, B and C are partners contributed the following: A - P6, 000.00; B – P4, 000.00; and C – service. No
agreement was made as to the sharing of profits and losses. How shall the profit of P10, 000.00 be distributed?

-A – P6, 000.00; B – P4, 0000.00; C – just

C and P are capitalist partners while I is industrial partner, who in addition to his services also contributed
capital to the partnership. There is no agreement as to the profits and losses. The partnership realized profit in
the amount of P21, 000.00. The share of I in the profits shall be:

-Pro rata to his contributed capital.

A, B and C are partners contributed the following: A - P6, 000.00; B – P4, 000.00; and C – service. They agreed
that the profits and losses shall be distributed as follows to wit: A – 35%; B- 25% and C – 40%. How shall the
loss of P10, 000.00 be distributed?

-A – P3, 500.00; B – P2, 500.00; C – P4, 000.00

A, B and C are partners in partnership “DA KING RAYMOND” to engage in buy and sell of carabao milk. A
and B contributed P10, 000.00 each while C contributed his service. After payment of the partnership liabilities
to creditors, only P6, 000.00 remains. In the absence of stipulation to the contrary the share of C shall be:

-Nothing

X and Y are capitalist partners while Z is industrial partner. There is no agreement as to the profits and losses.
The partnership realized a loss of P21,000.00.
How much is the share in the loss of Z?

-None, he being an industrial partner.

Sharing of losses and liabilities - Assessment

F, G, H and I are partners. They contributed capital as follows: F – P5, 000; G – P30, 000; H – P20,000; and I as
the industrial partner, his services. The partnership obligation to outsiders exceeds the total net assets by P18,
000.Who and by how much will the partners be liable for the payment of the P18,000?

-F – P4,500; G – P 4,500; H – P4, 500; I P4, 500

A and B are capitalist partners while C is an industrial partner. Both A and B equally contributed P15, 000.00 to
each to the capital. A contractual liability in favor of X was incurred in the amount of P40, 000.00. After the
exhausting partnership assets there is a balance recoverable from:

-A, B and C and C can get reimbursement from A and B.

A, B and C are partners who contributed equally to the capital. D without the knowledge of the death of C
contracted with A who also was unaware of the death of C. The liability of A is P90,000.00. How much can D
collect after exhausting partnership assets in the amount of P60,000.00.

-P10, 000.00 from each of A and B and P10, 000.00 from C’s estate.

A and B are partners engaging in the humble business of merchandising. On January 15, Year 5 when the total
obligation of the partnership totals P80, 000, Raymond was admitted as new smiling face partner with or
without reason who secretly promised to himself that the partnership will maximize profit up to nine digits. At
the time of Raymond’s admission, the partnership creditors were M for P50, 0000 and N for P30, 000. After
January 15, Year 5, the partnership borrowed from O, P20, 000 and P40,000 from P. On June 15, Year 5, the
partnership becomes terribly insolvent despite the presence of the promising new partner whose promises were
made to be broken leaving an obligation totaling to P140,000 and the partnership assets amounting to P30, 000.
The creditors are going after the separate properties of the partners to satisfy their remaining claims. How are
the creditors’ claims satisfied?
Statement 1 – M and N can go after the separate properties of A and B but Raymond’s separate properties are
not answerable to their claims.
Statement 2 – O and P can go after the separate properties of A, B and Raymond.

-Both answers are correct.

Suppose instead of profit, the partnership suffered loss in the same amount of P21, 000.00 the share of the
capitalist partners in the loss shall be:

-In proportion to their capital contribution.

A, B and C formed the partnership with A as general partner, B as limited partner and C as industrial partner. A
and B contributed P50, 000 each. The partnership failed and after disposing all its assets to pay partnership debts
there still remains a note payable in the sum of P 30, 000.00

-Only A is liable to pay P30, 000 indebtedness.

With still the same facts, as industrial partner, the share of I in the loss shall be:

-None, he being an industrial partner.

A and B are capitalist partners while C is an industrial partner. Both A and B equally contributed P15, 000.00 to
each to the capital. A contractual liability in favor of X was incurred in the amount of P40, 000.00.
Suppose A, B and C agreed that one of them shall not be liable to the creditors, is the agreement valid?

-It shall be void insofar as the creditors are concerned.

A, B and Raymundu are equal partners in X partnership. On April 29, 2010, After incurring unexpected heavy
losses like several mountains that fall on the little and tiny partnership, partner Raymundu died after walking
and crying not only a river but an ocean on the lonely road of broken dreams. Not knowing that Raymundu died,
on May 1, 2010 A feeling alone contracted a liability to D who also does not know of the death of Raymundu,
the liability is P90, 000. After D exhausted the net assets of X partnership in the amount of P60, 000, he can
collect:

-P10, 000 from estate of Raymundu; P10, 000 from A; P10, 000 from B

Partnership assets and liabilities are as follows:

12/31/20Y2 12/31/20Y1
Assets P 200, 000 P 50,000
Liabilities 100, 000 200, 000
Capital
A P50, 000 P50, 000
B 100, 000 150, 000
A and B, general partners, have fully paid their capital contributions. What is the remedy of creditor C?

-Collect partnership liability from A and B capital contributions (including personal assets)
A partnership is dissolved, except:

-Partnership business can only be carried on at a loss.

X, Y and Z are partners and contributed to the partnership P40, 000. P30, 000and services, respectively. The
partnership was later liquidated and after payment of the partnership indebtedness, only P20, 000 worth of assets
remained. How much is the share of Z?

-Zero

XYZ partnership composed of three (3) capitalist partners and one industrial partner suffered business losses. Its
remaining assets amounting to P100,000. The partnership is indebted to its supplier C in the amount of
P160,000. How can C recover the 160,000?

-C can recover from the partnership P100,000 and the balance of P60,000 from the four (4) partners jointly
including the industrial partner.

A and B are capitalist partners with C as industrial partner. A and B contributed P20, 000 each to the capital of
the partnership. A contractual liability of P50, 000 was incurred by the partnership in favour of REX. The assets
of the partnership has been exhausted still leaving an unpaid liability of P12, 000. What are the rights and
obligation of the partner if any?

-A, B and C are liable to REX and C after giving his share may ask reimbursement from A and B, unless
otherwise stipulated.
Modes and retirement requirements - Assessment

One of the following incidents as a cause for involuntary dissolution of the partnership,

-Insolvency of a partner.

1st Statement -After dissolution, the partners can still enter into new business transactions in the name of the
dissolved partnership although not for the purpose of winding up partnership affairs.
2nd Statement - Insanity of either general or limited partner in a limited partnership shall dissolve the
partnership.

-Both statements are false

Limited partnership - Assessment

A limited partner shall be liable as general partner unless:

-He renounces his share in the profits after knowledge of the error that he was made a general partner.

Partner who is liable only to the extent of his contribution

-Limited

Obligations of the Partners - Assessment

1st Statement - The partnership shall be bound in the contract entered into by the partner who has no authority
provided the third person is in good faith although the act of the partner is not in usual way of business.
2nd Statement - The partner’s acts although not in the usual way of conducting the business shall bind the
partnership provided he was authorized by his co-partners.

-First is false, second is true

A and B are partners of X partnership. A is the managing partner. E owes A P10, 000 and X partnership P30,
000. The obligations of E are both due. A collected from E the debt of E to A in the amount of P10, 000 and
issued a receipt in the name of A.

-P2, 500 to debt of E to A and P7, 500 to debt of E to the partnership.

X, Y and Z are partners who contributed equally to the capital of the partnership. A owes the partnership P9,
000.00. Z collected from A P3, 000.00 before X and Y could receive anything from A, who later became
insolvent and therefore, they could not collect their shares.
-Partner Z shall share the P3, 000.00 with his co-partners X and Y.

A and B are partners with A as the managing partner. C owes A P10,000.00 and the partnership P30,000.00
which are now both due. A issued a receipt for the payment of C in the amount of P10, 000.00 in his own name.
The payment shall be applied to:

-The payments shall be applied proportionately to both credits.

A and B are partners in a real estate business. The partnership owns a parcel of land which C desires to buy. C
contacted A and informed him of his intention to buy the said land. A did not tell B such intention of C. A
bought B out of the partnership and afterwards sold the land to C at a profit.

-A is liable to B for his share in the profits.

1st Statement - The partners are liable to third persons jointly or equally for torts or quasi-delict committed by
any partner in the conduct of the business or with authority of the partners.
2nd Statement - For contractual liability, their liability shall be solidary and all partners are liable.

-Both are false statements

A is the managing partner of A and B company. X is indebted to A for P20,000 and the partnership for P60,000.
When both debts mature, X pays A P20,000 and the latter issues a receipt for his personal credit. The payment
for P20,000 shall be applied:

-¼ in favor of A and ¾ in favor of partnership.

A limited partner shall be liable as general partner unless:

-He renounces his share in the profits after knowledge of the error that he was made a general partner.

Property Rights of the Partners - Assessment

A, B, and C are general partners in the merchandising firm. Having contributed equal amounts to the capital,
they also agreed on equal distribution of whatever profit is realized per fiscal period. After two years of
operation however, C conveys her whole interest in the partnership to D, without knowledge and consent of A
and B.
Based on the preceding facts:

-D cannot inspect the books nor copy them for any information on the partnership affairs as a partner can.

A, B, and C are general partners in the merchandising firm. Having contributed equal amounts to the capital,
they also agreed on equal distribution of whatever profit is realized per fiscal period. After two years of
operation however, C conveys her whole interest in the partnership to D, without knowledge and consent of A
and B.
Based on the preceding facts:
-If A and B want to dissolve the partnership, C as a partner need not consent thereto because he had assigned his
interest to D.

Which of the following is incorrect?

-A capitalist partner may engage in the same line of business as that of the partnership.

A, B, and C are general partners in the merchandising firm. Having contributed equal amounts to the capital,
they also agreed on equal distribution of whatever profit is realized per fiscal period. After two years of
operation however, C conveys her whole interest in the partnership to D, without knowledge and consent of A
and B. Is the partnership dissolved?

-The partnership is not dissolved because the conveyance of a partner’s interest in the partnership does not of
itself dissolve the partnership.

Three of the following are property rights of a partner. Which is not?

-Right to demand formal accounting of partnership affairs.

1st Statement -A partner’s interest in the partnership is not assignable unless the other partners consent.
2nd Statement - An act of strict dominion may be performed by a partner without the consent of his co-partners
if it is advantageous to the partnership.

-Both statements are false

Liability of Partners to Third Persons - Assessment

A, B and C are partners in “RAY MOON” Company to engage in the sale of beer under the full moon on
summer days even in cases of conflagration and very very hot coffee on rainy days even in case of inundation.
D represented himself as a partner in the partnership to E who, on the belief of such representation, extended
credit of P50, 000.00 to the partnership. Assuming only B and C consented to such representation, who shall be
liable to E?

-All of A, B, C, and D are liable because of partnership liability for the credit extended to the partnership by E.

Which of the following is not a requisite prescribed by law in order that the partnership may be held liable to a
third party for the acts of one of the partners.

-The partner must have the authority to bind the partnership.

1st Statement -A partnership contract begins from the moment of the execution of the contract unless it is
otherwise stipulated
2nd Statement -Even if a third person is in good faith, the partnership is not bound in the contract entered into
by a partner after the dissolution of the partnership if the business of the partnership has become unlawful.

-Both are true

X, Y and Z are partners in Ace & Co. W represented himself as a partner in the said partnership to A, who on
the faith of such representation, granted P1M loan to the partnership. Assuming only X and Y consented to such
representation, who shall be liable to A?

-Since the loan was extended to the partnership, all the partners and W are liable.

Dissolution of Partnership - Assessment

A, B and C are partners in a partnership engaged in retail with each contributing P20,000.00 each. D is admitted
as a new partner with a contribution of P8,000.00. At the time of his admission, the partnership has a pre-
existing obligation to E in the amount of P80, 000.00.

-D is liable up to his capital contribution.

This is the order of priority in general partnership liabilities:

-Outside creditors, creditor partner, partner’s capital, partner’s profit.

Which of the following incidents may be a cause for involuntary dissolution of a partnership?

-Insolvency of any partner

A limited partnership formed in 2004 by Raymondo as general partner and Zeus and Sharryl as limited partners.
In 2005, Raymondo and Sharryl got married. Did the marriage dissolve or change the form of the partnership?
1st answer – yes, partnership is dissolved by the marriage because there is a change in equity and status among
the partners.
2nd answer – no, because spouses can enter into a universal partnership.

-Both answers are wrong

1st Statement -A universal partnership of present property shall include the profits which the partners may
acquire therewith such as properties to be acquired through legacy, donation or inheritance.
2nd Statement -After dissolution, the partners may still enter into contracts in the name of the dissolved
partnership if it is for the purposes of winding up.

-First statement is false, second is true

If a partner is insolvent, the first in the order of preference is:

-Separate creditors of the partner.

A, B and C are partners in a joint venture engaged in real estate and land development. A without the knowledge
of B and C offered to sell to D all the remaining unsold lots at a price very much higher than the prevailing
market prices. Later, A bought out B and C from the partnership and thereafter finally sold the lots at a very
high profit.
1st conclusion – When A bought out B and C from the partnership, the partnership was dissolved so B and C
have no more share in the profit of the sale.
2nd conclusion – The sale of the lots between A and D is void because it was without the knowledge and
consent of B and C.

-Both conclusions are wrong

Which of the following liabilities of the partnership shall rank 1st in the order of payment?

-Those owing to creditors other than partners.

1st Statement - After dissolution, the partners can still enter into new business transactions in the name of the
dissolved partnership although not for the purpose of winding up partnership affairs.
2nd Statement - Insanity of either general or limited partner in a limited partnership shall dissolve the
partnership.

-Both statements are false

If a partner is insolvent, the first in the order of preference in the distribution of his assets is:

-Separate creditors of the debtor

1st Statement -A general partnership is dissolved by the insanity of a partner.

2nd Statement -A limited partnership is dissolved by the insanity of a limited partner

-Both statements are false

1st Statement -The death, insanity, retirement, insolvency or civil interdiction of a limited partner does not
dissolve the partnership.
2nd Statement -In a general partnership, the fact that the business can only be carried on at a loss does not result
in the dissolution of the partnership.

-Both are true

Nature and classes of corporation - Assessment

Which of the following is not a requisite for a close corporation?

-That no close corporation is a stockholder thereof owning at least 2/3 of the voting stocks.
One established for charitable purposes

-Corporation sole

A corporation created in strict compliance with all the legal requirements and whose right to exist as a
corporation cannot be successfully attacked in a direct proceeding for that purpose by the State is?

-De jure corporation

Under this theory, the nationality of the corporation is that of the country whose law it was formed
-Incorporation test

One organized for a purpose other than for religion

-Lay corporation

A corporate doctrine which the stockholders are not personally liable for corporate debts?

-Separate legal entity

A corporation created in strict compliance with all the legal requirements and whose right to exist as a
corporation cannot be successfully attacked in a direct proceeding for that purpose by the State is?

-De jure corporation

Corporations begin to have corporate existence and juridical personality

-From the date of the issuance of the certificate of incorporation by the SEC under its official seal

A corporation existing in fact but not in law

-De facto corporation

Corporators in a stock corporation

-Stockholders

Persons who have agreed to take and pay for original unissued shares of a corporation formed or to be formed

-Subscribers

A corporation

-All of the above

One which is limited to selected persons or members of a family

-Close corporation

A corporation in fact and in law

-De jure corporation

The right of this corporation to exist as such is not subject to collateral attack by private individuals but subject
to direct attack by the State –

-De facto corporation

Corporations as distinguished from partnerships

-no dissolution in case of death, withdrawal or resignation of an owner

The right of a corporation to exist as juridical person during its term as stated in the articles of incorporation
despite the death of any of its stockholders is?

-Right of redemption.

One which is so related to another corporation that the majority of its directors can be elected by such other
corporation

-Subsidiary corporation

Which of the following is the disadvantage of forming a corporation?

-The shareholders are not liable for the debts of the business;

All of this corporation’s issued stock of all classes exclusively of treasury shares shall be held of record by not
more than twenty (20) persons

-private educational corporation

A religious corporation which consists of one member only or his successors

-Corporation sole

Private corporations have the following attributes, except:

-Its may be formed, organized and existing under a special law or charter.

One incorporated under the laws of the Philippines

-Domestic corporation

The following are corporate acts in which a stockholder of a corporation shall have the right to dissent and
demand payment of the fair value of his shares of stock, except one?

-In case of an amendment of the articles of incorporation which has the effect of changing or restricting the
rights of any stockholder;

Statement 1 - The declaration of dividends out of the capital and not surplus profits is violation of the doctrine
of piercing the veil of corporate fiction.
Statement 2 - When the corporation is used as an alter ego or conduit to avoid the performance of an obligation
is violation of the trust fund doctrine.

-Both statements are false.

When a corporation is used to defeat public convenience, justify wrong, protect fraud, or defend crime or made
as a shield to confuse the legitimate issues or where a corporation is a mere alter ego or business conduit of a
person, this doctrine applies

-Doctrine of piercing the veil of corporate fiction

Incorporation and organization of Private Corporation - Assessment

Persons who bring about or cause to bring about the formation and organization of a corporation by bringing
together the persons interested in the enterprise

-Promoters

One who has agreed to take stock from the corporation on the original issue of such stock is called

-Subscribers

The assets of the corporation as represented by its capital stock are to be maintained unimpaired that there can
be no distribution of such assets among the stockholders without provision being first made for the payment of
corporate debts

-Trust fund doctrine

Private corporations have the following attributes, except:

-Its may be formed, organized and existing under a special law or charter.

Jessa Jane Corp. has a total 1,000 delinquent shares at P10 par value, to be sold at public auction sale. Total
amount recoverable includes: total amount of the 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?

-G, who is willing to pay the P15,000 at 900 shares;

Which of the following conditions will allow corporate formation and S.E.C. registration?
(1) Authorized Capital
(2) Subscribed Capital
(3) Paid-up Capital

-(1) P60,000.00; (2) P15,000.00; (3) P6,000.00

Shares without par value may not be issued for a consideration

-Less than P5 per share

Incorporators of a corporation:

-All of the above

Watered stock is share of stock issued by a corporation for a consideration less than its par or issued value or for
a consideration in any form other than cash, valued in excess of its par value. In this regard?

-The agreement that it shall be paid for less than its par value is illegal and void and cannot be enforced;

The following are the qualifications of incorporators. Choose the exception:

-Majority of whom must be Filipinos.

One of the following is a ground for the suspension or revocation of the certificate of incorporation by the
S.E.C.

-If the corporation has commenced its business transaction and afterwards ceased operations continuously for a
period of at least 5 years;

The Corporation Code requires that;

-At least a majority of the directors are residents of the Philippines;

If the authorized capital stock is P60,000, divided into 600 shares with par value of P100 per share. If P15,000
has been subscribed, the minimum paid-up should be

-P5,000

A private corporation organized under the corporation law commences to have corporate existence and juridical
personality and its deemed incorporated from:

-From the date the SEC issues a certificate of incorporation under its official seal.

The corporation shall be deemed dissolved and its corporate powers cease, if from the date of its incorporation,
it does not formally organize and commence the transaction of its business or the construction of its works
within

-2 years

Which of the following will qualify as an incorporator in a corporation?

-Foreigner.

Unless sooner dissolved or extended, the life of a corporation may be for a period not exceeding

-Fifty years

Issued to those who in some way interested to the company, for incorporating the company, for services
rendered in launching the welfare of the company

-Promotion stock

The articles of incorporation differ from the by-laws in that the articles of incorporation is:

-A condition precedent in the acquisition by a corporation of a juridical personality

Majority of the following must be residents of the Philippines, except:

-Officers

The following are ways of enforcing payment of unpaid subscription, which is the exception?

-Sale at public auction of delinquent stocks;

If the corporation has commenced the transaction of its business, the corporate franchise or certificate of
incorporation may be suspended or revoked, if it subsequently becomes continuously inoperative for a period of
at least

-5 years

One of the following is a ground for the suspension or revocation of the certificate of incorporation by the
S.E.C.

-If the corporation fails to commence and start to operate and the failure is due to a cause beyond its control;

Which of these conditions comply with the minimum requirements of law to corporate formation?
(1) Authorized Capital
(2) Subscribed Capital
(3) Paid-up Capital

-(1) 100,000; (2) 25,000; (3) 12,500

Amount equal to the aggregate par value or issued value of the outstanding capital stock

-Legal Capital

Based on the provisions of the Corporation Code of the Philippines, the following will qualify to corporate
formation and registration with the Securities and Exchange Commission.
(1) Authorized Capital
(2) Subscribed Capital
(3) Paid in Capital

-(1) P200,000; (2) P100,000; (3) P50,000

Corporate dissolution may take place by voluntary inaction which will result in the cessation of its corporate
powers and the corporation shall be deemed dissolved. Such voluntary inaction may result from?

-Inaction of the corporation through its failure to formally organized and commence with the transaction or its
business or the construction of its work within two (2) years from the date of its incorporation;

If the authorized capital stock is P60,000, divided into 600 shares with par value of P100 per share and P40,000
has been subscribed, the minimum paid-up should be

-P10,000

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 that must be paid is?

-P50,000 or 500 shares

Powers of a corporation - Assessment

(1) A foreign corporation doing business in the Philippines without a license may be sued but it cannot sue.
(2) A written demand for payment of the fair value of the shares made in the exercise of the appraisal right will
suspend the stockholder’s rights.

-Both are true.

A written promise to pay the money loaned, but ordinarily-it has no specific fund or property as security for the
payment is called

-Debenture bond

The following are not only express powers of the corporation but also inherent powers, EXCEPT:

-None of the above

A corporation has only such powers as are expressly granted and those that are necessarily implied from those
expressly granted or those which are incidental to its existence

-Doctrine of limited capacity

A corporation has only such powers as are expressly granted and those that are necessarily implied from those
expressly granted or those which are incidental to its existence

-Doctrine of limited capacity

A written promise to pay the money loaned, but ordinarily-it has no specific fund or property as security for the
payment is called

-Debenture bond

Ultra vires acts:

-All of the above

Board of Directors / Corporate Officers - Assessment

At the annual meeting of CERTS Inc. (the creator of the first and leading online learning platform in the
Philippines) for the election of five directors, A, B, C, D, E, F and G were nominated. A, B, C, D and E received
the highest number of votes and proclaimed elected. F received ten votes less than E. Subsequently, E sold all
his share to F. The transfer of shares having been registered with the corporation.
Who between E and F has the right to attend as director in the board meeting?
-Neither of them shall be director.

Statement 1 - The doctrine of corporate opportunity rests on the unfairness of an officer or director of a
corporation taking advantage of an opportunity for his own personal benefit adverse to the corporation.
Statement 2 - The by-laws must be filed with the SEC for the corporation to acquire juridical personality.

-First is true, second is false.

A, B, C, D, E, F and G are the duly elected directors for Year 2 of CRAB Corporation whose article of
incorporation provide for 7 directors. On August 1, Year 2, Directors A, B, C, D and E met to fill the two
vacancies in the board brought about by the valid removal of F for disloyalty to the corporation and the death of
G. In the said meeting, the remaining directors voted for X to replace F, and Y, a son of G, to replace his father.
Both X and Y are owners of at least one share of stock of the corporation. The election of X and Y by the
remaining directors:

-Not valid with respect to X, valid with respect to Y

A shareholders’ option to subscribe to allotment of shares in proportion to his holding of outstanding shares,
before new shares are offered to others

-Pre-emptive right

In a corporation, two or more positions may be held concurrently by the same person, except that no person
shall act as?

-Secretary and treasurer;

Which of the following qualifications is necessary in order that one may be elected secretary of the corporation?

-He must be a citizen and a resident of the Philippines.

The executive committee cannot act on this matter except:

-Board resolution on depository bank of the corporation.

In no case shall the total yearly compensation of directors, as such directors, exceed

-10% of the net income before income tax during the preceding year

May rightfully question an ultra-vires act of a corporation, except

-Competitors

If the remaining directors constitute a quorum, they can fill up the vacancy

-In case of abandonment of a director

Majority of the following must residents of the Philippines, except:

-Officers
The board of directors of a corporation consists of nine (9) members, where two (2) were removed and two (2)
have resigned, who fills up the vacancy?
First answer – the remaining members of the Board
Second answer – the stockholders

-Both answers are false

A corporate officer or director cannot, take advantage for their personal benefit a business opportunity which the
corporation is financially able to undertake.

-Doctrine of corporate opportunity

The board of directors of a corporation consists of nine (9) members, where two (2) were removed and three (3)
have resigned, who fills up the vacancy?
First answer – the remaining members of the Board
Second answer – the stockholders

-Only the second answer is true

The following are qualifications of corporate directors, except?

-Must own at least one share of stock;

Classes of stocks - Assessment

A certificate of stock is distinguished from a share of stock in that a share of stock

-Is one of the units into which the capital stock is divided

Delinquent stocks are:

-Entitled to dividends

A certificate of stock is distinguished from a share of stock in that a share of stock

-Is one of the units into which the capital stock is divided

The following may be the consideration of the shares of stock of a corporation, except

-Services to be performed by a lawyer on the proposed increased in capital stock of the corporation

Watered stocks are shares of stock issued by a corporation for a consideration less than its par or issued value or
for a consideration in any form other than cash, valued in excess of its par value. In this regard?

-The agreement that it shall be paid for less than its par value is illegal and void and cannot be enforced;

One of the characteristics of treasury shares is that?

-They may be reissued or sold again;

One of the following does not have voting rights:

-Treasury shares

Stock which has been issued by a corporation, has fully paid up when in fact it is not, because it has been issued
as bonus or otherwise, without any consideration at all, or for less than par, or for property, labor or services at
an overvaluation.

-Watered stock

The following may be the consideration of the shares of stock of a corporation, except

-Services to be performed by a lawyer on the proposed increased in capital stock of the corporation

Which of the following issuance of stocks is not allowed under the Corporation Code of the Philippines (BP 68):

-Metro Bank Corp. issued a no par value common shares for P5 per share.

As regards treasury shares, which is not correct?

-They are considered as part of earned or surplus profits and therefore distributable as dividends

Shares deposited by the seller or his agent with a bank or third party to be delivered to the buyer or subscriber
only upon the fulfillment of the stipulated suspensive condition

-Escrow shares

Powers, duties, rights and obligations of stockholders - Assessment

A stockholder who does not approve the action taken by the Board of Directors in proposing to amend the
articles of incorporation is not allowed to withdraw from the corporation in one of the following instances?

-Investing of corporate funds in another corporation;

An action brought by a stockholder against the corporation for direct violation of his contractual rights

-Individual suit

A corporate stockholder sold his share to another, but the sale has not been recorded in the books of the
corporation. The sale is:

-The sale is perfectly valid as between the buyer and the seller.

An action brought by a stockholder against the corporation for direct violation of his contractual rights

-Individual suit
Mr. Tomtom, named after his beautiful mother and handsome father, subscribed to 100 shares of Mara
Corporation, paying 25% of the amount thereof. The corporation refuses to issue to the former a stock certificate
for his subscription despite the demand of Tomtom for a stock certificate corresponding to 25 shares which he
claims have been paid. Meanwhile, the corporation has become insolvent and Tomtom now refuses to pay for
his unpaid balance on his subscription.
Is Tomtom correct in refusing to pay for the remaining shares, the company being already insolvent?

-No, under the trust and fund doctrine upon the insolvency of the corporation to which he is still liable for his
unpaid subscription.

A representative action where a stockholder brings an action in the name and in behalf of the corporation and
any relief obtained belongs to the corporation and not to the stockholders individually or collectively

-Derivative suit

The right of pre-emption shall not apply

-All of the above

Appraisal right means that whenever the capital stock of a corporation is increased and new shares of stock are
issued, the new issue must first be offered to the stockholders in proportion to their existing shareholdings
before subscription are received from the general public.
(1) Ultra vires acts are illegal and therefore void.
(2) Certificate of incorporation is the document prepared by the persons establishing the corporation and filed
with the SEC containing the matter required by the Corporation Code.

-All are false;

The voting proportion required to enable a corporation to invest its fund in any other corporation or business or
for any purpose other than its primary purpose?

-Majority vote of the board of directors and ratified by 2/3 of the stockholders.

A written instrument signed by the proper officers of the corporation, stating or acknowledging that the person
named therein is the holder of a designated number of shares of its stock:

-Certificate of stock

In three of the following instances, shares with or without voting rights can be voted, except:

-Election of directors or trustees.

The right of dissenting stockholders to demand payment of the value of their share shall cease:

-All of the above

Requirement to effect the amendment of the by-laws of a corporation?

-Majority vote of the board of directors and majority vote of the outstanding capital stock.
Where a stockholder may bring suit in behalf of himself and all other stockholders who are similarly situated
when a wrong is committed against them

-Representative suit

A. It is illegal to issue watered stocks. However, stock issues without any consideration at all is justified if such
issues are bonus shares.
B. A director is removed from office by a vote of the stockholders holding at least 2/3 of the outstanding capital
stock. The vacancy occasioned by such removal can be filled by a vote of the majority of the remaining
directors if still constituting a quorum.

-Only letter A is correct;

Rayemoon, after a day of rest and after her plane landed in the Philippine jurisdiction following a surgery she
underwent in Thailand and just after the ruling of the court rendering an order/judgment that he is a she,
subscribed to 10,000 shares of stock of NORTHERN Corporation located at the heart of Baguio along the foot
of Session road and head of Burnham Park. She paid 25% of the said subscription. During the stockholders
meeting, can Rayemoon vote all her subscribed shares?

-Yes, because unpaid shares not delinquent can be voted.

Which of the following statements is not correct in terms of appraisal right?

-In case of incurring, creating or increasing bonded debts;

Mr. Tomtom, named after his beautiful mother and handsome father, subscribed to 100 shares of Mara
Corporation, paying 25% of the amount thereof. The corporation refuses to issue to the former a stock certificate
for his subscription despite the demand of Tomtom for a stock certificate corresponding to 25 shares which he
claims have been paid. Meanwhile, the corporation has become insolvent and Tomtom now refuses to pay for
his unpaid balance on his subscription.
Is the refusal of the corporation to issue the certificate valid?

-Valid because the stock certificate can only be issued after the full payment of the subscription.

In case of a delinquent stockholder, the following rights are not given to him except:

-Right to receive dividends in accordance with the provisions of the law

It is one brought by one or more of the stockholder or members in the name and on behalf of the corporation to
redress wrongs committed against it or to protect 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.

-Derivative suit

The right given to the stockholders to dissent and demand payment of the fair value of their shares is called:

-Appraisal right

Majority and minority control - Assessment

The voting proportion required to enable a corporation to invest its fund in any other corporation or business or
for any purpose other than its primary purpose?

-Majority vote of the board of directors and ratified by 2/3 of the outstanding capital stock;

Requirement to effect the amendment of the by-laws of a corporation?

-Majority vote of the board of directors and majority vote of the outstanding capital stock.

By Laws - Assessment

The by-laws of a corporation may create an executive committee, composed of not less than 3 members of the
board of directors to be appointed by the board. The executive committee may act, by majority vote of all its
members on such specific matters within the competence of the board, as may be delegated to it in the bylaws or
on majority vote of the board, EXCEPT:

-All of the above

Which of the following cannot be included as a valid provision under the By laws:

-The time, place and manner of calling and conducting regular or special meetings of the stockholders or
members;

The articles of incorporation differ from the by-laws in that the articles of incorporation is:

-A condition precedent in the acquisition by a corporation of a juridical personality

Rules of action adopted by the corporation for its internal government and for the government of its officers and
of its stockholders or members

-By-laws

Statement 1 - The by-laws may provide that the holders of a majority of the outstanding capital stock may elect
all the members of the board of directors.
Statement 2 - That it may also provide that no officer of the corporation shall be required to be a stockholder.

-First is true, second is false.

Rules of action adopted by the corporation for its internal government and for the government of its officers and
of its stockholders or members

-By-laws

What is the voting proportion required to enable a corporation to amend its by laws?

-Majority of the board of directors and 2/3 of the outstanding capital stock
Meetings - Assessment

Regular meetings of stockholders or members shall be held annually on a date fixed in the by-laws, or if not
fixed, on any date, as determined by the board of directors or trustees, in:

-April

Mercy subscribed 10,000 shares of Rosario Corporation and paid 25% of the total subscription. During the
stockholders’ meeting how many votes on subscribed shares does Mercy have?

-10,000 shares

One of the following does not require stockholder’s approval?

-Change of corporate name;

What is the voting proportion required to enable the corporation to invest its fund in any other corporation on
business or for purpose other than its primary purposes?

-Majority of the board of directors and ratified by 2/3 of the outstanding capital stock.

Which of the following instance wherein non-voting shares is not allowed to vote:

-Mortgaging substantially all of the corporate property.

•Stockholders’ meeting must be in the city or municipality where the principal office is located while members
meeting of non-stock corporation may be outside thereof.
•The secretary of the corporation must generally be a citizen and a resident of the Philippines.

-Both are true.

In the meeting of the board of directors of NORTH Corporation, a construction company held on March 31,
Year 10, directors, A, B, C, D and E were present among the 9 directors. The meeting had for its agenda the
following:

I. The appointment of Y a new manager as allowed by the by-laws

II. The approval of the contract for the purchase of office supplies worth P130,000 from CPA
Supplies Co.
When the voting took place, directors A, B, C and D voted for the election of Y as the new manager, and
directors A, B and C voted for the approval of the contract with CPA Supplies

-The election of Y as a new manager is not valid, the approval of the contract with CPA Supplies is valid

Unless the by-laws provide otherwise, written notice of regular meetings shall be sent to all stockholders of
record

-At least two (2) weeks prior to the meeting

The board of directors of a corporation consists of nine (9) members, where two (2) have died during their term
of office and one (1) is abroad, the quorum would be
-Five (5) members

The distinction between proxy and voting trust is that in a voting trust?

-The trustee may attend the stockholders’ meeting even in the presence of the stockholder-trustor

Statement 1 - Stockholders’ meeting must be in the city or municipality where the principal office is located
while members meeting of non-stock corporation may be outside thereof.
Statement 2 - The secretary of the corporation must generally be a citizen and a resident of the Philippines.

-Both are true.

The holders of non-voting shares shall nevertheless be entitled to vote on the following matter, except:

-Dividend declaration.

Corporate reorganization - Assessment

Dissenting stockholders are given appraisal right:

-All of the above

Non-stock corporation - Assessment

Any profit which it may earn shall be used for the furtherance of the purpose for which the corporation was
organized as such profit is not distributable to its members

-non stock corporation

Any profit which it may earn shall be used for the furtherance of the purpose for which the corporation was
organized as such profit is not distributable to its members

-non stock corporation

A non stock corporation:

-All of the above

Modes of dissolution and liquidation - Assessment

Statement 1 - After dissolution but within the three-year period for liquidation a corporation’s term may still be
extended by amendment of its articles of incorporation.
Statement 2 - The dissolution of a corporation shall take place because it had been in continuous non-operation
for five-years.

-Both statements are false.

Involuntary dissolution of the corporation is caused by:

-An expiration of the period for which it was lawfully formed

Voluntary dissolution of a corporation is caused by:

-All of the above

•After dissolution but within the three-year period for liquidation a corporation’s term may still be extended by
amendment of its articles of incorporation.
•The dissolution of a corporation shall take place because it had been in continuous non-operation for five-years.

-Both statements are false.

Corporate dissolution may take place by voluntary inaction which will result in the cessation of its corporate
powers and the corporation shall be deemed dissolved. Such voluntary inaction may result from?

-Inaction of the corporation through its failure to formally organized and commence with the transaction or its
business or the construction of its work within two (2) years from the date of its incorporation;

Voluntary dissolution of a corporation is caused by:

-All of the above

The interest or right of the stockholder in the corporation’s profits or in the net assets of corporation on
dissolution is?

-Capital

What is the voting proportion required for the voluntary dissolution of the corporation?

-Majority votes of the board of directors and 2/3 votes of the outstanding capital stock.

Which of the following is a ground for the suspension or revocation of the certificate of incorporation by the
SEC?

-If the corporation has ceased operations continuously for a period of at least five years;

Corporate dissolution may take place by voluntary inaction which will result in the cessation of its corporate
powers and the corporation shall be deemed dissolved. Such voluntary inaction may result from?

-Inaction of the corporation through its failure to formally organized and commence with the transaction or its
business or the construction of its work within two (2) years from the date of its incorporation;
Foreign corporations - Assessment

Foreign corporation

-All of the above

(1) A foreign corporation doing business in the Philippines without a license may be sued but it cannot sue.
(2) A written demand for payment of the fair value of the shares made in the exercise of the appraisal right will
suspend the stockholder’s rights.

-Both are true.

An individual or a domestic corporation designated in a written power of attorney, by a foreign corporation

authorized to transact business in the Philippines, on whom any summons and other legal processes may be
served in all actions or other legal proceeding against such corporation is called?

-Resident agent;

Securities Regulation Code - Assessment

The power to examine into the affairs of a corporation in order to supervise, direct, and control its management
is called

-Visitorial power of the state

These corporation are prohibited from issuing no par shares, except:

-Stock exchanges

Corporation is not entitled to this kind of damages?

-Moral damages

Close corporation - Assessment

Stockholders of the close corporation

-All of the above

Which of the following is not a requisite for a close corporation?

-That no close corporation is a stockholder thereof owning at least 2/3 of the voting stocks.

The following industries may organize as a close corporation

I. Mining Companies
II. Oil Companies

-Neither I or II

The business of this corporation can be managed by the stockholders:

-Close

All of the close corporation's issued shares shall be held of record by not more than

-20 persons

A close corporation:

-All of the above

Dividends - Assessment

Dividend which gives the stockholder an option to receive cash or stock dividend

-Optional dividend

Dividend which are actually distributions of the assets of the corporation upon dissolution or winding up

-Liquidating dividend

Stock dividends differ from cash dividend in that stock dividends

-Require the approval of both the board of directors and the stockholders

Rod Bake Corporation posted a P1M profit in its realty business and its real estate has appreciated in value in
the amount of P4M despite the El Nino phenomenon that struck the northern and southern Philippines. The
board then declared dividends to its stockholders computed on the basis of 5M representing profits and
appreciation in value of its real state. Is the dividend declaration valid?

-Not valid because dividends must only come from the unrestricted retained earnings.

Dividend which is partly in cash and partly in stocks

-Composite dividend

The following are the requisites except one, for valid declaration and/or issuance of stock dividend.
-Existing unrestricted retained earnings;

Dividend in the form of a promissory note and may be issued to bear interest

-Scrip dividend

Special corporation - Assessment

A corporation commences its existence from the issuance of the certificate of incorporation, which one is the
exception?

-Religious corporation

Organization and Registration of Cooperatives - Assessment

Every cooperative shall conduct its affairs in accordance with Filipino culture, good values and experience and
the universally accepted principles of cooperation which include, but are not limited to, the following, except:

-Bureaucratic Member Control

A cooperative may be organized and registered for any or all of the following purposes, except:

-None of the choices

Administration - Assessment

Statement 1: The general assembly shall be the highest policy-making body of the cooperative and shall exercise
such powers as are stated in the Cooperative Code, in the articles of cooperation and in the bylaws of the
cooperative.
Statement 2: The general assembly can delegate its power to determine and approve amendments to the articles
of cooperation and bylaws.

-Only Statement 1 is true

Statement 1: A regular meeting shall be held annually by the general assembly on a date fixed in the bylaws, or
if not so fixed, on any dated within ninety (90) days after the close of each fiscal year: Provided, That notice of
regular meetings shall be sent in writing, by posting or publication, or through other electronic means to all
members of record.
Statement 2: Whenever necessary, a special meeting of the general assembly may be called at any time by a
majority vote of the board of directors or as provided for in the bylaws: Provided, That a notice in writing shall
be sent one (1) week prior to the meeting to all members who are entitled to vote.

-Both statements are true

Responsibilities, Rights and Privileges of Cooperatives - Assessment

Statement 1: The accountant or the bookkeeper of the cooperative shall be responsible for the maintenance of
the cooperative in accordance with generally accepted accounting practices. He shall also be responsible for
audit or inspection.
Statement 2: Every cooperative shall have an official postal address to which all notices and communications
shall be sent. Such address and every change thereof shall be registered with the Cooperative Development
Authority.

-Only Statement 2 is true

Cooperatives registered, notwithstanding the provisions of any law to the contrary, be also accorded the
following privileges, except:

-Cooperatives not rendering special types of services and facilities such as cold storage, ice plant, electricity,
transportation, and similar services and facilities shall secure a franchise therefore, and such cooperatives shall
open their membership to all persons qualified in their areas of operation;

Capital, Property of Funds - Assessment

Statement 1: No member of primary cooperative other than cooperative itself shall own or hold more than ten
per centum (10%) of the share capital of the cooperative.
Statement 2: The bylaws of a cooperative may prescribe a fine on unpaid subscribed share capital. Provided, that
such fine is fair and reasonable under the circumstances.

-both statements are true

Cooperatives registered under this Code may derive their capital from any or all of the following sources,
except:

-none of the choices

Audit, Inquiry and Members’ Right to Examine - Assessment

Statement 1: A member shall have the right to examine the records required to be kept by the cooperative during
reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records
without charge except the cost of production.
Statement 2: Every cooperative shall, at its principal office, keep and carefully preserve the records required by
this Code to be prepared and maintained. It shall take all necessary precaution to prevent its loss, destruction or
falsification.

-Both statements are true

Statement 1: The accountant shall submit to the board of directors and to the audit committee the financial audit
report which shall be in accordance with the generally accepted auditing standards for cooperatives as jointly
promulgated by the Philippine Institute of Certified Public Accountants (PICPA) and the Cooperative
Development Authority.
Statement 2: Performance and social audit reports which contain the findings and recommendations of the
auditor shall be submitted to the audit committee.

-Both statements are false

Allocation and Distribution of Funds - Assessment

Statement 1: Notwithstanding the provisions of existing laws, the net surplus of cooperatives shall be
determined in accordance with its bylaws.
Statement 2: Every cooperative shall determine its net surplus at the close of every fiscal year and at such other
times as may be prescribed by the bylaws.

-Both statements are true

The sum allocated for patronage refunds shall be made available at the same rate to all patrons of the
cooperative in proportion to their individual patronage, provided, that:

-All of the choices

Types and Categories of Cooperatives - Assessment

It is one that promotes and undertakes savings and lending services among its members. It generates a common
pool of funds in order to provide financial assistance to its members for productive and provident purposes.

-Credit Cooperative
It is one that undertakes joint production whether agricultural or industrial. It is formed and operated by its
members to undertake the production and processing of raw materials or goods produced by its members into
finished or processed products for sale by the cooperative to its members and non-members.

-Producers Cooperative

Merger and Consolidation of Cooperatives - Assessment

The following are the procedures to the Merger or Consolidation of cooperatives. Which is the first procedure?

-Approval of the proposal to merge or consolidate by the General/Representative Assembly of each constituent
cooperatives;

Statement 1: Two (2) or more cooperatives may merge into a single cooperative, which shall be either one of the
constituent cooperatives or the consolidated cooperatives.
Statement 2: No merger or consolidation shall be valid unless approved by three-fourths (3/4) vote of all
members with voting rights, present and constituting a quorum of each of the constituent cooperatives at
separate general assembly meetings.

-Both statements are true

Dissolution of Cooperatives - Assessment

The following procedure shall be observed in liquidation of cooperatives. Which is the first procedure?

-Inventory of Assets and Liabilities of the Cooperative.

The following are the coverage of liquidation, except:

-None of the choices

LAW ON OTHER BUSINESS TRANSACTIONS

Insurable Deposits - Assessment

In the management and/ or conversion of the assets of the closed bank, the receiver shall have the authority to:
I. Conduct a physical or ocular inspection of the properties owned by, or mortgaged to, the closed bank, to
determine their existence and present condition.
II. Determine the disposal price of assets in accordance with generally accepted valuation principles, standards
and practices.

-Both are true

The following are the qualifications of the board of directors of the PDIC, except:

-At least 45 years old

This term means the net amount due to any depositor for deposits in an insured bank (after deducting offsets)
less any part thereof which is in excess of P10,000. Such net amount shall be determined according to such
regulations as the Board of Directors may prescribe and in determining the amount due to any depositor there
shall be added together all deposits in the bank maintained in the same capacity and the same right for his
benefit or in his own name or in the names of others.

-Insured Deposit

I. The creditors shall have a period of nine (9) months from the date of publication of notice of the approval by
the court of the final asset distribution plan of the closed bank within which to claim payment of the principal
obligations and surplus dividends.

II. The individual stockholders of record of their duly-authorized representative or the court-appointed
stockholders’ representative shall have a period of nine (9) months form publication of notice of the approval by
the court of the final asset distribution plan of the closed bank within which to claim the residual assets.

-Only II is true

The receiver is authorized to adopt and implement, without need of consent of the stockholders, board of
directors, creditors or depositors of the closed bank, any or a combination of the following modes of liquidation:
I. Conventional liquidation
II. Purchase of assets and/or assumption of liabilities.

-Both are true

It is the unpaid balance of money or its equivalent received by a bank in the usual course of business and for
which it has given or is obliged to give credit to a commercial, checking, savings, time or thrift account or which
is evidenced by its certificate of deposit, and trust funds held by such bank whether retained or deposited in any
department of such bank or deposited in another bank, together with such other obligations of a bank as the
Board of Directors shall find and shall prescribe by regulations to be deposit liabilities of the Bank.

-Deposit

I. Whenever a bank is ordered closed by the Monetary Board, the PDIC shall be designated as receiver and it
shall proceed with the takeover and liquidation of the closed bank
II. The receiver is authorized to adopt and implement, without need of consent of the stockholders, board of
directors, creditors or depositors of the closed bank, any or a combination of the modes of liquidation
-Both are true

It occurs whenever a deposit account with an outstanding balance of more than the statutory maximum amount
of insured deposit maintained under the name of natural or juridical persons is broken down and transferred into
2 or more accounts in the name/s of natural or juridical persons or entities who have no beneficial ownership on
transferred deposits in their names within 120 days immediately preceding or during a bank declared bank
holiday, or immediately preceding a closure order issued by the Monetary Board of the Bangko Sentral ng
Pilipinas for the purpose of availing of the maximum deposit insurance coverage.

-Separation of deposits

Maximum Liability - Assessment

Statement 1: If the account is held jointly by two or more natural persons, or by two or more juridical persons or
entities, the maximum insured deposit shall be divided into as many equal shares as there are individuals,
juridical persons or entities, unless a different sharing is stipulated in the document of deposit.
Statement 2: If the account is held by a juridical person or entity jointly with one or more natural persons, the
maximum insured deposit shall be presumed to belong entirely to such juridical person or entity.

-Both statements are true

What is PDIC’s maximum deposit insurance coverage?

-500,000

Requirements for Claims - Assessment

When should the depositor of a closed insured bank file his claim with PDIC?

-The depositor of the closed insured bank has 24 months from date of bank takeover to file his deposit insurance
claim.

What happens when the depositor of a closed bank fails to file his claim within the period prescribed by PDIC?
A. All rights of the depositor with respect to the insured deposit shall no longer be honored.
B. The depositor may still make a claim against the assets of the closed bank.

-Both A and B

Bank secrecy law - Assessment

I. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in
bonds issued by the issued by the Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential nature.
II. All deposits of whatever nature with banks or banking institutions in the Philippines may not be examined,
inquired or looked into by any person, government official, bureau or office.

-Both are true

It is hereby declared to be the policy of the Government:

I. To give encouragement to the people to deposit their money in banking institutions.
II. To discourage private hoarding.

-Both are true

X is unemployed; however, he is suspected to be a jueteng operator. X has never been charged or convicted of
any crime. He has several bank accounts and purchased several houses and lots from Y Realty Corp. amounting
to P50,000,000. After that, the Register of Deeds reported his purchased to the Anti-Money Laundering Council
(AMLC). Upon request of the AMLC, Z Bank disclosed to it X’s bank deposits. Subsequently, X was charged
in court for violation of the Anti-Money Laundering Law. Did Z Bank violated the Secrecy of Bank Deposit Act
in disclosing X’s bank account to the AMLC?

-No. Z bank did not violate the Secrecy of Bank Deposit Act. A bank is obliged to report to the AMLC covered
and suspicious transactions.

X, a newspaper columnist, while having a bank transaction, overheard a bank teller informing a co-employee
that Y, the municipal mayor, has just P10,000 in his bank account and that his next check might probably
bounce. X wrote this information in his newspaper column. Thus, Y filed a complaint against X for violation of
the Secrecy of Bank Deposits Act. Decide.

-X, who merely overhead the remark of the bank teller to a co-employee and writing the same in his newspaper
column is neither the inquiry nor disclosure contemplated by law.

All deposits of whatever nature with banks or banking institutions in the Philippines may not be examined,
inquired of looked into by any person, government official, bureau or office except upon.

-All of the above

I. It shall be unlawful for any official or employee of a banking institution to disclose to any person any
information concerning deposits.
II. The Secrecy of Bank Deposit Account does not prohibit attachment or garnishment of bank accounts, which
does not involve revealing specific information of deposits.

-Both are true

Y is the creditor of X. Upon demand, X failed to pay Y; thus, the latter filed a case against the former. X had a
savings account with Z Bank.
Subsequently, the court ordered that X’s account be garnished the amount of P100,000 to satisfy the judgement
in favor of Y. X complained that the garnishment violated the Secrecy of Bank Deposit Act. Decide.

-X is not correct because pesos deposits may garnished and Y bank can comply with the order of garnishment
without violating the Secrecy of Bank Deposit Act.
Unclaimed balances law - Assessment

It includes credits or deposits of money, bullion, security, or other evidence of indebtedness of any kind, and
interest thereon with banks, building and loan associations, and trust corporations in favor of any person known
to be dead or who has not made further deposits or withdrawals during the preceding ten years or more.

-Unclaimed balances

It refers to the judicial process in which the State, by virtue of its sovereignty, steps in and claims abandoned,
left vacant, or unclaimed property, without there being an interested person having a legal claim thereto.

-Escheat proceedings

I. Whenever the Solicitor General shall be informed of such unclaimed balances, he shall commence an action
or actions in the name of the People of the Republic of the Philippines in which shall be joined as parties the
bank, building and loan association or trust corporation and all such creditors or depositors.
II. Upon the trial, the court must hear all parties who have appeared therein, and if it be determined that such
unclaimed balances in any defendant bank, building and loan association, or trust corporation are unclaimed
balances have been escheated to the Government of the Republic of the Philippines and commanding said bank,
building and loan association or trust corporation to forthwith deposit the same with the Treasurer of the
Philippines to credit of the Government of the Republic of the Philippines.

-Both are true

I. The unclaimed balances, together with the increase and proceeds thereof, shall be deposited with the Treasurer
of the Philippines to the credit of the Government of the Republic of the Philippines.
II. All banks, building and loan associations, and trust corporations shall forward to the Treasurer of the
Philippines a statement, under oath, of their respective managing officers, of all credits and deposits held by
them in favor of persons known to be dead, or who have not made further deposits or withdrawals during the
preceding ten years or more.

-Both are true

I. The unclaimed balances, together with the increase and proceeds thereof, shall be deposited with the Treasurer
of the Philippines to the credit of the Government of the Republic of the Philippines.
II. All banks, building and loan associations, and trust corporations shall forward to the Treasurer of the
Philippines a statement, under oath, of their respective managing officers, of all credits and deposits held by
them in favor of persons known to be dead, or who have not made further deposits or withdrawals during the
preceding ten years or more.

-Both are true

Covered Institutions / Persons / Transactions - Assessment

It is a transaction in cash or other equivalent monetary instrument involving a total amount in excess of five
hundred thousand pesos (Php500,000.00) within one (1) banking day.
-Covered transactions

Suspicious Transactions - Assessment

The following circumstance exists in suspicious transactions (choose the exception):

-there is underlying legal or trade obligation, purpose or economic justification;

Reporting Requirements - Assessment

Statement 1: The Covered Transaction Report (CTR) and the Suspicious Transaction Report (STR) shall be in
the forms prescribed by the Anti-Money Laundering Council (ALMC).
Statement 2: Covered transaction reports and suspicious transaction reports shall be submitted in a secured
manner to the Anti-Money Laundering Council (AMLC) in electronic form.

-Both statements are true

Covered institutions shall report to the Anti-Money Laundering Council (ALMC) all covered transactions and
suspicious transactions within ___ working days from occurrence thereof, unless the supervising authority
concerned prescribes a longer period not exceeding ___ working days.

-5, 10

Law on Patents - Assessment

I. No patent may be granted unless the application identifies the inventor.

II. An applicant who is not a resident of the Philippines must appoint and maintain a resident agent or
representative in the Philippines.

-Both are true

A patent shall confer on its owner the following exclusive rights:

I. Where the subject matter of a patent is a product: to restrain, prohibit and prevent any unauthorized person or
entity from making, using offering for sale, selling, or importing that product;
II. Where the subject matter of a patent is a process: to restrain, prevent or prohibit any unauthorized person or
entity from using the process, and from manufacturing, dealing in, using, selling or offering for sale, or
importing any product obtained directly or indirectly from such process.

-Both are true

It means any person who, at the filing date of application, had the right to the patent.

-Inventor

I. The term of a patent shall be 17 years from the filing date of the application.
II. To maintain the patent application or patent, an annual fee shall be paid upon the expiration of 4 years from
the date the application was published.

-Only II is true

Law on Trademark, Service Marks and Trade Names - Assessment

I. An application for registration of a mark, or its registration, may be assigned or transferred with or without the
transfer of the business using the mark.
II. The assignment of the application for registration of a mark, or of its registration, shall be in writing and
require the signature of the contracting parties.

-Both are true

I. A petition to cancel a registration of a mark may be filed by any person who believes that he is or will be
damaged by the registration of a mark.

II. Non-use of a mark may be excused if caused by circumstances arising independently of the will of the
trademark owner. Lack of funds shall excuse non-use of a mark.

-Only I is true

Any person who shall, without the consent of the owner of the registered mark reproduce, counterfeit, copy or
colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy
or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisement intended to be
used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or
services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.

-Infringement of trademar

I. The owner of a registered mark may recover damages from any person who infringes his rights.
II. The measure of the damages suffered shall be either the reasonable profit which the complaining party would
have made, had the defendant not infringed his rights, or the profit which the defendant actually made out of the
infringement.

-Both are true

It is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise
and shall include a stamped or marked container of goods.

-Mark

I. A registered mark shall have no effect against any person who, in good faith, before the filing date or the
priority date, was using the mark for the purposes of his business or enterprise.
II. Where an infringing who is engaged solely in the business of printing the mark or other infringing materials
for others is an innocent infringer, the owner of the right infringed shall be entitled as against such infringer only
on to an injunction against future printing

-Both are true

I. Infringement of trademark is the unauthorized use of a trademark.

II. Unfair competition is the passing off of one’s goods as those of another.

-Both are true

I. Assignment and transfers of registration of marks shall be recorded at the IPO; assignment and transfers of
applications for registration shall be provisionally recorded, and the mark, when registered, shall be in the name
of the assignee or transferee.
II. Assignment and transfers shall have no effect against third parties until they are recorded at the IPO.

-Only II is true

It means any visible sign designated as such in the application for registration and capable of distinguishing the
origin or any other common characteristic.

-Collective mark

Law on Copyright - Assessment

I. An author cannot be compelled to perform his contract to create a work or for the publication of his work
already in existence. However, he may be held liable for damages for each of such contract.
II. When an author contributed to a collective work, his right to have his contribution attributed to him is
deemed waived unless he expressly reserves it

-Both are true

Is the making of one more copies of a work or a sound recording in any manner or form?

-Reproduction

I. The natural person whose name is indicated on a work in the usual manner as the author shall, in the absence
or proof to the contrary, be presumed to be the author of the work.
II. The person or body, corporate whose name appears on an audio-visual work in the usual manner shall, in the
absence of proof to the contrary, be presumed to be the maker of said work.
-Both are true

Are original intellectual creations in the literary and artistic domain protected from the moment of their
creation?

-Works

Is an artistic creation with utilitarian function or incorporated in a useful article, whether made by hand or
produced on an industrial scale?

-Work of applied art

It is any technology, device or component that in the normal course of its operation, restricts acts in respect of a
work, performance or sound recording which are not authorized by authors, performance or producers of sound
recording concerned or permitted by law.

-Technological measure
The following derivative works shall also be protected by copyright:
I. Dramatizations, translations, adaptations, abridgments, arrangements, and other alterations of literary or
artistic works; and
II. Collections of literary, scholarly or artistic works, and compilations of data and other materials which are
original by reason of the selection or coordination or arrangement of their contents.

-Both are true

I. The copyright may be assigned in whole or in part.

II. The copyright is not deemed assigned inter vivos in whole or in part unless there is a written indication of
such intention.

-Both are true

Statement 1: in the case of original literary and artistic works, copyright shall belong to the author of the work;
Statement 2: In the case of works of joint authorship, the co-authors shall be the original owners of the copyright
and in the absence of agreement, their rights shall be governed by the rules on co-ownership.

-Both statements is true

I. No protection shall extend to any idea, procedure, system method or operation, concept, principle, discovery,
or mere data as such, even if they are expressed, explained, illustrated, or embodied in a work; news of the day
and other miscellaneous facts having the character of mere items of press information; or any official text of a
legislative, administrative or legal nature, as well as any official translation thereof.
II. No copyright shall subsist in any work of the Government of the Philippines.

-Both are true

Processing and Security of Personal Information - Assessment

It refers to a system for generating, sending, receiving, storing or otherwise processing electronic data messages
or electronic documents and includes the computer system or other similar device by or which data is recorded,
transmitted or stored and any procedure related to the recording, transmission or storage of electronic data,
electronic message, or electronic documents.

-Information and Communication System

Personal information must be:

I. Collected for specified and legitimate purposes determined and declared before, or as soon as reasonably
practicable after collection, and later processed in a way compatible with such declared, specified, and
legitimate purposes only.
II. Processed fairly and lawfully.

-Both are true

It refers to a person or organization who controls the collection, holding, processing or use of personal
information, including a person or organization who instructs another person or organization to collect, hold,
process, use, transfer, or disclose personal information on his or her behalf.

-Personal information controller

I. The unauthorized processing of personal information shall be penalized by imprisonment ranging from 1 year
to 3 years and a fine of not less than P500,000 but not more than P2,000,000 shall be imposed on persons who
process personal information without the consent of the data subject, or without being authorized.
II. The unauthorized processing of personal sensitive information shall be penalized by imprisonment ranging
from 3 years to 6 years and a fine of not less than P500,000 but not more than P4,000,000 shall be imposed on
persons who process personal information without the consent of the data subject, or without being authorized.

-Both are true

Data Privacy Act applies to:

I. The processing of all types or personal information.
II. To any natural and juridical person involved in personal information processing including those personal
information controllers and processors who, although not found or established in the Philippines, use equipment
that are located in the Philippines, or those who maintain an office, branch or agency in the Philippines.

-Both are true

The processing of personal information shall be permitted only if not otherwise prohibited by law, and when at
least one of the following conditions exists. Which is not one of the conditions?

-The data subject need not necessary give his or her consent.

I. The personal information controller must implement reasonable and appropriate organizational, physical and
technical measures intended for the protection of personal information against any accidental or unlawful
destruction, alteration and disclosure, as well as against any other unlawful processing.

II. The personal information controller shall implement reasonable and appropriate measures to protect personal
information against natural dangers such as accidental loss or destruction, and human dangers such as unlawful
access, fraudulent misuse, unlawful destruction, alteration and contamination.
-Both are true

I. Any personal information controller or personal information processor or any of its officials, employees or
agents, who disclosed to a third party the subject personal information without the consent of the data subject,
shall he subject to imprisonment ranging from 1 year to 3 years and a fine of not less than P500,000 but not
more than P1,000,000.
II. Any personal information controller or personal information processor or any of its official, employees or
agents, who disclosed to a third party sensitive personal information without the consent of the data subject,
shall be subject to imprisonment ranging from 3 years to 5 years and a fine of not less than P500,000 but not
more than P2,000,000.

-Both are true

The processing of sensitive personal information and privileged information shall be prohibited, except in the
following cases:

-All of the above.

It refers to any natural or juridical person qualified to act as such under the Data Privacy Act of 2012 to whom a
personal information controller may outsource the processing of personal data pertaining to a data subject.

-Personal information processor

Legal Recognition and Communications of electronic data messages and electronic documents -
Assessment

Unless otherwise agreed between the originator and the addressee, the time of receipt of an electronic data
message or electronic document is as follows:
I. If the addressee has designated an information system for the purpose of receiving electronic data message or
electronic document, receipt occurs at the time when the electronic data message or electronic document enters
the designated information system.
II. If the electronic data message or electronic documents is sent to an information system of the addressee that
is not the designated information system, receipt occurs at the time when the electronic data message or
electronic document is retrieved by the addressee.
III. If the addressee has not designated an information system, receipt occurs when the electronic data message
or electronic document enters an information system of the addressee.

-I, II, and III are true

I. Electronic Commerce Act aims to facilitate domestic and international dealings, transactions, arrangement,
agreements, contracts and exchanges, and storage of information through the utilization of electronic, optical
and similar medium, mode, instrumentality and technology to recognize the authenticity and reliability of
electronic documents related to such activities and to promote the universal use of electronic transaction in the
government and general public.
II. Electronic Commerce Act shall apply to any kind of data message and electronic document used in the
context of commercial and non-commercial activities to include domestic and international dealings,
transactions, arrangement, agreements, contracts and exchanges and storage of information.
-Both are true

In any proceedings involving an electronic signature, it shall be presumed that:

I. The electronic signature is the signature of the person to whom it correlates.
II. The electronic signature was affixed by that person with the intention of signing or approving the electronic
document unless the person relying on the electronically signed electronic document knows or has noticed of
defects in or unreliability of the signature or reliance on the electronic signature is not reasonable under the
circumstances.

-Both are true

In any legal proceedings, nothing in the application of the rules on evidence shall deny the admissibility of an
electronic data message or electronic document in evidence.
I. On the sole ground that it is electronic form.

-Both are true

I. In assessing the evidential weight of an electronic data message or electronic document, the reliability of the
manner in which it was generated, stored or communicated the reliability of the manner in which its originator
was identified, and other relevant factors shall be given due regard.
II. As between the originator and the addresses of an electronic data message or electronic document, a
declaration of will or other statement shall not be denied legal effect, validity or enforceability solely on the
ground that it is in the form of an electronic data message.

-Both are true

Service provider refers to a provider of:

I. On-line services or network access or the operator of facilities therefor, including entities offering the
transmission, routing, or providing of connections for online communications, digital or otherwise, between or
among points specified by a user, or electronic documents of the user’s choosing.
II. The necessary technical means by which electronic documents of an originator may be stored and made
accessible to designated or undesignated third party.

-Both are true

It refers to a system intended for and capable of generating, sending, receiving storing, or otherwise processing
electronic data messages or electronic documents and includes the computer system or other similar device by
or in which data is recorded or stored and any procedures related to the recording or storage of electronic data
message or electronic document

-Information and Communications System

I. The person seeking to introduce an electronic data message or electronic document in any legal proceeding
has the burden of proving its authentically by evidence capable of supporting a finding that the electronic data
message or electronic document is what the person claims it to be.
II. In assessing the evidential weight of an electronic data message or electronic document, the reliability of the
manner in which it was generated, stored or communicated, the reliability of the manner in which its originator
was identified, and other relevant factors shall be given due regard.

-Both are true

I refers to information or the representation of information, data, figures, symbols or other modes or written
expression, described or however represented, by which a right is established or an obligation extinguished, or
by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed,
retrieved, or produced electronically.

-Electronic Document

As between the originator and the addressee, an electronic data message or electronic document is deemed to be
that of the originator if it was sent:
I. By a person who had the authority to act on behalf of the originator with respect to that electronic data
message or electronic document.
II. By an information system programmed by, or on behalf of the originator to operate automatically.

-Both are true

It refers to information generated, sent, received, or stored by electronic, optical or similar means.

-Electronic Data Message

It refers to a person who in behalf of another person and with respect to a particular electronic document sends,
receives, and/ or stores provides other services in respect of that electronic data message or electronic document.

-Intermediary

It refers to any distinctive mark, characteristics and / or sound in electronic form, representing the identity of a
person and attached to or logically associated with electronic data message or electronic document or any
methodology or procedures employed or adopted by a person and executed or adopted by such person with the
intention of authenticating or approving an electronic data message or electronic document.

-Electronic Signature

XYZ are solidarily liable to A for P30,000 which mature on July 1 1993. On May 1, 1993, X paid A for the
whole amount of the debt. If on December 1, 1993, X will be reimbursed by Y, the latter will be liable for: (Phil
CPA, 98-1)

-P10,000 with interest from July 1, 1993 to December 1, 1993

When the thing deteriorates pending the fulfillment of the suspensive condition without the fault of the debtor,
the impairment is: (Phil CPA, 98-1)

-to be borne by the creditor

Compensation shall take place when: (Phil CPA, 91-1)

-two persons, in their own right are creditors and debtors of each other

When the characters of the creditor and the debtor are merged in one and the same person, there is
extinguishment of the obligation by: (Phil CPA, 96-2)

-merger of rights
OE is obliged to give OR his 1982 Mitsubishi, 4 door sedan Lancer with plate number NBA 123 on September
30, 1989. On October 10, 1989, OE is not yet deliver the car which was totally destroyed by an earthquake on
such date. Is OE still liable? (Phil CPA, 89-2)

-no. The obligation is extinguished. The specific this was lost due to fortuitous event and no demand or deliver
was made by OR.

Which of the following contracts cannot be ratified? (Phil CPA, 87-1)

-those whose cause or object did not exist at the time of the transaction

S and B entered into a contract of sale of a piece of land embodied in a public document on March 14, 2002. On
July 20,2002, the said public document was registered with the Register of Deeds. On December 15, 2002, B
discovered that he was defrauded by S. The prescriptive period for the filing of the action for annulment shall be
counted;

-within four (4) years from july 20, 2002 or the date of registration with the office of the registration of deeds

When is the price in a contract of sale can be considered certain?

-all of the above

Alabang Shoe Store Incorporated (ASSI) entered into separate contracts with 2 movie stars, Kimi and Honesto.
With Kimi, the agreement was that the shoe store shall deliver at a specified date for a price of P2,000 a pair of
shoes of a specified brand which the store had been manufacturing for the general public but which at the time
of the contract had already been sold out, and with Honesto, the arrangement was that the shoe store shall
deliver at a specified date for a price of P3,000 a pair of shoes to be made specifically for him, in accordance
with a design submitted by him.

What is the nature of the contract between Kimi and ASSI?

-Contract of sale

The indorsement “Pay to C, Sgd. B is a

-special indorsement

A bill reads:
Pay to the order of B P200,000, 30 days after sight.
To:X Sgd. A
Subsequent indorsements: B to C; C to D; D to E and E to F who made the first presentment for acceptance on
Feb.28, 2005, X refused to accept so that a notice of dishonor by non-acceptance to A, B, C, D and E were
given. Before the maturity however, at the request of the drawer, F made a second presentment for acceptance
to X on March 5, 2005 and this time X accepted the bill. On maturity date, the drawee acceptor refused to pay.
Which is correct?

-f must give a notice of dishonor by non-payment to all the parties secondarily liable to make them liable

When the instrument is not payable on demand, presentment must be made:

-on the day it falls due

The following defect will preclude the creation of even a de facto corporation?

-lack of certificate of incorporation from the SEC

A corporation, the sole purpose of which is to invest its capital in a specific property and afterwards consume
that property or extract its value at a profit is called:

-wasting asset corporation

PDIC shall not pay deposit insurance for the following accounts or transactions.

-deposit accounts or transactions constituting, and/or emanating from, unsafe and/or unsound banking practice/s

The following are the composition of the board of directors of the Philippine Deposit Insurance Corporation
(PDIC), except:

-none of the above

In case the employee made the invention in the course of his employment contract, the patent shall belong to:
I. The employee, if the inventive activity is part of his regular duties even if the employees uses the time,
facilities and materials of the employer.
II. The employer, if the invention is the result of the performance of his regularly-assigned duties, unless there is
an agreement, express or implied, to the contrary.

-only II is true

I. The dominancy test focuses on the focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion or deception.
II. The holistic test requires the court to consider the entirely of the marks as applied to the products, including
the labels and packaging, in determining confusing similarity.
-both are true

Upon the designation of the PDIC as receiver of a closed bank, it shall serve a notice of closure to the highest-
ranking officer of the bank present in the bank premises or on its main entrance.
II. The receiver shall have authority to use reasonable force, including the authority to force open the premises
of the bank, and exercise such acts necessary to take actual physical possession and custody of the bank and all
its assets, records, documents, and take charge of its affairs upon the service of the notice closure.

-both are true

I. The Philippine Deposit Insurance Corporation (PDIC) shall insure the deposits of all banks.
II. The PDIC shall promote and safeguard the interests of the depositing public by providing insurance coverage
on all insured deposits and helping maintain a sound and stable banking system.

-both are true

I. The use of the mark in a form different from the form in which it is registered, which does not alter its
distinctive character, shall not be a ground for cancellation or removal of the mark and shall not diminish the
protection granted to the mark.
II. The use of a mark by a company related with the registrant or applicant shall inure to the latter’s benefit, and
such use shall not affect the validity of such mark or of its registration.
-both are true

A mark cannot be registered if it:

-all of the choices

I. In case of works of joint authorship, the economic rights shall be protected during the life of the last surviving
author and for 50 years after his death.
II. In case of anonymous or pseudonymous works, the copyright shall be protected for 50 years from the date on
which the work was first lawfully published.

-both are true

I. The submission of a literary, photographic, or artistic works to a newspaper, magazine or periodical for
publication shall constitute only a license to make a single publication unless a greater right is expressly granted.
II. The copyright is distinct from the property in the material object subject to it. Consequently, the transfer or
assignment, or licensing of the copyright shall not itself constitute a transfer of the material object. Nor shall a
transfer or assignment or licensing of the sole copy or of one or several copies of the work imply transfer or
assignment of the copyright.

-both are true

I. If the application meets the legal requirements, the Intellectual Property Office (IPO) shall grant the patent.
II. A patent shall take effect on the date of the publication of the grant of the patent in the IPO Gazette.

-both are true

I. The person who commissions the work shall own the patient, unless otherwise provided in the contract.
II. An application for patent filed by any person who has previously applied for the same invention in another
country which by treaty, convention, or law affords similar privileges to Filipino citizens, shall be considered as
filed as of the date of filing the foreign application.

-both are true

I. Any person who shall employ deception or any other means contrary to good faith by which he shall pass off
the goods manufactured by him or in which he deals, or his business, or services for those of the one having
established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of
unfair competition.
II. A person who has identified in the mind of the public the goods he manufactures or deals in, his business or
services from those of others, whether or not a registered mark is employed, has a property right in the goodwill
of the said goods, business or services so identified, which will be protected in the same manner as other
property rights.

-both are true

Is the transfer of the possession of the original or a copy of a work or a sound recording for a limited period of
time for profit-making purposes?

-rental

It is recitation, playing, dancing, acting or otherwise performing the work, either directly or by means of any
device or process in the case of a work other than an audio-visual work.
-public performance

Which of the following is not a requisite of a holder in due course?

-He becomes the holder of the instrument after it is overdue, and with notice that it had been previously
dishonored if such was the fact.

Which of the following is a defense that is available against a holder in due course?

-Fraud in factum

Which of the following is not a warranty of a qualified indorser of negotiable instrument?

-That the instrument, is at the time of his indorsement, is valid and subsisting.

What is the prima facie evidence that the drawer of issuer of check has knowledge that check he
issued has insufficient fund?

-The making, drawing and issuance of a check payment of which is refused by the drawee because of
insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of the
check.

Which of the following is not an element of criminal violation of Batas Pambansa Bilang 22 for
issuance of worthless checks?

-There must be intent to commit fraud upon the issuance of worthless check.

The following are similarities between a partnership and a corporation. Which is the exception?

-The individuals composing both have little voice in the conduct of the business.

A partner in a partnership who is not really a partner, not being a party to the partnership agreement
but is made liable as a partner for the protection of innocent third persons is known as:

-Nominal partner or partner by estoppel.

Ralph and Vi orally agreed to form a partnership. Each contributed cash and personal properties worth
P10, 000 to a common fund. But they did not register the partnership with the Securities and
Exchange Commission (SEC).

-The partnership is still valid

When cash or property worth P3, 000 or more is contributed as capital, the Articles of Co-Partnership
shall be in a public instrument and registered with the Securities and Exchange Commission. If the
said requirements are not complied with:

-It will not affect the liability of the partnership and the partners thereof to third parties.

W, X, Y and Z are the general partners, who contributed P500, 000.00, P300, 000.00, P100, 000.00
and services to the common fund, respectively. After dissolution the partnership suffered losses
amounting to P600, 000.00. How much shall be the share of Z in the losses?
-none

A, B and C are general partners in ABC Partnership. A, the managing partner engaged personally in a
business that is same as business of the partnership without the consent of B and C.

-If there are profits, A will give the profits to the partnership.

A and B are capitalist partners, with C as an industrial partner. A and B contributed P15,000.00 each
the capital of the partnership. A contractual liability of P40,000.00 was incurred by the partnership in
favor of X. In the case of bar, the capital asset of P30, 000.00 shall first be exhausted thereby leaving
an unsatisfied liability of P10,000.00. X can recover the amount from:

-A, B and C and C can recover for reimbursement from A and B.

Which is not a ground for the automatic dissolution of a partnership?

-By the insanity of any partner

A, B, C are partners in a trucking and freight business, B and C without the knowledge of A
approached X and offered to sell to X all the trucks of the partnership at a price very much higher than
their book value. The B and C bough-out A from the partnership and thereafter X bought all the trucks
with a big profit of B and C.

-When A was bought-out of the partnership, the partnership was dissolved so A has no more share in the profit
in the sale.

In a limited partnership, the creditor of a limited partner may charge the interest of the indebted
limited partner, the interest so charged may be redeemed with:

-Separate property of any general partner

Three of the following are requisites for the existence of de facto corporation, except:

-Existing in law and in fact

A private corporation organized under the corporation law commences to have corporate existence and
juridical personality and its deemed incorporated from:

-From the date the SEC issues a certificate of incorporation under its official seal.

Incorporators of a corporation:

-All of the above

Which of the following complies with the legal requirements for incorporation?

-500,000 – 300,000 – 80,000

The following are not only express powers of the corporation but also inherent powers, EXCEPT:

-None of the above

What is the maximum ownership of Foreigners in a cooperative in the Philippines?

-None

Upon registration of the Cooperative with the Cooperative Development Authority, the former must
have at least

-All of these

The following are the principles of cooperatives, EXCEPT

-Democratic Officers’ control

The number of the Board of Trustees in a non-stock corporation?

-May be more than fifteen upon its organization provided that is stated in the article of incorporation or the by-
laws.

The corporation has a nine-member board of directors. Two of the members sold their shares while
two others are abroad. To have a quorum, the number require is:

-Five

“The majority vote its board of directors and by the vote or written assent of the stockholders
representing at least two-thirds of the subscribed capital stock of the corporation” is prescribed under
the corporation law for this purpose

-To amend the articles of incorporation.

When an article of incorporation provides for non-voting shares such as redeemable or preferred
shares, the holders of such shares shall nevertheless be entitled to vote on the following matters
except?

-Payment of bonded indebtedness

Which of the following statement is not correct about preferred shares?

-It is absolutely no voting rights

X is a director in T Corp. who was elected to a 1-year term on February 1, 2018. On April 11, 2018, X
resigned and was replaced by R, who assumed as director on May 17, 2010. On November 21, 2018, R
died. S was then elected in his place. Until which time should S serve as director?

-February 1, 2019

In areas where there are no available notaries public, the judge exercising his ex officio capacity as
notary public, shall render service, free of charge, to any person or group of persons requiring the
administration of oath or the acknowledgement of articles of cooperation and instruments loan from
cooperatives not exceeding

-50,000
Under RA 9520, the following are mandated committees of a cooperative, EXCEPT

-Credit Committee

The kinds of membership in cooperatives.

-Regular and associate

Cooperatives’ net surplus is generally allocated based on the provision of the individual coop’s by-
laws and in accordance with the Cooperative Code, as follows:

-10% - 10% - 7% - 3% - 70%

Any merger or consolidation of cooperatives shall be effective upon:

-The issuance of the certificate of merger and consolidation by the CDA

Where no creditors are affected, the cooperative may be voluntarily dissolved by vote of the board of
directors and by a resolution duly adopted by the affirmative vote of at least of all members with
voting rights, present in constituting a quorum at a meeting to be held upon call of the directors

-Majority 2/4

A cooperative may be dissolved by order of a competent court after due hearing on the ground/s of:
I. violation of any law, regulation or provisions of its bylaws
II. Insolvency

-I and II

Analiza has two separate single bank accounts with P1,000,000 and P2,000,000 balance, respectively
in the same bank which is closed by BSP. Belen, on the other hand, has two separate single bank
accounts with P3,000,000 and P2,000,000 balance, respectively with the said bank. Aside from that,
Analiza has two separate joint accounts with different persons in the same bank. The first joint
account of Analiza is with Belen with balance of P10,000,000 while the other joint account of Analiza
is with Atasha with balance of P4,000,000. How much is the maximum insured amount by PDIC from
these deposits concerning Analiza and Belen, respectively?

-P1,000,000 and P750,000

X is a depositor of AAA Bank. She has three (3) deposit accounts all under her name. One, in
checking account, one in saving account and another one in time deposit account. Each account has a
balance of Php250,000. AAA Bank became insolvent. Philippine Deposit Insurance Corporation
closed the Bank. X therefore is unable to withdraw from all of the accounts. She then filed her claims
with the Philippine Deposit Insurance Corporation. Which statement is most accurate?

-X can claim a total of Php500,000 for all the three (3) accounts.

Under R.A. 1405, which of the following is not covered by the Bank Secrecy Law?

-Investment in bonds issued by publicly traded corporations

In which office shall the letter requesting the reactivation of unclaimed balances or dormant account
be filed by the applicant depositor?

-Bureau of Treasury
Which of the following is a covered person, therefore, required to report to AMLC reportable or
suspicious transactions?

-Casinos

Under the Anti-Money Laundering Law, a covered institution is required to maintain a system of
verifying the true identity of their clients as well as persons purporting to act on behalf of

-Such clients

For purposes of determining violation of the provisions of Anti-Money Laundering Law, a transaction
is considered as a "Suspicious Transaction" with "Covered Institutions" regardless of the amount
involved, where which the following circumstances exist/s?

-All of the above

When may the Anti- Money Laundering Council (AMLC) perform an inquiry into deposits of
a person?

-Upon order of the court when there is probable cause that the deposits are related to crime of unlawful activities
defined in R.A. 9194

Anti-Money Laundering Council refers to the financial intelligence unit of the Republic of the
Philippines which is the government agency tasked to implement the AMLA. Which of the following
statements regarding the composition of AMLC is incorrect?

-The BIR Commissioner is a member of AMLC.

Newton and Einstein invented separately the technology for time machine. On January 1, 2018,
Newton obtained patent for his technology in USA. On April 1, 2018, Einstein registered his right
over the same technology with IPO of Philippines. On May 1, 2018, Newton filed an application for
patent for the same technology with IPO of Philippines and such local application claims priority. On
June 1, 2018, Newton submitted a certified copy of the foreign application together with an English
translation with IPO of Philippines. Who has better right over the patent?

-Newton because he has earlier priority date.

It refers to an intellectual property granted or issued by IPO which gives an exclusive right to an
inventor of a product, process or an improvement of a product or process which is new, inventive and
useful to exclude others from making, using, or selling the product of his invention during the life of
the intangible asset.

-Patent

It refers to trademark infringement test that focuses on the similarity of the main, prevalent or
essential features of the competing trademarks that might cause confusion.

-Dominancy test

Suppose an author published a book describing a new method of book-keeping, which of the following
statements is true?

-The extent of the author’s copyright is limited to him being able to prevent third persons from copying portions
of his work; he is unable to prevent third persons from employing or describing the method discussed in such
book
Refers to a person or organization who controls the collection, holding, processing or use of personal
information, including a person or organization who instructs another person or organization to
collect, hold, process, use, transfer or disclose personal information on his or her behalf.

-Personal information controller

Data Privacy Act of 2012 covers all except:

-Information about any individual who is or was an officer of the government institution that relates to the
position or function of the individual

No. 1 - The addressee is entitled to regard the electronic data message or electronic document
received as that which the originator intended to send;
No. 2 - If the transmission resulted in any error the addressee in not entitled to regard the electronic
data message or electronic document received as that which the originator intended to send;

-Both statements are true

Refers to information or the representation of information, data, figures, symbols or other modes of
written expression, described or however represented, by which a right is established or an obligation
extinguished;

-Electronic document