1.
B A contract is a “Meeting of the minds” which necessarily would be an agreement between the
contracting parties. All others do not require consent as an element for the obligation to
arise.
2. C Art. 2144. xxx This juridical relation does not arise in either of these instances:
(1) When the property or business is not neglected or abandoned;
(2) If in fact the manager has been tacitly authorized by the owner.
xxx
In the second case, the rules on agency in Title X of this Book shall be applicable. (1888a)
3. A In Saludaga vs. FEU, the SC held that a school is obliged to ensure and take adequate steps
to maintain peace and order within the campus. When (the student) was shot inside the campus
by no less the security guard who was hired to maintain peace and secure the premises, there
is a prima facie showing that respondents failed to comply with its obligation to provide a
safe and secure environment to its students.
4. D Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment
5. C In joint obligations, each debt/credit is considered independent of the others. A “joint”
creditor cannot validly condone or remit the entire credit that belongs to the other creditors,
unlike an obligation where there are solidary creditors.
6. D Mora accipiendi is delay on the part of the creditor
Mora Solvendi is delay in the part of the debtor; ex re if in real obligations; ex persona in
personal obligations.
7. C Resolution or “rescission in reciprocal obligations” is in implied in reciprocal obligations
under Art. 1191.
8. A Art. 1245: Dation in payment - property is alienated to the creditor in satisfaction of a debt
in money.
9. D Art. 1270 xxx Express condonation shall xxx comply with the forms of donation.
Art. 748 xxx If the value of the property donated exceeds P5,000, the donation and the
acceptance shall be in writing. Otherwise, the donation is void.
10. C Art. 1294 If the substitution is without the knowledge or against the will of the debtor, the
new debtor’s insolvency or non-fulfillment of the obligations shall not give rise to any
liability on the part of the original debtor.
11. A The essential elements of a contract are consent, object and cause.
Implied warranties are regarded as natural elements. While a stipulation for interest is
considered an accidental element.
12. D Art. 749 In order that the donation of an immovable may be valid, it must be made in a public
instrument xxx
13. D A is governed by Art. 1312; B is governed by Art. 1313; C is governed by Art. 1314;
Art. 1311, 2nd par., provides for a stipulation pour autrui which provides that “a mere
incidental benefit or interest of a person is not sufficient.”
14. D Art. 1403(3) provides that contracts where both parties are incapable of giving consent to a
contract are considered unenforceable.
Art. 1327 provides the persons who cannot give consent to a contract, namely: unemancipated
minors and insane or demented persons (including deaf-mutes who do not know how to write)
15. B Art. 1378: In case where no specific rule on construction applies, the rule shall be:
Gratuitous contracts: least transmission of rights and interests
Onerous contracts: greatest reciprocity of interests.
16. C Art. 1308: The contract must bind both contracting parties, its validity or compliance cannot
be left to the will of one of them.
This provision was applied by the SC when a bank unilaterally increased the interest rate of
a loan, holding that it violates the principle of mutuality. (Sps. Florendo vs. CA)
17. B Art. 1652 provides that a sublessee is subsidiarily liable to the lessor for any rent due from
the lessee.
The action of the lessor to enforce such subsidiary liability is called accion directa.
18. B Art. 1316 provides for real contracts which require delivery for perfection, namely: deposit,
pledge and commodatum. Mutuum is deemed a real contract also since Art. 1953 provides that “by
a contract of loan, one of the parties delivers to another,”
19. B Art. 1381. The following contracts are rescissible:
(1) Those which are entered into by guardians whenever the wards whom they represent suffer
lesion by more than one-fourth of the value of the things which are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated
in the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect
the claims due them;
(4) Those which refer to things under litigation if they have been entered into by the defendant
without the knowledge and approval of the litigants or of competent judicial authority;
(5) All other contracts specially declared by law to be subject to rescission.
Nothing in the enumeration includes a situation where the principal suffers lesion.
20. B Art. 1403(2) provides for the Statute of Frauds which requires that the contracts must be in
writing in order to be enforceable.
A – is covered by par. (e) and has no regard for the amount, as long as it involves a sale of
real property (or a lease thereof for a period of more than 1 year).
C – is covered by par. (b) – a special promise to answer for the debt, default or miscarriage
of another.
D – is covered by par. (a) – an agreement not to be performed within a year from the making
thereof.
B is not covered by par. (d) since it concerns itself only with a contract of sale of personal
property; neither by par. (e) since it pertains only to real property.
21. D Real or personal object as to a contract of sales is material in:
i. Statute of Frauds – par. (d) applies only to personal property; par. (e) pertains only
to real property.
ii. Double sale – the rules as to who have better rights differ since in real property, the
first registrant in good faith is preferred over the first possessor in good faith, where
possession in good faith is the only basis in personal properties.
iii. Maceda Law applies only to sale of residential realty; while Recto Law applies only to
sale of personal property, though both on installment.
22. D The buyer is entitled to a 60 day grace period for the first two years worth of installment
plus 30 days for each year of installment thereafter. Since the payment was already 7 years,
the additional five years entitles the buyer to 150 days grace period added to the 60 days for
the first two years – 210 days.
23. C Art. 1505 par. 2(3) provides that purchases made in a merchant’s store or in fairs, markets
are not covered by the rule that the buyer acquires no better title than that of the seller.
Note that Art. 559 does not apply since the seller did not lose the object nor was he unlawfully
deprived of its possession since he voluntarily delivered the thing to the buyer.
24. B Art. 1544 provides that if the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession thereof in
good faith, if it should be movable property.
25. C Stoppage in transit presupposes that the seller has ALREADY parted with possession; while
Possessory Lien presupposes RETENTION OF POSSESSION of the thing sold.
26. C Art. 1554: if the vendee has renounced the right to warranty in case of eviction and eviction
should take place, the vendor shall only pay the value which the thing sold had at the time
of eviction.
27. D Art. 1623: The right of legal pre-emption or redemption shall not be exercised except within
30 days from the notice in writing. Since there was never a notice given in this case, the 30
day period to redeem has not yet begin to run.
28. A Conventional – parties.
Judicial – by court
Legal – by law
29. A Art. 2115. The sale of the thing pledged shall extinguish the principal obligation, whether
or not the proceeds of the sale are equal to the amount of the principal obligation, interest
and expenses in a proper case. If the price of the sale is more than said amount, the debtor
shall not be entitled to the excess, unless it is otherwise agreed. If the price of the sale
is less, neither shall the creditor be entitled to recover the deficiency, notwithstanding any
stipulation to the contrary.
30. A Sec. 6 of Act No. 3135 provides that the debtor may redeem the property within the term of one
year.
90 to 120 days pertain to the period of equity of redemption in judicial foreclosure
3 months or upon registration whichever is earlier is under the General Banking Law, which
applies to extrajudicial foreclosure where the mortgagor is a juridical person and the creditor
is a bank
30 days is the redemption period in case of legal redemption
31. A Unlike in sales, where ownership of the seller is only required at the time the obligation to
deliver arises, in pledge/mortage, absolute ownership must exist at the time the contract is
entered into as required under Art. 2085.
32. C This is an ORDER instrument which requires an indorsement for valid negotiation. Since the
signature of C is forged, it is wholly inoperative under Section 23 of the NIL and cannot be
the source of liability of parties prior to the same, including C.
33. C Minority affects capacity. One of the warranties under Section 65 of a general indorser is
that prior parties had capacity to contract. Since M was a minor, the indorsers are in breach
of such warranty.
34. B A “drawee” is a party only to a bill of exchange and not in a promissory note.
35. B If the acceptance is qualified as to amount it is called “partial acceptance.”
36. C Sec. 1 of BP Blg 22 provides: Any person who makes or draws AND issues any check xxxx
37. C Sec. 1 par. 2 of the same BP provides the presumption of knowledge of insufficiency of funds
in case the check is presented within a period of 90 days from the date appearing thereon.
38. A Art. 1779. In a universal partnership of all present property, the property which belongs to
each of the partners at the time of the constitution of the partnership, becomes the common
property of all the partners, as well as all the profits which they may acquire therewith.
39. C Art. 1811. A partner is co-owner with his partners of specific partnership property.
Under the 2nd par., (2) a partner’s right to specific partnership property is not assignable
except in connection with the assignment of rights of all the partners in the same property
(not their consent).
40. A Art. 1815: xxx those who, not being members of the partnership, include their names in the
firm name, shall be subject to the liability of a partner.
Art. 1846 – limited partner who includes his name in the partnership name shall be liable as
a general partner.
41. B Art. 1800: The partner who has been appointed managing partner xxx; his power is irrevocable
without just or lawful cause. The vote of the partners representing the controlling interest
shall be necessary for such revocation
If after the partnership has been constituted, may be revoked at any time (with or without
cause), only requiring the controlling interests’ vote.
42. A Art. 1862: xxx the court may charge the interest of the indebted limited partner with the
payment of the unsatisfied amount of such claim, xxx
The interest may be redeemed with the separate property of any general partner, but may not
be redeemed with partnership property.
43. B Art. 1791: If there is no agreement to the contrary, in case of imminent loss of the business
of the partnership, any partner who refuses to contribute additional share to the capital,
except an industrial partner, to save the venture, shall be obliged to sell his interest to
the other partners.
44. B Art. 1797: The losses and profits shall be distributed in conformity with the agreement. Xxx
In the absence of stipulation, the share of each partner in the profits and losses shall be
in proportion to what he may have contributed xxx.
Since the agreement pertains only to losses, the same does not apply to profits. Therefore,
the profit shall be distributed in accordance with their capital contributions – equal.
45. D Art. 1850: without the written consent or ratification by all limited partners, general partners
do not have authority to continue the business with partnership property on the death,
retirement, insanity, civil interdiction or insolvency of a general, unless right to do so is
given in the certificate.
46. A If the cause of the dissolution is acts, insolvency or death, notice is required to terminate
mutual agency. As such, under Art. 1833, each partner is liable to his co-partners for his
share of any liability created by any partner acting for the partnership as if the partnership
had not been dissolved unless the partner had knowledge or notice.
47. D Art. 1839(2)(d) the last to be paid shall be those owing to the partners in respect of profits.
48. B Under the corporate entity doctrine, the corporation has a personality separate and distinct
from that of the stockholders composing it. Thus, it cannot be held liable for obligations of
the stockholders and vice versa.
49. C Section 35 (formerly Section 36) par. (h) now expressly authorizes a corporation to enter into
a partnership and joint venture
Under par. (i), the word “domestic” in corporations prohibited from making such donations has
already been removed limiting the prohibition to foreign corporations only.
Under Section 10 of the RCC, a partnership, association or corporation are now included in the
enumeration of who may be incorporators, which used to have “natural persons” only.
50. C Eleemosynary Corporations are created for charitable and benevolent purposes such as those
organized for the purpose of maintaining hospitals and houses for the sick, aged or poor
51. D The requirement under the old Section 13 requiring that at least 25% of the Authorized Capital
Stock be subscribed and that at least 25% of the subscribed capital must be paid-up, has been
removed. There is no longer a minimum subscription and paid-up capital requirement.
52. A Under Section 10 of the RCC, a partnership, association or corporation are now included in the
enumeration of who may be incorporators, which used to have “natural persons” only.
53. D Issued shares are those which are fully paid already. Subscribed shares of subscribers being
entitled to all the rights of a stockholder (except issuance of certificate) are considered
outstanding already. Treasury shares are part of issue shares but are not entitled to any
rights of a stockholder.
54. D In case of ordinary stock corporations, the restrictions or preferences need to be stated in
the Articles and Certificate. Unlike in close corporations where it must be stated ALSO in the
by-laws.
55. A Sec. 22: If a corporation does not formally organize and commence the transaction of its
business or the construction of its works within two (2) years from the date of its
incorporation, its corporate powers cease and the corporation shall be deemed dissolved.
Which is now 5 years under the RCC.
56. C Section 24. xxx In stock corporations, xxx; and said stockholder may vote such number of shares
for as many persons as there are directors to be elected or he may cumulate said shares and
give one candidate as many votes as the number of directors to be elected multiplied by the
number of his shares shall equal, or he may distribute them on the same principle among as
many candidates as he shall see fit.
As such, by default, in ordinary corporations, they are entitled to cumulative voting. Since
there are 10 directors to be elected, the stockholder who holds 1,000 shares shall be entitled
to 10,000 votes (10 * 1,000)
57. B Section 29. Any vacancy occurring in the board of directors or trustees other than by removal
by the stockholders or members or by expiration of term, may be filled by the vote of at least
a majority of the remaining directors or trustees, if still constituting a quorum.
As such, if the cause is removal and expiration of term, the stockholders will be the ones to
fill-in the vacancy.
58. D The compensation of directors for other functions is not subject to the limitation imposed by
the Corp Code.
59. A Section 34. Disloyalty of a director. – Where a director, by virtue of his office, acquires
for himself a business opportunity which should belong to the corporation, thereby obtaining
profits to the prejudice of such corporation, he must account to the latter for all such
profits by refunding the same, unless his act has been ratified by a vote of the stockholders
owning or representing at least two-thirds (2/3) of the outstanding capital stock.
60. C If the injury is to the corporation, the suit that will be filed in behalf of it is a derivative
suit.
61. B SEC. 24. Corporate Officers. – Immediately after their election, the directors of a corporation
must formally organize and elect: xxx; (b) a treasurer, who must be a resident; xxx
62. C Section 6. Classification of shares, 3rd par.: Shares of capital stock issued without par value
shall be deemed fully paid and nonassessable and the holder of such shares shall not be liable
to the corporation or to its creditors in respect thereto.
The director to escape liability must have his objection in writing.
63. D Amendment of the by-laws would require a majority vote of the BoD first and a resolution
adopted by the stockholders (including non-voting shares) adopting the same by majority vote.
64. D Sec. 74, 3rd par.: However, if the total assets or total liabilities of the corporation is less
than Six hundred thousand pesos (P600,000.00), or such other amount as may be determined
appropriate by the Department of Finance, the financial statements may be certified under oath
by the treasurer and the president.
65. D Amendment of the by-laws require only a majority vote.
66. C Members of non-stock corporations’ meeting can be anywhere within the Philippines
BoD meetings can be anywhere even outside the Philippines
Meetings of stockholders are required to be in the city or municipality where the principal
place of business is located.
67. C SEC. 38. Power to Deny Preemptive Right. – All stockholders of a stock corporation shall enjoy
preemptive right to subscribe to all issues or disposition of shares of any class, in proportion
to their respective shareholdings, unless such right is denied by the articles of incorporation
or an amendment thereto: Provided, That such preemptive right shall not extend to shares issued
in compliance with laws requiring stock offerings or minimum stock ownership by the public;
or to shares issued in good faith with the approval of the stockholders representing two-
thirds (2/3) of the outstanding capital stock, in exchange for property needed for corporate
purposes or in payment of a previously contracted debt.
The 2/3 requirement only pertain to acquisition of property or payment of previously contracted
debt.
68. C Section 8. Redeemable shares. – xxx They may be purchased or taken up by the corporation upon
the expiration of a fixed period, regardless of the existence of unrestricted retained earnings
in the books of the corporation, xxx
69. D Section 96. Definition and applicability of Title. - A close corporation, within the meaning
of this Code, is one whose articles of incorporation provide that: (1) All the corporation’s
issued stock of all classes exclusive of treasury shares, shall be held of record by not more
than a specified number of persons, not exceeding twenty (20);
70. A SEC. 118. Articles of Incorporation. –A One Person Corporation shall file articles of
incorporation xxx.
71. B Under the Constitution, ownership of land is limited to Filipinos. As to corporations, they
must be 60% Filipino-owned. In this case, since Basha Corporation owns 70% of the stocks of
Popoy Corporation, and in turn, Basha Corporation is 90% Filipino-owned. Applying the
grandfather rule, it is 63% Filipino-owned (70% * 90%).
72. B Section 138, 2nd par.: If the corporation is ordered dissolved by final judgment pursuant to
the grounds set forth in subparagraph (e) hereof, its assets, after payment of its liabilities,
shall, upon petition of the Commission with the appropriate court, be forfeited in favor of
the national government.
73. D Excluding the bank’s shares of stock.
74. C Mandatory Tender Offer applies if the acquisition will amount to 35% of the shares with the
right to vote, whether direct or indirect, or less than 35% but would result to over 50%
ownership. In this case, the acquisition of 50% of Y Corporation would result to 32% (64% *
50%) indirect ownership, added to the 18% already owned would result only in exactly 50%.
75. C It must be a person who learns such information by a communication from any of the other
insiders.
In a similar case decided by a US Court (persuasive as to the interpretation of SRC), persons
who obtain the information by mistake are not considered insiders.
76. B “marginalized fishermen” – Fishermen Cooperative
77. B ART. 16. Registration. – xxx. All applications for registration shall be finally disposed of
by the Authority within a period of sixty (60) days from the filing thereof, otherwise the
application is deemed approved, unless the cause of the delay is attributable to the applicant.
78. D Art. 14 (5): No cooperative, other than a cooperative union xxx shall be registered unless the
articles of cooperation is accompanied with the bonds of the accountable officers and a sworn
statements of the treasurer elected by the subscribers showing that at least twenty-five per
centum (25%) of the authorized share capital has been subscribed and at least twenty-five per
centum (25%) of the total subscription has been paid: Provided, That in no case shall the
paid-up share capital be less than Fifteen thousand pesos.
The minimum paid-up capital and subscription requirement do not apply to a Union.
79. D This is not a requirement in forming cooperatives. The requirement is that they are actually
residing or working in the intended area of operation.
80. D Art. 61(2)(a): Income Tax – xxx; Provided, further, that cooperatives regardless of
classification, are exempt income tax from the date of registration with the Authority
81. A Cooperative, Kooperatiba or Cooperativa are required to be stated in the name including the
type of cooperative.
Incorporated – prohibited
Development – discouraged
82. C Rule VI, Section 13. Quorum Requirement. Unless otherwise provided in the By-laws of the
Electric Cooperative, quorum shall be five per centum (5%) of all the members entitled to vote
Each member gets one vote, regardless of the share capital held.
As such, with 200 members, the quorum requirement would be 10 (200 * 5%)
83. A ART. 18. Amendment of Articles of Cooperation and Bylaws. – Unless otherwise prescribed by
this Code and for legitimate purposes, any provision or matter stated in the articles of
cooperation and by laws may be amended by two-thirds (2/3) vote of all the members with voting
rights
84. D Art. 39(3) The members of the board of directors shall not hold any other position directly
involved in the day to day operation and management of the cooperative.
85. A Art. 86(1) An amount for the reserve fund which shall be at least ten per centum (10%) of net
surplus.
(a) The reserve fund shall be used for the stability of the cooperative and to meet net losses
in its operations. The general assembly may decrease the amount allocated to the reserve fund
when the reserve fund already exceeds the share capital.
86. B Sec. 54 of the Intellectual Property Code. Term of Patent. - The term of a patent shall be
twenty (20) years from the filing date of the application
87. D 178.4 of the Intellectual Property Code. In the case of a work-commissioned by a person other
than an employer of the author and who pays for it and the work is made in pursuance of the
commission, the person who so commissioned the work shall have ownership of work, but the
copyright thereto shall remain with the creator, unless there is a written stipulation to the
contrary.
88. A Impeachment cases are exceptions to bank secrecy of peso deposits only not foreign currencies.
89. C Escheat is the proceeding initiated by the Solicitor General to have the unclaimed balances
forfeited in favor of the Government under Section 3 of the law.
90. B Deposits payable outside the Philippines are not entitled to insurance claims
91. A Each depositor is entitled to P500,000 insurance on his individual deposits. Also, each
depositor is entitled to a separate P500,000 insurance on joint accounts. Each joint account
is entitled to P500,000 but the same shall be shared by the co-depositors equally (absent any
agreement to the contrary). As such, Juan is entitled to P500,000 on his individual account
(P100,000 uninsured); and P500,000 for the joint accounts (P150,000 uninsured on the account
with Pedro).
92. A These are provided under Section 4 of the AMLA.
93. C The stages of money-laundering:
Placement - At this stage, the launderer inserts dirty money into a legitimate financial
institution. This is the riskiest stage of the laundering process because large amounts of
cash are pretty suspicious and banks are required to report high-value transactions
Layering - Involves sending money through various financial transactions to change its form
and make it more difficult to follow
Integration - At this stage the money re-enters mainstream economy in legitimate-looking form,
appearing to have come from legitimate transaction
94. D “covered persons” EXCLUDE both accountants and lawyers
95. D A court order is not necessary when the offense or unlawful activity involved is any of the
following:
1. Kidnapping for ransom
2. Sections 4, 5, 7, 8, 9, 10, 12, 13, 14, 15 and 16 of Comprehensive Dangerous Drugs Act (RA
9165)
3. Hijacking and other violations under RA 6235, destructive arson and murder, including those
perpetrated by terrorists against non-combatant persons and similar targets
4. Terrorism and conspiracy to commit terrorism as defined under the Human Security Act
96. B Covered institutions shall report to the AMLC all covered or suspicious transactions within 5
working days from occurrence thereof, unless the AMLC prescribes a longer period not exceeding
15 working days. Conviction of the unlawful activity is not necessary before a report is made.
“Occurrence” as used above shall mean the time the covered entity has determined that the
transaction is suspicious, which should not exceed 10 days from the date of the transaction.
Also, if a transaction is both covered and suspicious, only a suspicious transaction report
shall be made.
97. B Sec. 22 of the E-Commerce Act provides for the following rules on time of receipt:
1. If there is a designated information system – upon entry therein. Except if both addressee
and originator are participants – upon retrieval.
2. If there is a designated information system but the EDM/ED enters a different information
system – upon retrieval
3. If there is no designated information system – upon entry to the addressee’s information
system.
98. A Sec. 12 provides that processing of personal information shall be permitted. Unlike in Sec.
13 which provides that processing of sensitive personal information and privileged information
shall be prohibited.
99. B National Privacy Commission is the government agency created by the Data Privacy Act which
under Sec. 7 thereof will have the power to administer and implement the provisions of the
Data Privacy Act.
100. If an application or request involving activities which pose danger to public health, safety,
C morals or public order, the processing time shall not exceed 20 days, whether it is simple,
complex or highly technical.
