Regulatory Framework for Business Transactions

Preweek Handout One

1. It is a primary cooperative which promotes and advocates cooperativism among its members and the public
through socially-oriented projects, education and training, research and communication, and other similar
activities to reach out to its intended beneficiaries.
A. Education Cooperative
B. Advocacy Cooperating
C. Training Cooperative
D. Research Cooperative
union---member
2. Which of the following is NOT a function of a Federation of Cooperatives?
A. To carry on any cooperative enterprise authorized under Cooperative Code of the Philippines that
complements augments, or supplements but does not conflict, complete with, nor supplant the business
or economic activities of its members
B. To render services designed to encourage simplicity, efficiency, and economy in the conduct of the
business of its member cooperatives and to facilitate the implementation of their bookkeeping,
accounting, and other systems and procedures
C. To raise funds through membership fees, dues and contributions, donations, and subsidies from local and
foreign sources whether private or government
D. To print, publish, and circulate any newspaper or other publication in the interest of its member
cooperatives and enterprises and to coordinate and facilitate the activities of its member cooperatives
E. To enter into joint ventures with national or international cooperatives of other countries in the
manufacture and sale of products and/or services in the Philippines and abroad only local

3. Which of the following is NOT a purpose of Cooperative Unions?

A. To acquire, analyze, and disseminate, economic, statistical, and other information relating to its members
and to all types of cooperatives within its area of operation
B. To carry on, encourage, and assist educational and advisory work relating to its member cooperatives
C. To sponsor studies in the economic, legal, financial, social and other phases of cooperation, and publish
the results thereof and to represent its member organization
D. To promote the knowledge of cooperative principles and practices and to develop the cooperative
movement in their respective jurisdictions
E. To advise the appropriate authorities on all questions relating to cooperatives

4. Unless otherwise provided in the by-laws of the Electric Cooperative, what is the quorum necessary for holding a
valid meeting of the general assembly in an Electric Cooperative?
A. At least 25% of all the members entitled to vote
B. At least majority of all the members entitled to vote
C. At least 5% of all the members entitled to vote
D. At least 3/4 of all the members entitled to vote

5. Who is responsible for the strategic planning, direction-setting and policy-formulation activities of the
Cooperatives?
A. General assembly ---highest body
B. Board of Regents
C. Board of Trustees ----trustees for non-stock corporation
D. Board of Directors

6. When shall the by-laws of a Cooperative be submitted to the Cooperative Development Authority?
A. Within 30 days from the issuance by Cooperative Development Authority of Certificate of Registration
B. Within 20 days from the issuance by Cooperative Development Authority of Certificate of Registration
C. Within 10 days from the issuance by Cooperative Development Authority of Certificate of Registration
D. At the same time of submission of Articles of Cooperation to Cooperative Development Authority

7. Which of the following persons cannot become a prospective member of a Primary Cooperative?
A. Natural persons cooperative is inclusive for filipino--100%
B. Filipino citizens
C. Foreigners
D. Residents or workers in the intender area of operation of the primary cooperative

8. Which position in a cooperative is allowed to be held by a member of Board of Directors of a Cooperative?

A. President --both member GA & BOD
B. General manager ----is for corporation???
C. Controller
D. Vice Chairman or Chairman

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 9. The following grounds enumerated below are those which will justify the Cooperative Development Authority to
suspend or revoke, after due notice and hearing, the certificate of registration of a cooperative. Which of the
following is a ground for dissolution of a cooperative by order of a competent court after due notice and hearing?
A. Insolvency of the cooperative ---dumadaan sa court
B. Having obtained cooperative's certificate of registration by fraud
CDA C. Willful failure to operate on a cooperative basis
D. Existence for an illegal purpose
E. Willful violation, despite notice by the CDA, of the provision of the Cooperative Code or its own by-laws.

10. It refers to the full membership of the cooperative duly assembled for the purpose of exercising all the rights and
performing all the obligations pertaining to cooperatives, as provided by this Code, its articles of cooperation and
by-laws. It shall be composed of regular members who are entitled to vote under the articles of cooperation and
by-laws and shall be the highest policy-making body of the cooperative and shall exercise such powers as are
stated in this Code, in the articles of cooperation and in the bylaws of the cooperative.
A. Board of Directors
B. General Assembly
C. Board of Trustees
D. Executive Committee

11. What is the required vote for the voluntary dissolution of a cooperative?
A. At least majority vote of the board of directors and affirmative vote of at least 3/4 of all the members with
voting rights, present and constituting a quorum
B. At least majority vote of the board of directors and affirmative vote of at least 2/3 of all the members with
voting rights, present and constituting a quorum
C. At least majority vote of the board of directors and affirmative vote of at least 25% of all the members with
voting rights, present and constituting a quorum
D. At least majority vote of the board of directors and affirmative vote of at least 5% of all the members with
voting rights, present and constituting a quorum

12. In the distribution of net surplus of a cooperative, which of the following funds is the first priority?
A. Education and training fund
B. Community development fund
C. Reserve fund
D. Optional fund

13. Which type of cooperative is absolutely exempted from payment of any type of tax?
A. Duly registered cooperative with CDA which does not transact any business with non-members or the
general public.
B. Duly registered cooperative with CDA with accumulated reserves and undivided net savings of not more
than P10,000,000
C. Duly registered cooperative with CDA with accumulated reserves and undivided net savings of more than
P10,000,000
D. Duly registered cooperative with CDA which transacts with its members and the general public

14. Which of the following is NOT a security required to be registered with the Securities and Exchange Commission
(SEC)? ?????
A. Bond indenture or Bonds
B. Lease contract not affected by 3rd parties
C. Securities of publicly accountable entities
D. Derivatives like options and warrants

15. Which of the following persons may engage in the business of buying or selling of securities if NOT registered
with Securities and Exchange Commission (SEC)?
A. Dealer
B. Salesman they are all must be registered
C. Associated person
D. None of the above

16. It means a publicly announced intention by a person acting alone or in concert with other persons to acquire
outstanding equity securities of a public company, or outstanding equity securities of an associate or related
company of such public company which controls the said public company.
A. Insider trading
B. Fraudulent practices
C. Manipulation of prices
D. Tender offer

17. It refers to the act of an insider of selling or buying a security of the issuer, while in possession of material
information with respect to the issuer or the security that is not generally available to the public
A. Tender offer
B. Insider trading these is a crime
C. Fraudulent practices
D. Manipulation of prices

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18. Which of the following bank deposits is NOT insured by Philippine Deposit Insurance Corporation?
A. Deposit in overseas or foreign branch of a domestic bank operating outside the Philippines only in philipine teritory
B. Time deposit in a Philippine branch or subsidiary of foreign banks licensed by BSP to operate in the
Philippines
C. Savings deposit of only P100,000 in a rural bank operating in the Philippines
D. Deposit of employees working under a thrift bank operating in the Philippines

19. A is the managing partner of ABC Partnership. Partner A and ABC Partnership maintain bank accounts in Banko
Filipino, a bank closed by Bangko Sentral ng Pilipinas. The following data are given concerning the bank accounts
of Partner A and ABC Partnership in Banko Filipino
ABC Partnership Savings Deposit P800,000 ---500,000 only covered
ABC Partnership and Partner A Joint Demand Deposit 400,000
Partner A Time Deposit 100,000
if 2 partnership 900,000 ung answer
Partner's loan payable to Banko Filipino 200,000
How much is the insured deposit by PDIC in so far as ABC Partnership is concerned?
A. P900,000
B. P300,000
C. P200,000
D. P500,000

20. Using the data in the preceding number, how much is the insured deposit by PDIC in so far as Partner A is
concerned?
A. P300,000
B. P100,000
C. P500,000
D. P200,000

21. Which of the following statements is FALSE regarding payment of insured deposit by PDIC?
A. Payment may be made in cash or through making available to each depositor a transferred deposit in
another insured bank in an amount equal to insured deposit of such depositor.
B. The claim for insured deposit should be settled within six (6) months from the date of filing provided all
requirements are met but the claim must be filed within twenty-four (24) months after bank takeover.
C. The six-month period shall not apply if the documents of the claimant are incomplete or if the validity of
the claim requires the resolution of issues of facts and law by another office, body or agency,
independently or in coordination with PDIC.
D. The depositor of the closed insured bank has twelve (12) months from date of bank takeover to file his
deposit insurance claim. 2yrs.

22. What is the penalty for violation of Batas Pambansa Bilang 22 a.k.a. Bouncing Check Law?
A. Imprisonment of not less than thirty (30) days but not more than one (1) year; or Fine of not less than but
not more than double the amount of the check which fine shall in no case exceed Two Hundred
Thousand Pesos (P200,000); or Both Imprisonment and Fine at the discretion of the court.
B. Imprisonment of not less than twenty (20) days but not more than two (2) years; or Fine of not less than
but not more than double the amount of the check which fine shall in no case exceed Three Hundred
Thousand Pesos (P300,000); or Both Imprisonment and Fine at the discretion of the court.
C. Imprisonment of not less than ten (40) days but not more than six (6) months; or Fine of not less than but
not more than double the amount of the check which fine shall in no case exceed One Hundred
Thousand Pesos (P100,000); or Both Imprisonment and Fine at the discretion of the court.
D. Imprisonment of not less than sixty (60) days but not more than three (3) years; or Fine of not less than
but not more than double the amount of the check which fine shall in no case exceed Five Hundred
Thousand Pesos (P500,000); or Both Imprisonment and Fine at the discretion of the court.

23. What is the quantum of evidence necessary to prove the guilt of the accused for violation of Batas Pambansa
Bilang 22 a.k.a. Bouncing Check Law? guilt----
A. Preponderance of Evidence
B. Proof beyond reasonable doubt
C. Prima facie evidence or probable cause
D. Clear and convincing evidence

24. What is the quantum of evidence required to sue a person or to file a criminal case for violation of Batas
Pambansa Bilang 22 a.k.a. Bouncing Check Law?
A. Preponderance of Evidence
B. Proof beyond reasonable doubt
C. Prima facie evidence or probable cause
D. Clear and convincing evidence

25. Unless increased by the Anti-Money Laundering Council (AMLC), what is the maximum period for reporting all
covered transactions and suspicious transactions by covered persons to AMLC?
A. Within 5 working days from the occurrence of the transaction
B. Within 5 calendar days from the occurrence of the transaction
C. Within 15 working days from the occurrence of the transaction <<<
D. Within 15 calendar days from the occurrence of the transaction

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26. When may a Certified Public Accountant (CPA) become a covered person under AMLA such that it must be
required to report covered transactions and suspicious transactions to AMLC?
A. When the CPA is rendering assurance services to a client under independent contractor relationship
B. When the CPA manages the client money, securities or assets or when engages in the organization of
contributions for the creation, operation or management of companies or creation of juridical persons.
C. When the CPA performs audit of historical financial statements of a publicly listed entity.
D. When the CPA renders management consultancy or tax advisory/compliance services with a client.

27. Which of the following quantitative thresholds in so far as covered transactions are concerned is INCORRECT?
A. Banks, insurance company and security dealers - Transactions with amount exceeding P500,000
B. Jewelry stores or Jewelry dealers - Transactions with amount exceeding P1,000,000
C. Casino or Online Casinos - Transactions with amount exceeding P5,000,000
D. Registry of Deeds of LRA - Transactions with amount exceeding P50,000

28. A bank account of a person may be examined by a government official in the following exceptional cases
UNLESS
A. Through subpoena duces tecum on bank deposit of a public official, his wife and unmarried children may
be taken into consideration in the enforcement of Section 8 of The Anti-Graft and Corrupt Practices Act
(Rep. Act No. 3019)
B. Upon lawful order by the Ombudsman
C. Garnishment --this is not inquiry this is attachment
D. The PCGG conduct of its investigations to recover unexplained or ill-gotten wealth accumulated by former
President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, may
issue subpoenas requiring the attendance and testimony of witnesses and/or the production of books,
papers, contracts, records, statement of accounts and other documents execution

29. He refers to a person appointed by the Monetary Board of Bangko Sentral ng Pilipinas whenever, on the basis of
a report submitted by the appropriate supervising or examining department, the Monetary Board finds that a bank
or a quasi-bank is in a state of continuing inability or unwillingness to maintain a condition of liquidity deemed
adequate to protect the interest of depositors and creditors. He has the powers as the Monetary Board shall deem
necessary to take charge of the assets, liabilities, and the management thereof, reorganize the management,
collect all monies and debts due said institution, and exercise all powers necessary to restore its viability and he
shall have the power to overrule or revoke the actions of the previous management and board of directors of the
bank or quasi-bank.
A. Receiver
B. Conservator
C. Liquidator
D. Provisional Director

30. Who may be appointed by the BSP Monetary Board as conservator of a banking institution?
A. He may not be an employee of BSP but he should be competent and knowledgeable in bank operations
and management. In such case, the conservator shall receive remuneration to be fixed by the Monetary
Board in an amount not to exceed two-thirds (2/3) of the salary of the president of the institution in one (1)
year, payable in twelve (12) equal monthly payments.
B. He may be an employee of BSP or connected with BSP in which case he shall not be entitled to receive
any remuneration or emolument from the Bangko Sentral during the conservatorship.
C. Either A or B
D. Neither A nor B

31. The following are the grounds for placing a quasi-bank or a banking institution under receivership by BSP
Monetary Board through summarily and without need for prior hearing forbidding the quasi-bank or banking
institution from doing business in the Philippines and designating a receiver, EXCEPT
A. It is unable to pay its liabilities as they become due in the ordinary course of business: Provided, That this
shall not include inability to pay caused by extraordinary demands induced by financial panic in the
banking community.
B. It has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities.
C. It cannot continue in business without involving probable losses to its depositors or creditors.
D. It has willfully violated a cease and desist order under issued by BSP Monetary Board that has become
final, involving acts or transactions which amount to fraud or a dissipation of the assets of the institution.
E. It is in a state of continuing ability or willingness to maintain a condition of liquidity deemed adequate to
protect the interest of depositors and creditors.

32. Who shall be appointed by BSP Monetary Board as the receiver of a summarily closed banking institution?
A. Philippine Deposit Insurance Corporation
B. Any person of recognized competence in banking or finance
C. A CPA engaged in public practice
D. A member of Integrated Bar of the Philippines

33. Who shall be appointed by BSP Monetary Board as the receiver of a summarily closed quasi-bank?
A. Philippine Deposit Insurance Corporation

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 B. Any person of recognized competence in banking or finance
C. A CPA engaged in public practice
D. A member of Integrated Bar of the Philippines

34. If the receiver of a closed bank determines that the institution cannot be rehabilitated or permitted to resume
business with safety to its depositors and creditors and the general public, what shall be done to the closed bank?
A. It shall proceed to rehabilitation proceedings.
B. It shall proceed to liquidation of the bank.
C. It shall proceed to conservatorship of the bank.
D. It shall proceed to operation of the bank.

35. Which of the following statements is TRUE as regards to conservatorship, receivership and liquidation of a bank?
A. The designation of a conservator is not a precondition to the designation of a receiver.
B. PDIC may proceed directly to liquidation proceedings of a bank without undergoing the 90-day
receivership period of a closed bank.
C. Both A and B.
D. Neither A nor B.

36. It refers to a kind of intellectual property that pertains to any visible sign capable of distinguishing the goods of an
enterprise and shall include a stamped or marked container of goods.
A. Distinguishing mark
B. Trademark
C. Patent
D. Copyright

37. When is there trademark infringement?

A. When any person uses, without the consent of the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business.
B. When any person reproduce, counterfeit, copy, or colorably imitate any such mark or trade-name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with such goods,
business or services.
C. When any person passes off or attempts to pass off upon the public of the goods or business of one
person as the goods or business of another with the end and probable effect of deceiving the public. unfair
D. Either A or B. competition

38. It shall refer to either (1) the financial condition of a debtor that is generally unable to pay its or his liabilities as
they fall due in the ordinary course of business or (2) financial condition of a debtor when he has liabilities that
are greater than its or his assets.
A. Illiquidity
B. Unprofitability
C. Insolvency
D. Bankruptcy

39. It refers to the restoration of the debtor to a condition of successful operation and solvency, if it is shown that its
continuance of operation is economically feasible and its creditors can recover by way of the present value of
payments projected in the plan, more if the debtor continues as a going concern than if it is immediately
liquidated.
A. Liquidation
B. Dissolution
C. Rehabilitation Domestic Corp- DC
D. Incorporation Foreign Corp.- FC

40. Indicate whether the following are considered express powers of a corporation
I. To give donation in aid of political party or candidate or for purposes of partisan political activity. partialy true-- DC-allowed
II. To establish pension, retirement, and other plans for the benefit of its directors, trustees, officers- FC-not and allowed
employees. absolute true
A. True and True
B. False and True
C. False and False
D. True and False

41. In nothing is stated in the corporate by-laws or in the subscription agreement, what is the interest rate on
subscribed shares?
A. 6% --LEGAL INTEREST
B. 12%
C. 9%
D. 24%

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42. A, a resident of Pasay City, has an obligation to deliver a Honda car with plate number ATTY-004 to B, a resident
of Taguig City with a stipulation that the said car shall be delivered in Quezon City. At the time of constitution of
the obligation, the said car is located in Manila City. At the date of delivery, the said car is located in Makati City.
Where shall the car be delivered by A to B?
A. Pasay City
B. Makati City SPECIFIC---may agreement--autonomy of contract
C. Manila City
D. Quezon City

43. On November 1, 2000, A, B and C executed a contract of partnership whereby A, B and C partners will contribute
P100,000 cash, a land and a car on March 1, 2001, respectively. The partners registered the contract of
partnership to Securities and Exchange Commission on January 10, 2001. It was agreed in the contract of
partnership that the juridical personality of the partnership shall commence on December 1, 2000. When shall the
juridical entity or personality of the partnership begin?
A. November 1, 2000 1st w/- contract : Autonomy of contract
B. March 1, 2001 2nd w/out- execution of contract
C. December 1, 2000
D. January 10, 2001

44. In case of an imminent loss of the business of the partnership, which partner is NOT liable to contribute additional
share to the capital of the partnership in order to save the business?
--is always capitalist
A. Limited partner
B. Managing partner
C. Capitalist partner with-out agreement--industrial
D. Industrial partner

45. What is the effect if a partner has undertaken to contribute a sum of money and failed to do so?
A. He becomes a debtor to the partnership for the interest and damages from the time he should have
complied with his obligation.
B. He becomes a debtor to the partnership for the interest and damages from the judicial demand for
payment.
C. He becomes a debtor to the partnership for the interest and damages from the oral extrajudicial demand
for payment.
D. He becomes a debtor to the partnership for the interest and damages from the written extrajudicial
demand for payment.

46. What is the legal rate of interest for loan or forbearance of money, goods or credits and the rate allowed in
judgment?
A. 6%
B. 12% legal interest rate --July 1, 20
C. 9%
D. 24%

47. A is indebted in the amount of P100,000 to B. The obligation is perfected on January 1, 2016. It will become due
on June 30, 2016 but B only demanded for payment on July 1, 2016. A paid the obligation on December 31,
2016. When will the legal interest start to accrue?
A. January 1, 2016 no demand no delay
B. June 30, 2016
C. July 1, 2016
D. December 31, 2016

48. Where shall the deed of Chattel Mortgage constituted on a motor vehicle or car be registered?
A. Chattel mortgage register of the province where the mortgagor resides and Land Transportation Office
where the motor vehicle or car is registered
B. Chattel mortgage register of the province where the mortgagee resides and Land Transportation Office
where the motor vehicle or car is registered
C. Chattel mortgage register of the province where the mortgagee resides
D. Land Transportation Office

49. S sold in writing a specific laptop to B at a selling price of P3,000 after B pointed a gun to S threatening to kill him.
What is the prescriptive period available to S to file an action for annulment of this voidable contract of sale?
A. 5 years
B. 4 years
C. 6 years annulment
D. 10 years

50. He refers to a person admitted to all the rights of a limited partner who has died or has assigned his interest in the
partnership.
A. Assignee of limited partner
B. Successor of limited partner
C. Heir of limited partner
D. Substituted limited partner
51. Indicate whether the statement is true or false:

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 I. Where the illegal contract is a criminal offense, the innocent party shall not be bound to comply with his promise
if he has not yet given anything and if he had given, he may claim or recover for its return.
II. Where the illegal contract is not a criminal offense, the innocent party may demand the return or recover what
he has given without any obligation to comply with his promise.
A. True and True
B. False and False
C. True and False
D. False and True

52. Indicate whether true or false

I. With the promulgation of Central Bank Circular No. 905, Usury Law has become legally inexistent, thereby
allowing the lender and borrower to freely charge any interest on a loan as long as it is not excessive or
unconscionable.
II. With the promulgation of Central Bank Circular No. 905, the lenders in a loan have blanket authority to charge
or raise any interest rate that may enslave their borrowers or lead to hemorrhaging of their assets.
III. Stipulations providing for excessive, exorbitant or unconscionable interest rates in a loan are null and void for
being contra bonus mores or contrary to morality or good customs.
A. True, True, True
B. True, False, True
C. False, False, True
D. True, False, False

53. The following are prohibited acts for Executive Committee of a corporation, EXCEPT
A. Declaration or distribution of cash dividends or stock dividends
B. Approval of major contract with a supplier
C. Amendment of Articles of Incorporation
D. Amendment of By-laws

54. A is selling his specific house and lot at a price of P1,000,000. B went to A to buy the specific house and lot for a
lower price of P200,000. After knowing the unfortunate story of B, A told B that he is giving the said house and lot
for free. The contract is sealed with a handshake. What is the status of the contract?
A. Voidable
B. Perfectly valid
contract of donation is void
C. Void
D. Unenforceable

55. A borrowed P100,000 from B and executed a chattel mortgage on his house and lot as a security for his debt to
B. When the principal obligation became due, A did not pay despite demand for payment from B. Which is
CORRECT?
A. B has no right to foreclose the chattel mortgage because he can sue for collection.
B. B has no right to foreclose the chattel mortgage unless A consents to the foreclosure.
C. B may foreclose the chattel mortgage because A is estopped from claiming the invalidity of the chattel
mortgage over the real property but foreclosure should be made under the procedure of real estate
mortgage law.
D. B has no right to foreclose the chattel mortgage because the house and lot are not chattels. Thus, the
contract of chattel mortgage is null and void.

56. X, Y, Z are solidarily liable to A, B, C, solidary creditors in the amount of P2,700. A condoned the entire obligation
in favor of X who accepted the renunciation. The condonation is without the consent of B and C. Which is
CORRECT?
A. The entire obligation is extinguished. both solidary both side,,, reimburse na lang
B. Only P900 obligation is extinguished.
C. Only P300 obligation is extinguished.
D. A cannot condone the obligation without the permission of B and C.

57. A, B and C are partners in ABC Partnership. Later, they sell their ABC Partnership business to D with the
agreement that D shall assume all the liabilities of the partnership to third persons. However, the third persons
have no knowledge of the sale to D. Which is CORRECT?
A. The liabilities of ABC Partnership to third persons are extinguished.
B. Third party creditors may only ask from D for payment of ABC Partnership’s obligations.
C. The creditors of ABC Partnership are no longer creditors of Partner A, Partner B and Partner C.
D. Partner A, Partner B and Partner C remain to be liable to the creditors of ABC Partnership in addition to
D’s liability to these creditors.

58. A and B are partners in AB Partnership operating a laundry business. While in the course of his duty as the
managing partner of the laundry business, B used a polo-shirt that one of his customers owned. While using the
said polo-shirt without the knowledge of Partner A, a food dropped on the polo leaving a stain. Upon demand of
the customer for damages, who shall be liable?
A. Partner B only because he used the polo-shirt without the consent of A.
B. Partner B and AB Partnership only, solidarily
C. Partner A, Partner B and AB Partnership, solidarily directly solidarily liable
D. AB Partnership then Partner A and Partner B, subsidiarilly

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59. A, B and C are partners in ABC Pawnshop Partnership. A customer borrowed P10,000 from ABC Partnership and
then pledged his specific watch as collateral. A obtained from the storage cabinet of the Pawnshop the said
pledged watch without the knowledge of B and C and used it in a party. During the party, the said pledged watch
was stolen by a thief from A. Upon demand of the customer for damages, who shall be liable?
A. Partner A only because he used the watch without the knowledge of Partner B and Partner C
B. Partner A and ABC Partnership only, solidarily
C. Partner A, Partner B, Partner C and ABC Partnership, solidarily
D. ABC Partnership then Partner A, Partner B and Partner C, subsidiarially.

60. D, a professional singer, agreed to sing for a fee of P20,000 at the birthday party of C who was a fan of D. Due to
numerous commitments, D could not go to the birthday party of C. So he sent X, another professional singer who
was known to sing better than D, to sing at C’s birth party, and informed C that the latter needed to pay only
P10,000. Which is CORRECT? have special characteristics
A. D may validly assign his obligation to sing because the reduced fee was advantageous to C.
B. D may validly assign his obligation to sing because X could perform the obligation better than him.
C. D may not validly assign his obligation to sing because it is personal in nature.
D. C cannot refuse the performance of the obligation by X because the obligation to sing is transmissible
since it would not require much effort on the part of either D or X who are both professional singers.

61. The Articles of Incorporation of a Stock Corporation can be amended by at least majority vote of Board of
Directors and
A. Written assent or vote of at least 2/3 of the outstanding capital stock ---silent
B. Ratification of at least 2/3 of the outstanding capital stock ----use if very importatnt
C. Approval of at least 2/3 of the outstanding capital stock
D. Consent of at least 2/3 of the outstanding capital stock

62. A, B and C are partners in ABC Trust Fund Partnership. A receives cash from a client for purposes of trust fund
management. Partner A misappropriated the fund given by such client. Which is CORRECT?
A. If A is a managing partner, he cannot be held liable if he uses the money for partnership purposes.
B. ABC Partnership, Partner A, Partner B and Partner C may be held solidarily liable by third parties whom
cash was misapplied by Partner A. exeptionaly rule
C. Only Partner A and ABC Partnership are solidarily liable to the client.
D. ABC Partnership is the only person liable to the client.

63. A went to Red Ribbon and ordered a customized cake with a price of P500 for the first birthday of his child. A and
Red Ribbon orally agreed that delivery of the cake will occur after one week and payment of the price will be
made at the same time of delivery. Which is CORRECT? special order---is not cover by statute of fraud---perfly valis
A. The contract is unenforceable because it is a sale of personal at a price of P500.
B. This contract for a piece of work is enforceable because it is not covered by statute of fraud.
C. The contract must be ratified first to be enforceable.
D. This contract must be in writing to be valid and binding.

64. It is a contract whereby the parties conceal their true agreement. Thus, the contracting parties are bound by their
real agreement provided it does not prejudice a third person and is not intended for any purpose contrary to law,
morals, good customs, public order or public policy.
A. Absolutely simulated contract
B. Relatively simulated contract
C. Vitiated contract
D. Ratified contract

65. Alden offers his specific house to Maine at a selling price of P200,000. However, Maine asks Alden if he can buy
it at a price of P50,000. Later, Alden decided to give his specific house to Maine for free. They hugged as a sign
of validity of the contract they entered into. What is the status of the contract?
A. Perfectly valid
B. Voidable
C. Unenforceable
D. Void nneed to be notarized ti become valid

66. A, B, C, D and E are partners of ABCDE Partnership Poultry Farms. A, B and C are appointed as managing
partners with stipulation that none of the managing partners shall act without the consent of the other two
managing partners. On the date of schedule delivery of 500 kilos of frozen dressed chicken ordered by KFC
Restaurant, heavy rains caused a power failure and made transport difficult due to landslides. A local resident
ordered to purchase the dressed chickens (which were already thawing) at 80% of the contract price. However,
only Partner A and Partner B were around to decide as Partner C, who was on a business trip for the firm, could
not be contacted due to poor communication signals. Which is CORRECT?
A. Partner A and Partner B cannot decide by themselves because managing partners must act with
unanimity.
B. Partner A and Partner B may decide by themselves since any further delay would result in more losses to
the firm.
C. Partner A and Partner B can decide since they constitute the majority of the managing partners.
D. The absence of partner C cannot be alleged since there was a stipulation that none of the managing
partners shall act without the consent of the others.

-exemptional -have imenet danger

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67. In which of the following corporate acts may preferred stockholders classified as non-voting in the Articles of
Incorporation NOT allowed to vote?
A. Merger or consolidation of corporations
B. Distribution or declaration of stock dividends
C. Increase or decrease authorized capital stock
D. Sale, disposition, pledge, mortgage or encumbering all or substantially all the assets of the corporation

68. The following are the proper distinctions between proxy and voting trust agreement, EXCEPT
A. A proxy votes as an agent as he has no legal title to the shares while a trustee votes as an owner as he
has legal title to the shares.
B. A proxy is generally revocable while a voting trust agreement is irrevocable for the duration of its term.
C. A proxy is valid only for the meeting for which it was intended unless it is a continuing proxy while a voting
trust agreement is not limited to a particular meeting.
D. A proxy votes in the absence of the stockholder while a trustee can vote and exercise his rights of the
transferor even in the latter’s presence in the meeting.
E. A proxy must vote in person while a trustee may vote in person or through a proxy.
F. A proxy must be notarized while a voting trust agreement is not required to be notarized.

69. A is indebted in the amount of P10,000 to B. At the maturity date of the obligation, A tendered a cashier’s check
with an amount of P10,000 to B as payment for the obligation. B refused to accept the cashier’s check. This
prompted A to consign the cashier’s check to the court. Which is TRUE?
A. Cashier’s check is as good as cash and considered as legal tender that’s why A may compel B to accept
cashier’s check for the payment of the obligation.
B. The consignation made by A is justified because there is valid tender of payment.
C. The obligation of A to B is extinguished by the consignation of the cashier’s check to the court.
D. The obligation of A to B remains to exist because there is neither valid tender of payment nor valid
consignation.

70. A, B, C and D are partners in ABCD Partnership with A, B and C contributing cash amounting P10,000; P20,000;
and P30,000, respectively. On the other hand, D contributed cash amounting to P40,000 and services to the
Partnership as a capitalist-industrial partner. ABCD Partnership neither have profit agreement nor loss
agreement. In the first year of operation, ABCD Partnership incurred net loss of (P10,000). How much is the share
of partner D in the partnership net loss?
A. P2,500 in his capacity as an industrial partner
B. P4,000 in his capacity as capitalist partner but none as an industrial partner
C. None because he is an industrial partner
D. P2,500 in his capacity as a capitalist partner.

71. A, B and C are partners in ABC Partnership with contributions of P10,000; P40,000 and P50,000, respectively.
Their agreement shows that they will share in the profits in the ratio of [Link], respectively. During the year, ABC
Partnership sustained a net loss of P9,000. How shall the loss be divided among Partner A, B and C,
respectively?
A. P3,000 – P3,000 – P3,000
B. P900 – P3,600 – P4,500
C. P2,000 – P3,000 – P4,000
D. There must be a loss sharing agreement first before the loss will be distributed among the three partners.

72. A, B and C are partners in AB Ltd., a limited partnership with capital contribution of P300,000; P600,000 and
P100,000, respectively. A and B are general partners while C is a limited partner. After three years of continuous
losses, AB Ltd. Partnership decided to liquidate. Partner C received P100,000 as return of his capital contribution
from AB Ltd. Partnership. After such distribution to Partner C, P220,000 unpaid liabilities to third person remain.
No assets remain in the partnership due to insolvency. How much may the unpaid creditor of the partnership go
after the separate assets of Partner A, Partner B and Partner C, respectively?
A. P40,000 – P80,000 – P100,000
B. P66,000 – P132,000 – P22,000
C. P73,333 – P73,333 – P73,333
D. P73,333 – P146,667 – P0

73. Which of the following contracts must be in public instrument in order to be valid and enforceable at the same
time?
A. Contract of guaranty
B. Contract of donation of immovable or real property
C. Contract of antichresis
D. Contract of sale of a piece of land

Page 9 of 12 (PW-1)
74. D borrowed P100,000 from C and mortgaged his land to secure the fulfilment of the loan. The contract of real
estate mortgage provides that upon default of D in the payment of the principal contract of loan, C becomes the
automatic owner of the mortgaged land. Which is CORRECT?
A. Upon default of D in the payment of the loan, C becomes the automatic owner of the mortgaged land.
B. Upon default of D in the payment of the loan, C must still foreclose the real estate mortgage over the loan
because automatic transfer of ownership of the mortgaged land to C upon default of D in the payment of
the loan is null and void for being pactumcommissorium.
C. The contract of real estate mortgage is null and void because of the provision regarding
pactumcommissorium.
D. The contract of loan is extinguished by the automatic transfer of the mortgaged land to C upon default of
D in the payment of the principal contract of loan.

75. In which of the following cases will there be legal subrogation?

A. When a preferred creditor pay a creditor who is not preferred even without the debtor’s knowledge.
B. When a third person, not interested in the obligation, pays without the consent or knowledge of the
debtor.
C. When even without knowledge of the debtor, a person interested in the fulfilment of obligation pays the
creditor.
D. When there is voluntary payment by a third person who has no interest in the obligation and there is no
approval by the debtor.

76. Which of the following contracts may be assailed by a third person?

A. Rescissible contract
B. Voidable contract
C. Unenforceable contract
D. Perfectly valid contract

77. Which of the following contracts may be assailed by a third person?

A. Void contract
B. Voidable contract
C. Unenforceable contract
D. Perfectly valid contract

78. On July 1, 2020, Selya sold a specific land covered by Torrens Title to Carlos. On August 1, 2020, Selya sold
again the same specific land to Lino. On August 10, 2020, Carlos discovered the second sale made by Selya to
Lino. On the following day, Carlos asked Lino to meet him to discuss the matter. Lino refused to meet Carlos. This
prompted Carlos to register his adverse claim over the land on August 15, 2020. On August 20, 2020, Lino
registered the deed of sale before the Registry of Deeds. Afterwards, on August 31, 2020, the Registry of Deeds
issued the title to Lino. Who has better right over the land?
A. Lino because he is the first registrant of the deed of sale in good faith.
B. Lino because the certificate of title in his own name is a conclusive evidence that he is the owner of the
land.
C. Carlos because he is the buyer with the older title in good faith and Lino acted in bad faith in registering
the deed of sale.
D. Selya because he has not yet received the price. have adverse claim----means bad faith with knowing it

79. Which of the following is NOT negotiable because it is NOT a sum certain in money?
A. When the sum to be payable is to be paid with interest and with acceleration clause provision that upon
default in payment of any instalment or of interest, the whole sum become due.
B. When the sum to be paid is with exchange, whether at a fixed rate or at the current rate.
C. When the sum payable is to be paid by stated instalments with amount and maturity date of each
instalment.
D. When the instrument contains an order or promise to do any act in addition to the payment of money.

80. Which of the following is NOT negotiable because it is NOT a sum certain in money?
A. I promise to pay P or order the sum of P10,000 or an Iphone X at the option of the holder.
B. I promise to pay P or order the sum of USA $10,000 at December 31, 2020 exchange rate with attorney’s
fees if not paid at maturity.
C. I promise to pay P or order P10,000 in five equal monthly instalments starting January 1, 2020.
D. I promise to pay P or order P10,000 in the form of candies.

81. It is a formal written statement made by a notary public at the request of a holder of a bill of exchange stating that
he has demanded acceptance or payment of the bill and that it has been refused, with the reasons, if any, given
by the drawee or acceptor for the dishonour, whereupon, the notary public protests against all parties to such
instrument and declares that they will be held responsible for all loss or damage arising from the dishonor of the
bill.
A. Protest
B. Demand letter
C. Petition
D. Notice of dishonour

82. The following are the instances when protest is required, EXCEPT

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 A. When a foreign bill is dishonored by non-acceptance or a foreign bill previously accepted is dishonored by
non-payment.
B. Where an inland bill has been accepted for honor.
C. Where an inland bill contains a referee in case of need.
D. Where an inland bill is dishonored by the acceptor for honor.
E. Where an inland bill is accepted by the drawee of the bill.

83. D issued a bill of exchange payable to the order of P with A indicated as the drawee. The bill is indorsed by P to
B, B to C. C to E, and E to H, holder. H presents the bill to A for acceptance but the latter refuses to accept it. H
protested the bill. Before the date of maturity, S, a stranger to the bill, accepts the bill for the honor of B, an
indorser. To whom shall S become liable?
A. C, E and H
B. B, C, E and H
C. P, B, C, E and H
D. D, P, B, C, E and H

84. Using the same data in the preceding number, if S pays the bill of exchange to H, from whom may S ask for
reimbursement?
A. D, P and B
B. D, P, B and C
C. D, P, B, C and E
D. D, P, A and B

85. What is the required vote for the delegation to the Board of Directors of the power to amend the by-laws of the
Corporation?
A. At least majority of the outstanding capital stock
B. At least 2/3 of the outstanding capital stock
C. At least majority of the Board of Directors and at least majority of the outstanding capital stock
D. At least majority of the Board of Directors and at least 2/3 of the outstanding capital stock

86. It refers to the natural right of stockholders to subscribe to all issues or disposition of shares of any class in
proportion to their present shareholdings in order to preserve their ownership interests in the corporation.
A. Appraisal right
B. Preemptive right -common law right
C. Right of first refusal
D. Right of first option

87. Which of the following is a real defense in a negotiable instrument?

A. Undelivered and incomplete instrument
B. Fraud in inducement
C. Illegality of consideration
D. Filling of wrong amount contrary to authority given

88. In which of the following corporate acts is appraisal right available to a dissenting stockholder?
A. Merger or Consolidation of Corporations
B. Increase or decrease of authorized capital stock
C. Approval of management contract
D. Incurring bond indebtedness

89. Which of the following corporations is NOT allowed to issue no par value common shares?
A. Mining company
B. Educational institution
C. Trust company
D. Oil company

90. Which of the following corporations is NOT allowed to be incorporated as a close corporation?
A. Stock exchange
B. Restaurant business
C. Business process outsourcing
D. Manpower agency

91. Which of the following modes of extinguishment of obligation is essentially gratuitous and requires acceptance by
the debtor?
A. Compensation
B. Merger
C. Remission
D. Novation

92. Which of the following matters must be provided in the Articles of Incorporation instead in the By-laws?

Page 11 of 12 (PW-1)
 A. Provision on founders' shares
B. Creation of an executive committee
C. Form of proxies
D. Quorum in meeting of stockholders
with in 5 yrs

93. What is the legal effect of failure on the part of the corporation to formally organize within two years from the
issuance of certificate of registration by Securities and Exchange Commission?
A. The corporation becomes a de facto corporation.
B. The corporation remains a de jure corporation.
C. That failure becomes a ground for dissolution of a corporation through a court order.
D. The corporation is ipso facto dissolved by operation of law. --automatically dissolved

94. A, B, C, D and E are partners in ABCDE Partnership with capital contribution ratio of [Link], respectively. No
one is appointed as managing partner in the Articles of Co-Partnership. The partners held a meeting for the
selection of its lessor. A and B want SM. C and D want Robinson. E wants Ayala. Which shall be considered as
the lessor of ABCDE Partnership?
A. SM
B. Robinson
C. Ayala
D. None of the above

95. Which of the following is NOT a ground for dissolution of a general partnership?
A. Expiration of the term of the partnership
B. Assignment of partner's interest to a third person
C. Death of a partner
D. Insolvency of the partnership

96. Which of the following is a characteristic of a private corporation?

A. It has all the powers, rights, properties and attributes unless denied in the law, articles of incorporation or
by-laws.
B. Its owners are liable up to the extent of their separate assets.
C. It enjoys the right of succession.
D. It is created by mere consent of the founders.

97. It refers to the process of converting the non-cash assets of a corporation into cash and then distributing the net
proceeds to the creditors of a corporation on the basis of Civil Code provisions on concurrence and preference of
credits.
A. Corporate liquidation
B. Corporate dissolution
C. Corporate rehabilitation
D. Incorporation of a corporation

98. The Articles of Incorporation of ABC Corporation provides for 15 sits. In the election for the President of the
corporation, 11 attended. How many votes are necessary in order to elect the Corporate President?
A. At least 5 votes
B. At least 6 votes
C. At least 7 votes
D. At least 8 votes

99. The Articles of Incorporation of ABC Corporation provides for 15 sits. In the approval of the collective bargaining
agreement with the labor union, 11 attended. How many votes are necessary in order to approve the collective
bargaining agreement?
A. At least 5 votes
B. At least 6 votes
C. At least 7 votes
D. At least 8 votes

100. A borrowed P1,000 from B as evidenced by a negotiable promissory note. In order to secure the
fulfillment of the obligation, A pledged and delivered his specific watch to B. At the date of maturity of the
obligation, B voluntarily return the specific watch to A. Which is CORRECT?
A. Only the contract of loan is extinguished.
B. Only the contract of pledge is extinguished.
C. Both contract of loan and contract of pledge are extinguished.
D. Neither contract of loan nor contract of pledge are extinguished.
-Nothing Follows-

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