REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

Law on Obligation A. W can collect from B P3,200

1. A promised to give B P1,000 if B will hear mass for ten consecutive Sundays. This is a B. Y can collect from C P6,400
A. Civil obligation C. Natural obligation C. Y can collect from either B or C P8,000
B. Moral obligation D. Religious obligation D. W or Y can collect from B and C P12,000

2. Which of the following is a valid stipulation? 8. Which of the following statements is correct?
A. A will give B P10,000, if B will kill C A. The effect of a conditional obligation to give, once the condition has been fulfilled, shall
B. A agreed to give B a house and lot if B will be his mistress retroact to the day of the constitution of the obligation
C. A agreed to put poison on the food of B’s wife and if A fails, to pay B P10,000 for B. If the obligation is unilateral, the fruits and interest during the pendency of the condition
damages shall be deemed to have been mutually compensated
D. A promises to give B P10,000, and if A fails, A will allow B to have sexual intercourse C. In an obligation to do and not to do, the parties shall determine, in each case the
with her retroactive effect of the condition that has been complied with
D. If the obligation imposes reciprocal prestations upon the parties, the debtor shall
3. What is the prescriptive period of the right to file an action based on quasi-delict? appropriate the fruits and interests received, unless from the nature and circumstances
A. 4 years C. 6 years of the obligation it should be inferred that the intention was different
B. 5 years D. 10 years
9. Which of the following statements is not correct?
4. A, B and C are solidarily indebted to D for P9,000 representing the purchase price of 1gram A. Remission of the debt by any of the solidary creditors shall extinguish the obligation
of shabu but A’s consent has been obtained by violence and intimidation, and B is a minor. B. A solidary creditor can assign his right even without the consent of the other creditors
How much can D collect from C? C. If two or more solidary debtors offer to pay, the creditor may choose which offer to
A. P0 C. P6,000 accept
B. P3,000 D. P9,000 D. The debtor may pay any of the solidary creditors but if any demand has been made by
one of them, payment should be made to him
5. A, B and C are solidary debtors sharing at [Link] of solidary creditors W and Y sharing at 1:2.
The obligation is P12,000. If B is a minor and C is insolvent and W condones the obligation of 10. Which of the following obligations is due and demandable?
A without the consent of Y, how much can W collect from A? [Note 1] A. Obligation ex die
A. P0 C. P6,000 B. Obligation in diem
B. P2,000 D. P8,000 C. Obligation with a suspensive condition
D. Obligation payable as soon as possible
6. A has two creditors, B and C. the obligation to B is P10,000 and to C is P12,000. Later, with
the consent of A and B, W pays B P10,000. Now W and C are the creditors of A. Suppose A 11. A has an obligation to pay P100,000 to B but the obligation states that “A will pay the
has only P12,000, which is correct? obligation when his means permit him to do so.” Which of the following statements is correct?
A. A may choose whom to pay C. C should be preferred A. The obligation is due and demandable.
B. C and W should be paid proportionately D. W should be preferred B. The obligation is subject to a resolutory period.
C. The obligation is subject to a suspensive condition.
7. A, B and C are solidary debtors of W and Y, joint creditors for P12,000 where the share of the D. The court may fix the suspensive period of the obligation.
debtors in the obligation is [Link] while the share of the creditors is 1:2. If A is insolvent, which
of the following is correct? [Note 2] 12. A has an obligation to deliver a specific cellphone to B but a specific laptop may be

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substituted in lieu of the specific cellphone. Who has the right of choice in this type of
obligation? 17. A pointed a gun and threatened to kill B if B will not sign a promissory note which reads “I
A. Always A promise to pay A, P100,000”. Out of fear, B signed the note. It turned out that two days
B. Always B earlier, A’s obligation to B amounting to P100,000 became due and B demanded payment.
C. A unless there is stipulation to the contrary Now, A alleges compensation. Is A correct?
D. B unless there is stipulation to the contrary A. Yes, provided B will agree
B. No, because A’s obligation does not exist
13. A, who is domiciled in Lipa City, has an obligation to deliver a 2018 Ltd. Edition Black C. Yes, because the promissory note is valid
Fortuner to B, who is domiciled in Batangas City. A 2018 Ltd. Edition Black Fortuner is D. No, because the promissory note was signed only because there was intimidation
located in Tanauan City at the time of perfection of obligation while another 2018 Ltd. Edition
Black Fortuner is located in Tagaytay City at the agreed delivery date. Where shall the car be 18. A, husband and B, wife are legally separated. By order of the court, which decreed the legal
delivered by A to B? separation, A is obliged to give a monthly support of P50,000 to B payable in advance within
A. Batangas City C. Tagaytay City the first five days of the month. B owes A P50,000 by way of loan. On the other hand, A has
B. Lipa City D. Tanauan City not yet given B support of P50,000 for the preceding month and another P50,000 of the
present month. All the debts are already due. Based on the foregoing, which of the following
14. A obtained an interest free loan of P50,000 from B evidenced by a promissory note payable statements is incorrect?
six months after date. At maturity, A called B by phone to ask for an extension of one month A. If B demands her support for the current month, A may claim compensation as regards
and offer to pay 20% interest on the loan. Enticed by the 20% interest, B agreed to the the loan that B owes him
extension of maturity. Which is correct? B. If B demands her support for the preceding month, A may set up compensation as
A. The interest is unenforceable regards the loan that B owes him
B. The loan is valid but the interest is void C. If A demands payment of the loan, B may set up compensation as regards her support
C. The loan and interest are both demandable for the current month that A owes her
D. The interest is a demandable interest by virtue of an agreement D. If A demands payment of the loan, B may set up compensation as regards her support
for the preceding month that A owes her
15. A has three outstanding due and demandable obligations to B consisting of: (1) Accounts
Payable in the amount of P1,000,000; (2) Notes Payable in the amount of P1,000,000 which 19. A, B and C wrote and signed a promissory note which states “We promise to pay D and E
is solidary debt with G; (3) Loans Payable with 10% interest in the amount of P1,000,000; and P60,000.” At the maturity date of the note, D indorsed back the promissory note to A. How
(4) Mortgage Payable in the amount of P1,000,000 which is secured by real estate mortgage much obligation is extinguished and by what mode of extinguishment of obligation? [Note 4]
over A’s land. A paid P1,000,000 to B and designated the payment to the accounts payable. A. P10,000 by merger C. P30,000 by remission
In which debt shall the payment be applied by B? B. P20,000 by confusion D. P60,000 by compensation
A. Accounts payable C. Mortgage payable
B. Loans payable D. Notes payable 20. In which type of delay is consignation the proper legal remedy of the injured party?
A. Mora accipiendi C. Mora pactum
16. A, a minor, B and C wrote and signed a promissory note which states “I promise to pay D B. Mora obligori D. Mora solvendi
P30,000.” At the maturity date of the note, how much may D validly collect from C if B
becomes insolvent? [Note 3] 21. A has an outstanding obligation in the amount of P100,000 to C with G serving as guarantor
A. P10,000 C. P20,000 and P pledging his car to secure the fulfillment of A’s obligation. At the maturity date of the
B. P15,000 D. P30,000 obligation, P paid P100,000 to C without the knowledge of A. Which of the following is

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correct? A. The contract shall be enforceable if there is ratification by A

A. P may only recover from A only in so far as the payment is beneficial to A. B. The contract shall be unenforceable if the value is at least P500.00
B. P may go after G if A will not be able to reimburse P because of insolvency. C. The contract is unenforceable because A made an oral agreement to answer for the debt
C. P cannot recover from A because the payment is without the knowledge or consent of A. of B
D. P may recover from C in case of non-reimbursement by A based on the principle of D. The contract is enforceable because A did not make a special promise to answer for the
unjust enrichment. default of another person

22. X, Y and Z are W’s sons. Upon the death of W, the three sons found a last will and testament 26. A delivered a specific calculator to B so that the latter will be able to use it for a period of one
in the cabinet of W. The will showed disposition of a 30-hectare land, the only asset of W at month without any rental payment. In case of doubt in the incidental circumstance of this
the time of his death in favor of the following: X – 5 hectares, Y – 10 hectares and Z – 15 contract, how shall it be interpreted?
hectares. X felt discriminated with his share of only 5 hectares. Which is correct? A. It shall be interpreted in favor of the beneficiary B.
A. The law does not allow any remedy in this case B. It shall be interpreted in favor of greatest reciprocity of interest.
B. Rescission is the proper remedy to correct the damage on the part of X C. It shall be interpreted in favor of least transmission of rights.
C. Annulment of the instrument is the proper remedy to correct the mistake D. It shall be interpreted in such a manner to make the contract null and void.
D. Reformation of the instrument in order to correct the disparity in the disposal of the
property 27. Which of the following contracts is perfected by the delivery of the subject matter of the
contract?
Law on Contracts A. Contract of partnership C. Contract of real estate mortgage
23. Under the New Civil Code of the Philippines, what is the moment of perfection of contract B. Contract of pledge D. Contract of sale
entered into through telegram?
A. The contract is perfected from the moment the acceptance is declared or made. 28. A, an insane sold his specific laptop to B at a price of P10,000. After obtaining knowledge of
B. The contract is perfected from the moment that the notification of acceptance is in the the contract, C, a childhood friend of A, filed an action before the court for annulment of the
hands of the offeror. contract of sale.
C. The contract is perfected from the moment the offeree transmits the notification of What principle of contract is violated by the filing of such action?
acceptance to the offeror. A. Legality of contract C. Mutuality of contract
D. The contract is perfected from the moment the offeree’s acceptance comes to the B. Liberality of contract D. Relativity of contract
knowledge of the offeror.
29. A borrowed P10,000 from B. B filed an action to collect a sum of money against A which
24. Which of the following executory contracts is not required to be in writing to be enforceable resulted to the issuance of writ of attachment. The cellphone of A is the first to be attached by
under the Statute of Fraud? the sheriff. Afterwards, A orally sold and delivered his laptop to C at a price of P5,000.
A. Contract of guaranty Payment of the price will happen after one week from the perfected of contract. What is the
B. Contract of sale of a condominium unit at a price of P400 status of contract of sale of laptop?
C. Contract for a piece of work of a table at a price of P500 A. Perfectly valid C. Unenforceable
D. Contract of lease of land for a period of two years at a monthly rental of P300 B. Rescissible D. Voidable

25. A was having his house repaired by B, who needed construction materials, so A orally told 30. A, an illiterate, borrowed P100,000 from B. Aside from that, A mortgaged his land to B which
the seller C, “Give B the materials, I shall be responsible. I shall pay in 30 days”. C delivered the latter accepted to secure the payment of the loan. B prepared a deed of sale with a right
the materials. As a result, to repurchase of the land at a price of P100,000 which A signed after B explained that such

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document evidenced their agreement. What is the proper legal remedy available to A? proper legal remedy on the part of B?
A. Action for rescission of contract A. Action for annulment of voidable contract by reason of dolo causante.
B. Action for annulment of contract B. Action for declaration of nullity of contract by reason of illegality of contract.
C. Action for reformation of instrument C. Action for damages for breach of contract by reason of fraud in the performance of
D. Action for declaration of nullity of contract contract
D. Action for rescission of rescissible contract by reason of lesion of more than ¼ the value
31. A, minor, sold the ring of his brother without authority for P600,000. The ring has a fair market of the authentic bag
value of P1,000,000. The contract is
A. Rescissible C. Void 36. A delivered to B the following instrument:
B. Unenforceable D. Voidable In payment of a gambling debt, A made a promissory note which reads: “I promise to
pay B P10,000 Sgd. A.” B indorsed the note in blank before maturity and delivered
32. On January 1, 2018, A bought a parcel of land from B who was insane. The deed of sale was it to C for value.
duly acknowledged before a notary public. Six months after the sale, A realized that he When due, A refused to pay and C sued B. Could C recover from B?
needed a larger area on which to construct a commercial building. At about the same time, B A. No, the instrument is not negotiable and B is a mere assignor of credit
who had been undergoing psychiatric treatment was declared of sound mind by his B. No, C could not sue B because B did not write the name of C as indorsee
neurologist. Which is correct should a court action be filed today? C. Yes, provided C gives notice of dishonor to B otherwise B is discharged from liability
A. Neither A nor B may successfully prosecute a court action to annul the contract D. Yes, the endorsement will be considered as an assignment, hence B will be liable as an
B. A may successfully prosecute a court action to annul the contract on the ground of B’s assignor of the instrument
insanity
C. B may successfully prosecute a court action to annul the contract on the ground of his 37. In payment of merchandise purchased by A from B, A made a promissory note which reads
insanity “I promise to pay B P10,000. Sgd. A”. B indorsed the note in blank before maturity and
D. A may successfully prosecute a court action to annul the contract on the ground of delivered to C for value. A failed to pay due to insolvency upon maturity. Could C collect from
mistake as to the area of the parcel of land B?
A. No, the instrument is not negotiable and B is a mere assignor of credit
33. What is the status of oral contract of lease of public streets or thoroughfares entered by a city B. No, C could not sue B because B did not write the name of C as indorsee
government with private market stallholders at a monthly rental of P500? C. Yes, provided C gives notice of dishonor to B otherwise B is discharged from liability
A. Rescissible C. Void D. Yes, the endorsement will be considered as an assignment, hence B will be liable as an
B. Unenforceable D. Voidable assignor of credit

34. A delivered P1,000 cash to B as a contract of deposit which the latter thought to be a contract Law on Partnership
of loan. What is the proper legal remedy on the part of the injured party? 38. A and B are co-owners of a parcel of land from where they share the profits equally as co-
A. Action for rescission of contract heirs in inheritance. Is there a partnership?
B. Action for annulment of contract A. There is a prima facie presumption of partnership because of the equal sharing of profits
C. Action for reformation of instrument B. There is prima facie presumption of partnership they being co-owners and co-
D. Action for declaration of nullity of contract possessors
C. There is no partnership since in partnership, division of profits is not always necessary
35. A sold in writing an authentic Coach Bag at a price of P10,000 to B. At the time of delivery of among partners
the bag, A delivered a counterfeited Coach Bag to B with a price of P7,400 only. What is the D. There is no partnership because co-ownership by itself does not establish a partnership

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despite the sharing of profits to cover the two debts?

A. The partner cannot apply the payment to his own credit
39. A and B are partners in AB partnership. While A was performing his duties as a partner in the B. The sum collected shall be applied to the partnership credit
course of business, he negligently caused damage to X, a third person. Who shall be liable to C. The sum shall be applied to the two credits in proportion to their amounts
X and up to what extent? D. The debtor has the right to have the payment applied to his debt to the partner if it should
A. Both A and B shall be liable solidarily to X be onerous to him
B. Only A shall be liable for he is the only one at fault
C. A, B, and the Partnership are all liable solidarily to X 46. Which of the following is the right of an assignee of a partner’s interest?
D. Only the partnership shall be liable it being a juridical person separate and distinct from A. Right to the share in net income of his assignor
the partners B. Right to vote in the selection of the managing partner
C. Right to participate in the management of the partnership
40. Which of the following partners is not required to make additional share capital to the D. Right to inspect the partnership book and demand audited financial statements of the
partnership to save the partnership in case of imminent loss of the business of the partnership
partnership?
A. Industrial partner C. Managing partner 47. A and B entered into a universal partnership of all present property. No stipulation was made
B. Limited partner D. Silent partner regarding future property. After the perfection of the contract, A inherited a parcel of land and
B acquired a car as remuneration for services rendered. The properties acquired after the
41. Which type of partner may be excluded by the injured partner in case he engaged in another perfection of the contract belong to whom?
business without express permission of the partnership? A. B. C. D.
A. Capitalist partner C. Limited partner Land A A Partnership Partnership
B. Industrial partner D. All of them Car B Partnership B Partnership

42. Which of the following has no right to inspect the books of the partnership? 48. On April 1, 2018, A and B entered into a contract of partnership for the purpose of selling
A. Dormant partner C. Nominal partner cows’ milk, with the former as capitalist partner and the latter as industrial partner. It was
B. Limited partner D. Secret partner agreed that A shall contribute 1,000 cows to the common fund on May 2, 2018. Upon the
arrival of the designated date, A failed to deliver the contribution he promised. As a result
43. Which of the following may not be contributed by a pure limited partner? A. B can compel A to deliver his contribution and its fruits without the necessity of demand
A. Intangible asset C. Money B. B should make a demand upon A for the delivery of his contribution and its fruits to
B. Labor or service D. Movable property render A in default
C. The contract of partnership becomes void because A failed to give his contribution to the
44. Which of the following acts of the partnership may be done by the managing partner alone? common fund
A. Confession of judgment. D. The contract of partnership was never perfected because there was no delivery of
B. Disposition of the goodwill of the business. contributions by the partners
C. Renunciation of a claim of the partnership.
D. Approval of collecting bargaining agreement. 49. In the absence of agreement as to sharing of partnership losses, how shall the losses be
distributed to the partners?
45. In case a managing partner collects a demandable debt from his debtor who also owes the A. It should be divided equally among the capitalist partners.
partnership a demandable debt, which of the following is not correct if payment is not enough B. It should be dividend equally to all partners including the capitalist partners.

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C. It should be divided in accordance with the profit agreement among the capitalist
partners. 56. Which of the following companies may be incorporated as a close corporation?
D. It should be divided proportionately to the capitalist partners in accordance to the capital A. Mining companies C. Review school
contribution ratio. B. Oil companies D. Stock exchange

50. It is the change in the relation of the partners caused by any partner ceasing to be associated 57. In which type of corporation is foreign ownership prohibited by 1987 Constitution?
in the carrying on of the business. A. Advertising company C. Mass media
A. Partnership dissolution C. Partnership liquidation B. Educational institution D. Public utility
B. Partnership incorporation D. Partnership termination
58. ABC Co. fails to comply with the minimum Filipino ownership as prescribed by the
51. Which of the following instances will not automatically dissolve a general partnership? Constitution. Who has the legal standing to question the juridical personality of such
A. Civil interdiction of any partner C. Insanity of any partner corporation?
B. Death of any partner D. Insolvency of any partner A. Any stockholder of such corporation through a criminal action.
B. Any creditor of such corporation through an ordinary civil action.
52. Which of the following claims shall be paid last in the liquidation of general partnership? C. Any prospective investor through an administrative action filed before Securities and
A. Those owing to partners in respect of capital. Exchange Commission.
B. Those owing to the creditors other than partners. D. The state through special civil action called quo warranto proceedings filed by Solicitor
C. Those owing to partners in respect of profits. General.
D. Those owing to partners other than capital and profits.
59. What is the effect of the failure of a private corporate to renew its corporate term within the
Corporation Code deadline set by the Corporation Code of the Philippines?
53. Which of the following is an attribute of a private corporation? A. It will make such private corporation a de facto corporation.
A. It is created by mere consent. B. Such failure will be a ground for court-ordered corporate dissolution.
B. It enjoys the right of succession. C. Such private corporation is ip so facto dissolved by operation of law.
C. The owners are liable up to the extent of their separate assets. D. Such private corporation will be liable for fine before it may be able to renew its corporate
D. It has a personality which is not separate and distinct from its owners. term.

54. When does the juridical personality of a private corporation commence? 60. What is the period for the submission of the by-laws of the corporation in case it is not
A. From the moment of obtaining consent among the incorporators. attached to the articles of incorporation submitted to Securities and Exchange Commission?
B. From the moment of execution of contract among the incorporators of the corporation. A. Within 15 days from the end of the fiscal year of the corporation
C. From the moment of issuance by Securities and Exchange Commission of Certificate of B. Within 20 days from the issuance of Securities and Exchange Commission of the
Registration. Certificate of Incorporation
D. From the moment of submission of articles of incorporation by the incorporators to the C. Within 30 days from the submission of articles of incorporation to the Securities and
Securities and Exchange Commission. Exchange Commission
D. Within 30 days from the issuance of Securities and Exchange Commission of the
55. Which type of corporation is allowed to issue no-par value common shares? Certificate of Incorporation
A. Banks C. Insurance company
B. Educational institution D. Public utility 62. Which of the following matters must be provided in the Articles of Incorporation of the

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Corporation? required period of residency in the Philippines. As a result, which of the following is not
A. Denial of preemptive right correct?
B. Creation of executive committee A. The right to exercise corporate powers, shall not be inquired into collaterally in any
C. Provision for compensation of directors private suit to which the corporation maybe a party
D. Entries to be made in the stock and transfer book B. The Solicitor General has the right to question or contest the validity of its corporate
existence through a quo-warranto proceedings
63. Which of the following right is not available to unpaid subscribed stock which is not yet C. The corporation shall be considered as a de-facto corporation and shall be allowed to
delinquent? function as a corporation under the color of law
A. Right to certificate of stock C. Right to inspect books of the corporation D. In a suit filed against the corporation for breach of contract, the plaintiff can allege that
B. Right to dividends D. Right to vote in election of directors the corporation has no legal personality and therefore all incorporators shall be held
personally liable for damages
63. It refers to the right of the stockholder to demand the fair market value of his stocks in case
he dissents in particular corporate acts provided by the Corporate Code. 68. Which of the following is not a valid consideration for the issuance of shares of stocks of a
A. Appraisal right C. Protective right corporation?
B. Preemptive right D. Right of first refusal A. Future services
B. Intangible property
64. Which type of corporate officer is required to be a director of the corporation? C. Previously incurred indebtedness
A. President C. Treasurer D. Amounts transferred from unrestricted retained earnings
B. Secretary D. Vice-President
69. ABC Co. is a proposed corporation with authorized capital stock of P60,000 and actual
65. Which of the following corporate act may be delegated to the executive committee? subscribed capital stock of P32,000. What is the minimum paid up capital of this corporation?
A. Distribution of stock dividends [Note 5]
B. Investment of corporate funds to other business A. P3,750 C. P7,500
C. Amendment, repeal or adoption of corporate by-laws B. P5,000 D. P8,000
D. Approval of compensation scheme of employees
70. As a general rule, what is the maximum surplus profits that can be retained by a stock
66. Which of the following statements is correct? corporation?
A. The number of trustees in a nonstock corporation maybe five but not more than fifteen A. 50% of authorized capital stock C. 100% of authorized capital stock
B. A director individually and acting as such can bind the corporation because he is an B. 50% of paid up capital D. 100% of paid up capital
agent of the corporation
C. The officers of a non-stock corporation maybe elected directly by the members instead of 71. It shall mean any sale of a security which the seller does not own or any sale which is
by the board of trustees consummated by the delivery of a security borrowed by, or for the account of the seller with
D. When a vacancy in the board arises, such vacancy maybe filled by the remaining the commitment of the seller or securities borrower to return or deliver said securities or their
directors provided they still constitute a quorum equivalent to the lender on a determined or determinable future date.
A. Long sale C. Short sale
67. A, B, C, D and E formed Super Corporation and submitted their Articles of Incorporation to B. Middle sale D. Wide sale
the SEC. Inadvertently, through an oversight; the SEC approved the Articles and issued a
certificate of incorporation. Thereafter, it was discovered that they have not completed their 72. Who is prohibited from making a short sale in securities of the corporation?

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A. Creditor of the corporation A. Board of Directors C. President

B. Employees of the corporation B. Chairman of the Board of Directors D. Stockholders
C. Stockbroker of the corporation
D. Director, officer or principal shareholder of a corporation 79. What is the required number of independent directors to corporations covered by Revised
Code of Corporate Governance?
73. Which of the following right is still available to delinquent subscribed stock? A. Always one C. Always three
A. Appraisal right C. Right to dividends B. Always two D. Always four
B. Preemptive right D. Right to vote in election of directors
80. Which of the following is a ground for permanent disqualification of a director of a corporation
74. In which type of corporate acts may a non-voting preferred stockholders disqualified from covered by Revised Code of Corporate Governance?
participating? A. Dismissal or termination for cause as director of any corporation covered by this Code
A. Distribution of stock dividends B. Conviction by final judgment of an offense involving moral turpitude such as fraud,
B. Increase or decrease of capital stock estafa, theft, forgery bribery or perjury
C. Merger or consolidation of corporations C. If the beneficial equity ownership of an independent director in the corporation or its
D. Sale of all or substantially all of corporate property subsidiaries and affiliates exceeds two percent of its subscribed capital stock
D. Absence in more than fifty percent of all regular and special meetings of the Board
75. Equitable-PCI Bank and BDO Unibank entered into business combination which will result to during his incumbency, or any twelve month period during the said incumbency
BDO Unibank absorbing all the net assets of Equitable-PCI Bank. What type of business
combination is present in this case? 81. Land Corporation is a nonstock, nonprofit corporation whose articles of incorporation provide
A. Consolidation C. Merger for 9 trustees. The trustees elected and their respective terms are: A, B and C for 3 years, D,
B. Dissolution D. Spin-off E and F for 2 years, and G, H and I for 1 year. After one year, J, K and L were elected to
replace G, H and I whose term expired, while M and N were elected to replace B and E,
76. What is the required vote for the revocation of the power given to the Board of Directors to respectively who resigned after one year in office. What is the term of office of L, M and N?
amend the By-Laws of the Corporation? A. B. C. D.
A. At least 2/3 vote of the outstanding capital stock L 1 year 2 years 3 years 3 years
B. At least majority vote of the outstanding capital stock M 2 years 2 years 2 years 3 years
C. At least majority vote of Board of Directors and ratification by at least 2/3 vote of the N 1 year 2 years 1 year 3 years
outstanding capital stock
D. At least majority vote of Board of Directors and ratification by at least majority vote of the 82. This vacancy in the board of directors may be filled by the board of directors if the remaining
outstanding capital stock directors still constitute a quorum.
A. Death of a director C. Increase in the number of directors
77. It refers to the framework of rules, systems and processes in the corporation that governs the B. Expiration of the term of a director D. Removal of a director
performance by the Board of Directors and Management of their respective duties and
responsibilities to the shareholders. 83. The articles of incorporation of ABC Corporation provide for 7 directors. In the monthly
A. Articles of Incorporation C. Corporate Governance meeting of the board of directors held on April 8, 2009, directors B, C, D and E were present
B. By-Laws D. Internal Control and the following resolutions were approved:
I. A resolution for the purchase of a delivery truck from E Trading, a sole proprietorship
78. Which is supreme in the matter of management of the corporation? owned by E. B, C, D and E voted for the resolution

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II. A resolution appointing T as the new corporate secretary where B, C, D and E voted for 87. Which of the following is a defense that is available against a holder in due course?
the resolution. A. Fraud in factum
Which is correct? B. Illegality of consideration
A. Both resolutions are valid but need shareholders’ approval C. Acquisition of instrument by force or duress
B. Both resolutions are valid and do not need shareholders’ approval D. Absence of delivery of complete instrument
C. Resolution I is not valid. Resolution II needs shareholders’ approval
D. Resolution I needs shareholders’ approval. Resolution II is valid 88. Which type of indorsement may prohibit the further negotiation of a negotiable instrument?
A. Conditional indorsement C. Qualified indorsement
84. A law was passed disqualifying former members of Congress from sitting in the Board of B. Facultative indorsement D. Restrictive indorsement
Directors of government owned or controlled corporations. Because of this, the Board of
Directors of ABC Corp, a government owned and controlled corporation, disqualified C, a 89. A is maker and B is payee of a negotiable promissory note payable to order. There is no
former Congressman, from continuing to sit as one of its members. C objected, however, valuable consideration for the note. B delivers the instrument to C, without indorsement,
insisting that under the Corporation Code, members of the board of directors of corporations under circumstances that otherwise would have made C a holder in due course such as, that
may only be removed by vote of shareholders’ holding 2/3 of its outstanding capital stock in C did not know of the absence of consideration. May C recover from A?
a regular or special meeting called for that purpose. Is C correct? A. Yes, because the promissory note is negotiable
A. No, since the board has the power to oust C even without the new law. B. Yes, because A’s personal defense cannot be used against C
B. Yes, since the provisions of the Corporation Code apply as well to government owned C. No, because A has a real defense which can be used even against a holder in due
and controlled corporations course
C. Yes, since the new law cannot be applied to members of the board of directors already D. No, because C acquires only B’s rights and A can set up against B the defense of
elected prior to its passage absence of consideration
D. No, since the disqualification takes effect by operation of law and it is sufficient that C
was declared no longer a member of the board 90. A issued a check dated April 2, 2017, in favor of B in payment of A’s obligation to B
amounting to P100,000. B kept the check in his drawer and failed to encash it due to his busy
Negotiable Instrument schedule. On February 16, 2018, B presented the check to the drawee bank for payment.
85. Which of the following is not a warranty of a qualified indorser of negotiable instrument? The bank refused to pay the check for failure of B to present the check within the reasonable
A. That he has good title to the instrument. time after its issue. In this case
B. That all prior parties had capacity to contract. A. B can sue the bank because as drawee it is the party primarily liable
C. That the instrument is genuine and in all respects what it purports to be. B. When B accepted the check when A tendered payment, A’s obligation is extinguished
D. That the instrument, is at the time of his indorsement, is valid and subsisting. C. A’s obligation to B is extinguished because the impairment of the check is due to B’s
fault
86. Which of the following is not a requisite of a holder in due course? D. A’s obligation to B is not extinguished because the failure of B to present the check for
A. He takes the instrument in good faith and for value. payment within a reasonable time did not cause any injury to A
B. He holds an instrument that is complete and regular upon its face.
C. He becomes the holder of the instrument after it is overdue, and with notice that it had 91. M delivers a negotiable promissory note payable to P or order. Later, P makes a special
been previously dishonored if such was the fact. indorsement to A and A delivers the note to B. Who is the holder?
D. At the time the instrument is negotiated to him, he has no notice of infirmity in the A. P, because he is the payee
instrument or defect in the title of the person of the person negotiating it. B. A, because he is the indorsee
C. No one can be considered as holder

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D. B, because he is in possession of the note D. If A dishonors the note D can collect from B but not from C

92. A owes B P10,000 as gambling debt and A issued a promissory note to B to cover the debt, 96. Which of the following instruments is negotiable?
as follows: A. “Pay to the order of A or B the sum of P100,000.” Sgd. C and D
“I promise to pay B or order P10,000. Sgd. A” B. “We promise to pay A and B the sum of P100,000”. Sgd. C and D
Which of the following statements is correct? C. “Pay to B or order the sum of P100,000 30 days after sight”. Sgd. A
A. A is not liable because of illegal consideration D. “I promise to pay to the order of A or B the sum of P100,000”. Sgd. C and D
B. B can collect from A because the note is negotiable
C. If B negotiates to C, a holder in due course, C can collect from A 97. A bill of exchange states on its face: “One month after sight, pay to the order of Mr. R, the
D. B cannot negotiate the note because the consideration between A and B is illegal amount of Php 50,000 chargeable to the account of Mr. S Signed, Mr. T”. Mr. S, the drawee,
accepted the bill upon presentment by writing on it the words “I shall pay Php 30,000 three
93. A made a negotiable promissory note payable to the order of B. Later, B made a blank months after sight.” May he accept under such terms, which varies the command in the bill of
indorsement to C and C delivered the note to D, who likewise delivered the note to E. E made exchange?
a special indorsement to F and F made a qualified indorsement to G. Which of the following is A. Yes, provided the drawer and payee agree to the acceptance
correct? B. Yes, since a drawee accepts according to the tenor of his acceptance
A. C and D are not liable because they negotiated the instrument by delivery C. No, since he is bound as drawee to accept the bill according to its tenor
B. If the instrument is dishonored by A, the present holder G cannot go after C and D D. No, since, once he accepts, a drawee is liable according to the tenor of the bill
C. B’s indorsement can be stricken out because B’s blank indorsement converted the
instrument to bearer 98. X, a drawee of a bill of exchange, wrote the words: “Accepted, with promise to make payment
D. The indorsement made by E is not necessary because the instrument was converted to within two days. Signed X.” The drawer questioned the acceptance as invalid. Is the
bearer, hence the indorsement made by F can be stricken out acceptance valid?
A. Yes, because the form of the acceptance is really immaterial
94. A promissory note reads: B. No, because the acceptance must be clear assent to the order of the drawer to pay
“ I promise to pay B or bearer P20,000. Sgd. A.” C. Yes, because the acceptance is in reality a clear assent to the order of the drawer to pay
B delivered the note to C. C indorsed the note to D. Then Y stole the note from D and D. No, because the document must not express that the drawee will perform his promise
indorsed the note to E. E delivered the note to F. As a result within two days
A. F can collect from D or E
B. F can go after indorsers C and Y Sales
C. F cannot be a holder in due course 99. If at the time the contract of sale is perfected, the thing which is the object of the contract has
D. If A pays F in good faith, A’s obligation is extinguished been entirely lost, which of the following most accurately completes the statement?
A. The buyer bears the risk of loss
95. A promissory note reads: B. The seller bears the risk of loss
“I promise to pay B or order P20,000. Sgd. A” C. The contract shall be without any effect
B made a special indorsement to C and C made a conditional indorsement to D. If the D. The buyer may withdraw from the contract
condition is not yet fulfilled, which of the following is correct?
A. If A pays D, A’s obligation is extinguished 100. B rented the specific truck of S. After the end of the contract, S sold the property to B. As a
B. If A dishonors the note, D can collect from B or C result of sale, B continues to have possession of the property. What type of constructive
C. If A pays, A becomes liable if D fails to fulfill the condition delivery is present?

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A. Traditio brevi manu C. Traditio constitutum possessorium goods to bind the offer, the delivery and acceptance of which makes the final assent of both
B. Traditio clavium D. Traditio longa manu parties to the contract.
A. Arras C. Discount
101. A sells to B a Sony Colored TV for P12,000 payable in twelve equal monthly installments B. Deposit D. Option money
beginning May 5, 2018 and every 5th day of each month thereafter. The contract provides
that upon failure to pay any installment due, the whole balance becomes due and 106. A orally offered to sell his rice land to B for P8,000,000. B orally accepted the offer. The land
demandable. To secure the obligation, a chattel mortgage over the TV set was executed. is to be delivered through the execution of a notarized Deed of Sale and the price is to be
When B defaulted on the 7th and 8th installments, A sued B for the payment of the whole paid directly two weeks from their oral agreement. Which of the following is most accurate?
balance of P6,000. The TV set was levied and subsequently sold at a public sale for P5,000. A. The contract between A and B is rescissible
Can A still recover the deficiency of P1,000 from B? B. The contract between A and B is subject to ratification by the parties.
A. Yes, if there was stipulation to that effect C. If A refused to deliver the land, B may successfully sue A for the fulfillment of the
B. Yes, even though there was no stipulation obligation before the payment of the purchase price
C. No, if there was no stipulation to that effect D. If A refuses to deliver the land on the agreed date despite payment made by B, the latter
D. No, any stipulation allowing recovery is void may not successfully sue A because the contract is unenforceable

102. H, an Olympic judo champion, with violence and intimidation forced his wife W to sell W’s 107. F made a telephone call to his son S, for S to sell F’s land. In the deed of absolute sale which
pieces of jewelry to B. What is the treatment of the sale? was acknowledged before a notary public, S signed as agent of F. Later, in the presence of
A. Valid and binding two witnesses, F ratified the sale executed by S. Which is correct?
B. Voidable, because the consent of W is vitiated A. The sale remained void despite the ratification by F
C. Rescissible, if W suffered lesion of at least one-fourth of the value of the property B. The sale was void at the start but was validated upon the ratification by F
D. Void, except when a separation of property was agreed upon in the marriage settlement C. The sale was merely unenforceable at the start but the ratification validated the contract
or there has been a judicial separation of property D. The sale was valid from the start since it was made in a public instrument and F, the
owner ratified the sale
103. Spouses H and W are under the regime of absolute community of property. H, through
violence and intimidation obtained the signature of W to a contract of sale involving W’s 108. What is the prescriptive period of the right to file an action based on breach of warranty of
exclusive property in favor of B. The fair market value of the property is P1,000,000 but the sale of immovable against non-apparent and unregistered burden or servitude?
selling price is only P700,000. What is the treatment of the sale? A. 3 days from the date of contract of sale or from the discovery of burden
A. Rescissible C. Void B. 1 year from the date of contract of sale or from the discovery of burden
B. Valid D. Voidable C. 6 months from the date of contract of sale or from the discovery of burden
D. 40 days from the date of contract of sale or from the discovery of burden
104. A and B are legally married and their property regime is governed by absolute community of
property. A orally sold his specific cellphone to B at a price of P500 with a carrying amoun of 109. A, B and C are co-owners of a parcel of land. A sold his 1/3 share on April 7, 2018, B his 1/3
P800 after B pointed a gun to A. Delivery of the specific cellphone will happen after three share on April 15, 2018 and C his 1/3 share on April 23, 2018, all to D and with the right of
years. What is the status of the contract of sale? repurchase. Which of the following is correct?
A. Rescissible C. Unenforceable A. A may redeem his 1/3 share only if D allows him to do so
B. Void D. Voidable B. A should redeem the whole property if he is required by D to do so
C. A can redeem his 1/3 share even if D requires him to redeem the whole property
105. It is a sum of money paid, or a thing delivered upon the making of a contract for the sale of D. A can redeem the entire property even if D allows him to redeem only his 1/3 share

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Who shall have the preferred right to repurchase the lot sold by A to F? [Note 9]
110. S sold his lot with an area of 100 square meters to B at a selling price of P1,000 per square A. E because his adjoining rural lot has larger area.
meter. After delivery of the lot, B discovered that the actual area is only 91 square meters. B. D because his adjoining rural lot has smaller area.
What is the legal remedy available to B? [Note 6] C. B because his share in the co-owned lot is smaller.
A. B can ask for cancellation of the contract of sale. D. B and C with an area of 150 square meters and 450 square meters, respectively
B. B may ask for proportionate reduction of price and must pay P91,000 only.
C. Either A or B. 115. An agricultural land is owned by A and D pro-indiviso. D sells his one-half part to R, who is
D. Neither A nor B. the owner of the adjoining land. When A learned of the sale, he tried to redeem the portion
sold by D by reimbursing R with the purchase price and expenses. Which is not correct?
111. S sold a residential condominium unit to B at an installment price of P6,000,000 payable in 50 A. A can compel R to permit redemption
years at a monthly rental of P10,000 per month. After payment of several instalments totalling B. The sale to R is valid but A can elect to exercise his right of redemption
P1,200,000, B defaulted in the payment of remaining installments which resulted to the C. The sale to R is valid and as adjoining land owner he is the one entitled to redemption
cancelation of the contract of sale after the lapsing of the grace period. What is the amount of D. A co-owner of a thing may exercise the right of redemption in case the shares of the
cash surrender value to be received by B from S as a result of cancellation? [Note 7] other co-owners or any one of them are sold to a third person
A. P600,000 C. P900,000
B. P840,000 D. P960,000 Law on Pledge, Real Estate Mortgage, Chattel Mortgage, Antichresis
Pledge
112. A bought a residential house and lot from B Realty for P2,000,000 giving a down payment of 116. Essential elements of pledge include all of the following, except
P200,000 and promising to pay the balance of P1,000,000 in 15 years in monthly installments A. Pledgor is the absolute owner of the thing pledged.
of P10,000. After paying 72 installments A defaulted in the payment of subsequent B. To bind third persons there must be an affidavit of good faith
installments. Despite the grace period given, A was not able to make any further payments. C. The thing pledged must be placed in the possession of the creditor or of a 3rd person by
Accordingly, B Realty cancelled the sale. How much cash surrender value is A entitled to common agreement
receive? [Note 8] D. The person constituting the pledge has the free disposal of his property or if he is an
A. P396,000 C. P506,000 agent or representative, that he is legally authorized
B. P462,000 D. P552,000
117. The sale of the thing pledged
113. In which of the following instances are the goods still in transit which will allow the unpaid A. Extinguishes only the pledge
seller to exercise his right of stoppage in transitu in case of insolvency of the buyer? B. Absolutely extinguishes the obligation
A. If the buyer obtains delivery of the goods before arrival at the appointed destination. C. Deprives the pledgee to get the excess
B. If the carrier or other bailee wrongfully refuses to deliver the goods to buyer or his agent. D. Extinguishes the debt only to the extent of the proceeds
C. If the carrier or other bailee acknowledges to the buyer or his agent, that he is holding
the goods in his behalf, after arrival of the goods at their appointed destination. 118. A pledged his ring to B for P20,000. A failed to pay his obligation. B sold it at a public auction
D. If the goods are rejected by the buyer, and the carrier or other bailee continues in for P18,000. Can B recover the deficiency?
possession of them, even if the seller has refused to receive them back. A. No, even if there is stipulation C. Yes, even without stipulation
B. No, unless there is stipulation D. Yes, if there is stipulation
114. A, B, and C are co-owners of a rural lot with an area of 1,000 square meters in the ratio of
[Link], respectively. The co-owned lot is bounded by farm lots of D and E with an area of 50 119. A pledged his ring to B for P20,000. A failed to pay his obligation. B sold it at a public auction
square meters and 75 square meters, respectively. A sold his share of the co-owned lot to F. for P22,000. Can A recover the excess?

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A. No, even if there is stipulation C. Yes, even without stipulation D. C cannot collect from D. He can only go after the mortgage which was given as security
B. No, if there is stipulation D. Yes, if there is stipulation
124. A borrowed P100,000 from B and mortgaged his house to secure the payment of the loan.
120. B borrowed P100,000 from S secured by a pledge on B’s diamond ring. The debt is payable The contract of real estate mortgage is not notarized and not registered with Registry of
in installment. When B defaulted in 2 installment payments, S foreclosed the pledge and sold Deeds. The contract of real estate mortgage provides that A is prohibited from selling the
the diamond ring at a public auction. If there is excess, who is entitled to the excess? mortgaged house and in case of default of A at the maturity date of the loan, B will become
A. B, even without stipulation C. S, even without stipulation the automatic owner of the mortgaged house.
B. B unless there is stipulation D. S, only if there is stipulation Which of the following statements is correct?
A. B becomes the owner of the mortgaged house upon default of A.
121. P borrowed P1,000 from C. P pledged and delivered his specific cellphone to C as collateral B. A may still sell the house to third person despite the prohibition in the contract of real
for the loan. The contract of pledge provides that C may recover the deficiency as a result of estate mortgage.
foreclosure sale. P failed to pay his obligation at the maturity date which prompted C to sell C. The contract of real estate mortgage is unenforceable because it is not in public
the pledged cellphone at public auction. The cellphone was sold at a price of P900. Which of document and not registered with Registry of Deeds
the following statements is correct? D. The contract of real estate mortgage is null and void because of the stipulation of pactum
A. The contract of pledge is not extinguished. commissorium which is contrary to law and public policy.
B. Pledgee P may still recover the deficiency of P100 because there is stipulation to that
effect. Chattel Mortgage
C. Both the contract of pledge and contract of loan are extinguished by the public sale. 125. Essential elements of chattel mortgage include all of the following, except
D. The contract of pledge is extinguished but the contract of loan is extinguished up to P900 A. The object is a personal or movable property
only. B. The thing mortgaged is not delivered to the creditor
C. The mortgagor can not sell without the consent of the mortgagee
Real Estate Mortgage D. Description of the thing mortgaged must appear in a public instrument
122. Essential elements of real estate mortgage include all of he following, except
A. The thing mortgaged must be delivered to the creditor 126. C mortgaged his car to B for P200,000. C failed to pay his obligation. B sold it at a public
B. In case of foreclosure sale, the mortgagor is entitled to the excess auction for P180,000. Can B recover the deficiency?
C. The mortgagor can sell even without the consent of the mortgagee A. No, even if there is stipulation C. Yes, even without stipulation
D. To bind third persons it must be recorded in the Registry of Property B. No, unless there is stipulation D. Yes, only if there is stipulation

123. D borrowed P100,000 from C. The obligation is secured by a mortgage on D’s land and 127. C mortgaged his car to B for P200,000. C failed to pay his obligation. B sold it at a public
building. C registered the mortgage with the Register of Deeds. Thereafter, D sold the land auction for P220,000, Can C recover the excess?
and building to B who was not aware of the existence of the mortgage at the time of sale A. No, even if there is stipulation C. Yes, even without stipulation
since only the photocopy of the transfer certificate of title which did not yet contain the B. No, unless there is stipulation D. Yes, only if there is stipulation
annotation of the mortgage was shown to him. It was only when he went to the Register of
Deeds to register the sale of the land and building to him that he learned of the mortgage. 128. S sold his car to B on installments and a chattel mortgage was constituted on the car. B
Which is correct? defaulted in two installment payments. S foreclosed the chattel mortgage and sold the car at
A. C cannot foreclose the mortgage because B is a buyer in good faith a public auction. If there is deficiency, can S recover the deficiency?
B. C can collect from D and if D cannot pay, C can foreclose the mortgage A. No, even if there is stipulation C. Yes, even without stipulation
C. C can collect from D, but f D cannot pay, C cannot foreclose the mortgage B. No, unless there is stipulation D. Yes, if there is stipulation

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133. What is the maximum ownership of Foreigners in a cooperative in the Philippines?

129. D borrowed P100,000 from C and entered into a chattel mortgage involving his land to secure A. None C. 60%
the payment of his loan. D failed to pay the loan at maturity date. Which of the following B. 40% D. 100%
statements is correct?
A. C may still foreclose the chattel mortgage on the land on the basis of doctrine of 134. It is a type of cooperative that promotes and undertakes savings and lending services among
estoppel. its members. It generates a common pool of funds in order to provide financial assistance to
B. C cannot foreclose the chattel mortgage over the land because the subject matter must its members for productive and provident purposes.
be a movable property. A. Cooperative bank C. Insurance cooperative
C. The contract of chattel mortgage is null and void in so far as the contracting parties are B. Credit cooperative D. Service cooperative
concerned because the subject matter is a land.
D. Third person directly affected by the contract of chattel mortgage is not allowed to file an 135. What is the maximum par value of a share in a cooperative?
action for declaration of nullity because of relativity of contract. A. P5 C. P100
B. P10 D. P1,000
Antichresis
130. A contract where the creditor acquires the right to receive the fruits of an immovable of his 136. What is the maximum limit on the share ownership of a member in a cooperative?
debtor, with the obligation to apply them to the payment of interest if owing, and thereafter to A. 5% of the share capital of the cooperative
the principal of his credit is B. 20% of the share capital of the cooperative
A. Antichresis C. Real estate mortgage C. 25% of the share capital of the cooperative
B. Commodatum D. Usufruct D. 10% of the share capital of the cooperative

Comprehensive 137. A cooperative is intended to be established with authorized capital stock of P100,000 and
131. Which of the following is a feature common to chattel mortgage and pledge? actual subscribed capital stock of P40,000. What is the minimum paid up capital of this
A. The object of the contract is a movable property proposed cooperative? [Note 10]
B. An affidavit of good faith is required to bind third persons A. P5,000 C. P15,000
C. Deficiency is recoverable in case of sale of the thing pledged/mortgaged B. P10,000 D. P25,000
D. The excess of the proceeds of sale over the amount of the obligation belongs to the
pledgor/mortgagor 138. It is the highest highest policy-making body of the cooperative and shall exercise the powers
of the Cooperative as stated in the Cooperative Code.
132. Which of the following statements is not correct? A. Board of Directors C. Executive Committee
A. Shares of stock can be the object of pledge or mortgage B. Board of Members D. General Assembly
B. If the thing pledged is returned by the pledgee to the pledgor, the obligation is
extinguished 139. What is quorum necessary for validity of meeting of General Assembly in ordinary
C. In sale at public auction, the pledgor may bid and his bid is valid even if he is the only cooperative?
bidder A. At least 5% of all the members entitled to vote
D. Any stipulation authorizing the pledgee to appropriate the thing pledged is void and B. At least 2/3 of all the members entitled to vote
without effect C. At least majority of all the members entitled to vote
D. At least 25% of all the members entitled to vote
Cooperative Code

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140. How many years must a single-line cooperative operate before it may transform into a multi-
purpose cooperative? 146. It refers to a public and fully government-owned and controlled corporation organized with
A. At least 1 year C. At least 3 years original capital stock of P50 billion which has the powers to provide policy directions in the
B. At least 2 years D. At least 4 years areas of money, banking, and credit and to supervise the operations of banks, finance
companies and non-bank financial institutions performing quasi-functions. It has the sole
141. Which of the following is a ground for involuntary dissolution of a cooperative through an authority to issue currency to be considered legal tender within Philippine territory.
order by a competent court after hearing? A. Bangko Sentral ng Pilipinas C. Landbank of the Philippines
A. Insolvency B. Development Bank of the Philippines D. Philippine Depositor Insurance
B. Having obtained its registration through fraud Corporation
C. Willful failure to operate on a cooperative basis
D. Failure to meet the required number of members of the cooperative 147. All of the following are the qualifications of members of Monetary Board, except
A. He must be a Natural born-citizens of the Philippines
142. What is the required vote for the merger of two or more cooperative into a single cooperative? B. He must be a director or officer of a banking institution.
A. At least 25% of all members with voting rights C. He must be of 35 years of age with the exception of BSP governor who must be 40 years
B. At least 2/3 of all the members with voting rights of age.
C. At least ¾ of all the members with voting rights D. He must be of good moral character, of unquestionable integrity, of known probity and
D. At least majority of all the members with voting rights patriotism and with recognized competence in social and economic disciplines.

143. It refers to the fund which is the first priority in the distribution of the net surplus of the 148. May the BSP Monetary Board order the closing of a bank with the hearing to follow despite
cooperative. It pertains to the fund to be used for the stability of the cooperative and to meet the absence of prior hearing for closure?
net losses in its operations. A. Yes, even there is not justifiable or factual basis for the closure.
A. Education and training fund C. Reserve fund B. No, because that is violative of right to property of the bank’s stockholders.
B. Optional fund D. Retained earnings C. No, because right to due process always requires prior hearing before closure.
D. Yes, because close now hear later has already been justified as a measure for the
General Banking Law protection of the public interest.
144. It is the only bank allowed to exercise the powers of investment house and to invest in non-
allied enterprises. 149. Unless otherwise changed by Monetary Board, what is the interval for examination of banking
A. Commercial bank C. Thrift bank institution by supervising and examining department head of BSP?
B. Rural bank D. Universal bank A. Once every month (monthly) C. Once every 6 months (semi-annually)
B. Once every 3 months (quarterly) D. Once every 12 months (annually)
145. Which of the following powers is not allowed to be conducted by a commercial bank?
A. Engaging in the businesses of preneed plans and insurance or reinsurance 150. Under Circular No. 425 of 2004 issued by Monetary Board of Bangko Sentral ng Pilipinas,
B. Accepting or creating demand deposits and buying and selling foreign exchange and what is the maximum limit of loan to be granted by a bank to a single borrower?
gold or silver bullion A. 10% of net worth of the bank C. 20% of net worth of the bank
C. Discounting and negotiating promissory notes, drafts, bills of exchange, and other B. 15% of net worth of the bank D. 25% of net worth of the bank
evidences of debt
D. Accepting drafts and issuing letters of credit and receiving other types of deposits and 151. Which of the following shall not be included in the computation of Single Borrower’s Limit?
deposit substitutes A. association or any other entity, the liabilities of said entities to such bank.

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B. In the case of a partnership, association or other entity, the liabilities of the members arrangements for payment in full by the drawee of such check within (10) banking days
thereof to such bank. after receiving notice that such check has not been paid by the drawee.
C. Loans, credit accommodations and acceptances under letters of credit to the extent B. The maker or drawer pays the holder thereof the amount due thereon, or makes
covered by margin deposits. arrangements for payment in full by the drawee of such check within (15) banking days
D. In the case of a corporation, all liabilities to such bank of all subsidiaries in which such after receiving notice that such check has not been paid by the drawee.
corporation owns or controls a majority interest. C. The maker or drawer pays the holder thereof the amount due thereon, or makes
arrangements for payment in full by the drawee of such check within (3) banking days
Bouncing Checks Law after receiving notice that such check has not been paid by the drawee.
152. Which of the following is not an element of criminal violation of Batas Pambansa Bilang 22 for D. The maker or drawer pays the holder thereof the amount due thereon, or makes
issuance of worthless checks? arrangements for payment in full by the drawee of such check within (5) banking days
A. There must be intent to commit fraud upon the issuance of worthless check. after receiving notice that such check has not been paid by the drawee.
B. There must be making, drawing, and issuance of any check to apply for account or for
value. Bank Secrecy Law
C. There must be knowledge of the maker, drawer, or issuer that at the time of issue he 155. Under R.A. 1405, which of the following is not covered by the Bank Secrecy Law?
does not have sufficient funds in or credit with the drawee bank for the payment of the A. Investment in time deposit
check in full upon its presentment. B. Savings deposit and demand deposit
D. There must be subsequent dishonor of the check by the drawee bank for insufficiency of C. Investment in bonds issued by publicly traded corporations.
funds or creditor dishonor for the same reason had not the drawer, without any valid D. Investment in bonds issued by the Government of the Philippines, its political
cause, ordered the bank to stop payment. subdivisions and its instrumentalities.

153. What is the prima facie evidence that the drawer of issuer of check has knowledge that check 156. Which of the following is not protected by Republic Act No. 1405 also known as Bank
he issued has insufficient fund? Secrecy Law?
A. The making, drawing and issuance of a check payment of which is refused by the A. Certificate of time deposit C. Investment in government bonds
drawee because of insufficient funds in or credit with such bank, when presented within B. Demand account D. Money market placement
sixty (60) days from the date of the check.
B. The making, drawing and issuance of a check payment of which is refused by the 157. Under Republic Act No. 6426 also known as Foreign Currency Deposit Act of the Philippines,
drawee because of insufficient funds in or credit with such bank, when presented within what is the only exception provided by such law from the absolute confidentiality of foreign
thirty (30) days from the date of the check. currency deposit?
C. The making, drawing and issuance of a check payment of which is refused by the A. Upon written permission or consent in writing by the depositor.
drawee because of insufficient funds in or credit with such bank, when presented within B. In cases where the money deposited or invested is the subject matter of the litigation.
twenty (20) days from the date of the check. C. Upon order of a competent court in cases of bribery or dereliction of duty of public
D. The making, drawing and issuance of a check payment of which is refused by the officials.
drawee because of insufficient funds in or credit with such bank, when presented within D. In cases of impeachment of the President, Vice President, members of the Supreme
ninety (90) days from the date of the check. Court, members of the Constitutional Commission (Commission on Elections, Civil
Service Commission and Commission on Audit) and the Ombudsman for culpable
154. What is the evidence or defense that may be used by the issuer of a worthless check to violation of the Constitution, treason, bribery, graft and corruption, other high crimes or
destroy the prima facie evidence that he has knowledge of insufficiency of fund of the check? betrayal of public trust.
A. The maker or drawer pays the holder thereof the amount due thereon, or makes

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Foreign Currency Deposit C. The chairperson of AMLC is the BSP governor.

158. A nonresident alien has been convicted of crime of raping a minor. The RTC judge issued a D. The Insurance Commissioner is a member of AMLC.
writ of garnishment for the satisfaction of civil damages caused to the victim. Is the issuance
of writ of garnishment a violation of Foreign Currency Deposit Act of the Philippines 163. Which of the following is a covered person, therefore, required to report to AMLC reportable
considering that a BSP circular provides that foreign currency deposits shall be exempted or suspicious transactions?
from attachment, garnishment, or any other order or process of any court, legislative body, A. Casinos C. Mining companies
government agency or any administrative body whatsoever? B. Educational institution D. Transportation companies
A. Yes, because foreign currency deposit is absolutely confidential in nature.
B. Yes, because RA 6426 was enacted in order to encourage foreign investment. 164. What is the amount of covered transaction in so far as jewelry dealers are concerned for
C. Yes, even RA 6426 failed to anticipate the inequitous effects producing outright injustice purposes of reporting to Anti-Money Laundering Council?
and inequality to Filipinos. A. A transaction exceeding P100,000 C. A transaction exceeding P1,000,000
D. No, because if that foreign currency deposit will be exempted from garnishment, injustice B. A transaction exceeding P500,000 D. A transaction exceeding P5,000,000
would result especially to a citizen aggrieved by a foreign guest.
165. Which of the following companies is exempted by Anti Money Laundering Law from reporting
Unclaimed Balances Law reportable and suspicious transactions to Anti-Money Laundering Council?
159. What petition shall be filed by the Solicitor General or his representative in behalf of the A. Casino
Republic of the Philippines before the RTC for the unclaimed balances to be forfeited in favor B. Holding companies
of the state where a deceased dies intestate in the Philippines leaving no heir or person by C. Remittance companies
law entitled to the same? D. Auditing firm rendering assurance engagement
A. Petition for certiorari C. Petition for estate settlement proceedings
B. Petition for escheat proceedings D. Petition for partition proceedings Central Bank Act
166. Who is primarily liable to the notes and coins which are considered legal tender in the
160. In which office shall the letter requesting the reactivation of unclaimed balances or dormant Philippine jurisdiction?
account be filed by the applicant depositor? A. Landbank of the Philippines
A. Bureau of Customs C. Bureau of Internal Revenue B. Bangko Sentral ng Pilipinas
B. Bureau of Immigration D. Bureau of Treasury C. Development Bank of the Philippines
D. Government of the Republic of the Philippines
161. Under Unclaimed Balances Law, what is the minimum period of dormancy of the deposit in a
bank to be considered unclaimed balances? 167. Under the Central Bank Act, who shall be appointed as the receiver of a banking institution in
A. At least 1 year C. At least 5 years case the conservatorship of a bank is converted into receivership?
B. At least 3 years D. At least 10 years A. Office of Government Corporate Counsel
B. Monetary Board of Bangko Sentral ng Pilipinas
Anti Money Laundering Council C. Philippine Depositor Insurance Corporation
162. Anti-Money Laundering Council refers to the financial intelligence unit of the Republic of the D. Supervising Officer of Bangko Sentral ng Pilipinas
Philippines which is the government agency tasked to implement the AMLA. Which of the
following statements regarding the composition of AMLC is incorrect? Philippine Deposit Insurance Corporation
A. The SEC Chairperson is a member of AMLC. 168. Which of the following is not insured by Philippine Deposit Insurance Corporation?
B. The BIR Commissioner is a member of AMLC. A. Certificate of time deposit C. Investment in government bonds

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B. Demand or checking account D. Savings deposit when they fall due.

D. When an individual debtor possessed sufficient property to cover all his debts but he
169. What is the maximum period provided by law to depositors to file their claim before Philippine foresees the impossibility of meeting them when they respectively fall due.
Deposit Insurance Corporation from its takeover of the closed bank?
A. Two years C. Four years 174. An insolvent individual debtor made a proposal in his petition for the settlement of his
B. Three years D. Five years obligations the payment of which is suspended by the suspension order issued by the
Regional Trial Court. What is the required vote by the creditors affected for the approval of
170. A has two separate single bank accounts with P1,000,000 and P2,000,000 balance, such proposal of insolvent individual debtor?
respectively in the same bank which is closed by BSP. B, on the other hand, has two A. 1/3 of the creditors voting to unite upon the same proposition and the claims represented
separate single bank accounts with P3,000,000 and P2,000,000 balance, respectively with by said majority vote amount to at least 4/5 of the total liabilities mentioned in the
the said bank. Aside from that, A has two separate joint accounts with different persons in the petition.
same bank. The first joint account of A is with B with balance of P10,000,000 while the other B. 3/5 of the creditors voting to unite upon the same proposition and the claims represented
joint account of A is with C with balance of P4,000,000. How much is the maximum insured by said majority vote amount to at least 2/3 of the total liabilities mentioned in the
amount by PDIC from these deposits concerning A and B, respectively? [Note 11] petition.
A. P500,000 and P500,000 C. P1,000,000 and P750,000 C. 4/5 of the creditors voting to unite upon the same proposition and the claims represented
B. P1,000,000 and P500,000 D. P1,000,000 and P1,000,000 by said majority vote amount to at least 3/5 of the total liabilities mentioned in the
petition.
Insolvency Law D. 2/3 of the creditors voting to unite upon the same proposition and the claims represented
171. It refers to the financial condition of a debtor that is generally unable to pay its or his liabilities by said majority vote amount to at least 3/5 of the total liabilities mentioned in the
as they fall due in the ordinary course of business or financial condition of a debtor when he petition.
has liabilities that are greater than its or his assets.
A. Bankruptcy C. Impoverishment 175. An individual debtor has liabilities exceeding P500,000 but his assets are not sufficient to
B. Illiquidity D. Insolvency cover his liabilities. What is the proper petition that must be filed by such insolvent individual
debtor?
172. An individual debtor possesses sufficient property to cover all his debts but he foresees the A. File a petition for rehabilitation
impossibility of meeting them when they respectively fall due. What is the proper petition that B. File a petition for involuntary liquidation
must be filed by such insolvent individual debtor? C. File a petition for voluntary liquidation
A. File a petition for rehabilitation D. File a petition for declaration of state of suspension of payments
B. File a petition for voluntary liquidation
C. File a petition for involuntary liquidation 176. What is the quantitative threshold before any creditor or group of creditors may file a petition
D. File a petition for declaration of state of suspension of payments for involuntary liquidation of an insolvent individual debtor?
A. Claim of at least P500,000 C. Claim of at least P5,000,000
173. What is the ground before an individual debtor may file a verified petition praying for B. Claim of at least P1,000,000 D. Claim of at least P25,000,000
declaration of state of suspension of payments?
A. When the total assets of the individual debtor exceed his total liabilities. Corporate Rehabilitation
B. When the capital of the individual debtor is more than the liabilities of the individual 177. It shall refer to the restoration of the debtor to a condition of successful operation and
debtor. solvency, if it is shown that its continuance of operation is economically feasible and its
C. When an individual debtor possessed sufficient property but he can pay his obligations creditors can recover by way of the present value of payments projected in the plan, more if

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the debtor continues as a going concern than if it is immediately liquidated. Financial Rehabilitation Insolvency Law
A. Dissolution C. Rehabilitation 182. What is the maximum period of conservatorship of a bank or quasi-bank?
B. Liquidation D. Reorganization A. It shall not exceed 1 month. C. It shall not exceed 6 months
B. It shall not exceed 3 months. D. It shall not exceed 1 year.
178. It is a type of rehabilitation wherein the insolvent debtor and its creditors already negotiated
and prepared the rehabilitation plan before they file a verified petition to the court for the 183. Who shall be appointed by BSP Monetary Board as receiver of a bank?
approval of such plan. A. Philippine National Bank
A. Pre-negotiation rehabilitation B. Landbank of the Philippines
B. Out-of court or informal rehabilitation C. Development Bank of the Philippines
C. Voluntary court-supervised rehabilitation D. Philippine Deposit Insurance Corporation
D. Involuntary court-supervised rehabilitation
184. What is the ground for placing a bank under liquidation proceedings by BSP Monetary
179. Which of the following cases is not stayed by the suspension order issued by the Board?
Rehabilitation Court? A. The bank cannot continue in business without involving probable losses to its depositors
A. Civil action to collect unpaid taxes pending before Municipal Trial Court or creditors.
B. Civil action for damages involving corporate tort pending before Regional Trial Court B. The bank has insufficient realizable assets, as determined by the Bangko Sentral, to
C. Criminal action against the corporate officer pending before Municipal Trial Court meet its liabilities.
D. Judicial foreclosure of real estate mortgage involving the land of the corporation pending C. If the receiver determines that the institution cannot be rehabilitated or permitted to
before Regional Trial Court resume business.
D. Whenever, on the basis of a report submitted by the appropriate supervising or
180. What is the quantitative threshold before any creditor or group of creditors may file a petition examining department, the Monetary Board finds that a bank or a quasi-bank is in a state
for involuntary corporate rehabilitation of an insolvent corporation? of continuing inability to maintain a condition of liquidity deemed adequate to protect the
A. Claim of at least P500,000 or at least 10% of subscribed capital stock, whichever is interest of depositors and creditors.
higher
B. Claim of at least P5,000,000 or at least 20% of subscribed capital stock, whichever is 185. May a bank be placed by BSP Monetary Board under receivership without undergoing
higher conservatorship?
C. Claim of at least P10,000,000 or at least 15% of subscribed capital stock, whichever is A. No, because conservatorship proceedings is mandatory.
higher B. No, because it is violative of right to due process of bank’s shareholders.
D. Claim of at least P1,000,000 or at least 25% of subscribed capital stock, whichever is C. Yes, because designation of a conservator is not a precondition to the designation of a
higher receiver.
D. Yes, but only if approved by at least majority of the bank’s Board of Directors and ratified
181. What is the required vote by the creditors affected by the rehabilitation of a corporation for the by at least 2/3 of the outstanding stockholders.
approval of the proposed rehabilitation plan?
A. Approval by all classes of creditors whose rights are affected. 186. What is the effect of issuance by the court of an order suspending any pending execution
B. Approval by at least ¼ of all classes of creditors whose rights are affected. against individual debtor upon motion filed by an insolvent individual debtor?
C. Approval by at least 2/3 of all classes of creditors whose rights are affected. A. Secured creditors shall not institute or sue proceedings to collect claim from the debtor.
D. Approval by at least 1/3 of all classes of creditors whose rights are affected. B. Properties held as security by secured creditors shall be the subject of such suspension
order.

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C. No creditor shall sue or institute proceedings to collect claim from the debtor from the C. Claims aggregating at least P1,000,000
time of the filing of the petition for suspension of payments and for as long as D. Claims aggregating at least P1,500,000
proceedings remain pending.
D. Those creditors having claims for personal labor, maintenance, expense of last illness 190. Which of the following is not considered an act of insolvency by an individual insolvent
and funeral of the wife or children of the debtor incurred in the sixty (60) days debtor?
immediately prior to the filing of the petition shall not institute or sue proceedings to A. That being absent from the Republic of the Philippines, with intent to defraud his
collect claim from the debtor. creditors, he remains absent.
B. That such person is about to depart or has departed from the Republic of the Philippines,
187. What is the duration of a court’s order suspending any pending execution against individual with intent to defraud his creditors.
debtor upon motion filed by an insolvent individual debtor? C. That he conceals himself to avoid the service of legal process for the purpose of
A. The suspension order shall lapse when six months shall have passed without the hindering or delaying the liquidation or of defrauding his creditors
proposed agreement being accepted by the creditors or as soon as such agreement is D. That he has neither confessed nor offered to allow judgment in favor of any creditor or
denied. claimant for the purpose of hindering or delaying the liquidation or of defrauding any
B. The suspension order shall lapse when three months shall have passed without the creditor or claimant.
proposed agreement being accepted by the creditors or as soon as such agreement is
denied. 191. Which of the following is considered an act of insolvency by an individual insolvent debtor?
C. The suspension order shall lapse when the ten months shall have passed without the A. That being a merchant or tradesman, he has generally defaulted in the payment of his
proposed agreement being accepted by the creditors or as soon as such agreement is current obligations for a period of five days.
denied. B. That he has while in state of solvency, made an payment, gift, grant, sale, conveyance or
D. The suspension order shall lapse when twelve months shall have passed without the transfer of his estate, property, rights or credit.
proposed agreement being accepted by the creditors or as soon as such agreement is C. That for a period of three days, he has failed, after demand, to pay any moneys
denied. deposited with him or received by him in a fiduciary capacity.
D. That he has made any assignment, gift, sale, conveyance or transfer of his estate,
188. What is the quorum required for the validity of meeting of creditors for the approval of property, rights or credits with intent to hinder or delay the liquidation or defraud his
insolvent individual debtor? creditor.
A. The presence of creditors holding claims amounting to at least 1/4 of the liabilities shall
be necessary for holding of meeting. 192. It refers to a corporate rehabilitation proceedings initiated by the insolvent juridical person by
B. The presence of creditors holding claims amounting to at least 2/3 of the liabilities shall filing it in court.
be necessary for holding of meeting. A. Informal rehabilitation proceedings
C. The presence of creditors holding claims amounting to at least 3/4 of the liabilities shall B. Prenegotiated rehabilitation proceedings
be necessary for holding of meeting. C. Voluntary court-supervised rehabilitation proceedings
D. The presence of creditors holding claims amounting to at least 3/5 of the liabilities shall D. Involuntary court-supervised rehabilitation proceedings
be necessary for holding of meeting.
193. What is the minimum claim of creditors or group of creditors in order to file a petition for
189. What is the minimum claim by a creditor or group of creditors before they may file a petition involuntary court-supervised rehabilitation proceedings of an insolvent corporation?
for involuntary liquidation of insolvent individual debtor? A. Any creditor or group of creditors with a claim of. or the aggregate of whose claims is, at
A. Claims aggregating at least P100,000 least P1,000,000 or at 25% of the subscribed capital stock, whichever is higher.
B. Claims aggregating at least P500,000 B. Any creditor or group of creditors with a claim of. or the aggregate of whose claims is, at

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least ten P10,000,000 or at least 50% of the subscribed capital stock, whichever is C. 10 years but subject to unlimited renewal
higher. D. Life of the right holder plus 50 years after his death
C. Any creditor or group of creditors with a claim of. or the aggregate of whose claims is, at
least One billion pesos or at least 40% of the subscribed capital stock, whichever is 198. It refers to trademark infringement test that focuses on the similarity of the main, prevalent or
higher. essential features of the competing trademarks that might cause confusion.
D. Any creditor or group of creditors with a claim of. or the aggregate of whose claims is, at A. Holistic test
least One hundred million pesos or at least 10% of the subscribed capital stock, B. Dominancy test
whichever is higher. C. Literal infringement test
D. Doctrine of Equivalents Infringement test
Intellectual Property
194. It refers to an intellectual property granted or issued by IPO which gives an exclusive right to 199. As a general rule, what is the legal term of copyright?
an inventor of a product, process or an improvement of a product or process which is new, A. 20 years
inventive and useful to exclude others from making, using, or selling the product of his B. Indefinite
invention during the life of the intangible asset. C. 10 years but subject to unlimited renewal
A. Copyright C. Trademark D. Life of the author plus 50 years after his death
B. Patent D. Tradename
200. A commissioned B to paint his garden. Who owns the painting and the copyright on the
195. Which of the following may be protected by patent registration? painting, respectively?
A. Aesthetic creations A. Both A C. A and B, respectively
B. Programs for computers B. Both B D. B and A, respectively
C. Microbiological process
D. Methods for treatments of the human body

196. 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?
A. Government
B. Newton because he has earlier priority date.
C. Einstein because he has earlier local application filing date.
D. None of them

197. What is the legal term of trademark or service mark?

A. 20 years
B. Indefinite

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NOTES: installments, an additional five percent every year but not to exceed ninety percent of the total
payments made. In this problem, the buyer has already paid 72 months of installments
1. Answer is (C. equivalent to 6 years. Therefore, the buyer is entitled to 55% cash surrender value.
Mixed Solidary Debt P12,000 Down payment P200,000
Less: Share of B, a minor in solidary debt, real defense (P12,000 x 2/6) ( 4,000) Add: Installments paid 720,000
Less: Share of A which is condoned by solidary creditor (P12,000 x 1/6) ( 2,000) Total payments made P920,000
Amount that W can collect from A P6,000 Multiply by cash surrender value percentage 55%
Even though the obligation is solidary, the share of the minor debtor may still be setup as a Cash surrender value P506,000
defense because it is a real defense but only in so far as the share of the minor is concerned.
9. Answer is (D). 1,000 x 6/10 = 600 SQM x ¼ = 150SQM to B and 600 SQM x ¾ =
2. Answer is (C). 450SQM
Share of joint creditor Y from the obligation (P12,000 x 2/3) P8,000
Since the obligation is joint only on the part of creditor, Y can only proportionately collect his 10. Answer is (C). Note: Cooperative Code fixed the minimum paid up capital at
share of 2/3 out of P12,000 or P8,000 from either B and C, the solidary debtors who are not
P15,000.
insolvent. Since the obligation is solidary on the party of debtor, B and C will absorb the
insolvency of A.
11. Answer is (C).
A B C
3. Answer is (C). Maximum Insured Deposit for Single Account P500,000 P500,000
Solidary Debt P30,000 Maximum Insured Deposit for Joint Account (A&B) 250,000 250,000
Less: Share of minor A (real defense) ( 10,000) Maximum Insured Deposit for Joint Account (A&C) 250,000 . 250,000
Amount that can be collected P20,000 P1,000,000 P750,000 P250,000

4. Answer is (A). Since the obligation is joint, only the share of D and A will be
extinguished amounting to P10,000 (P60,000/3=P20,000/2=P10,000)

5. Answer is (D). (P32,000 x 25%) = P8,000 (25% of subscribed shares)

6. Answer is (B). (91 square meters x P1,000 = P91,000) Note: Cancellation is allowed
only if the lacking area is at least 10% of stated area.

7. Answer is (C). Under Maceda Law, 10 years instalment will entitle the buyer to 75%
of total amount paid (P1,200,000 x 75% = P900,000) in case of cancellation

8. Answer is (C). Maceda Law applies to sale of residential real property in installment. The
said law provides that if the buyer has paid 2-5 years of installments and the contract is
canceled, the buyer shall have the right to that cash surrender value of the payments on the
property equivalent to fifty percent of the total payments made, and after five years of
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