Business Law – Mockboard Exam

ANSWER KEY

1. A

2. D

When the conditions have been imposed with the intention of suspending the efficacy of an obligation
to give, the following rules shall be observed in case of the improvement, loss or deterioration of the
thing during the pendency of the condition.

1. If the thing is lost without the fault of the debtor, the obligation shall be extinguished;

2. If the thing is lost thru the fault of the debtor, he shall be obliged to pay damages; it is understood
that the thing is lost when it perishes, or goes out of commerce, or disappears in such way that its
existence is unknown or it cannot be recovered.

3. When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the
creditor;

4. If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of
the obligation and its fulfilment, with indemnity for damages in either case;

5. If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the
creditor;

6. If it is improved at the expense of the debtor, they shall have no other right than that granted to the
unsufructuary (1189).

3. C
4. A
5. B

6. A

An alternative obligation is one where out of the two or more prestations which may be given, only one
is due.

In alternative obligation, the right of choice belongings to the debtor, unless it has been expressly
granted to the creditor (1200).

When the right of choice is with the debtor:

a. If only one or some are lost through a fortuitous event or through the debtor’s fault, the debtor
may deliver any of the remainder, or that which remains if only one subsists.
b. If all are lost through a fortuitous event, the obligation is extinguished (based on the rule that no
person shall be responsible for fortuitous event).
c. If all are lost through the debtor’s fault, the debtor shall pay the value of the last thing that was
lost plus damages.

7. A

8. A

9. D

The contractual stipulations must not be contrary to mandatory and prohibitive laws – the issuance of
the promissory note is based on an unlawful cause.

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 Business Law – Mockboard Exam
ANSWER KEY

10. C

11. C

12. B

The determination of the performance may be left to a third person, whose decision shall not be binding
until it has been made known to both contracting parties. [Art. 1309].

The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall
decide what is inequitable under the circumstances. [Art. 1310].

13. A

14. C

An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party
before acceptance is conveyed. [Art. 1323].

15. B

There is no mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the
contract. [Art. 1333].

Mutual error as to the legal effect of an agreement when the real purpose of the parties is frustrated,
may vitiate consent. [Art. 1334].

16. A

Every contract of partnership having a capital of three thousand pesos or more, or money or property,
shall appear in a public instrument, which must be recorded in the Office of the Securities and Exchange
Commission.

Failure to comply with the requirements of the preceding paragraph shall not affect the validity of the
partnership and the members thereof to third persons. [Art. 1772].

A contract of partnership is void, whenever immovable property is contributed thereto if an inventory of

said property is not made, signed by the parties, and attached to the public instrument. [Art. 1773].

17. C

The following must appear in a public document:

a) Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property; sales or real property or of an interest,
therein are governed by Articles 1403, No. 2 and 1405;
b) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal
partnership of gains;
c) The power to administer property, or any other power which has for its object an act appearing
or which should appear in a public document, or should prejudice a third person.
d) The cession of actions or rights proceeding from an act appearing in a public document.

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 Business Law – Mockboard Exam
ANSWER KEY

All other contracts where the amount involved exceeds P500 must appear in writing even a
private one. But sales of goods, chattels or things in action are governed by Articles 1403, No. 2
and 1405. [Art. 1358].

18. A

19. A

20. D

Section 3 of Maceda Law is comprehensive enough to include both contracts of sale and contracts to
sell, provided that the terms of the payment of the price require at least two installments.

21. B
22. B
23. D
24. D
25. D
26. D
27. A
28. D
29. D
30. D
31. B
32. C
33. B
34. C
35. D
36. B
37. A
38. D
39. A
40. B
41. A
42. B
43. A
44. B
45. D
46. D

47. C

Where an instrument expressed to be payable at a fixed period after date is issued undated, or where
the acceptance of an instrument payable at a fixed period after sight is undated, any holder may insert
therein the true date of issue or acceptance and the instrument shall be payable accordingly. (Sec. 13)

48. A

The defense that the instrument had not been filled in accordance with the authority given and within a
reasonable time is not available against a holder in due course. (Sec. 14)

Thus, a holder in due course may enforce the instrument as if it had been filled-up in accordance with
the authority given.

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 Business Law – Mockboard Exam
ANSWER KEY

NOTE: Since the problem is silent, B is considered a holder in due course.

49. D

Where the holder is not a holder in due course, he can enforce the instrument as completed only
against parties subsequent to the completion but not against those prior thereto.

50. A
51. A
52. B
53. D

54. C

Provided, that (1) where a stockholder or stockholders representing the same interest of both the
managing and the managed corporations own or control more than 1/3 of the total outstanding capital
stock entitled to vote of the managing corporation; or (2) where a majority of the members of the board
of directors of the managing corporation also constitute a majority of the members of the board of
directors of the managed corporation, then the management contract must be approved by the
stockholders of the managed corporation owning at least 2/3 of the total outstanding capital stock
entitled to vote, or by at least 2/3 of the members in the case of non-stock corporation.

No management contract shall be entered into for a period longer than five years for any one term. (Sec.
44)

55. D

56. C

A private corporation may invest its funds in any other corporation or business or for any purpose other
than the primary purpose for which it was organized when approved by a majority of the board of
directors or trustees and ratified by the stockholders representing at least 2/3 of the outstanding capital
stock, or by at least 2/3 of the members in the case of non-stock corporation, at a stockholders’ or
members’ meeting duly called for the purpose.

Provided, that any dissenting stockholder shall have appraisal right as provided in the corporation code.

Provided, however, that were the investment by the corporation is reasonably necessary to accomplish
its primary purpose as stated in the articles of incorporation, the approval of the stockholders or
members shall not be necessary (Sec. 42)

57. A

58. C

Any cash dividends due on delinquent stock shall first be applied to the unpaid balance on the
subscription plus costs and expenses, while stock dividends shall be withheld from the delinquent
stockholder until his unpaid subscription is fully paid. (Sec. 43)

59. D

Shares of stock so issued are personal property and may be transferred by delivery of the certificate or
certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the
transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is
recorded in the books of the corporation showing the names of the parties to the transaction, the date

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ANSWER KEY

of the transfer, the number of the certificate or certificates and the number of shares transferred. (sec.
63)

60. À

61. D

Written notice of regular meeting shall be sent to all stockholders or members of record at least 2 weeks
prior to the meeting, unless a different period is required by the by-laws (Sec. 50)

62. D

Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of
his shares in the following instances:

1) In case any amendment to the articles of incorporation has the effect of changing or restricting
the rights of any stockholder or class of shares, or of authorizing preferences in any respect
superior to those of outstanding shares of any class, or of extending or shortening the term of
corporate existence;
2) In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or
substantially all of the corporate property and assets; and
3) In case of merger or consolidation (Sec. 81).
4) To invest corporate funds in another corporation or business (Sec. 42).

63. B
64. C
65. A
66. D
67. A
68. C
69. A
70. A

71. A

Purpose of TILA: To protect its citizens from a lack of awareness of the true cost of credit to the user by
assuring a full disclosure of such cost with a view of preventing the uniformed use of credit to the
detriment of the national economy.

Purpose of GBL: To protect and maintain a stable and efficient banking and financial system that is
globally competitive, dynamic and responsive to the demands of a developing economy.

Purpose of SRC: To establish a socially conscious, free market that regulates itself, encourage the widest
participation of ownership in enterprises, enhance the democratization of wealth, promote the
development of the capital market, protect investors, ensure full and fair disclosure about securities,
minimize if not totally eliminate insider trading and other fraudulent or manipulative devices and
practices which create distortions in the free market.

72. A
73. A
74. A
75. A
76. B
77. D

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 Business Law – Mockboard Exam
ANSWER KEY

78. C
79. B
80. D
81. B
82. C
83. B
84. C
85. A
86. A
87. D
88. B
89. D
90. C
91. A
92. D
93. A

94. C

PDIC insures valid deposits in domestic officesof its member-bank by:

I. Deposit Type
a) Savings
b) Special Savings
c) Demand/Checking
d) Negotiable Order of Withdrawal (NOW)
e) Time Deposits

II. By Deposit Account

a) Single Account
b) Joint Account
c) Account “By”, “In Trust For” (ITF) or “For the Account of” (FAO) another person.

III. By Currency
a) Philippine Peso
b) Foreign currencies considered as part of BSP’s international reserves

95. C

NOTE also, that, for purposes of computing the insured deposits, all obligations or loans of the deposit
with the closed bank, as of bank closure, shall be deducted from the depositor’s total deposits with the
said bank (PDIC Regulatory Issuance No. 2011-04)

96. B

97. D (Sectiono 4(f) of the PDIC Charter)

98. D

99. D

100. C