Law Mock(100) A.doc

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. 1

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

B B D D D D A D D D B C B C D B A D A B A B A B D 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. 3

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. 51. 52. 53.

A A B 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 4

Business Law – Mockboard Exam 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. 64. 65. 66. 67. 68. 69. 70.

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

A A A A B D 5

Business Law – Mockboard Exam ANSWER KEY 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93.

C B D B C B C A A D B D C A D 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

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