NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS – REGION 3

REGULATORY FRAMEWORK AND BUSINESS TRANSACTIONS

REGIONAL MOCKBOARD EXAMINATION
EXAMINEE NO: ______

NAME: ______________________________________ LOCAL CHAPTER: _________________

Select the correct answer for each of the following questions. Mark only one answer for
each item by shading the box corresponding to the letter of your choice on the sheet
provided.

1. A contract of sale with a right to repurchase and other contracts including a

contract purporting to be an absolute sale shall be presumed to be an equitable
mortgage in the following cases except when the:
a. Price of sale with right to repurchase is unusually inadequate
b. Vendor remains in possession of the thing sold
c. Period to repurchase the property is extended
d. Vendee binds himself to pay the taxes due

2. In addition to the qualifications for membership in the Board provided for in the
Corporation Code, Securities Regulation Code and other relevant laws, the Board may
provide for additional qualifications which include, among others, the following
except:
a. College education or equivalent academic degree
b. Accredited under the Professional Regulations Commission
c. Practical understanding of the business of the corporation or previous business
experience on the same field
d. Membership in good standing in relevant industry, business or professional
organization

3. All foreign corporations applying for license to do business in the country should
indicate in their applications the following, except:
a. Country or state of incorporation
b. Specific address of the resident agent
c. Specific location where the corporation shall hold office and place in the
Philippines where the corporation intends to operate
d. Specific addresses of the present directors and officers of the corporation

4. The obligation begins only from a day certain or upon the arrival of the period
a. Ex die
b. In diem
c. Conditional
d. With a period

5. A, B and C are solidary debtors of X in the amount of P30,000.00. C was insane at

the time the obligation was constituted.
a. X may possibly collect from A the amount of P30,000.00
b. X may possibly collect from A the amount of P20,000.00
c. X may possibly collect from A the amount of P10,000.00
d. X may not be able to collect anything from A since the insanity of C at the
time of obligation was constituted rendered the whole obligation voidable

6. Ranny borred P5M from Reyes and Lulu who acted as solidary creditors. When the loan
matured, Reyes wrote a letter to Ranny demanding payment of the loan directly to him.
Before Ranny could comply, Lulu went to see him personally to collect and he paid
her. Did Ranny made a valid payment?
a. Yes, since payment covers the whole obligation
b. Yes, since Lulu was a solidary creditor, payment to her extinguished the
whole obligation
c. No, since Ranny should have split the payment between Reyes and Lulu
d. No, since Reyes, the other solidary creditor, already made a prior demand
from Lulu

REGIONAL MOCKBOARD EXAMINATION – REGULATORY FRAMEWORK AND BUSINESS TRANSACTIONS

Page 1 of 7
 7. Which of the following is an indivisible obligation?
a. To pay a loan obligation of P100,000.00 in 10 equal monthly installments
b. To give a rendition tonight of Handel’s “Messiah” in a concert at the Folk
Arts Theater
c. To lecture for 5 Saturdays in a tax seminar
d. To construct a pavement measuring 2 meters wide and 10 meters long

8. Cash dividend as distinguished from stock dividend

a. Consensus of the stockholders is required
b. Corporate capital is increased
c. Being part of corporate property, maybe reached by corporate creditors
d. Encompasses disbursement to the stockholders of accumulated earnings
9. Which of the following will not cause the automatic dissolution of a general
partnership?
a. Death of a partner
b. Insolvency of a partner
c. When the partnership business becomes unlawful
d. Insanity of a partner

10. James, subscribed 15,000 shares in Bomo Corporation. He paid 50% of the 15,000
shares. James asked the Corporate Secretary to issue him the corresponding stock
certificate representing the 50% of the paid subscriptions. The Corporate Secretary
of the corporation refused. Was the action of the Corporate Secretary correct?

a. The Corporate Secretary is correct because the Corporation Code provides that
no certificate of stock shall be issued to a subscriber until the shares as
subscribed have been fully paid.
b. The Corporate Secretary cannot refuse because a stock certificate can be
issued corresponding to the percentage of shares which were paid.
c. The Corporate Secretary cannot refuse because a certificate of stock can be
issued provided it is indicated in the certificate the actual percentage of
what has been paid.
d. The Corporate Secretary cannot refuse because it is his legal duty to issue a
stock certificate corresponding to the number of shares actually subscribed
regardless of the actual payment.

11. The board of directors of a corporation consist of nine (9) members, where two (2)
were removed and two (2) have resigned, who fills up the vacancy
First answer – the remaining number of BOD
Second answer – the stockholders
a. Both are true
b. Both are false
c. Only the first is true
d. Only the second is true

12. Several Canadian doctors wanted to set up a group clinic in the BGC, Philippines so
they could render modern medical services. If the clinic is to be incorporated
under our laws, what is the required foreign equity participation in such a
corporation
a. 20%
b. 0%
c. 50%
d. 100%

13. Alexis pays for Edgards transportation fare without Edgard’s knowledge and later
discovers that Edgard was entitled to half-fare. Which is not correct?
a. Alexis can recover the half-fare from Edgard
b. Alexis can recover the half-fare from the carrier
c. Alexis can recover ½ from Edgard and ½ from the carrier
d. Alexis can recover half-fare from Edgard only

14. Republic Act No. 9160 dated March 8, 2002, is also known as:
a. General Banking Law
b. Intellectual Property Law
c. Anti-Money Laundering Act
d. Secrecy of Bank Deposits and Unclaimed Balances Law

REGIONAL MOCKBOARD EXAMINATION – REGULATORY FRAMEWORK AND BUSINESS TRANSACTIONS

Page 2 of 7
 15. Where a bill payable after sight is accepted for honor, its maturity is calculated
from the date of
a. Acceptance for honor
b. Presentment of acceptance
c. Dishonor by non-acceptance
d. Noting for non-acceptance

16. Nina and Theresa are partners in buying and selling automobiles. Nina, as stated in
the partnership agreement, was authorized to buy automobiles only on cash basis, never
on the installment plan. One day Nina bought on credit/installment plan a car from
Karla. Karla did not know of Nina’s lack of authority to buy on credit. Nina’s purchase
was made on behalf and in the name of the partnership. Is the partnership bound?
a. No because Nina was not really authorized to bought on installment plan.
b. No because acquisition of automobiles requires the consent of all
partners.
c. Yes because although Nina was not really authorized, still for “apparently
carrying on in the usual way the business of the partnership” Nina is
implicitly authorized and ka did not know of A’s lack of authority.
d. Yes because all transaction made by any partners with third person is
valid provided the latter acted in good faith.

17. The operations and activities of banks shall be subject to the supervision of the
Bangko Sentral includes the following except:
a. Inquiring into the solvency and liquidity of the institution
b. The conduct of examination to determine compliance with laws and regulations
if the circumstances so warrant as determined by the Monetary Board
c. The issuance of rules of, conduct or the establishment standards of operation
for uniform application to all institutions or functions covered, taking into
consideration the distinctive character of the operations of institutions and
the substantive similarities of specific functions to which such rules, modes
or standards are to be applied
d. Examining an enterprise which is wholly or majority-owned or controlled by
the bank

18. Can future inheritance be the subject of a contract of sale?

a. No, since the seller owns no inheritance while his predecessor lives.
b. No, since it will put the predecessor at the risk of harm from a tempted
buyer, which is contrary to public policy.
c. Yes, since the death of the decedent is certain to occur.
d. Yes, but on the condition that the amount of the inheritance can only be
ascertained after the obligations of the estate have been fully paid.

19. The Negotiable Instrument Law is also known as:

a. Act No. 3021
b. Act No. 2031
c. Act No. 2130
d. Act No. 3102

20. D obtained a loan from C in the amount of P50,000.00. Unable to give cash on due date
in payment of his loan obligation, D proposed to C that he would be giving instead
his diamond ring to settle his debt. C agreed and accepted the ring from D. The new
agreement between D and C involved both:
a. Novation and application of payment
b. Novation and dacion en pago
c. Compensation and payment of cession
d. Confusion and tender of payment

21. The following obligations are divisible, except an obligation:

a. To give definite things
b. Which has for its object the execution of a certain number of days of work
c. Which has for its object the accomplishment of work by metrical units
d. Which by its nature is susceptible of partial performance

22. Mae sold to Arvie her car and promised to deliver in five days after. The next day,
after the sale to Arvie, Mae sold the same car to Meldy and immediately effected
delivery. On the day agreed upon, Mae did not deliver the car to Arvie. Which is
correct?
a. Arvie should make a demand to make Mae in default

REGIONAL MOCKBOARD EXAMINATION – REGULATORY FRAMEWORK AND BUSINESS TRANSACTIONS

Page 3 of 7
 b. Mae is liable to Arvie for damages and is in default without need for any
demand
c. Mae is liable to Arvie for the value of the car plus damages after Arvie
makes a demand
d. Arvie can cancel the contract between Mae and Meldy, because the contract
between Mae and Arvie was perfected ahead of the contract between Mae and
Meldy

23. Under a trust receipt arrangement, who among the parties shall bear the risk of
loss of goods covered by trust receipt?
a. The entrustor who is the owner of the goods
b. The entrustee who holds the goods in trust for the entrustor
c. Both the entrustor and the entrustee jointly
d. The entrustor and the entrustee are solidarily liable

24. X found a check on the street, drawn by Y against ABC Bank, with Z as payee. X
forged Z’s signature as an indorser, then indorsed it personally and delivered it to
DEF Bank. The latter, in turn, indorsed it to ABC Bank which charged it to Y’s account.
Y later sued ABC bank but it set up the forgery as its defense. Will it prosper?
a. Yes, since forgery is only a personal defense
b. Yes, since ABC Bank is bound to know the signature of Y, its client
c. No, since the payee’s signature has been forged
d. No, since Y’s remedy is to run after the forger

25. Which of the following statements is not correct?

a. The sale of the thing pledged shall extinguish the principal obligation, whether
or not the proceeds of the sale are equal to the amount of the principal
obligation, interest and expenses in a proper case
b. If the price of the sale of the thing pledged is more than the obligation, the
debtor shall not be entitled to the excess unless it is otherwise stipulated
c. If the price of the thing pledged is less than the obligation, the creditor
shall not be entitled to recover the deficiency, unless it is otherwise agreed
d. At the public auction, the pledger or owner may bid and he shall have a better
right if he should offer the same terms as the highest bidder

26. Which of the following contracts of sale is void?

a. Oral sale of a piece of land made through an agent whose authority is in a
public instrument
b. Sale of a piece of land in a public instrument made through an agent whose
authority was given orally by the principal
c. Sale of a piece of land in a private instrument made through an agent whose
authority is in a public instrument
d. Sale of a piece of land in a public instrument made through an agent whose
authority is in a private instrument

27. Except as a condition in a loan agreement, the voting trust agreement shall
not exceed6 months
a. 3 months
b. 1 year
c. 3 years
d. 5 years

28. Under the Code of Commerce, it is stated that contracts negotiated through
correspondences shall be deemed perfected upon:
a. From the moment of offer by the offeror
b. From the moment of acceptance through letter is made
c. From the moment of acceptance made by a letter is received by the offeror
d. From the moment the offeror learned of the acceptance of the offeree

29. The common law “Duty of Obedience” of directors, trustees and officers comes
from the principle in
a. Corporation Law that being a fiduciary of the corporation, he must account to
the corporation all profits and income arising from the property or business
managed for the corporation
b. Agency Law principle that every agent shall be bound to render an account of
his transaction and delivery to the principal whatever he may have receive by
virtue of the agency, even though it may not be owing to the principal

REGIONAL MOCKBOARD EXAMINATION – REGULATORY FRAMEWORK AND BUSINESS TRANSACTIONS

Page 4 of 7
 c. Agency Law that every agent must act within the scope of his authority and in
accordance with the instructions of the principal
d. Agency Law principle that every agent shall be liable for damages if, there
being a conflict between his interest and those of the principal, he should
prefer his own

30. Quasi-tradition is also known as:

a. Symbolical delivery
b. Longa manu
c. Brevi-manu
d. Execution of a public instrument
e. All of the above.

31. A warranty inherent in a contract of sale, whether or not mentioned in it is

known as
a. Warranty on quality
b. Warranty against hidden defects
c. Warranty against eviction
d. Warranty in merchantability

32. If one party was mistaken and the other acted fraudulently or inequitably in
such a way that the instrument does not show their true intention, which one of the
following is not incorrect?
a. The former may ask for reformation
b. The latter may ask for reformation
c. Either the former or the latter may ask for reformation
d. The formal may ask for annulment

33. Ana sold to Nyce a parcel of land for P4.9M. The sale is evidence by a
memorandum of agreement of sale written in Spanish. One week later, Ana sold the
same parcel of land to Shane for P6M. This is evidenced by a formal deed of sale.
Upon buying the property, Shane, who was aware of the first sale, immediately took
possession of the lot. When informed of the second sale, Nyce subsequently
registered an adverse claim to the property. Later, Shane registered the deed of
sale in his favor. The title of the parcel of land shall belong to
a. Nyce because he has the older title
b. Shane because he is the first to take possession
c. Shane because he is the first to formally register the deed of sale
d. No one because both sales are void

34. Edgar lost in gambling and as payment executed a promissory note in favor of
the winner, Jay. Later, Jay assigned the note to Mac. May Mac successfully recover
from Edgar?
a. Yes, if Mac is not aware that it is in payment of a gambling debt
b. Yes, because Jay can recover, so also the assignee can
c. No, because Jay cannot recover, so also assignee cannot
d. No, because promissory notes can only be negotiated but not assigned

35. Who bears the risk of things contributed to the partnership?

a. General partner
b. Limited partner
c. Partner contributing usufructuary rights over fungible things
d. Partner contributing usufructuary rights over non-fungible things

36. Edgar lost in gambling and as payment executed a promissory note in favor of
the winner, Jay. Later, Jay assigned the note to Mac. May Mac successfully recover
from Edgar?
a. Yes, if Mac is not aware that it is in payment of a gambling debt
b. Yes, because Jay can recover, so also the assignee can
c. No, because Jay cannot recover, so also assignee cannot
d. No, because promissory notes can only be negotiated but not assigned
37. Action by the vendee against the vendor to nullify the sale due to some vices
or defects which render the object of sale unfit for the use intended or knowledge
of which, the vendee would not have bought the thing
a. Redhibilitory action

REGIONAL MOCKBOARD EXAMINATION – REGULATORY FRAMEWORK AND BUSINESS TRANSACTIONS

Page 5 of 7
 b. Accion quantis minoris
c. Accion reinvidicatoria
d. Accion pauliana

38. Cy and Isa put up a partnership to engage in distribution of books and school
supplies. Cy contributed P2M while Isa her services. Cy wants to put up a
restaurant on the opposite side of the street. On the other hand, Isa wants to have
a bakery beside Cy’s restaurant. Which of the following is not incorrect?
a. Neither Cy and Isa can put up another business
b. Both Cy and Isa can put up their respective businesses without the need of
securing each other’s consent
c. Cy may put up his restaurant without need of securing Isa’s consent
d. Isa may put up her bakery without the need of securing Cy’s consent

39. These statements are presented to you:

I. Several prestations are due but all must be performed to extinguish the
obligation.
II. If there are void prestations, the other prestations may still be valid; hence,
the obligation remains.
In your evaluation of the foregoing statements:
a. Both statements refer to an alternative obligation
b. Neither statement refers to an alternative obligation
c. Only Statement I refers to an alternative obligation
d. Only Statement II refers to an alternative obligation

40. Essential elements of chattel mortgage, except

a. The object is personal or movable property
b. Description of the thing mortgaged must appear in a public instrument
c. The thing mortgaged is not delivered to the creditor
d. The mortgagor cannot sell without the consent of the mortgagee

41. Which of the following contracts is valid?

a. Contract of sale between an insane person and a deaf-mute who does not know
how to write and read
b. Contract of donation between a husband and his paramour
c. Contract of sale between husband and wife who are under the conjugal
partnership of gains
d. Contract of donation between a wife as donee and her former boyfriend as
donor

42. A, B and C were the co-owners of a lot in the ration of 1:2:1. A died. He was
succeeded to the property by S, his son and heir. Who may redeem the lot of A from
S?
a. B, because as the owner of a bigger portion, he enjoys preference in the
exercise of the right of legal redemption
b. C so that he and B will have an equal share in the lot
c. B and C, in proportion to the share of each in the lot
d. Neither B nor C may exercise the right of legal redemption.

43. A, B and C are jointly liable to X in the amount of P12,000.00. On due date,
X demanded payment from A but A refused to pay. How much may X collect from B?
a. P4,000.00 without any damages
b. P8,000.00 plus damages for delay
c. P12,000.00 plus damages for delay
d. P8,000 without any damages

44. As stated in Article 1170 of the Civil Code of the Philippines, “The obligor
shall be liable for damages if in the fulfillment of the obligation, he is guilty
of
a. Delay
b. Negligence
c. Fraud
d. Injury

45. Which is an unenforceable contract?

a. Contracts whose object is outside the commerce of man
b. Contracts where both parties are incapable of giving consent to a contract

REGIONAL MOCKBOARD EXAMINATION – REGULATORY FRAMEWORK AND BUSINESS TRANSACTIONS

Page 6 of 7
 c. Contract of sale by which a guardian acquires the property of his ward
without the approval of the court
d. Contract of sale by which a city mayor acquires a portion of the city
pursuant to a city ordinance enacted by the City Council

46. This is not negotiation of a negotiable instrument

a. Indorsement completed by delivery of an instrument payable to order
b. Assignment
c. Delivery of a bearer instrument
d. Delivery of an instrument to the payee

47. A deposit is a/an __________ contract, except when there is an agreement to

the contrary, or unless the depositary is engaged in the business of storing goods.
a. Valid
b. Unenforceable
c. Gratuitous
d. Partnership

48. The corporate term of a stock corporation is that which is stated in its
articles of incorporation. It may be extended or shortened by an amendment of the
articles when approved by majority of its Board of Directors and
a. Approved by at least 2/3 of the stockholders representing the outstanding
capital stock
b. Approved and ratified by at least 2/3 of all stockholders
c. Ratified by at least 2/3 of all stockholders
d. Ratified by at least 2/3 of the stockholders representing the outstanding
capital stock

49. The Realty Installment Buyer Protection Act applies to all transactions
involving the sale or financing of real estate on installment but it excludes the
following except:
a. Sale or financing of industrial lots
b. Sale or financing of commercial building
c. Sale to tenants under the Land Reform Code
d. Sale of residential condominiums

50. Edgar lost in gambling and as payment executed a promissory note in favor of
the winner, Jay. Later, Jay assigned the note to Mac. May Mac successfully recover
from Edgar?
a. Yes, if Mac is not aware that it is in payment of a gambling debt
b. Yes, because Jay can recover, so also the assignee can
c. No, because Jay cannot recover, so also assignee cannot
d. No, because promissory notes can only be negotiated but not assigned

--- END OF EXAM ---

REGIONAL MOCKBOARD EXAMINATION – REGULATORY FRAMEWORK AND BUSINESS TRANSACTIONS

Page 7 of 7