Regulatory Framework for Business Transactions

FINAL EXAM

General Instructions:
 Summarize your answers.
 Take a picture of your answer. If you are going to send using docx,
properly label it with (YOUR LAST NAME, Final Exam). Send it to my
Messenger Account (JOSEPHINE BALBINES GALAMAY)
 You are given Three Hours to accomplish your exam. The exam starts
at 6 pm and will end at 9 pm.
 There will be a 5% deduction for every hour of late submission.

PART I TRUE OR FALSE

Instruction: Write TRUE if the statement is correct and FALSE if the
statement if incorrect. 1 point each.

1. Close Corporation is one where no part of its income is distributable as

dividends to its members, trustees, or officers.

2. The natural person whose name is indicated on a work in the usual

manner as the author shall, in the absence of proof to the contrary, be
presumed to be the author of the work.

3. In fortuitous event, the mere difficulty to foresee the happening is not

impossibility to foresee the same.

4. A non-stock corporation can be converted into a stock corporation by

mere amendment of its articles of incorporation because the
conversion would change the corporate nature.

5. In case of works of applied art, the protection should be for a period of

50 years from the date of making.

6. If the suspensive condition is fulfilled, the obligation is extinguished.

7. Membership in and all rights arising from a non-stock corporation are

transferable.

8. When in fact the manager has been tacitly authorized by the owner is
an example of quasi contract.
9. Carnapping per se can be considered as a fortuitous event.

10. In case of joint authorship, the economic rights shall be

protected during the life of the last surviving author and for 50 years
from the date on which the work was first lawfully published.

11. Right is a claim or title to an interest in anything whatsoever

that is enforceable by law.

12. There is exact mathematical formula to determine proximate

cause.

13. The receipt of the principal by the creditor without reservation

with respect to the interest, shall give rise to the presumption that
said interest has been paid.

14. An obligation to pay money is generic.

15. Electronic documents shall have the legal effect, validity or

enforceability as any other document or legal writing.

16. If the object is a specific thing, the loss or destruction of

anything of the same kind even without the debtor’s fault and before
he has incurred in delay will not have the effect of extinguishing the
obligation.

17. The degree of diligence required of banks is more than that of a

good father of a family.

18. The use of the mark by a company related with the registrant or
applicant shall inure to the latter’s benefit, and such use shall not
affect the validity of such mark or of its registration.

19. When an employee causes damage due to his own negligence

while performing his own duties, there arises the presumption that his
employer is negligent, rebuttable only by proof of observance of the
extraordinary diligence.

20. Dolo causante is a fraud which renders a party to be liable for

damages.

21. Negligence signifies mere want of care or diligence and not the
voluntariness of act or omission.
22. Negligence signifies willfulness or deliberate intent to cause
damage to injury to another.

23. Waiver of for future fraud is valid.

24. Moral damages are in the category of an award designed to

compensate the claimant for actual injury suffered and to impose a
penalty on the wrongdoer.

25. Non-use of mark may be excused of caused by the

circumstances arising independently of the will of the trademark
owner. Lack of funds shall excuse non-use of a mark.

26. The Holistic or Totality Test necessitates a consideration of the

entirety of the marks as applied to the products, including labels and
packaging in determining confusing similarity.

27. If the obligor binds himself to perform his obligation as soon as

“he shall have obtained a loan” from a certain bank, this obligation is
with a term.

28. Actual delivery of the thing or payment of the price is required

for the perfection of the sale.

29. Reluctantly and against her good sense and judgment,

Rosemarie entered into a contract for the delivery of tables to Corazon
for a price of P50,000. The contract is voidable.

30. Universal Partnership is a type of Partnership in which partners

enjoy practically all the profits.

31. One who has adopted and used a trademark on his goods does
not prevent the adaptation and use of the same trademark by others
for products which are of a different description.

32. Simulated Contract takes place when the parties do not intend to
be bound at all by their agreement.

33. A partnership which comprises all that the partners may acquire
by their work or industry during the existence of the partnership is
Universal Partnership of Profits.
34. There shall be reformation of contract when a contract of sale
fraudulently made as a contract of lease.

35. A pledge cannot be constituted to secure the performance of a

voidable or unenforceable contract.

36. Data object refers to an individual whose data is being

processed.

37. After the first sale of the lawfully made copy of the copyrighted
work, anyone who is the owner of that copy can sell or dispose of that
copy in any wat without any liability for copyright infringement.

38. A pledge cannot be constituted unless the thing pledged be

placed in the possession of the creditor.

39. A stipulation in the mortgage contract prohibiting the owner from

alienating the immovable is valid.

40. Private information processor refers to any natural or juridical

person qualified to act as such under Data Privacy Act of 2012 to
whom personal information controller may outsource the processing of
personal data pertaining to a data subject.

41. If alienation of mortgage credit is not registered, it is still valid

between the parties.

42. There is a disputable presumption of law that a contract is

presumed to have an existing and lawful consideration, and the debtor
has the burden to prove that there is really no consideration.

43. Except in cases specified by law, lesion or inadequacy of cause

shall not invalidate a contract, unless there has been fraud and
mistake or undue influence.

44. When the parties agree upon the mortgage or pledge of real or
personal property, but the instrument states that the property is sold
absolutely or with right of repurchase, annulment is the proper
remedy.

45. Data Privacy Act applies to personal information processed for

journalistic, artistic, literary or research purposes.
46. A personal information controller may not subcontract the
processing of personal information.

47. Business One Stop Shop is a single common location, or a single

online website or portal designated for the Business Permit and
Licensing System of an LGU to receive and process applications,
receive payments, and issue approved licenses, clearances, permits or
authorizations.

48. Ratification requires the conformity of the contracting party who

has no right to file an action for annulment.

49. Whoever pays for the damages caused by his dependents or

employees may recover from the latter what he has paid or delivered
in satisfaction of the claim.

50. The Articles of Partnership must not be kept secret.

51. In sale of stolen object made in private, the owner cannot

recover from the buyer.

52. Personal information must be retained only for as long as

necessary for the fulfillment of the purposes for which the data was
obtained or for the establishment, exercise or defense of legal claims,
or fir legitimate business purposes, or as provided by law.

53. Expenses of delivery shall be borne by the buyer unless agreed

otherwise.

54. When the goods are already at the hands of the buyer and seller
is still unpaid, the seller can no longer ask for rescission.

55. All records of all transactions of covered institutions shall be

maintained and safely stored for 5 years from the date of transaction.
 PART II ESSAY
Instruction: Answer each problem and give a brief justification of your
answers. 4 points each.

1. A subscribed for 1000 shares of the Corporation and has the shares
registered in his name in the Stocks & Transfer Book of the X-Corp. Three
months later, he sold all his 1000 shares to Y who failed to have the transfer
registered in his Stock & Transfer Book. Then A died, leaving E his only heir.
Two months after A’s death, X-corp. declared dividends. Who is entitled to
receive the dividends corresponding to the 1000 shares of A, E or Y?

2. After approval of the Articles of Incorporation and issuance of the Certificate

of Incorporation, it is discovered that majority of the incorporators have not
completed their prescribed period of residency in the Philippines.
Q. 1. What is the status of the Corporation? Explain your answer.

3. Subscriber X has a total 1000 delinquent shares at P10 per share to be sold
at public auction. Total Amount Recoverable includes: total amount of the
delinquent shares, P10,000 and total expenses of the sale P5,000. Who will
be declared the highest bidder among the following in the public sale?
a. N who is willing to pay the P15,000 for 970 shares
b. P who is willing to pay the P15,000 for 920 shares
c. O who is willing to pay the P15,000 for 950 shares

4. A, B, C, D, E , F and G are duly elected directors for 2020 of XYZ Corporation

whose Articles of Incorporation provide 7 directors. On August 1, 2020,
Directors A, B, C, D and E met to fill two vacancies in the board brought
about by the valid removal of F for disloyalty to the corporation and the
death of G. In the said meeting, the remaining directors voted for X to
replace F and Y, a son of G, to replace his father. Both X and Y owners of at
least one share of stock of the corporation.
Q. Is the appointment of X and Y valid?

5. A, B, C, D and E distributed calling cards identifying themselves as directors

of XYZ Corporation, to several individuals during a business conference. In
reality, however, no such corporation is registered with the SEC. X, who
received a calling card granted credit amounting to Php500,000 to XYZ
Corporation believing that such corporation existed. When the supposed
corporation was unable to pay, X brought a court action against it. At that
time XYZ Corporation had assets of Php250000.
Q. What is the remedy of X?
6. Partnership assets and liabilities are:
December 31,2019 December 31, 2020
Assets P800,000 P200,000
Liabilities P400,000 P600,000
P400,000 (P400,000)
Capital A – P200,000
Capital B – P200,000
A and B are General Partners, have fully paid their capital contributions.
What is the remedy of the creditor? Explain.
a. Collect partnership liability from the Partnership
b. Collect partnership liability from A and B capital contributions (including
personal asset)
c. Collect partnership liability from B only
d. Collect partnership liability from A only

7. When the mortgage is due and remains unpaid, can the mortgagee
appropriate the mortgaged property?
Answer 1: No, the only right of the mortgagee is to foreclose the mortgage.
Answer 2: Yes, if there is a stipulation in the mortgage contract allowing the
mortgagee, creditor may appropriate the property mortgaged.
Which of the following is the best answer? Justify.

8. A, at the point of a gun, compels B to marry him. Since the contract of

marriage is voidable, either A or B has the right to file the action for
annulment. Is the statement correct?

9. A owes Mr. B P100,000. A knows that on maturity date, he will not be able
to pay B, and in order to prevent attachment of his property by B, A, before
maturity of his debt, executes a contract pretending to sell to T his property.
Is the contract between A and T binding? Explain.

10. A is authorized by B to sell the latter’s books for P100 at 10%

commission. A sold 10 books to C on credit but for a price of P120 each.
After ratifying the sale of credit, B can collect cash payment from C of how
much? If there was no ratification, the contract is? Reason.

11. A and B are partners. On June 15, 2019 when the total obligation of
the partnership was P800,000, C was admitted as new partner. At the time
of C’s admission, the partnership creditors were M for P500,000 and N for
P300,000. After June 15, the partnership borrowed from O P200,000 and
P400,000 from P. On December 15, 2019, the partnership became insolvent
leaving obligation totaling P1,400,000 and the partnership assets amounting
in P300,000. The creditors are going after the separate properties of the
 partners to satisfy their remaining claims’. How are the creditors’ claims
satisfied?

12. G, guardian of W, minor ward, sold W’s property worth P100,000 to X

for P70,000. Thus W suffered lesion by more than ¼ of the value of the
property. Upon reaching the age of majority, X wanted to file for rescission
but can no longer return the P70,000. Would rescission be proper? Explain.

13. A promise to sell to B his Toyota Corona Sedan for P400,000 at a

future date, and B promised to buy A’s Toyota for the same price at the
same time. Is there a perfected contract? If one of the parties fails to
comply with his promise, what is the remedy of the injured party?