12th Annual Charlwin Lee Cup

National Federation of Junior Philippine Institute of Public Accountants (NFJPIA)

Regulatory Framework for Business Transaction
Final Round

EASY 1
These are obligations which are not based on positive law but on equity and natural law. Also these do
not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they
authorize the retention of what has been delivered or rendered by reason thereof.

a. Negative Obligations
b. Equity Obligations
c. Natural Obligations
d. Voluntary Obligations
e. None of the above

ANSWER: C. NATURAL OBLIGATIONS

Reference:

Article 1423 of the Civil Code of the Philippines provides that Natural obligations, not being based on
positive law but on equity and natural law, do not grant a right of action to enforce their performance,
but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or
rendered by reason thereof.

EASY 2
In accordance with the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 10708,
otherwise known as the Tax Incentives Management and Transparency Act (TIMTA), all registered
business entities (RBEs) registered with investment promotion agencies (IPA) [e.g., Philippine
Economic Zone Authority (PEZA)] shall file their first annual tax incentives report (ATIR) for all taxable
years ended in 2015 on or before _________?

a. October 15, 2016

b. September 15, 2016
c. October 15, 2017
d. December 30, 2016
e. None of the above

ANSWER: B. SEPTEMBER 15, 2016

Reference:

Implementing Rules and Regulations (IRR) of TIMTA through Joint Administrative Order No. 1-2016,
jointly issued by Department of Finance (DOF) and Department of Trade and Industry (DTI)

EASY 3
These are issued by one merchant to another, or for the purpose of attending to a commercial
transaction.

a. Letters of demand
b. Letters of recommendation
c. Love letters
d. Preliminary Assessment letters
e. None of the above

ANSWER: E. NONE OF THE ABOVE LETTERS OF CREDIT

Reference:

Article 567 of Code of Commerce

EASY 4
Under Section 4 of Presidential Decree (PD) No. 115, this is a written or printed document whereby the
entrustee binds himself: (1) to hold the designated goods, documents or instruments in trust for the
entruster, and (2) to sell or otherwise dispose of the goods, documents or instruments with the
obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to the
entruster or as appears in the aforementioned document or the goods, documents or instruments
themselves if they are unsold or not otherwise disposed of, in accordance with the terms and conditions
specified in such document.

a. Trust Receipt
b. Acknowledgement Receipt
c. Treasury Receipt
d. Vouchers
e. None of the above

ANSWER: A. TRUST RECEIPT

Reference:

Section 4 of PD No. 115 also known as Trust Receipts Law

EASY 5
As defined under Section 3 (f) of Republic Act (RA) No. 9505, this is a voluntary retirement account
established by and for the exclusive use and benefit of the Contributor for the purpose of being invested
solely in PERA investment products in the Philippines.

a. Private Equity and Retribution Asset

b. Personal Equity and Retirement Assistance
c. Probationary Equivalent Retirement Asset
d. Private Equity and Retirement Account
e. None of the above

ANSWER: E. NONE OF THE ABOVE PERSONAL EQUITY AND RETIREMENT ACCOUNT (PERA)

Reference:

Section 3 (f) of Republic Act (RA) No. 9505, also known as PERA Act of 2008

EASY 6
As defined under Section 3 (f) of Republic Act (RA) No. 9505, this is an entity accredited by the Bureau
of Internal Revenue (BIR), after pre-qualification by the concerned Regulatory Authority. This entity shall
be responsible for overseeing the PERA, whose core functions shall include, but not limited to: reporting
on contributions made to the account, computing the values of investments, educating the Contributor,
enforcing PERA contributions and withdrawal limits, collecting appropriate taxes and penalties for the
government, securing BIR Income Tax Credit Certificates for the Contributor, consolidating reports on
all investments, income, expenses and withdrawals on the account and ensuring that PERA
contributions are invested in accordance with the prudential guidelines set by the Regulatory
Authorities.

a. Executor
b. Contributor
c. Administrator
d. Manager
e. None of the above

ANSWER: C. ADMINISTRATOR

Reference:

Section 3 (a) of Republic Act (RA) No. 9505, also known as PERA Act of 2008
EASY 7
Under Section 102 of Republic Act (RA) No. 10863, otherwise known as the Customs Modernization
and Tariff Act (CMTA), this refers to the act of bringing in of goods from a foreign territory in the
Philippine territory, whether for consumption, warehousing, or admission.

a. Exportation
b. Lodgement
c. Freight Forwarding
d. Conditional Importation
e. None of the above

ANSWER: E. NONE OF THE ABOVE - IMPORTATION

Reference:

Section 102 (z) of Republic Act (RA) No. 10863, also known as Customs Modernization and Tariff Act
(CMTA)

EASY 8
Under Section 102 of Republic Act (RA) No. 10863, otherwise known as the Customs Modernization
and Tariff Act (CMTA), this refers to a transport document issued by shipping lines, carriers, and
international freight forwarders or non-vessel operating common carrier for water-borne freight.

a. Bill of Gates
b. Airway Bill
c. Bills of Exchange
d. Bill of Lading
e. None of the above

ANSWER: D. BILL OF LADING

Reference:

Section 102 (h) of Republic Act (RA) No. 10863, also known as Customs Modernization and Tariff Act
(CMTA)

EASY 9
A time-honored latin maxim which means Agreements must be kept and is a term used in
understanding the spirit of treaties and executive agreements among nations, including double taxation
agreements (DTAs) or what are otherwise known as tax treaties.

a. Expecto Patronum
b. Homenum Revelio
c. Engorgio Reparo
d. Pacta Sunt Servanda
e. None of the above

ANSWER: D. PACTA SUNT SERVANDA

Reference:

Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue (CIR) [General Register
(G.R.) No. 18850 promulgated August 19, 2013]

EASY 10
On July 13, 2015, the Philippines signed a reciprocal Intergovernmental Agreement (IGA) with the
United States to implement the provisions this law. This law was signed in 2010 by US President
Barack Obama as part of the United States (US) Hiring Incentives to Restore Employment (HIRE) Act,
which aims to obtain information on US persons with offshore income and/or assets to increase
compliance with US tax laws. Which is it?
 a. Foreign Account Tax Compliance Act (FATCA)
b. Tax Incentives Management and Transparency Act (TIMTA)
c. Customs Modernization and Tariff Act (CMTA)
d. Magna Carta for Disabled Persons
e. None of the above

ANSWER: A. FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA)

EASY 11
Which of the following statement is false?

I. Contracts must bind both contracting parties and its validity or compliance cannot be left
to the will of one of them. This is the principle of relativity of contracts.
II. Contracts are perfected by mere consent of the contracting parties. This is the principle
of obligatory force of contracts.

ANSWER: I and II

Reference:

The first sentence refers to the principle of obligatory force of contracts.

The second sentence refers to the principle that contracts are consensual in nature.

EASY 12
Which of the following is not considered as quasi-contract?

I. Solutio Indebiti
II. Negotiorum gestio
III. When the third person with the consent of the debtor pays the debt
IV. Reimbursement due the person who saved the property during calamity without the
knowledge of the owner
V. None of the above

ANSWER: III only

Reference:

TITLE XVII of the Civil Code EXTRA-CONTRACTUAL OBLIGATIONS, CHAPTER 1 Quasi-contracts

includes section for Negotiorum gestio (section 1), Solutio Indebiti (section 2) and Other quasi-contracts
(section 3).

Item IV takes the nature of Quasi contract under the purview of what is called Negotiorum Gestio.

Item III is not a quasi-contract because the same has been agreed upon there being the presence of
consent which makes it a contract.

Article 1305 of the Civil Code provides that A contract is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give something or to render some service.

EASY 13
A contract of sale whereby the seller acquires the right to repurchase the object of the sale from the
buyer within a certain period agreed upon:

I. Equitable Mortgage
II. Legal Redemption
III. On Sale or Return
IV. Conventional Redemption
V. None of the above
ANSWER: IV

Reference:

Article 1601 of the Civil Code provides that Conventional redemption shall take place when the vendor
reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of
article 1616 and other stipulations which may have been agreed upon.

EASY 14
This is not an implied warranty in a contract of sale:

I. Right to sell the thing at the time of perfection of the contract

II. Reasonably fit for the purpose they are acquired
III. Merchantable Quality
IV. Free for charges or encumbrances not declared or known to the buyer

ANSWER: I

Reference:

Article 1547 of the Civil Code provides that In a contract of sale, unless a contrary intention appears,
there is:

(1) An implied warranty on the part of the seller that he has a right to sell the thing at the time when the
ownership is to pass, and that the buyer shall from that time have and enjoy the legal and peaceful
possession of the thing.

Article 1562 of the Civil Code also provides that In a sale of goods, there is an implied warranty or
condition as to the quality or fitness of the goods, as follows:

(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for
which the goods are acquired, and it appears that the buyer relies on the seller's skill or judgment
(whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be
reasonably fit for such purpose;

(2) Where the goods are brought by description from a seller who deals in goods of that description
(whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be
of merchantable quality.

SUBSECTION 2. Warranty Against Hidden Defects of or Encumbrances Upon the Thing Sold

Article 1561 of the Civil Code provides The vendor shall be responsible for warranty against the
hidden defects which the thing sold may have, should they render it unfit for the use for which it is
intended, or should they diminish its fitness for such use to such an extent that, had the vendee been
aware thereof, he would not have acquired it or would have given a lower price for it; but said vendor
shall not be answerable for patent defects or those which may be visible, or for those which are not
visible if the vendee is an expert who, by reason of his trade or profession, should have known them.

The answer would only be I since; the same has been stated expressly as there should be the right
when the ownership is to pass, not at the exact time of perfection of the contract.

EASY 15
The following are the elements of both contract of pledge and mortgage, except:

I. Pledgor or mortgagor must be the absolute owner

II. Pledgor or mortgagor must have free disposal of the thing pledged.
III. The thing pledged or mortgaged may be appropriated if the debtor cannot pay.
IV. Pledge and mortgage are accessory contracts.
V. None of the above
ANSWER: III

Reference:

Article 2085 of the Civil Code provides that The following requisites are essential to the contracts of
pledge and mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;

(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in
the absence thereof, that they be legally authorized for the purpose.

Third persons who are not parties to the principal obligation may secure the latter by pledging or
mortgaging their own property.

There being no express provision from the civil code that pledge and mortgage are accessory contracts,
the same may be the implication of the (1) above, since pledge and mortgage must be constituted only
to secure the fulfillment of a principal obligation. Pledge and mortgage are contracts which are
accessory which arise due to the institution of a principal contract which (1) states above.

Article 2088 of the Civil Code provides further that The creditor cannot appropriate the things given by
way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void.

EASY 16
Y sold his horse to Z for P50, 000. No payment has yet been made and the sales document does not
provide the date of delivery. Before delivery and payment the horse gave birth to a baby horse, who is
has the right to the said baby horse?

I. Z, because it was born after the perfection of the contract

II. Y, because Z hasnt paid yet
III. Y, because it was born before the obligation to deliver the horse arise
IV. Z, provided he is to pay additional amount

ANSWER: I

Reference:

Under Article 1521 of the Civil Code, Whether it is for the buyer to take possession of the goods or of
the seller to send them to the buyer is a question depending in each case on the contract, express or
implied, between the parties. Apart from any such contract, express or implied, or usage of trade to the
contrary, the place of delivery is the seller's place of business if he has one, and if not his residence; but
in case of a contract of sale of specific goods, which to the knowledge of the parties when the contract
or the sale was made were in some other place, then that place is the place of delivery.

Where by a contract of sale the seller is bound to send the goods to the buyer, but no time for sending
them is fixed, the seller is bound to send them within a reasonable time.

Sale is a reciprocal contract which imposes parallel obligations and rights among the buyer and the
seller. Since there is no fixing of time, the obligation to deliver arises as the parties entered into the
contract. Stretching the discussion further, the right of the seller in this case is to receive payment but its
obligation is to deliver. Conversely, the right of the buyer is to demand the delivery consequently making
him obligated to pay the reasonable price of the article thereof. As regards, the fruit, since the in this
case, the buyer awaits the delivery, making him in essence a creditor in this point of view. The provision
of the Law below applies.

Article 1164 of the Civil Code provides that The creditor has a right to the fruits of the thing from the
time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has
been delivered to him. (1095)
Based on the foregoing, the answer should be I.

EASY 17
A sold her specific car to B for PhP 200, 000 payable in 5 equal installments. A delivered the car to B
but a mortgage was constituted on the car to answer for the unpaid installments. B paid the first 2
installments but failed to pay the last 3 installments. A foreclosed the mortgaged property and sold it at
public auction for PhP 100, 000. Which of the following is not correct?

I. A can recover from B the balance of PhP 20,000 even if there is no stipulation
II. A can recover from B the balance of PhP 20,000 only if there is stipulation
III. A cannot recover the deficiency except if there is stipulation
IV. A cannot recover the deficiency even if there is stipulation

ANSWER: I, II and III

Reference:

Article 1484 of the Civil Code provides that In a contract of sale of personal property the price of which
is payable in installments, the vendor may exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;

(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's
failure to pay cover two or more installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void.
(1454-A-a)

Applying (3) of the above article, there can no longer be recovery on the part of A on the deficiency he
suffered even if the same has been stipulated. Because any agreement or stipulation to that effect is
void.

EASY 18
O, the owner of a Xerox Machine, leased it to L, at a rental of P4, 000 a month for a period of one year
with option to buy the said machine at the end of the year for P80, 000, to be paid by applying the
rentals, so that L needs only to pay P 32,000. L failed to pay rentals for the 4th, 5th and 6th months so
that O terminated the lease and repossessed the machine, then sued L for the unpaid rentals of three
months or for the amount of P12, 000. Up to what amount is L liable?

ANSWER: 0

Reference:

Article 1484 of the Civil Code provides that In a contract of sale of personal property the price of which
is payable in installments, the vendor may exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;

(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's
failure to pay cover two or more installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void.
(1454-A-a)

Article 1485 of the Civil Code provides further that The preceding article shall be applied to contracts
purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee
of the possession or enjoyment of the thing. (1454-A-a)
Because of the application of Article 1485 on the case at hand, the same shall therefore be subjected to
the provisions of the preceding article 1484 (3). Since L, in this case the purchaser, was deprived of the
possession or enjoyment of the thing leased, the vendor shall have no further action against purchaser
to recover any unpaid balance of the price. Thus, it can be assumed that L is no longer liable to any
unpaid balance, making his liability 0.

EASY 19
In two separate documents signed by A, he obligated himself each to B and C, thus:

To B, my true love, I obligate myself to pay you my one and only car when I feel I like it. and
To C, my true sweetheart, I obligate myself to pay you the P 1M I owe you when I feel I like it.

In which of the two obligations is A liable?

I. A is liable to B because his written promise to give his car makes it enforceable
II. A is not liable to B because the obligation is void being one with a void potestative
condition
III. A is liable to C because the obligation is one with a suspensive condition which is valid.
IV. A is liable to C because the obligation is one with a period which depends upon the will
of the debtor.

ANSWER: IV

Reference:

First, the document signed by A which pertains to B, is not a valid obligation because the same is
subject to a suspensive condition which is potestative in nature. The instrument therefore doesnt make
A liable to B. Thereby, rendering Item I not the possible answer. The provision below amplifies this
explanation.

Article 1182 of the Civil Code provides that When the fulfillment of the condition depends upon the sole
will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a
third person, the obligation shall take effect in conformity with the provisions of this Code. (1115)

Second, the document signed by A which pertains to C, is a valid obligation, making A liable to C under
the circumstances. However, the same obligation is subject to a period.

Article 1193 of the Civil Code provides that Obligations for whose fulfillment a day certain has been
fixed, shall be demandable only when that day comes.

Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.

A day certain is understood to be that which must necessarily come, although it may not be known
when.

If the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall
be regulated by the rules of the preceding Section. (1125a)

The timing of payment of an obligation although not mentioned expressly must necessarily come,
therefore making the obligation in the second statement above subject to a period.

Based on the foregoing rationale, Item III cant be the possible answer.

Among II and IV the best answer would be IV since; II is not a responsive answer to the question at
hand.

EASY 20
Acceptance of an offer made by letter or telegram shall bind the offeror from the time:
 I. the offeree has knowledge of the offer
II. the offeree sent his acceptance
III. the acceptance is communicated
IV. the offeror made the offer

ANSWER: III

Reference:

Article 1319 of the Civil Code provides that Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain
and the acceptance absolute. A qualified acceptance constitutes a counter-offer.

Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed to have been entered into in the place where the
offer was made.

The above article presupposes that acceptance shall only take place when the same has come to the
knowledge of the offeror and is only coming unto him if the same has been communicated to him.

AVERAGE 1
As defined under Section 2. Definition of Terms of Rules and Regulations to Implement Republic Act
No. 10708, otherwise known as the Tax Incentives Management and Transparency Act (TIMTA),
through Joint Administrative Order No. 1-2016, Investment Promotion Agencies (IPAs) shall refer to
government entities created by law, executive order, decree or other issuance, in charge of promoting
investments, administering tax and non-tax incentives, and/or overseeing the operations of the different
economic zones and freeports in accordance with their respective charters. Which of the following
agencies are not included among the enumeration of IPAs under Joint Administrative Order No. 1-
2016?

a. Philippine Economic Zone Authority (PEZA)

b. Bases Conversion and Development Authority (BCDA)
c. Bureau of Internal Revenue (BIR)
d. Subic Bay Metropolitan Authority (SBMA)
e. Social Security System (SSS)
f. John Hay Management Corporation (JHMC)
g. Poro Point Management Corporation (PPMC)
h. Phividec Industrial Authority (PIA)
i. Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
j. Clark Development Cathedral (CDC)

Answer: C, E, J

Reference:

Implementing Rules and Regulations (IRR) of TIMTA through Joint Administrative Order No. 1-2016 as
jointly issued by Department of Finance (DOF) and Department of Trade and Industry (DTI)

AVERAGE 2
One early morning, A was awakened by the noise outside. He then suddenly stood up to see what is
happening outside and was surprised to see that the houses of his neighbors were on fire. Luckily for A,
their houses stood on the opposite side of the street, therefore As house is safe. At the time, As
neighbors were crying for help and were immediately vacating their places putting their things on the
open garage of A without his permission. At this juncture, a contract was created by operation of law.
What contract is it?

ANSWER: CONTRACT OF DEPOSIT

Reference:
Article 1962 of the Civil Code of the Philippines provides that A deposit is constituted from the moment
a person receives a thing belonging to another, with the obligation of safely keeping it and of returning
the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is
no deposit but some other contract.

Moreover, Article 1996 of the same code provides that A deposit is necessary: (1) when it is made in
compliance with a legal obligation; (2) when it takes place on the occasion of any calamity, such as fire,
storm, flood, pillage, shipwreck, or other similar events.

Applying the provisions above, even though there was no permission on side of A, he became a
depositary by virtue of necessary deposits. A legal tie was created even in the absence of express
consent from A because there was calamity.

AVERAGE 3
On August 15, 2016, A borrowed the car of B with the stipulation that the same shall be returned by A
on August 30, 2016. B delivered his car to A on the same day. On the early morning of August 16,
2016, noise outside the house of A awakened him and was surprised to see his neighbors panicked, as
fire broke out of his garage where the borrowed car was placed.

Unluckily, the garage from which the fire broke out was the same garage which his wife used to clean
every morning. A was rattled when he realized this, and rushed to the garage, only to find out that his
wife was nearly burnt and cant run due to cramps. At that time, he can only save one among the car he
borrowed, the jeepney he owns and his wife. He chose to save his wife, leaving the car and jeepney
behind.

Based on the foregoing facts, is A liable to B for the loss of the borrowed car (due to fire) under Article
1942 of the Civil Code of the Philippines?

ANSWER: NO

Reference:

A is not liable under Article 1942 (5), because it is not his thing that has been saved. It is his wife.

Article 1942 provides that The bailee is liable for the loss of the thing, even if it should be through a
fortuitous event:

1. If he devotes the thing to any purpose different from that for which it has been loaned;
2. If he keeps it longer than the period stipulated, or after the accomplishment of the use for
which the commodatum has been constituted;
3. If the thing loaned has been delivered with appraisal of its value, unless there is a
stipulation exemption the bailee from responsibility in case of a fortuitous event;
4. If he lends or leases the thing to a third person, who is not a member of his household;
5. If, being able to save either the thing borrowed or his own thing, he chose to save the
latter.

AVERAGE 4
Mr. A was attracted to Miss B. Initially, he wanted to introduce himself and court B. However, for so
many reasons, he knows that B will not fall for him. Because of this, he appointed himself as the
bodyguard of B to ensure Bs safety. At the start of each day, he will follow B to ensure that no one will
cause harm to B. When night comes, he is still there, scouting B, until she reach home. He is doing this
every day. One day, B noticed that a man is following her, of course B felt very anxious because in the
first place she doesnt really know the man. With this, B felt anxiety, she was worried and frightened,
which causes her sleepless nights. Finally, when B cant handle these anymore, B decided to go to
court to ask that A be arrested. A objected saying that he was actually there ensuring that B is in safe
condition. Still, B sued A, under Article 19 of the Civil Code; she claims that she has the right to have
peace and she was deprived of that. Because of the mental pain that was suffered by B, imagine all the
sleepless night, worries and fears, can she ask for payment of moral damages because of the injury she
suffered?
ANSWER: NO

Reference:

Awards for moral, exemplary and actual damages shall only be given if there was an act that actually
transpired. The worries and fears of B is based on speculation only.

AVERAGE 5
Mr. A was attracted to Miss B. Initially he wanted to introduce himself and begin courting B. However,
for so many reasons, he knows that B will not fall for him. Because of As urge to have B, he kidnapped
Bs mother (C), and injured her to death so that C could convince her daughter (B) to agree on the
contract of marriage laid down by A. During the kidnapping, C was very reluctant, until A pointed a gun
to her and threatened her, that he will kill both of them; C and her daughter, B. C surrendered and
through phone call, was able to convince her daughter, B, to marry A. Days later, marriage was
celebrated. Later on, B was asking for the annulment of the contract of marriage on the ground of
intimidation.

Based on the foregoing, within how many years from the time the intimidation cease, can B bring up the
action for annulment?

ANSWER: FIVE YEARS

Reference:

Contracts entered into by reason of violence, intimidation and undue influence can be annulled within 4
years from the time the violence, intimidation and undue influence ceases, except in the case of
contract of marriage. It is given a period of 5 years. The law gives a longer period in case of such
contract for reconciliation. Reference can be made under Article 45 to 47 of Family Code.

AVERAGE 6
On February 14, 2016, A obliged himself to give B the amount of PhP 100,000.00 if C will marry D on or
before December 31, 2016. B at that time was very confident because he believes that C will marry D
before the year ends because C and D had a relationship of more than 10 years, its just that they cant
marry each other yet because they believe that marriage is something to be prepared on.

Later on, B convinced C to ask her boyfriend D to marry her, to which D objected and cause the painful
feeling to C because all the while, she always taught that there is forever with D. C, believing that she is
old enough, decided to break up with D and find another guy who will marry her.

Months later, C bumped into E, the former boyfriend of hers who is very rich and smart. Fortunately for
C, E confessed on that day that he still has feelings for her and asked for her hand on a marriage. E,
excited to experience marriage, consented and it was then celebrated November 20 of the same year.
Unluckily, 2 days after the marriage, a car accident befell E which caused him serious injuries leading to
his immediate death. C was traumatized. B, after all that happened, was very happy because there is
now the chance for C to marry D, since December 31, 2016 is still yet to come. At this juncture, is the
obligation of A to give B the amount of PhP 100,000.00 extinguished?

ANSWER: YES

Reference:

The obligation of A to give B PhP 100,000 is already extinguished even before the year ends under
Article 84 of the family code. There will be no chance for C to marry D on 2016, since their marriage will
have no effect at all.

Article 84 of the Civil Code of the Philippines provides that No marriage license shall be issued to a
widow till after three hundred days following the death of her husband, unless in the meantime she has
given birth to a child.
AVERAGE 7
Advertising or mass media are nationalized activities subject to foreign equity limitations imposed by the
1987 Constitution and other pertinent laws. The activities of leasing out or subleasing of advertising
spaces, such as waiting sheds, billboard structures, electronic light-emitting diode (LED) displays and
other fixed or movable structures where advertisements can be displayed actually provides a medium to
convey messages to public, hence, are covered by the definition of mass media. Applying Securities
and Exchange Commission (SEC) - Office of the General Counsel (OGC) Opinion No. 16-17 dated July
11, 2016, up to how much foreign ownership (percentage) can be allowed on businesses such as this?
(Please round of to two (2) decimal places your answer)

ANSWER: Zero percent (0%)

Reference:

SEC-OGC Opinion No. 16-17 dated July 11, 2016

AVERAGE 8
______ are laws that creates, defines, and regulates rights and duties concerning life, liberty or property the
violation of which gives rise to a cause of action.

______ are laws which prescribes the methods of enforcing those rights and obligations created by
substantive law by providing a procedural system for obtaining redress for the invasion of rights and
violations of duties and by laying out rules as to how suits are filed, tried and decided upon by the courts.

ANSWER: Substantive law; Remedial law

References:

(Primicias v. Ocampo, 93 Phil. 446, 452)

(Bustos v. Lucero, 81 Phil. 640, 650)
(Bustos v. Lucero, 81Phil. 640, 653-654)

AVERAGE 9
Under Section 3 (g) of the Personal Equity and Retirement Account (PERA) Act of 2008, the type of PERA
investment products , provided that these are non-speculative, readily marketable, and with a track record of
regular income payments to investors, includes the following, except:

a. Unit investment trust funds (UITF);

b. Share of stock of mutual funds
c. Promissory notes
d. Annuity contracts
e. Insurance pension products
f. Pre-need pension plans
g. Government securities
h. Bills of exchange
i. Shares of stock or other securities listed and traded on the local stock exchange;
j. Exchange-traded bonds

ANSWER: C, H

Reference:

Section 3 (g) of PERA Law

AVERAGE 10
Which of the following instruments is negotiable?

I. I promise to pay B or order P20, 000 if he will pass the CPA board exam on Oct. 2014.
(Sgd. A)
II. I promise to pay B or order P20, 000 in four installments. (Sgd. A)
 III. I promise to pay B or order P20, 000, 30 days before the death of his father. (Sgd. A)
IV. I promise to pay B P20, 000. (Sgd. A)
V. Good to B or order, P20, 000 (Sgd. A)
VI. I hereby authorize you to pay B or order 20,000 (Sgd. A)
VII. I promise to pay B or order P20, 000 worth in sugar. (Sgd. A)
VIII. I promise to pay B or order P20, 000 on May 25. (Sgd. A)

ANSWER: V only

Reference:

Section 1 of the Negotiable Instruments Law refers to the essential requisites to make an instrument
negotiable.

Form of Negotiable Instruments. An instrument to be negotiable must conform to the following

requirements:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated
therein with reasonable certainty.

Instrument I and VI are not negotiable since those are not compliant to (b) above being both conditional.

Instrument III and VIII are not negotiable since those are not compliant to (c) above being both are not
payable on a determinate future time.

Instrument II and VII are not negotiable since those are not compliant to (b) above being both are
payable in sum certain in money.

Instrument IV is not negotiable since this is not compliant to (d) above lacking that it should be payable
to order or bearer.

The only instrument which is negotiable is the one falling under V. Mere use of the word Good doesnt
make it non-negotiable under Section 10 of the same law which is amplified below.

Section 10 of the Negotiable Instruments Law

Terms, When Sufficient The instrument need not follow the language of this Act, but any terms are
sufficient which clearly indicate an intention to conform to the requirements hereof.

AVERAGE 11
To which of the following instances will there be imposition of joint liability?

I. Obligations arising from torts.

II. Obligations of bailees in commodatum.
III. Liability of principals to their common agent.
IV. Obligations in favor of partnership suppliers by virtue of sales contract with regard to
each partner.
V. Obligations in favor of a partnership client for return of deposits misappropriated by one
of the partners.
VI. Obligations in favor of a pedestrian hit by the delivery van driven by one of the partners
in the course of partnership business.

ANSWER: IV only

Reference:

Article 1207 of the Civil Code provides that The concurrence of two or more creditors or of two or more
debtors in one and the same obligation does not imply that each one of the former has a right to
demand, or that each one of the latter is bound to render, entire compliance with the prestation. There is
a solidary liability only when the obligation expressly so states, or when the law or the nature of the
obligation requires solidarity. (1137a)

Article 1822 of the Civil Code provides that Where, by any wrongful act or omission of any partner
acting in the ordinary course of the business of the partnership or with the authority of his co-partners,
loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred,
the partnership is liable therefor to the same extent as the partner so acting or omitting to act. (n)

Article 1823 of the Civil Code provides further that The partnership is bound to make good the loss:

(1) Where one partner acting within the scope of his apparent authority receives money or property of a
third person and misapplies it; and

(2) Where the partnership in the course of its business receives money or property of a third person and
the money or property so received is misapplied by any partner while it is in the custody of the
partnership. (n)

Moreover, Article 1824 of the Civil Code provides that All partners are liable solidarily with the
partnership for everything chargeable to the partnership under articles 1822 and 1823. (n)

Items I, V and VI are cases where the law imposes solidarity among partners.

Article 1945 of the Civil Code provides that When there are two or more bailees to whom a thing is
loaned in the same contract, they are liable solidarily. (1748a).

The above provision makes choice II a case where the law also requires bailees to have solidary liability
among them.

Article 1915 of the Civil Code provides that If two or more persons have appointed an agent for a
common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences
of the agency. (1731).

The above provision also imposes solidary liability to principals with common agent.

Again from Article 1207, since solidarity is not presumed and may only be drawn under strict
circumstances as stated above, transactions entered into by partners which are incidental to transact
the business of a partnership cant impose solidary liability among those partners. Henceforth, item IV is
the only answer.

AVERAGE 12
The note reads as follows:

I promise to pay B or order PhP 200,000, 30 days after date. Sgd. A. The above promissory note
was issued by A to B on Feb. 8, 2016 for the Lancer car sold by B to A. A few days later, Feb. 15, 2016,
A was deprived of the car because it turned out to be a stolen car and the true owner was able to
recover it from A. On Feb. 25, 2016, B negotiated the promissory note to C. Terms- 50% payable on
Feb. 25, 2016 and the balance of P100,000 payable on Feb. 28, 2016, C paid the P100,000 on Feb. 25,
2016 as agreed upon. On Feb 27, 2016, C learned of the unlawful consideration between A and B.
Despite such knowledge, C paid the PhP 100,000 balance on Feb. 28, 2016. On maturity of the
instrument, how much, if any, can C collect from A?

ANSWER: PhP 100,000.00

Reference:

C can only collect PhP 100,000.00 from A, because A can setup a defense against C, which is the
illegality of the consideration between him and B, right after C learned of the infirmity on the instrument.
C as far as the law is concerned is no longer a holder in due course to which personal defenses can be
used. Thus being not a holder in due course anymore, the following rights below which are available to
a holder in due course cant be invoked by C.

SECTION 57 of the Negotiable Instruments Law

Rights of Holder in Due Course. A holder in due course holds the instrument free from any defect of
title of prior parties and free from defenses available to prior parties among themselves, and may
enforce payment of the instrument for the full amount thereof against all parties liable thereon.

However, to the extent of PhP 100,000 which is paid by C when he is still a holder in due course not
knowing any defect on the instrument, recovery of such may still commence against A. This is amplified
by the provision below.

SECTION 54 of the Negotiable Instruments Law

Notice Before Full Amount Paid. Where the transferee receives notice of any infirmity in the
instrument or defect in the title of the person negotiating the same before he has paid the full amount
agreed to be paid therefor, he will be deemed a holder in due course only to the extent of the amount
theretofore paid by him.

AVERAGE 13
Joy borrowed PhP 50,000.00 from Sadness. The obligation bears interest of 10% per annum. To secure
the debt, Joy agreed with Sadness that the fruits from the agricultural lot of Joy shall answer for the
interest and the principal obligation. Assuming the form required by the law was complied with, the
contract entered into between Joy and Sadness for the application of the fruits of the lot to the interest
and principal obligation is known as:

ANSWER: ANTICHRESIS

Reference:

Article 2132 of the Civil Code of the Philippines provides that A contract whereby the creditor acquires
the right to receive the fruits of an immovable of his debtor, with the obligation to apply them to the
payment of the interest, and thereafter to the principal of his credit.

AVERAGE 14
This is committed when two elements concur, namely: (1) the offender has no valid license or authority
required by law to enable one to lawfully engage in recruitment and placement of workers; and (2) he
undertakes either any activity within the meaning of "recruitment and placement" defined under Art. 13
(b), or any of the prohibited practices enumerated under Article 34 of the Labor Code.

ANSWER: ILLEGAL RECRUITMENT

Reference:

Presidential Decree No. 442- Labor Code (As amended)

AVERAGE 15
This law provides for a national competition policy prohibiting anti-competitive agreements, abuse of
dominant position, and anti-competitive mergers and acquisitions. This law also provides for the
establishment of the Philippine Competition Commission.

The law shall apply against any person or entity engaged in trade, industry and commerce in the
Philippines. It shall also apply to international trade having direct, substantial, and reasonably
foreseeable effects in trade, commerce and industry in the Philippines, including acts done outside the
Philippines.

Which of the following pertains to this law?

 a. Republic Act No. 10667 Philippine Competency Act
b. Republic Act No. 10887 Philippine Competence Act
c. Republic Act No. 10006 Prohibition of Business Combination Act
d. Republic Act No. 9504 Philippine Anti-business combination Act
e. None of the above

ANSWER: E. NONE OF THE ABOVE REPUBLIC ACT NO. 10667 Philippine Competition Act

Reference:

RA No.10667 also known as Philippine Competition Act

AVERAGE 16
Section 11 of Presidential Decree (PD) No. 612 Insurance Code of the Philippines provides that every
person has an insurable interest in the life and health of the following persons, except:

a. Of himself;
b. Of any person on whom he depends wholly or in part for education or support;
c. Of any person under a legal obligation to him for the payment of money, or respecting property
or services, of which death or illness might delay or prevent the performance; and
d. Of any person upon whose life any estate or interest vested in him depends.
e. All of the above

ANSWER: E. ALL OF THE ABOVE

Reference:

Section 11 of PD No. 612 also known as Insurance Code of the Philippines

AVERAGE 17
Under Section 25 of Presidential Decree (PD) No. 612 Insurance Code of the Philippines, this refers to
the neglect to communicate which a party knows and is ought to communicate.

ANSWER: CONCEALMENT

Reference:

Section 25 of PD No. 612 also known as Insurance Code of the Philippines

AVERAGE 18
The objective of this law is to facilitate domestic and international dealings, transactions, arrangements,
agreements, contracts and exchanges and storage of information through the utilization of electronic,
optical and similar medium, mode, instrumentality and technology to recognize the authenticity and
reliability of electronic documents related to such activities and to promote the universal use of
electronic transaction in the government and general public. Which is it?

a. Electricity Act of 1994

b. Electronic Commerce Act of 2000
c. Freedom of Information Act of 2016
d. Information and Technology Act of 2015
e. None of the above

ANSWER: B. ELECTRONIC COMMERCE ACT OF 2000

Reference:

Republic Act (RA) No. 8792 also known as Electronic Commerce Act of 2000

AVERAGE 19
This legal maxim means the mention of one thing implies the exclusion of another thing not mentioned.
If a statute enumerates the things upon which it is to operate, everything else must necessarily and by
implication be excluded from its operation and effect.

a. Unius est exclusio alterius

b. Homenum exclusion Revelio
c. Fenite Incantatem
d. Dura lex sed lex exclusio
e. None of the above

ANSWER: A. UNIUS EST EXCLUSIO ALTERIUS

Reference:

[Tolentino v. Paqueo, 523 Supreme Court Reports Annotated (SCRA) 377].

AVERAGE 20
On June 1, 2014, A obtained a loan of PhP 500,000 from B payable not later than June 1, 2015. B
required A to issue him a check for that amount to be dated June 1, 2015. B required A to issue him a
check for that amount to e dated June 1, 2015. Since he does not have any checking account, A with
the knowledge of B requested his friend, C, President of the Metro Savings Corporation (MSC), to
accommodate him. C agreed, he signed a check for the aforesaid amount, dated June 1, 2015, drawn
against MSCs account with the ABC Commercial Banking Corp. The By-laws of MSCs requires that
checks issued by it must be signed by the President and the treasurer or the Vice President. Since the
treasurer was absent, C requested the Vice President to co-sign the check, which the latter reluctantly
did. The check was delivered to B. The check was dishonored upon presentment on due date for
insufficiency of funds. Which of the following statements are not incorrect?

I. MSCs is liable as an accommodation party

II. The president and the Vice president are liable as an accommodation party.
III. The president and the Vice president are not liable because they are signing only in
behalf of the principal MSCs.
IV. MSC is liable to C provided B is a holder in due course.

ANSWER: I only

Reference

The act of the President and the Vice president will not bind the corporation since this will count as
ultra-vires act. However, since there signature appeared on the instrument they will be recognized as
accommodation party liable to B under the negotiable instruments law.

DIFFICULT 1
The following are the exceptions to the mandate of Section 2 of the Law on Secrecy of Bank Deposits,
as amended, which declares bank deposits to be "absolutely confidential". Which of the following is not
included among those exceptions?

I. In an examination made in the course of a special or general examination of a bank that is

specifically authorized by the Monetary Board after being satisfied that there is reasonable
ground to believe that a bank fraud or serious irregularity has been or is being committed and
that it is necessary to look into the deposit to establish such fraud or irregularity
II. In an examination made by an independent auditor hired by the bank to conduct its regular audit
provided that the examination is for audit purposes only and the results thereof shall be for the
exclusive use of the bank.
III. Upon oral permission of the depositor.
IV. In cases of impeachment
V. Upon order of an incompetent court in cases of bribery or dereliction of duty of public officials
VI. In cases where the money withdrawn is the subject matter of the litigation

ANSWER: III, V and VI only

Reference:

Section 2 of the Law on Secrecy of Bank Deposits, as amended, declares bank deposits to be
"absolutely confidential" except:

(1) In an examination made in the course of a special or general examination of a bank that is
specifically authorized by the Monetary Board after being satisfied that there is reasonable ground to
believe that a bank fraud or serious irregularity has been or is being committed and that it is necessary
to look into the deposit to establish such fraud or irregularity,

(2) In an examination made by an independent auditor hired by the bank to conduct its regular audit
provided that the examination is for audit purposes only and the results thereof shall be for the exclusive
use of the bank,

(3) Upon written permission of the depositor,

(4) In cases of impeachment,

(5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials, or

(6) In cases where the money deposited or invested is the subject matter of the litigation.

DIFFICULT 2
Section 2 (1) of Presidential Decree 612 or the Insurance Code defines a contract of insurance as an
agreement whereby one undertakes for a consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event. Which of the following elements should concur for
an insurance contract to exist under the Insurance Code?

I. The insured has an insurable interest

II. The insured is subject to a risk of loss by the happening of the designed peril
III. The insurer assumes the risk
IV. Such assumption of risk is part of a general scheme to distribute actual losses among a large
group of persons bearing a similar risk
V. Payment of premiums is not required
VI. In consideration of the insurer's promise, the insured pays a premium
VII. The insured must be in good faith
VIII. The insured event can be controlled
IX. There must be the presence of the risk

ANSWER: I, II, III, IV and VI only

Reference:

Presidential Decree No. 612- Insurance Code

Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage or liability arising from an
unknown or contingent event. An insurance contract exists where the following elements concur:
1. The insured has an insurable interest;
2. The insured is subject to a risk of loss by the happening of the designed peril;
3. The insurer assumes the risk;
4. Such assumption of risk is part of a general scheme to distribute actual losses among a large
group of persons bearing a similar risk and
5. In consideration of the insurer's promise, the insured pays a premium.

DIFFICULT 3
Which of the following statement/s is/are true?

I. Stock dividends shall be withheld from the delinquent stockholder until his unpaid subscription is
fully paid.
 II. Founders' shares classified as such in the articles of incorporation may be given certain rights
and privileges not enjoyed by the owners of other stocks, provided that where the exclusive
right to vote and be voted for in the election of directors is granted, it must be at least five (5)
years from the date of the approval by the Securities and Exchange Commission.

III. Cash dividends due on delinquent stock shall first be applied to the unpaid balance on the
subscription plus costs and expenses.

ANSWER: I and III

Reference:

SECTION 7. Founders' Shares. Founders' shares classified as such in the articles of incorporation
may be given certain rights and privileges not enjoyed by the owners of other stocks, provided that
where the exclusive right to vote and be voted for in the election of directors is granted, it must be for a
limited period not to exceed five (5) years subject to the approval of the Securities and Exchange
Commission. The five (5) year period shall commence from the date of the aforesaid approval by the
Securities and Exchange Commission. (Corporation Code of the Philippines)

SECTION 43. Power to Declare Dividends. The board of directors of a stock corporation may
declare dividends out of the unrestricted retained earnings which shall be payable in cash, in property,
or in stock to all stockholders on the basis of outstanding stock held by them: Provided, That 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: Provided, further, That no stock dividend shall be issued without the
approval of stockholders representing not less than two-thirds (2/3) of the outstanding capital stock at a
regular or special meeting duly called for the purpose.

DIFFICULT 4
The following must be present in order to be liable for violation of Batas Pambansa Blg. 22 or known as
the Bouncing Checks Law. Which of the following is not among those elements?

I. The accused makes, draws or issues any check to apply to account or for value.
II. The accused doesnt know at the time of the issuance that he or she does not have sufficient
funds in, or credit with, the drawee bank for the payment of the check in full upon its
presentment.
III. The check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or
it would have been dishonored for the same reason had not the drawer, without any valid
reason, ordered the bank to stop payment.
IV. The holder of the check shall be a holder as described under Sec. 52 of the Negotiable
Instruments Law.

ANSWER: II and IV only

Reference:

To be liable for violation of B.P. Blg. 22, the following elements must be present:

1. The accused makes, draws or issues any check to apply to account or for value;

2. The accused knows at the time of the issuance that he or she does not have sufficient funds in, or
credit with, the drawee bank for the payment of the check in full upon its presentment; and

3. The check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or it
would have been dishonored for the same reason had not the drawer, without any valid reason, ordered
the bank to stop payment.
DIFFICULT 5
Section 4 of the Republic Act No. 9257 or also known as the Expanded Senior Citizens Act of 2003
provides for the following privileges given to Senior Citizens. Which of the following is not correct as
contemplated under that section?

I. The grant of twenty percent (20%) discount from all establishments relative to the utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers, and
purchase of medicines in all establishments for the exclusive use or enjoyment of senior
citizens, including funeral and burial services for the death of senior citizens;

II. A minimum of twenty percent (20%) discount on admission fees charged by theaters, cinema
houses and concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement for the exclusive use or enjoyment of senior citizens;

III. Exemption from the payment of individual income taxes; Provided, That their annual taxable
income does not exceed the poverty level as determined by the Bureau of Internal Revenue
(BIR) for that year;

IV. Exemption from training fees for socio-economic programs;

V. Free medical and dental services, diagnostic and laboratory fees such as, but not limited to, x-
rays, computerized tomography scans and blood tests, in all government facilities, subject to the
guidelines to be issued by the Department of Health in coordination with the Social Security
System (SSS);

VI. The grant of twenty percent (20%) discount on medical and dental services, and diagnostic and
laboratory fees provided under Section 4(e), including professional fees of attending doctors in
all private hospitals and medical facilities, in accordance with the rules and regulations to be
issued by the Department of Health, in coordination with the Philippine Health Insurance
Corporation;

VII. The grant of twenty percent (20%) discount in fare for domestic air and sea travel for the
exclusive use or enjoyment of senior citizens;

VIII. The grant of twenty percent (20%) discount in public railways, skyways and bus fare for the
exclusive use and enjoyment of senior citizens;

ANSWER: III and V only

Reference:

"SECTION 4. Privileges for the Senior Citizens. The senior citizens shall be entitled to the following:
(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers, and purchase
of medicines in all establishments for the exclusive use or enjoyment of senior citizens, including funeral
and burial services for the death of senior citizens;
(b) a minimum of twenty percent (20%) discount on admission fees charged by theaters, cinema
houses and concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement for the exclusive use or enjoyment of senior citizens;
(c) exemption from the payment of individual income taxes; Provided, That their annual taxable
income does not exceed the poverty level as determined by the National Economic and Development
Authority (NEDA) for that year;
(d) exemption from training fees for socio-economic programs;
(e) free medical and dental services, diagnostic and laboratory fees such as, but not limited to, x-
rays, computerized tomography scans and blood tests, in all government facilities, subject to the
guidelines to be issued by the Department of Health in coordination with the Philippine Health Insurance
Corporation (PHILHEALTH);
(f) the grant of twenty percent (20%) discount on medical and dental services, and diagnostic and
laboratory fees provided under Section 4(e) hereof, including professional fees of attending doctors in
all private hospitals and medical facilities, in accordance with the rules and regulations to be issued by
the Department of Health, in coordination with the Philippine Health Insurance Corporation;
(g) the grant of twenty percent (20%) discount in fare for domestic air and sea travel for the
exclusive use or enjoyment of senior citizens;
(h) the grant of twenty percent (20%) discount in public railways, skyways and bus fare for the
exclusive use and enjoyment of senior citizens

DIFFICULT 6
Which of the following is/are true under Republic Act (RA) No. 10667 Philippine Competition Act
regarding Prohibited Acts under Chapter III of the act?

I. Entering into anti-competitive agreements which include those restricting competition; fixing
price; setting, limiting, or controlling production, markets, technical development, or investment;
dividing or sharing the market; and other similar agreements.

II. Abuse of dominant position by engaging in conduct that would substantially prevent, restrict or
lessen competition such as, selling goods or services below cost; imposing barriers to entry;
making a transaction subject to acceptance by the other parties of other obligations which have
no connection with the transaction; discriminatory pricing; imposing restrictions on the lease or
contract for sale of goods, or services concerning where, to whom, or in what forms goods or
services may be sold or traded such as fixing prices, giving preferential discounts or imposing
conditions not to deal with competing entities; making the supply of particular goods or services
dependent upon the purchase of other goods or services from the supplier which have no direct
connection with the main goods or services to be supplied; imposing unfairly low purchase
prices for goods and services of marginalized service providers and producers; and other similar
circumstances. There is a rebuttable presumption of market dominant position if the market
share of an entity in the relevant market is at least 50%.

III. Entering into mergers or acquisition agreements that substantially prevent, restrict or lessen
competition in the relevant market or in the market for goods or services. Merger refers to the
joining of two or more entities into an existing entity or to form a new entity. Acquisition refers to
the purchase of securities or assets, for the purposes of obtaining control by: (1) one entity of
the whole or part of another; (2) two or more entities over another; or (3) one or more entities
over one or more entities. When the value of the transaction exceeds P1 billion, parties to a
merger or acquisition agreement are required to notify the Philippine Competition Commission
(PCC) which shall have the power to review the agreement. If the PCC determines that the
agreement substantially prevents, restricts or lessens competition and does not qualify for
exemption, the PCC may prohibit the implementation of the agreement unless modified by
changes specified by PCC or the party or parties enter into a legally enforceable agreement.
The PCC shall adopt regulations stipulating thresholds subject to notification; information that
must be supplied for notified mergers or acquisitions; exceptions or exemptions from the
notification requirement, and other rules relating to the notification procedures.

IV. None of the above is true

ANSWER: I, II and III

Reference:

Section 14 and 15 under Chapter III Prohibited Acts of RA No. 10667, also known as Philippine
Competition Act

DIFFICULT 7
Which of the following is/are true under Republic Act (RA) No. 10142 Financial Rehabilitation and
Insolvency Act (FRIA) of 2010?

I. An individual with debts exceeding PhP 1,000,000 may apply for discharge of his obligations,
provided that his assets are not sufficient to cover his liabilities. On filing, the individual must
provide a schedule of assets and liabilities and an inventory of assets. These assets will be
 liquidated by a liquidator as in corporate liquidation and the proceeds used to pay creditors.

II. Any creditor or group of creditors with a claim or aggregate claim of at least PhP 1,500,000 on
an individual may file a petition for liquidation in the province or city where the debtor resides.
The petitioning creditor must post a bond the court will set. If the petition is dismissed or
withdrawn by the petitioner, the creditor will pay the costs and damages incurred by the debtor
including his legal costs.

III. None of the above is true

ANSWER: III

Reference:

Section 103 and 105 of RA No. 10142, also known as Financial Rehabilitation and Insolvency Act
(FRIA) of 2010

Section 103 of FRIA provides that An individual debtor whose properties are not sufficient to cover his
liabilities, and owing debts exceeding Five hundred thousand pesos (PhP 500,000.00), may apply to be
discharged from his debts and liabilities by filing a verified petition with the court of the province or city
in which he has resided for six (6) months prior to the filing of such petition. He shall attach to his
petition a schedule of debts and liabilities and an inventory of assets. The filing of such petition shall be
an act of insolvency.

Moreover, Section 105 of FRIA provides that Any creditor or group of creditors with a claim of, or with
claims aggregating at least Five hundred thousand pesos (PhP 500, 000.00) may file a verified petition
for liquidation with the court of the province or city in which the individual debtor resides.

DIFFICULT 8
Under Section 13 of Republic Act (RA) No. 9513 Renewable Energy Act of 2008, how much shall be
the share of the government on existing and new Renewable Energy (RE) development projects on the
gross income of RE resource developers resulting from the sale of renewable energy produced and
such other income incidental to and arising from the renewable energy generation, transmission, and
sale of electric power?

I. One and one-half percent (1.5%) of the gross income

II. Two percent (2%) of the gross income
III. One percent (1%) of the gross income
IV. Five percent (5%) of the gross income
V. None of the above is true

ANSWER: III

Reference:

Section 13 of RA No. 9513, also known as Renewable Energy Act of 2008 provides that, the
government share on existing and new RE development projects shall be equal to one percent (1%) of
the gross income of RE resource developers resulting from the sale of renewable energy produced and
such other income incidental to and arising from the renewable energy generation, transmission, and
sale of electric power except for indigenous geothermal energy, which shall be at one and a half percent
(1.5%) of gross income.

DIFFICULT 9
Renewable Energy (RE) developers of renewable energy facilities, including hybrid systems, in
proportion to and to the extent of the RE component, for both power and non-power applications, shall
be entitled to fiscal incentives under Section 15 of Republic Act (RA) No. 9513 Renewable Energy Act
of 2008. Which of the following are not among those incentives?

I. Income Tax Holiday (ITH) for the eight years (8) years of commercial operations. Additional
 investments in the RE project can be entitled to additional ITH of not more than three times the
period of the initial ITH availment;
II. Duty-free importation of RE machinery within the first ten (10) years upon issuance of a
certification of entitlement to incentives;
III. Special tax rates on realty and other taxes on civil works, equipment, machinery, and other
improvements of a registered RE developer actually and exclusively used for RE facilities not to
exceed 1.5% of their original cost less accumulated normal depreciation or net book value;
IV. Net Operating Loss Carry-Over (NOLCO) during the first three (3) years from the start of
commercial operation which had not been previously offset as deduction from gross income
shall be carried over as a deduction from gross income for the next seven (7) consecutive
taxable years immediately following the year of that loss;
V. After the ITH, a preferential corporate income tax rate of 10% on net taxable income;
VI. Accelerated depreciation of plant, machinery, and equipment that are reasonably needed and
actually used for the exploration, development and utilization of RE resources may be
depreciated using a rate not exceeding twice the rate which would have been used;
VII. Twelve percent (12%) Value-Added Tax (VAT) on sales of fuel or power generated from
renewable sources;
VIII. Tax Exemption on all proceeds from the sale of carbon emission credits; and
IX. Tax Credit equivalent to 100% on the value of the value-added tax and customs duties that
would have been paid on the RE machinery, equipment, materials and parts had these items
been imported.
X. All of the above are the fiscal incentives entitlement of RE developers

ANSWER: I and VII only

Reference:

Under Section 15 of RA No. 9513, also known as Renewable Energy Act of 2008, RE developers shall
be entitled to the following fiscal incentives:

Income Tax Holiday (ITH) for the first seven (7) years of commercial operations. Additional
investments in the RE project can be entitled to additional ITH of not more than 3x the period of the
initial ITH availment;

Duty-free importation of RE machinery within the first 10 years upon issuance of a certification of
entitlement to incentives;

Special tax rates on realty and other taxes on civil works, equipment, machinery, and other
improvements of a registered RE developer actually and exclusively used for RE facilities not to exceed
1.5% of their original cost less accumulated normal depreciation or net book value;

Net Operating Loss Carry-Over (NOLCO) during the first three (3) years from the start of commercial
operation which had not been previously offset as deduction from gross income shall be carried over as
a deduction from gross income for the next seven (7) consecutive taxable years immediately following
the year of that loss;

After the ITH, a preferential corporate income tax rate of 10% on net taxable income;

Accelerated Depreciation of plant, machinery, and equipment that are reasonably needed and actually
used for the exploration, development and utilization of RE resources may be depreciated using a rate
not exceeding 2x the rate which would have been used;

Zero percent (0%) VAT on sales of fuel or power generated from renewable sources;

Tax Exemption on all proceeds from the sale of carbon emission credits; and

Tax Credit equivalent to 100% on the value of the value-added tax and customs duties that would
have been paid on the RE machinery, equipment, materials and parts had these items been imported.

DIFFICULT 10
Republic Act (RA) No. 10845 Anti-Agricultural Smuggling Act of 2016 considers large-scale
agricultural smuggling of agricultural products as economic sabotage. This is committed by engaging in
any of the following activities stated under Section 3 of RA No. 10845 involving at least one million
pesos (PhP 1,000,000) worth of sugar, corn, pork, poultry, garlic, onion, carrots, fish, and cruciferous
vegetables, in its raw state, or which have undergone the simple processes of preparation or
preservation for the market, or rice, with a minimum amount of ten million pesos (PhP 10,000,000.00).
Which of the following activity/ies is/are not included within the purview of Section 3 of RA No. 10845?

I. Importing or bringing into the Philippines without the required import permits from the
regulatory agencies;
II. Using import permits or persons, natural or juridical, other than those specifically named in the
permit;
III. Using fake, fictitious or fraudulent import permits or shipping documents;
IV. Selling, lending, leasing, assigning, consenting or allowing the use of import permits of
corporations, nongovernment organizations, associations, cooperatives, or single
proprietorship by other persons;
V. Misclassification, undervaluation or misdeclaration upon filing of import entry and revenue
declaration with the Bureau of Customs (BoC) in order to evade of the payment rightful taxes
and duties due to the government;
VI. Organizing or using dummy corporations, nongovernment organizations, associations,
cooperatives or single proprietorships for the purpose of acquiring import permits;
VII. Transporting or storing the agricultural product subject to economic sabotage regardless of
quantity; or
VIII. Acting as broker of the violating importer.
IX. All of the above are included under Section 3 of RA No. 10845

ANSWER: IX ONLY

Reference:

Section 3 of RA No. 10845 provides that large-scale agricultural smuggling as economic sabotage,
involving sugar, corn, pork, poultry, garlic, onion, carrots, fish, and cruciferous vegetables, in its raw state,
or which have undergone the simple processes of preparation or preservation for the market, with a
minimum amount of one million pesos (PhP 1,000,000.00), or rice, with a minimum amount of ten million
pesos (PhP 10,000,000.00), as valued by the Bureau of Customs (BOC), is committed through any of the
following acts:

(a) Importing or bringing into the Philippines without the required import permit from the regulatory
agencies;

(b) Using import permits of persons, natural or juridical, other than those specifically named in the permit;

(c) Using fake, fictitious or fraudulent import permits or shipping documents;

(d) Selling, lending, leasing, assigning, consenting or allowing the use of import permits of corporations,
nongovernment organizations, associations, cooperatives, or single proprietorships by other persons;

(e) Misclassification, undervaluation or misdeclaration upon the filing of import entry and revenue
declaration with the BOC in order to evade the payment of rightful taxes and duties due to the government;

(f) Organizing or using dummy corporations, nongovernment organizations, associations, cooperatives,

or single proprietorships for the purpose of acquiring import permits;

(g) Transporting or storing the agricultural product subject to economic sabotage regardless of quantity;
or

(h) Acting as broker of the violating importer.