Regulatory Framework for Business Transactions – Special Laws

Batangas CPA Review Center

Tanauan City, Batangas

“Committed to your CPA review needs”

Atty. Amado R. Villegas, Jr.
Handout in Special Laws in RFBT
A. Cooperative (RA 9520)
1. The following are characteristics of a cooperative, except:
a. An autonomous and duly registered association of persons
b. With a common enjoyment of property
c. Who have voluntarily joined together to achieve their social, economic, and
cultural needs and aspirations
d. By making equitable contributions to the capital required
e. Patronizing their products and services

2. The following are universally accepted principles of cooperative, except:

a. Voluntary and Open Membership
b. Democrative Member Control
c. Member Economic Participation
d. Autonomy and Relativity
e. Concern for Community

3. A cooperative may be organized and registered for any or all of the following purposes,
except:
a. To divide the profits and losses among themselves
b. To encourage thrift and savings mobilization among the members
c. To generate funds and extend credit to the members for productive and provident
purposes
d. To encourage among members systematic production and marketing
e. To provide goods and services and other requirements to the members

4. A cooperative may be organized and registered for any or all of the following purposes,
except:
a. To promote and advance the economic, social and educational status of the
members
b. To establish, own, sell, appropriate, lease, mortgage or operate private markets
c. To coordinate and facilitate the activities of the cooperatives
d. To advocate for the cause of the cooperative movement
e. To ensure the viability of cooperatives through the utilization of new technologies

5. It promotes and undertakes savings and lending services among its members. It
generates a common pool of funds in order to provide financial assistance to its members
for productive and provident purposes.
a. Credit Cooperative
b. Consumers Cooperative
c. Producers Cooperative
d. Marketing Cooperative
e. Service Cooperative

6. It combines two (2) or more of the business activities of these different types of
cooperatives.
a. Service Cooperative
b. Marketing Cooperative
c. Multi-purpose Cooperative
d. Advocacy Cooperative
e. Consumers Cooperative

Atty. Amado R. Villegas, Jr. 1

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

7. It is organized by marginal farmers of which are agrarian reform beneficiaries for the
purpose of developing an appropriate system of land tenure, land development, land
consolidation of land management in areas covered by agrarian reform.
a. Cooperative Bank
b. Multi-purpose Cooperative
c. Financial Cooperative
d. Service Cooperative
e. Agrarian Reform Cooperative

8. S1 - Primary Cooperative has members are natural persons.

S2 - Secondary Cooperative has members of which are primaries.
S3- Tertiary Cooperative has members of which are secondary cooperatives.
a. All are correct
b. All are incorrect
c. Only S1 and S2 are correct and S3 is incorrect
d. Only S2 and S3 are correct and S1 is incorrect
e. Correct answer not given

9. The following are the qualifications of the persons who will organize a cooperative,
except:
a. Fifteen (15) or more natural persons
b. Majority of whom are Filipino citizens
c. of legal age
d. having a common bond of interest
e. actually residing or working in the intended area of operation

10. S1 - At least twenty-five per centum (25%) of the authorized share capital must be
subscribed.
S2 - At least twenty-five per centum (25%) of the total subscription has been paid.
S3 - In no case shall the paid-up share capital be less than Five thousand pesos.
(P5,000.00).
a. All are correct
b. All are incorrect
c. Only S1 and S2 are correct and S3 is incorrect
d. Only S2 and S3 are correct and S1 is incorrect
e. Correct answer not given

11. S1 - All applications for registration shall be finally disposed of by the Authority within a
period of ninety (90) days from the filing thereof, otherwise the application is deemed
approved, unless the cause of the delay is attributable to the applicant.
S2 - No extension of a Cooperative can be made earlier than five (5) years prior to the
original or subsequent expiry date/dates unless there are justifiable reasons for an
earlier extension as may be determined by the Authority.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

12. An Associate member in Cooperative is:

S1 – One who has no right to vote nor be voted upon and shall be entitled only to such
rights and privileges as the bylaws may provide.
S2 - One who meets the minimum requirements of regular membership, continues to
patronize the cooperative for three (3) years, and signifies his/her intention to remain a
member shall be considered a regular member
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

Atty. Amado R. Villegas, Jr. 2

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

13. S1 - A member shall be liable for the debts of the cooperative to the extent of his
contribution to the share capital of the cooperative.
S2 – The disqualification for elective officials of the government does not extend to a
party list representative being an officer of a cooperative he or she represents.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

14. S1 – A sixty (60) day notice to the board of directors is required in case of withdrawal of
membership
S2 - The insolvency or dissolution of a member in a secondary or tertiary cooperative
may be considered valid grounds for termination of membership.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

15. The following are causes for termination of the membership of the Board of Directors,
except:
a. When a member has not patronized any of the services of the cooperative for an
unreasonable period of time as may be previously determined by the board of
directors
b. When a member has continuously failed to comply with his obligations
c. When a member has acted in violation of the bylaws and the rules of the
cooperative
d. In case of death or insanity of a member in a primary cooperative
e. For any act or omission injurious or prejudicial to the interest or the welfare of
the cooperative

16. In a Cooperative, the quorum requirement for a meeting are as follows:

S1 - Electric Cooperatives, the quorum requirement shall be one-half plus one of the
number of voting shares of all the members in good standing.
S2 - Cooperative Banks, a quorum, unless otherwise provided in the bylaws, shall consist
of five per centum (5%) of all the members entitled to vote.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

17. Voting System in a Cooperative

S1 - In the case of members of secondary or tertiary cooperatives, they shall have one
(1) basic vote and as many incentive votes as provided for in the bylaws but not exceed
five (5) votes.
S2 - The bylaws of a cooperative other than a primary may provide for voting by proxy.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

18. S1 – The BOD of a Cooperative shall hold office for Three (3) years and shall hold office
until their successors are duly elected an qualified, or until duly removed for caused.

S2 – The members of the board of directors shall hold any other position directly
involved in the day to day operation and management of the cooperative.

a. Both are correct

b. Both are incorrect
c. S1 is correct, S2 is incorrect

Atty. Amado R. Villegas, Jr. 3

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

d. S1 is incorrect, S1 is correct

19. S1 - Loss of confidence shall not be a valid ground for removal unless evidenced by acts
or omission causing loss of confidence in the honesty and integrity of such BOD in a
Cooperative.
S2 – When a director, officer or committee member attempts to acquire or acquires, in
violation of his duty, any interest or equity adverse to the cooperative in respect to any
matter which has been reposed in him in confidence, he shall, as a trustee for the
cooperative, be liable for damages and shall be accountable for the profits which
otherwise would have accrued to the cooperative.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

20. S1 - The directors and officers of a cooperative shall not be entitled to any per diem
when, in the preceding calendar year, the cooperative reported a net loss or had a
dividend rate less than the official inflation rate for the same year.
S2 - Any compensation other than per diems may be granted to directors by a 2/3 vote
of the members with voting rights at a regular or special general assembly meeting
specifically called for the purpose.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

21. S1 - In case of self-dealing directors in a cooperative, where any of the two conditions
set forth in the law is absent, in the case of a contract with a director, such contract may
be ratified by a three-fourths (3/4) vote of all the members with voting rights, present
and constituting a quorum in a meeting called for the purpose.
S2 - A director who, by virtue of his office, acquires for himself an opportunity which
should belong to the cooperative shall be liable for damages and must account for the
profits that otherwise would have accrued to the cooperative by refunding the same,
unless his act has been ratified by a three-fourths (3/4) vote of all the members with
voting rights, present and constituting a quorum.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

22. The Authority may suspend or revoke, after due notice and hearing, the certificate of
registration of a cooperative on any of the following grounds:
a. Having obtained its registration by fault
b. Existing for an illegal purpose
c. Willful violation, despite notice by the Authority, of the provisions of this Code or
its bylaws
d. Willful failure to operate on a cooperative basis
e. Failure to meet the required minimum number of members in the cooperative

23. S1 - If a cooperative has not commenced business and its operation within two (2) years
after the issuance of its certificate of registration or has not carried on its business for
two (2) consecutive years, the Authority shall send a formal notice to the said
cooperative to show cause as to its failure to operate.
S2 – In case of voluntary dissolution where no creditors are affected in a cooperative,
Resolution by the affirmative vote of at least 2/3 of all the members with voting rights,
present and constituting a quorum at a meeting called for the purpose.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect

Atty. Amado R. Villegas, Jr. 4

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

d. S1 is incorrect, S1 is correct

24. A cooperative may be dissolved by order of a competent court after due hearing on the
grounds of:
a. Violation of any law or regulation
b. Violation of the provisions of its bylaws
c. Insolvency
d. In case of death or insanity of a member in a primary cooperative

25. S1 - No merger or consolidation shall be valid unless approved by a three-fourths (3/4)

vote of all the members with voting rights, present and constituting a quorum of each of
the constituent cooperatives at separate general assembly meetings.
S2 - An elective officer may be removed by three fourths (3/4) votes of the regular
members present and constituting a quorum, in a regular or special general assembly
meeting called for the purpose.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

B. Financial Rehabilitation and Insolvency Act of 2010 (RA 10142)

1. S1 - The insolvency proceedings under FRIA is in rem.
S2 - The insolvency proceedings is summary and adversarial.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

2. It refers to the financial condition of a debtor that is generally unable to pay its or his
liabilities as they fall due in the ordinary course of business or has liabilities that are
greater than its or his assets.
a. Insolveny
b. Exemplary
c. In Fraud of Creditors
d. Litis Pendentia
e. In Pari Delicto

3. It means the transactions in pursuit of the individual debtor’s or debtor’s business

operations prior to rehabilitation or insolvency proceedings and on ordinary business
terms.
a. Acts of Admistration
b. Acts of Strict dominion
c. Regular course of Business
d. Ordinary Course of Business
e. Acts in the usual way of the business

4. The following are not considered debtors for purposes of FRIA, except:
a. sole proprietorship duly registered with DTI
b. Banks
c. Insurance companies
d. Pre-need companies
e. National and local agencies or units

5. Group of debtors refers to and covers only:

a. Corporation that are financially related to one another as parent corporations,
subsidiaries or affiliates
b. Partnerships that are owned more than fifty percent (50%) by the same person
c. Single proprietorship that are owned by the same person
d. All of the above

Atty. Amado R. Villegas, Jr. 5

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

e. None of the above

6. Group of debtors refers to and covers only, except:

a. Corporation that are financially related to one another as parent corporations,
subsidiaries or affiliates
b. Partnerships that are owned more than sixty percent (60%) by the same person
c. Single proprietorship that are owned by the same person
d. All of the above
e. None of the above

7. Under the FRIA, An insolvent person may avail the following, except:
a. Rescission of contracts
b. Suspension of payments
c. Rehabilitation
d. Discharge of debts and liabilities
e. Answer not given

8. A petition of a debtor who, possessing sufficient property to cover his debts, foresees the
impossibility of meeting them when they fall due.
a. Rescission of contracts
b. Suspension of payments
c. Rehabilitation
d. Discharge of debts and liabilities
e. Answer not given

9. The following are requirements for Filing a Petition for Suspension of Payments, except;
a. The debtor is an individual debtor.
b. The debtor has insufficient property to cover his debts but foresees the
impossibility of meeting them when they fall due.
c. The amount of indebtedness is not reduced or discharged.
d. The number of creditors is not material.

10. The filing of petition for suspension of payment has the following effects:
S1 - All executions pending against the debtor shall be suspended.
S2 - Any creditor can sue or institute proceedings to collect his claim from the debtor
while the proceedings are pending.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

11. S1 - The presence of the creditors under the FRIA holding claims amounting to at least
3/4 of the liabilities shall be necessary for holding the meeting or for the quorum.
S2 - During the creditors’ meeting under FRIA, the creditors will vote for the proposed
manner of payment by the debtor. However, creditors who incurred his credit within sixty
(60) days prior to the filing of the petition are not entitled to vote.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

12. Under FRIA, for the proposal of the debtor to be considered as approved, the double
majority rule applies which is
a. Two thirds (2/3) of the creditors voting unite upon the same proposition; and
The claims represented by the said majority vote amount to at least three-fifths
(3/5) of the total liabilities of the debtor mentioned in the petition.
b. Three-Fourths (3/4) of the creditors voting unite upon the same proposition; and
The claims represented by the said majority vote amount to at least three-fifths
(3/5) of the total liabilities of the debtor mentioned in the petition.

Atty. Amado R. Villegas, Jr. 6

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

c. Two thirds (2/3) of the creditors voting unite upon the same proposition; and
The claims represented by the said majority vote amount to at least three-fourths
(3/4) of the total liabilities of the debtor mentioned in the petition.
d. Two thirds (2/3) of the creditors voting unite upon the same proposition; and
The claims represented by the said majority vote amount to at least two-thirds
(2/3) of the total liabilities of the debtor mentioned in the petition.
e. Answer not given

13. Rehabilitation refers to the restoration of the debtor to a condition of successful operation
and solvency,
a. The debtor has insufficient property to cover his debts but foresees the
impossibility of meeting them when they fall due.
b. if it is shown that its continuance of operation is economically feasible.
c. its creditors can recover by way of the present value of payments projected in the
plan.
d. more if the debtor continues as a going concern than if it is immediately
liquidated.

14. Rehabilitation plan refers to plan by which the financial well-being and viability of an
insolvent debtor can be restored using various means including, but no limited to the
following, except:
a. debt forgiveness
b. debt rescheduling
c. reorganization or quasi-reorganization
d. dacion en pago
e. debt equity appropriation

15. S1 - Voluntary Rehabilitation is a rehabilitation proceeding initiated by the debtor.

S2 - Involuntary Rehabilitation is a rehabilitation proceeding initiated by the creditor.
S3 - Pre-Negotiated Rehabilitation is a rehabilitation proceeding initiated by the debtor,
itself or jointly with any of its creditors for the approval of the pre-negotiated
rehabilitation plan.
a. All are correct
b. All are incorrect
c. Only S1 and S2 are correct and S3 is incorrect
d. Only S2 and S3 are correct and S1 is incorrect
e. Correct answer not given

16. S1 –The grounds for filing of the petition for Voluntary Proceedings for Insolvency are
Insolvency of the debtor and Viability of rehabilitation.
S2 - The petition for voluntary proceedings of the insolvent debtor must be approved by
Majority of the board of directors or trustees and authorized by stockholders representing
at least 2/3 of the outstanding capital stock or 2/3 of its members in case of non-stock
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

17. S1 – The Filing of Petition for Voluntary Rehabilitation by Group of Debtors may be filed
when the financial distress would likely adversely affect the financial condition and/or
operation if the other members of the group, and/or the participation of the other
member of the group is essential.
S2 - Any creditor or group of creditors, with a claim of, or the aggregate of whose claim
is, at least P1,000,000 or at least 30% of the subscribed capital stock or partners’
contributions, whichever is higher, may initiate involuntary proceeding against the debtor
by filing a petition for rehabilitation with the court.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect

Atty. Amado R. Villegas, Jr. 7

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

d. S1 is incorrect, S1 is correct

18. An insolvent debtor, by itself or jointly with any of its creditor, may file a verified petition
with the court for the approval of a pre-negotiated Rehabilitation Plan and the requisites
of the said plan must be, except:
a. Endorsed or approved by creditors
b. The creditor must be at least two-thirds (2/3) of the total liabilities of the debtor
c. The liabilities include secured creditors holding more than sixty percent (60%) of
the total secured claims of the debtor
d. The liabilities include unsecured creditors holding more than fifty percent (50%)
of the total unsecured claims of the debtor.
e. Answer not given

19. S1 – The court shall have a maximum period of one hundred twenty (120) days from the
date of the filing of the petition to approve the Rehabilitation Plan.
S2 - If the court fails to act within the 120-day period, the Rehabilitation Plan shall be
deemed approved and its effect shall retroact to the date of the filing.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

20. The following are the effects of the Stay Order in FRIA, except:
a. Suspend all the actions or proceedings in court, or otherwise, for the enforcement
of claim by and against the creditor;
b. Suspend all actions to enforce any judgement, attachment, or other provisional
remedies against the debtor;
c. Prohibit the debtor from selling, encumbering, transferring or disposing in any
manner any of its properties except in the ordinary course of business; and
d. Prohibit the debtor from making any payment of its liabilities outstanding as of
the commencement date except as may be provided herein.

21. S1 - A creditor whose claim is not listed in the schedule of debts and liabilities in FRIA
and who fails to file a notice of claim but subsequently files a belated claim is entitled to
participate in the rehabilitation proceedings but shall not be entitled to receive
distributions arising therefrom.
S2 - The Commencement Order and consequently the Stay Order in FRIA shall be
effective for the entire duration of the rehabilitation proceedings for as long as there is a
substantial likelihood that the debtor will be successfully rehabilitated.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

22. The rehabilitation receiver must have the following minimum qualifications, except:
a. A natural born citizen of the Philippines or a resident of the Philippines in the six
(6) months immediately preceding his nomination
b. Of good moral character and with acknowledged integrity, impartiality and
independence
c. Has the requisite knowledge of insolvency and other relevant commercial laws,
rules and procedure
d. Has no conflict of interest.

23. S1 –If the Rehabilitation Receiver is a juridical entity, the juridical entity and the
representative are solidarily liable for all obligations and responsibilities of the
rehabilitation receiver.
S2 - The rehabilitation receiver may be removed at any time by the court either motu
proprio or upon motion by any creditor/s holding more than sixty percent (60%) of the
total obligations of the debtor.

Atty. Amado R. Villegas, Jr. 8

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

a. Both are correct

b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

24. The following are grounds for the removal of the Rehabilitation Receiver, except:
a. Incompetence, gross negligence, failure to perform or failure to exercise the proper
degree of care in the performance of his duties and powers;
b. Lack of a particular or specialized competency required by the specific case;
c. Illegal acts or conduct in the performance of his duties and powers;
d. Lack of qualification or presence of disqualification;
e. Manifest lack of inter-dependence that is detrimental to the general body of the
stakeholders.

25. The court will appoint a management committee upon clear and convincing evidence of
any of the following circumstances.
a. Actual or imminent danger or dissipation, loss, wastage or destruction of the debtor’s
assets or other properties;
b. Paralyzation of the business operations of the debt; or
c. Gross mismanagement of the debtor or fraud or other wrongful conduct on the part of,
or gross or willful violation of FRIA by existing management of the debtor or the owner,
partner, director, officer or representative/s in management of the debtor.
d. All of the above
e. None of the above

C. Banking Laws
General Banking Law (RA 8791)
New Central Bank Act (RA 7653)

1. It provides that the Monetary Board has the power pass upon and review the
qualifications and disqualifications of individuals elected or appointed bank directors or
officers and disqualify those found unfit.
a. Proper and Fit Rule
b. Fit and Proper Rule
c. Extraordinary Diligence Rule
d. Pass and Review Rule
e. Qualified Rule

2. S1 - Foreign individuals and non-bank corporations may own or control up to forty

percent (40%) of the voting stock of a domestic bank.
S2 - A rural bank must be wholly owned by Filipinos.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

3. It is bank that can exercise all the powers as may be be necessary to carry on the
business of commercial banking.
a. Commercial Bank
b. Universal Bank
c. Rural Bank
d. Thrift bank
e. Cooperative Bank

4. The minimum capitalization of a thrift bank is:

a. 10 million - 1 billion
b. 50 million – 1 billion
c. 100 million – 1 billion

Atty. Amado R. Villegas, Jr. 9

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

d. 200 million – 1 billion

e. 200 million – 2 billion

5. The minimum capitalization of a commercial bank:

a. 1 billion – 15 billion
b. 2 billion – 15 billion
c. 3 billion – 15 billion
d. 3 billion – 20 billion
e. 5 billion – 20 billion

6. The following are powers of a commercial bank, except:

a. Accepting drafts and issuing letters of credit
b. Discounting and negotiating promissory notes, drafts, bills of exchange, and other
evidences of debt
c. the power to invest in non-allied enterprises
d. Receiving other types of deposits and deposit substitutes
e. Acquiring marketable bonds and other debt securities

7. It shall refer to entities engaged in the borrowing of funds through the issuance,
endorsement or assignment with recourse or acceptance of deposit substitutes.
a. Universal Bank
b. Commercial Bank
c. Cooperative Bank
d. Quasi-Bank
e. Rural Bank

8. It means all those liabilities of the Bangko Sentral and of other banks which are
denominated in Philippine Currency and are subject to payment in legal tender upon
demand by the presentation of checks.
a. Deposit substitutes
b. Demand Deposits
c. Current Deposits
d. Savings Deposit
e. Debt Securities

9. S1 - Universal bank and commercial banks are allowed to accept or create demand deposits.
S2 - A universal bank can exercise the powers and function of a commercial bank.
a. Both are correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct

10. Under the Single Borrower’s Limit, the ceiling or limit of the total amount of loans, credit
accommodations and guarantees that may be extended by a bank to any person, partnership,
association, corporation or other entity should not exceed ___ % of the net worth of the bank.
a. 10%
b. 20%
c. 25%
d. 30%
e. 40%

11. DOSRI account refers to the contracts of loans, financial accommodations borrowing or
security arrangement by directors, officers, stockholders and their ___________from his
bank or subsidiary of his bank.
a. Related income
b. Related interests

Atty. Amado R. Villegas, Jr. 10

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

c. Related subsidiaries
d. Related family
e. Answer not given

12. Dealings of a bank with any of its directors, officers or stockholders and their related
interests shall be upon terms not less favorable to the bank than those offered to others.
This is known as –
a. SBL Rule
b. Individual Ceiling Rule
c. Total Ceiling Rule
d. Aggregate Ceiling Rule
e. Arms Length Rule

13. The Aggregate Ceiling Rule provides that ____ percent (__%) of the total loan portfolio of
the bank or one hundred percent (100%) of the combined capital accounts whichever is
lower.
a. 10%
b. 15%
c. 20%
d. 25%
e. 30%

14. S1 – The monetary board of the Philippines is composed of five (5) members.
S2 - No member of the Monetary Board may be reappointed.
a. All are correct
b. All are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S2 is correct

15. Coins denominating P1, P5 and P10 is legal tender in amounts not exceeding
a. P100
b. P500
c. P1,000.00
d. P2,000.00
e. P5,000.00

16. Coins denominating 10 centavos ,5 centavos and centavos are legal tender in amounts
not exceeding:
a. P25.00
b. P50.00
c. P100.00
d. P500.00
e. P1,000.00

17. Philippine currency regardless of denomination may be exchanged, on demand and

without charge by the Bangko Sentral for Philippines notes and coins of any denomination
requested.
a. Inter-covertibility of Currency
b. Inter-convertibility of Currency
c. Inter-exchange of Currency
d. Inter-placement of Currency
e. Answer not given

18. Bangko Sentral will not replace the following, except:

a. Notes and coins the identification is impossible
b. Coins which shows signs of filing, clipping and perforation
c. Notes which have lost more than one-fifths (1/5) of their surface or all of the
signatures inscribed
d. Answer not given

Atty. Amado R. Villegas, Jr. 11

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

19. S1 - Notes of any series or denomination which are more than five (5) years old may be
called in for replacement.
S2 - For coins, it will be called in for replacement if the coin is more than ten (10) years
old already
a. All are correct
b. All are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S2 is correct

20. S1 - Notes and Coins called in for replacement will remain legal tender for a period of two
(2) years from the date of call.
S2 - Any person who habitually writes or puts marks in bank notes may be penalize
under Anti-Mutilation Law
a. All are correct
b. All are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S2 is correct

21. The following are remedies of troubled banks, except:

a. Guardianship
b. Conservatorship
c. Receivership
d. Liquidation

22. It is an attempt to save the bank from bankruptcy and ultimate liquidation
a. Guardianship
b. Conservatorship
c. Receivership
d. Winding-up
e. Dissolution

23. S1 - The conservatorship shall not exceed six (6) months.

S2 – Receivership shall not exceed to a period of ninety (90) days.
a. All are correct
b. All are incorrect
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S2 is correct

24. It the summary closure of a bank by the Monetary Board without prior notice and hearing
after a finding that the continuance in business would involve probable loss to its
depositors and creditors.
a. Bankruptcy Proceeding
b. Conservatorship
c. Termination
d. Receivership
e. Dissolution

25. The following are grounds for receivership, except:

a. The bank is unable to pay its liabilities as the become due in the ordinary course of
business: provided that this shall not include inability to pay caused by extraordinary
demands induced by financial panic in the banking community;
b. The bank has insufficient realizable assets, as determined by the Bangko Sentral, to
meet its liabilities;
c. The bank cannot continue in business without involving probable losses to its
depositors or creditors;
d. When on the basis of the findings of the Monetary Board that the continuance in
business of the institution would involve probable loss to its depositors or creditors.

Atty. Amado R. Villegas, Jr. 12

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

26. It is a situation where a bank or quasi-bank suspends the payment of its deposit liabilities
continuously for more than thirty (30) days
a. Bank Holiday
b. Insolvency
c. Bank Run
d. Receivership
e. Conservatorship

27. Bank Holiday is a situation where a bank or quasi-bank suspends the payment of its
deposit liabilities continuously for more than _______ (___) days.
a. 10 days
b. 20 days
c. 25 days
d. 30 days
e. 60 days

28. It is the proceeding that is instituted by the Monetary Board upon notice in writing to the
board of directors finding that the institution cannot be rehabilitated and permitted to
resume business.
a. Dissolution
b. Winding-up
c. Conservatorship
d. Receivership
e. Liquidation

D. Securities Regulation Code and Rule 68

1. A person engaged in the business of buying and selling securities for the account of
others.
a. Broker
b. Dealer
c. Issuer
d. Maker
e. Drawer

2. A document made by or on behalf of an issuer, underwriter or dealer to sell or offer

securities for sale to the public through registration statement filed with the SEC.
a. Registration Statement
b. Prospectus
c. Investment Agreement
d. Security Arrangement
e. Security Investment

3. The following are Exempt Transactions, except:

a. At any judicial sale, or sale by an executor, administrator, guardian or receiver or
trustee in insolvency or bankruptcy
b. By or for the account of a pledge holder, or mortgagee or any of a pledge lien holder
selling of offering for sale or delivery in the ordinary course of business and not for
the purpose of avoiding the provision of this Code
c. An incidental transaction
d. The distribution by a corporation actively engaged in the business authorized by its
articles of incorporation, of securities to its stockholders or other security holders as a
stock dividend or other distribution out of surplus

4. The following are Exempt Transactions, except:

a. The issuance of bonds or notes secured by mortgage upon real estate or tangible
personal property, when the entire mortgage together with all the bonds and notes
secured thereby are sold to a single purchaser at a single sale

Atty. Amado R. Villegas, Jr. 13

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

b. The issue and delivery of any security in exchange for any other security of the same
issuer pursuant to a right of conversion entitling the holder of the security
surrendered in exchange to make such conversion
c. Subscriptions for shares of the capitals stocks of a corporation prior to the
incorporation thereof or in pursuance of an increase in its authorized capital stocks
under the Corporation Code
d. The exchange of securities by the issuer with the existing security holders exclusively,
where no commission or other remuneration is paid or given directly or indirectly for
soliciting such exchange
e. The sale of securities by an issuer to fewer than ten (10) persons in the Philippines
during any twelve-month period

5. The SEC may order the rejection and revocation of registration of Securities if the issuer:
a. Has been juridically declared insolvent
b. Has violated any of the provision of SRC, rules, regulations and orders of the SEC
c. Has been or is engaged or is about to engage in isolated transactions
d. Has made any false or misleading representation of material facts in any prospectus
concerning the issuer or its securities
e. Has failed to comply with any requirements that the Commission relative to
registration

6. It is a method of creating false or misleading appearance of active trading by entering an

order or orders for the purchase or sale of such security with the knowledge that a
simultaneous order or orders of substantially the same size, time and price, for the sale
or purchase of any such security, has or will be entered by or for the same or different
parties.
a. Wash Sale
b. Matched order
c. Market Jiggling
d. Market Rigging
e. Straddle

7. It is a transferrable option or offer to deliver a given number or shares of stocks at a

stated price at any given time during a stated period.
a. Matched order
b. Put
c. Call
d. Straddle
e. Wash sale

8. There is no violation of insider trading when in the following instances, except:

a. The insider proves that the information was not gained from such relationship
b. If the other party selling to or buying from the insider (or his agent) is identified, the
insider proves that he disclosed the information to the other party, or that he had
reason to believe that the other party otherwise is also in possession of the
information.
c. If the selling or buying by an insider of a security of the issuer, while in possession of
material information with respect to the issuer or the security that is not generally
available to the public.
d. Answer not given

9. Under the Short-Swing Profit Rule, a company insider is required to return any profit
made from the purchase and sale of company stock if both transactions occur
a. within a 6 month period
b. within a period of 9 months
c. within a period of one year
d. within a period of one month
e. within a period of 8 weeks

Atty. Amado R. Villegas, Jr. 14

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

10. A public company means any corporation with a class of equity securities listed in the
Exchange with an assets in excess of __________ having 200 or more holders at least
200 of which are holding at least 100 shares of a class of equity securities.
a. P10,000,000.00
b. P20,000,000.00
c. P30,000,000.00
d. P40,000,000.00
e. P50,000,000.00

11. The mandatory tender offer will not apply to the following instances, which should not
belong in the list;
a. Any purchase of shares from unissued capital stock provided that the acquisition will
not result to a 50% or more ownership of shares by the purchaser.
b. Any purchase of shares from an increase in the paid-up capital stock.
c. Purchase in connection with foreclosure proceedings involving a duty constituted
pledge or security arrangement where acquisition is made by the debtor or creditor.
d. Purchase in connection with privatization undertaken by the government of the
Philippines.
e. Purchase in connection with corporate rehabilitation under court supervision.

12. Under the Mandatory Tender Offer, any person or group of persons acting in concert who
intends to acquire at least 35% of any class of any equity security of a listed corporation
of any class of any equity security of a public company in one or more transactions within
a period of _______________.
a. Three months
b. Six months
c. Nine months
d. Twelve months
e. Twenty four months

13. These corporations who have met the following thresholds are required to file financial
statements, which is incorrect?
a. Stocks corporations with outstanding capital stock of P50,000 or more
b. Non-stock corporations with total assets of P500,000 or more, or with gross annual
receipts of P100,000 or more
c. Branch offices of stock foreign corporations with assigned capital in the equivalent
amount of P1,000,000 or more
d. Branch offices of non-stock corporations with total assets in the equivalent amount of
P1,000,000 or more
e. Regional operating headquarters of foreign corporations with total revenues in the
equivalent amount of P1,000,000 or more

14. The following instances may involve an error, except;

a. Mathematical or clerical mistakes in the underlying records and accounting data
b. Oversight or misinterpretation of facts
c. Unintentional misapplication of accounting policies
d. Recording of transactions without substance

15. The following instances involve fraud, except:

a. Oversight or misinterpretation of facts
b. Manipulation, falsification or alternation of records or documents
c. Misappropriation of assets
d. Suppression or omission of the effects of transaction from records or documents
e. Intentional misapplication of accounting policies

16. The following are requisites of Micro entities, except:

a. Total assets and liabilities are below P2 Million
b. Are not required to file financial statements under Part II of SRC Rule 68

Atty. Amado R. Villegas, Jr. 15

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

c. Are not in the process of filing their financial statements for the purpose of issuing
any class of instruments in a public market
d. Are not holders of secondary licenses issued by regulatory agencies

17. Large or publicly accountable entities are those that meet any of the following criteria,
except:
a. Total assets of more than P300 Million or total liabilities of more than P250 Million
b. Are required to file financial statements under Part II of SRC Rule 68
c. Are in the process of filing their financial statements for the purpose of issuing any
class of instruments in a public market
d. Are holders of secondary licenses issued by regulatory agencies

18. An entity who meet all the below-mentioned criteria:

i. Total assets of between P3M to P350 Million or total liabilities of between P3M to P250
Million. If the entity is a parent company, the said amounts shall be based on the
consolidated figures
ii. Are not required to file financial statements under Part II of SRC Rule 68
iii. Are not in the process of filing their financial statements for the purpose of issuing any
class of instruments in a public market
iv. Are not holders of secondary licenses issued by regulatory agencies

a. Micro entities
b. Macro entities
c. Small and Medium Sized Entities
d. Large or Publicly Accountable entities

19. S1 - The independent auditor's responsibility for the financial statements required to be
filed with the SEC is confined to the expression of his opinion on such statements which
he has examined.
S2 - The management shall neither allow nor require its independent auditor to prepare it
financial statements and/or any of its supporting documents.
a. All are correct
b. All are incorrect
c. Only S1 is incorrect
d. Only S2 is incorrect

20. The following are the signatories of Statement of Management's Responsibility, except:
a. The Chairman of the Board
b. Chief Executive Officer
c. Chief Financial Officer
d. Chief Corporate Secretary
e. any person of equivalent position as prescribed by the corporate by-laws

E. Unclaimed Balances Law (Act No. 3936)

1. Unclaimed Balances shall include credits or deposits of money, bullion, security or other
evidence of indebtedness of any kind, and interest thereon with banks, buildings and loan
associations, and trust corporations, in favor of any person, except:
a. known to be dead
b. known to be insane
c. not made further deposits during the preceding ten years or more
d. not made withdrawals during the preceding ten years or more

2. Deposits that have become dormant for a period of ten (10) years may be __________
in favor the Government.
a. subject to attachment
b. garnished
c. executed
d. escheated
e. under replevin

Atty. Amado R. Villegas, Jr. 16

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

3. Every month of January of every odd year, all banks, building and loan associations, and
trust corporations shall forward to the Treasurer of the Philippines a statement, under
oath, of their respective managing officers, of all credits and deposits held by them in
favor of persons (1) known to be dead, or (2) who have not made further deposits or
withdrawals during the preceding ten years or more, arranged in alphabetical order
according to the names of creditors and depositors, and showing, except;
a. The names and first known place of residence or post office addresses of the persons
in whose favor such unclaimed balances stand
b. The amount and the date of the outstanding unclaimed balance and whether the same
is in money or in security, and if the latter, the nature of the same
c. The date when the person in whose favor the unclaimed balance stands died, if known,
or the date when he made his last deposit or withdrawal
d. The interest due on such unclaimed balance, if any, and the amount thereof

4. Under the Unclaimed Balances Law, the Solicitor General shall commence the action in the RTC of
the province or city _______________________________ in which shall be joined as parties the
bank, building and loan association or trust corporation and all such creditors or depositors.
a. where the depositor first resided
b. where the depositor last resided
c. where the last deposit was made
d. where the first deposit was made
e. where the bank is located

5. Under the Unclaimed Balances Law, if the president, cashier or managing officer of the bank,
building and loan association, or trust corporation neglects or refuses to make and file the sworn
statement required by this action, such bank, building and loan association, or trust corporation
shall pay to the Government the sum of ________________________ thereof during which such
default shall continue
a. five hundred pesos a month for each month or fraction
b. one thousand pesos a month for each month or fraction
c. two thousand pesos a month for each month or fraction
d. five thousand pesos a month for each month or fraction
e. ten thousand pesos a month for each month or fraction

F. Secrecy of Bank Deposits (R.A. 1405, as amended)

1. The Law on Secrecy of Bank Deposits is an act prohibiting the disclosure of or inquiry
into deposits with any banking institution and its purposes are, except:
a. encourage people to deposit money in banks
b. strengthen the peso
c. discourage private hoarding of money
d. protect the confidentiality of bank deposits

2. The following are exceptions under the Bank Secrecy Law, which exception is found under
other laws:
a. Upon written permission or consent in writing by the depositor
b. In cases of impeachment of the President, Vice President, members of the Supreme
Court, members of the Constitutional Commission and the Ombudsman
c. Upon order of a competent court in cases of bribery or dereliction of duty of public
officials.
d. In cases where the money deposited or invested is the subject matter of the litigation
e. The Presidential Commission on Good Government, in the conduct of its
investigations to recover ill-gotten wealth

3. The CIR is authorized to inquire into bank deposits in the following instances, except:
a. an application for compromise of tax liability
b. determination of a decedent’s gross estate under NIRC
c. determination of the gross income of a corrupt public official

Atty. Amado R. Villegas, Jr. 17

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

d. request for tax information of specific taxpayers made by a foreign tax authority
pursuant to a tax treaty under The Exchange of Information on Tax Matters Act of
2009

4. The Anti-Money Laundering Council without need of court order, when probable cause
exists that a particular deposit or investment with any banking institution is related to
certain predicate crimes, except:
a. espionage
b. kidnapping for ransom
c. violation of the Comprehensive Dangerous Drugs Act
d. hijacking and other violations under Republic Act No. 623510
e. destructive arson and murder

5. The Philippine Deposit Insurance Commission and the Bangko Sentral may inquire into
bank deposits when:
a. there is a request for tax information of specific taxpayers made by a foreign tax
authority pursuant to a tax treaty
b. there is a finding of unsafe or unsound banking practices
c. when there is probable cause that the deposits or investments are related to an
unlawful activity or a money laundering offense
d. there is a conduct annual testing which is limited to the determination of the
existence and true identity of the owners of numbered accounts
e. necessary to examine and gather information on the deposits, placements, trust
accounts, assets and records in a bank or financial institution in connection with anti-
terrorism case

6. The following are Authorized Disclosures in the Bank Secrecy Law, except:
a. when there is probable cause that the deposits or investments are related to an
unlawful activity or a money laundering offense
b. reporting of unclaimed balances to the Treasurer of the Philippines
c. turn-over to the CIR of the amount in bank accounts as may be sufficient to satisfy
the writ of garnishment issued to collect delinquent taxes
d. submission of report, and turn-over to, the court officer or executing sheriff of
garnished amounts pursuant to a writ of garnishment in satisfaction of a judgment
e. disclosure by a bank officer or employee upon order of the court in connection with a
deposit in a closed bank that was used in the perpetration of anomalies

7. The Anti-Money Laundering Council, either upon its own initiative or at request of the
Anti-Terrorism Council, further authorize to issue an ex parte order to freeze accounts
without delay. Freeze order shall be for a period of ___ days, unless extended by the CA
up to a period not exceeding six (6) months upon petition by the AMLC.
a. 10 days
b. 20 days
c. 30 days
d. 40 days
e. 50 days

8. S1 - The Secrecy of Bank Deposit Law does not apply to foreign currency deposits.
S2 – The AMLC, without a court order, is authorized to investigate property or funds that
are in any way related to financing of terrorism or acts of terrorism OR the property or
funds of any person or persons in relation to whom there is probable cause that such
person is involved in the acts of terrorism.
a. Both Statements are correct
b. Both Statements are incorrect
c. Only Statement 1 is incorrect
d. Only Statement 2 is incorrect

9. S1 - Bank accounts may not be garnished by the creditors of the depositor as this
constitutes a violation of the bank Secrecy Law.

Atty. Amado R. Villegas, Jr. 18

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

S2 - AMLC may inquire into deposits upon order of the court when there is probable
cause that the deposits are related to the crime of unlawful activities.
a. Both Statements are correct
b. Both Statements are incorrect
c. Only Statement 1 is incorrect
d. Only Statement 2 is incorrect

10. The following persons are not liable under Bank Secrecy Law, except:
a. Any person or government official who, or any government bureau or office that,
examines, inquires or looks into a bank deposit or government bond investment in
any of the instances not allowed in Sec. 2;
b. Any official or employee of a banking institution who makes a disclosure concerning
bank deposits to another in any instance not allowed
c. Any person who commits a violation of any of the provisions of the law
d. All of the above
e. None of the above

G. PDIC Law (RA 3591, as amended)

1. The PDIC is also authorized to conduct independent special examination of banks and
may inquire into or examine deposit accounts of ailing banks in the event
a. there is a finding of unsafe and unsound banking practices
b. The bank is in the verge of insolvency
c. The bank is in the liquidation proceeding
d. The bank is under receivership
e. The bank is under conservatorship

2. S1 – The Bangko Sentral ng Pilipinas is composed of 7 members in the board.

S2 – The PDIC is composed of 5 members of the board.
a. All are correct
b. All are wrong
c. Only S1 is incorrect
d. Only S2 is incorrect

3. The following are functions of PDIC, except:

a. Deposit Insurer
b. Co-regulator of Banks
c. Receiver and Liquidator of Closed Banks
d. Administrator of Banks

4. S1 - Examination involves an evaluation of the current status of a bank and determines

its compliance with the set standards regarding solvency, liquidity, asset valuation,
operations, systems, management, and compliance with banking laws, rules and
regulations. Such a process then involves an intrusion into a bank’s records.
S2 - Investigation is conducted based on specific findings of certain acts or omissions
which are subject of a complaint or a Final Report of Examination made by PDIC
a. All are correct
b. All are wrong
c. Only S1 is incorrect
d. Only S2 is incorrect

5. The maximum deposit insurance coverage under the PDIC Law is ________________. All
deposit accounts by a depositor in a closed bank maintained in the same right and
capacity shall be added together.
a. P100,000 per depositor
b. P500,000 per depositor
c. P1million per depositor
d. P2million per depositor

Atty. Amado R. Villegas, Jr. 19

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

6. The PDIC may propose to adjust the minimum deposit insurance coverage, subject to the
approval of the President of the Philippines, in case of _________________________
that may have systemic consequences.
a. exercise of the police power of the State
b. exercise of eminent domain
c. bankruptcy of the majority of banks in the Philippines
d. a condition that threatens the monetary and financial stability of the banking system
e. law passed by Congress

7. It means a deposit in an insured bank made available to a depositor by the Corporation

as payment of insured deposit of such depositor in a closed bank and assumed by
another insured bank.
a. Deposit substitutes
b. Demand deposit
c. Trust deposit
d. Trust substitutes
e. Transfer deposit

8. S1 - A joint account regardless of whether the conjunction ‘and,’ ‘or,’ ‘and/or’ is used,
shall be insured separately from any individually-owned deposit account.
S2 - If the account is held jointly by two or more natural persons, or by two or more
juridical persons or entities, the maximum insured deposit shall be divided into as many
equal shares as there are individuals, juridical persons or entities.
S3 - If the account is held by a juridical person or entity jointly with one or more natural
persons, the maximum insured deposit shall be presumed to belong entirely to such
natural person.
a. Only S1 is incorrect
b. Only S2 is incorrect
c. Only S3 is incorrect
d. Both S1 and S2 are incorrect
e. Both S2 and S3 are incorrect

9. R.A. No. 9576 stipulates that PDIC will pay deposit insurance for the following accounts
or transactions, except:
a. Investment products such as bonds, securities and trust accounts;
b. Deposit accounts which are unfunded, fictitious or fraudulent;
c. Deposit products constituting or emanating from unsafe and unsound banking
practices;
d. Deposits that are determined to be proceeds of an unlawful activity as defined under
the Anti-Money Laundering Law.
e. All of the above

10. S1 - Membership of banks to PDIC is mandatory.

S2 - As for Philippine banks with branches outside the country, RA 9576 stipulates that
subject to the approval of the Board of Directors, any insured bank with branch outside
the Philippines may elect to include for insurance its deposit obligations payable at such
branch.
S3 - Foreign currency deposits are also insured by PDIC.
a. Only S1 is incorrect
b. Only S2 is incorrect
c. Only S3 is incorrect
d. All are correct
e. All are incorrect

11. Splitting of deposits occurs whenever a deposit account with an outstanding balance of
more than the statutory maximum amount of insured deposit maintained under the name
of natural or juridical persons is broken down and transferred into two (2) or more
accounts in the name/s of natural or juridical persons or entities who have no beneficial
ownership on transferred deposits in their names within _____________________ days

Atty. Amado R. Villegas, Jr. 20

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

immediately preceding or during a bank-declared bank holiday, or immediately preceding

a closure order issued by the Monetary Board of the Bangko Sentral ng Pilipinas for the
purpose of availing of the maximum deposit insurance coverage.
a. 30 days
b. 60 days
c. 90 days
d. 120 days
e. 180 days

12. PDIC covers only the risk of a -

a. bank losses due to theft
b. bank closure ordered by the Monetary Board
c. bank losses due to fire, closure by reason of strike
d. banks losses due to existence of public disorder, revolution or civil war
e. All of the above

13. The insurance premium assessed against the bank under the PDICS is -
a. 1/5 of 1% per annum of the assessment base of the bank
b. 1/4 of 1% per annum of the assessment base of the bank
c. 1/5 of 2% per annum of the assessment base of the bank
d. 1/4 of 2% per annum of the assessment base of the bank

14. S1 – For purposes of the PDIC Law, deposits in different banking institutions are insured
separately.
S2 – For purposes of the PDIC Law, if a bank has one or more branches, the main office
and all branch offices are considered as one bank
a. All are correct
b. All are wrong
c. Only S1 is incorrect
d. Only S2 is incorrect

15. The depositor of the closed insured bank has ____________ to file his deposit insurance
claim.
a. 3 months from date of bank takeover
b. 6 months from date of bank takeover
c. 9 months from date of bank takeover
d. 12 months from date of bank takeover
e. 24 months from date of bank takeover

16. The claim for insured deposit under the PDIC Law should be settled
_______________________ after bank takeover.
a. Within 3 months from the date of filing provided all the requirements must be filed
within six months
b. Within 3 months from the date of filing provided all the requirements must be filed
within 12 months
c. Within 6 months from the date of filing provided all the requirements must be filed
within six months
d. Within 6 months from the date of filing provided all the requirements must be filed
within 12 months
e. Within 6 months from the date of filing provided all the requirements must be filed
within 24 months

17. Under the PDIC Law, the Corporation, its directors, officers, employees and agents are
held free and harmless to the fullest extent permitted by law from any liability, and they
shall be indemnified for any and all liabilities, losses, claims, demands, damages,
deficiencies, costs and expenses of whatsoever kind and nature that may arise in
connection with the performance of their functions, without prejudice to any criminal
liability under existing laws, except in the following:
a. willful violation of this PDIC Law

Atty. Amado R. Villegas, Jr. 21

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

b. performed in bad faith

c. with malice and/or gross negligence
d. All of the above

18. S1 - If the closed bank is not rehabilitated or taken over by another bank, amount in
excess of the P500,000 coverage can no longer be claimed in the final liquidation of the
remaining assets of the closed bank.
S2 - PDIC Charter provides that the deposits in branches and subsidiaries of foreign
banks licensed by the Bangko Sentral ng Pilipinas (BSP) to perform banking functions in
the Philippines are insured by the PDIC
a. All are correct
b. All are wrong
c. Only S1 is incorrect
d. Only S2 is incorrect

19. Deposits NOT covered by Insurance under the PDIC Law, except:
a. The amount in excess of insured deposit of P500,000
b. Deposit that is payable in foreign branches
c. Deposit accounts that resulted from splitting of deposit
d. Foreign currency deposits in the Philippines

20. It means funds held by an insured bank in a fiduciary capacity and includes without being
limited to, funds held as trustee, executor, administrator, guardian or agent.
a. Trust funds
b. Demand deposit
c. Trust deposit
d. Trust substitutes
e. Transfer deposit

H. Anti-Money Laundering Act (RA 9160, as amended)

1. The following are policies of the AMLA, except:
a. to protect and preserve the integrity and confidentiality of bank accounts
b. to ensure that the Philippines shall not be used as money laundering site for the
proceeds of any unlawful activity
c. to prevent money-laundering activities by providing more transparency in the
Philippine financial system
d. to generate foreign investors in investing in the Philippines

2. Money laundering is a crime committed by any person who knowing that any instrument
or property represents, involves, or relates to the proceeds of any unlawful activity.
Except:
a. transacts said monetary instrument or property;
b. converts or transfers, disposes of, moves, acquires, possess or uses said monetary
instrument or property;
c. conceals or disguises the true nature, source, location, disposition, movement or
ownership of or rights with respect to said monetary instrument;
d. failure to report to the AMLC by any covered person knowing that covered or
suspicious transactions is required under the law
e. Answer not given

3. It is a transaction in cash or other equivalent monetary instrument involving a total

amount in excess of P500,000.00 within one (1) banking day.
a. covered transaction
b. covered persons
c. suspicious transactions
d. unlawful activity

4. The following are covered persons, except:

a. banks supervised or regulated by BSP

Atty. Amado R. Villegas, Jr. 22

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

b. insurance companies regulated by the Insurance Commission

c. SEC supervised entities
d. company service providers
e. casinos regulated by PAGCOR

5. The following are obligations of a covered institution, except:

a. Arms-length rule
b. Customer identification
c. Record keeping
d. Reporting of covered and suspicious transactions

6. S1 – Covered institutions must record the true identity of its clients and all persons
purporting to act on their behalf based on official documents, and keep a system of
verifying their true identity as a system of verifying their legal existence and
organizational structure.
S2 - Peso and foreign currency non-checking numbered accounts shall be allowed.
a. All are correct
b. All are wrong
c. Only S1 is incorrect
d. Only S2 is incorrect

7. All records of all transactions of covered institutions shall be maintained and safely stored
for ___ years from the date of transactions. With respect to closed accounts, the records
on customer identification, account files and business correspondences, shall be
preserved and safely stored for at least ___ years from the date when they were closed.
a. 1-1
b. 2-2
c. 2-5
d. 3-5
e. 5-5

8. Covered persons shall report to the AMLC all covered transactions and suspicious
transactions within ___ working days from the occurrence thereof, unless the AMLC
prescribes a different period of not exceeding ___ working days.
a. 5-5
b. 5-10
c. 5-15
d. 10-15
e. 10-20

9. Suspicious transactions with covered institutions, regardless of the amount involved,

where any of the following circumstances exist are considered unlawful: except:
a. There is no underlying legal or trade obligation, purpose or economic justification;
b. The client is not properly groomed;
c. The amount involved is not commensurate with the business or financial capacity of
the client;
d. Taking into account all known circumstances, it may be perceived that the client’s
transaction is structured in order to avoid being the subject of reporting requirements

10. S1 - Lawyers and accountants acting as independent legal professionals are required to
report covered and suspicious transactions if the relevant information was obtained in
circumstances in their professional capacity.
S2 - Covered persons and their officers and employees are prohibited from
communicating directly or indirectly, in any manner or by any means, to any person or
entity or the media the fact that a covered or suspicious transaction has been reported or
is about to be reported, the contents of the report or any other information relating
thereto.
a. All are correct
b. All are wrong

Atty. Amado R. Villegas, Jr. 23

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

c. Only S1 is incorrect
d. Only S2 is incorrect

11. The following are Unlawful activities under the AMLA, except:
a. Kidnapping for ransom under Article 267 of RPC;
b. Sections in RA 9165 or Comprehensive Dangerous Drugs Act of 2002;
c. Espionage under the RPC
d. Plunder under RA 7080;
e. Robbery and Extortion under RPC

12. S1 - Jurisdiction over AMLA cases is vested upon the Regional Trial Court, or the
Sandiganbayan if committed by public officers and private persons in conspiracy with the
former.
S2 - Any person may be charged with and convicted of both the offense of money
laundering and unlawful activity.
a. All are correct
b. All are wrong
c. Only S1 is incorrect
d. Only S2 is incorrect

13. S1 – Composition of the PDIC Board is seven.

S2 – Composition of the AMLC Board is three.
a. All are correct
b. All are wrong
c. Only S1 is incorrect
d. Only S2 is incorrect

14. Land Registration Authority and all its Registries of Deeds are to submit to the AMLC,
reports on real estate transactions involving an amount in excess of ________________
pesos within fifteen (15) days from the date of the registration of the transaction and
submit all other relevant documents of all real estate transactions.
a. 300,000
b. 500,000
c. 1 Million
d. 2 million
e. 5 million

15. S1 - Only the Supreme Court has the sole authority to issue the freeze order in AMLA
cases.
S2 - No court shall issue a temporary restraining order or a writ of injunction against any
freeze order issued in AMLA, except the Supreme Court.
a. All are correct
b. All are wrong
c. Only S1 is incorrect
d. Only S2 is incorrect

16. It shall refer to accounts, the funds and sources of which originated from and/or are
materially linked to the monetary instrument(s) or property(ies) subject of the freeze
order in AMLA.
a. Splitting of Account
b. Related interest
c. Related Accounts
d. Substitute Account
e. Savings Account

17. The following are predicate crimes, except;

a. Jueteng and Masiao punished as illegal gambling under PD 1602;
b. Malicious mischief in open seas under RPC;
c. Qualified theft under Art. 310 of RPC;

Atty. Amado R. Villegas, Jr. 24

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

d. Swindling and other forms of swindling of RPC;

e. Smuggling under RA Nos. 455 and 1937;

18. The following are unlawful activities, except:

a. Violations of PD 1612 or the Anti-Fencing Law;
b. Violation of Section 6 of RA 8042 or the Migrant Workers and Overseas Filipino Act of
1995, as amended by RA 10022;
c. Violation of RA 8293 or the Intellectual Property Code of the Philippines;
d. Violation of Section 4 of RA 9995 or the Anti-Photo and Video Voyeurism
e. Violation of the Trust Receipt Law

19. If AMLA violation is committed by public officers and private persons in conspiracy with
the former, jurisdiction shall be vested in –
a. Ombusdman
b. PCGG
c. PDIC
d. Regional Trial Court
e. Sandiganbayan

20. No court order shall be required for the examination of bank deposits by AMLC in cases
involving, except:
a. Kidnapping for ransom under Article 267 of RPC;
b. Sections 4, 5, 8, 9, 10, 12, 13, 14, 15 and 16 of RA 9165, otherwise known as the
Comprehensive Dangerous Drugs Act of 2002;
c. Hijacking and other violations under RA 6235; destructive arson and murder as
defined under RPC, including those perpetrated by terrorists against non-combatant
persons and similar targets;
d. Forgeries and counterfeiting of RPC

I. Intellectual Property Law (RA 8293)

1. The Intellectual Property Office has the following functions, except:
a. Examine applications: patents, utility models, industrial designs, marks, geographic
indications, integrated circuits
b. Register technology transfer arrangements & settle disputes involving payments
c. Promote use of patent information
d. Publish undisclosed information relevant to the industry
e. Adjudicate proceedings affecting IPRs

2. The term of patent is –

a. 5 years from the date of filing of the application
b. 7 years from the date of filing of the application
c. 10 years from the date of the filing of the application
d. 20 years from the date of the filing of the application
e. 50 years from the date of the filing of the application

3. The following are the three criteria to be patentable, except:

a. Novelty
b. Inventive step
c. Territoriality
d. Industrially applicable

4. It is the criterion in patent that it is not obvious to a person skilled in the art at the time
of the filing date or priority date of the application claiming the invention.
a. Novelty
b. Inventive step
c. Territoriality
d. Industrially applicable

5. The following are not patentable, except:

Atty. Amado R. Villegas, Jr. 25

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

a. technical solution to a problem

b. discovery of a new plant
c. machines that defy laws of nature
d. scientific theories, mathematical methods
e. schemes, rules of methods, playing games

6. The following are criteria for the Utility model, except:

a. New
b. Industrially applicable
c. Inventive step
d. Territoriality
e. Both c and d

7. It is any composition of lines or colors or any three-dimensional form, whether or not

associated with lines or colors, provided, that such composition or form gives a special
appearance to and can serve as pattern for an industrial product or handicraft.
a. Prior art
b. Utility model
c. Industrial design
d. Copyright
e. Lay-out design

8. The term of protection for Utility Model is –

a. 5 years from the date of filing of the application
b. 7 years from the date of filing of the application
c. 10 years from the date of the filing of the application
d. 20 years from the date of the filing of the application
e. 50 years from the date of the filing of the application

9. The term of protection for a lay-out design of an integrated circuit is –

a. 5 years
b. 7 years
c. 10 years
d. 20 years
e. 50 years

10. The term of protection for trademark is –

a. 5 years
b. 7 years
c. 10 years
d. 20 years
e. 50 years

11. The following are two criteria for trademark, except:

a. novelty
b. Distinctive
c. Not deceptive
d. Answer not given

12. – A mark distinguishing the goods or services of members of the association which is the
proprietor of the mark from those of other undertakings.
a. Collective mark
b. Certification mark
c. Service mark
d. Trademark
e. Logo

13. It is the legal protection extended to the owner of the rights in an original work.
a. Patent

Atty. Amado R. Villegas, Jr. 26

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

b. Copyright
c. Trademark
d. Service mark
e. Geographical Indication

14. The term of protection of copyright is –

a. 5 years
b. 7 years
c. 10 years
d. 20 years
e. 50 years

15. Alteration of the literary & artistic works, works that are derived from other existing
sources.
a. Economic Right
b. Moral Right
c. IP right
d. Derivative Right
e. Right of Exclusion

16. The right to make any alterations, object to any distortion, restrain the use of his name
a. Economic Right
b. Moral Right
c. IP right
d. Derivative Right
e. Right of Exclusion

17. The following are the Related Rights in Copyright, except:

a. Rights of performers
b. Rights of phonogram producers
c. Rights of broadcasting organizations
d. Rights of authorship

18. Infringement of a patent prescribes in __ years from the date of the commission of the
crime.
a. 2 years
b. 3 years
c. 4 years
d. 5 years
e. 10 years

19. No damages can be recovered for acts of infringement of a patent committed more than
__ years before the institution of the action for infringement.
a. 2 years
b. 3 years
c. 4 years
d. 5 years
e. 10 years

20. Act of selling the goods that have been clothed with a general appearance of the goods
of another which is likely to deceive the ordinary purchaser exercising ordinary care
a. Infringement
b. Piracy
c. Estafa
d. Unfair Competition
e. Illegal exaction

21. Statutory fair uses and criticisms, comment, news reporting, teaching, scholarship,
research, decompilation fall under what right in Copyright –

Atty. Amado R. Villegas, Jr. 27

Professor I – Far Eastern University
Regulatory Framework for Business Transactions – Special Laws

a. Economic Right
b. Derivative Right
c. Moral Right
d. Fair use
e. Fair play

22. The following are Economic Rights, except;

a. reproduction
b. transformation
c. first public distribution
d. public performance
e. make any alterations

23. The following are derivative works, except:

a. translations of works into different languages
b. Adaptation of works
c. Arrangement of music
d. Abridgement of a novel
e. Right of transformation

24. This intellectual property is protected from the moment of its creation.
a. Trademark
b. Service mark
c. Patent
d. Copyright
e. Geographical Indication

25. The oldest law in Copyright Law.

a. Berne Convention
b. Rome Convention
c. TRIPS Agreement
d. WIPO Copyright Treaty

Atty. Amado R. Villegas, Jr.

Batangas CPA Review Center (Bats CPAR)

All Rights Reserved

2017

Atty. Amado R. Villegas, Jr. 28

Professor I – Far Eastern University