MOCK BAR EXAMINATION QUESTIONS IN

COMMERCIAL LAW
1. Which of the following reflects a correct legal precept?
a. Private corporations under the Corporation Code are created by law.
b. A private corporation may always be held civilly liable for negligent acts
committed by its employees.
c. The corporate obligations are, as a rule, not the obligations of the corporate
officers as long as the absence of liability of the latter is reflected in the
corporate by laws.
d. Private corporations under the Corporation Code may either be de facto or
de jure.
. Which of the following is in conformity with both law and !urisprudence?
a. The separate personality of a corporation may be disregarded when an
incorporator dominates and controls the outstanding capital stoc".
b. #hareholders cannot maintain a suit in their own names to recover corporate
property.
c. A corporation does not fall within the constitutional protection against
unreasonable searches and sei$ures.
d. A corporation has a right against self%incrimination.
&. Ten persons, all 'ilipinos, and acting as incorporators, filed an application for the
incorporation of ()* +an", ,nc. Which of the following is correct?
a. The incorporators are not dis-ualified by reason of their nationality.
b. ()* +an", ,nc. may issue no%par value shares as long as the consideration
thereof is not less than P..//.
c. The incorporators must all be Philippine residents.
d. 0one of the above.
1. When the articles of incorporation provide for non%voting shares, the holders of such
shares shall nevertheless be entitled to vote on the following matters, e2cept3
a. 4issolution of the corporation.
b. #ale, lease, e2change, mortgage, pledge or other disposition of all or
substantially all of corporate property. Amendment of the articles of
incorporation.
c. ,ncurring, creating, increasing or assignment of bonded indebtedness.
.. A+C Corporation, a private corporation engaged in the business of importing used cars
from 5apan was issued a certificate of incorporation by virtue of 6.A. 789/. +ecause of
a failed business transaction, A+C Corporation sued :r. ( for a damage arising from the
latter;s alleged breach of its contractual obligations.
a. :r. ( cannot allege <lac" of legal capacity to sue; of A+C Corporation in its
motion to dismiss because it has a legal personality conferred by law.
b. :r. ( cannot allege <lac" of legal capacity= in its motion to dismiss because it
is not allowed to attac" the e2istence of the corporation collaterally.
c. A+C Corporation is a de !ure corporation and its e2istence can be attac"ed
only through a quo warranto proceeding.
d. Attac"ing the e2istence of A+C Corporation may be done through a motion
to dismiss because its creation is void.
6. 0o 1 % Within five >.? years from issuance of its certificate of incorporation, the newly%
formed corporation must formally organi$e and commence business operations. 'ailure
to do so within such period is a ground for dissolution. 0o. % @very member of the
board of every corporation must own at least one >1? share of stoc" standing in his
name in the boo"s of the corporation.
a. +oth statements are false.
b. +oth statements are true.
c. The first statement is trueA the second is false.
d. The second statement is trueA the first is false.
7. A corporation was formed by fifteen >1.? incorporators and its certificate of
incorporation was duly issued. A year after its attainment of !uridical personality, the
stoc"holders, who are themselves the members of the board adopted a resolution,
providing for the following >i? That all of the corporation;s issued stoc" of all classes,
e2clusive of treasury shares, shall be held of record by not more than a specified
number of persons, not e2ceeding twenty >/?A >ii? That all of the issued stoc" of the
corporation shall be sub!ect to certain specified restrictionsA and >iii? That the corporation
shall not list in any stoc" e2change or ma"e any public offering of any of its stoc"s of any
class.
a. The corporation is a close corporation because the resolution contains
the elements of a close corporationA
b. The corporation is de facto because although it has a certificate of
incorporation, the provisions in the resolution should have been contained n
the articles.
c. The corporation is an open corporation. The corporation is a
corporation by estoppel because although it operates as a corporation, it did
not comply with certain legal re-uirements for the establishment of a close
corporation.
8. Which of the following is correct?
a. The secretary of a corporation must be a citi$en of the Philippines and
a resident of the Philippines. Be must be also a member of the board.
b. The members of the board are liable whenever they vote for unlawful
acts.
c. ,f there are only ten >1? directors elected although the articles of
incorporation provide for fifteen >1.? directors, the -uorum in a board meeting
is eight >8?.
d. A director may be removed by the vote of all the stoc"holders in any
meeting.
9. Which of the following acts could be ratified by a vote representing at least C& of the
outstanding capital stoc"?
a. Acts of directors or trustees who are guilty of gross negligence or bad
faith in directing the affairs of the corporationA
b. An attempt by a director to ac-uire or actual ac-uisition of any interest
adverse to that of the corporation in respect of any matter reposed upon him
in confidenceA
c. Acts of directors constituting an approval of patently unlawful actsA
d. Ac-uisition of a business opportunity which should belong to the
corporation, thereby ac-uiring profits which should belong to the corporation.
10. The pre%emptive right e2tends to the right to subscribeA
a. Dnly to new issues of shares arising out of an increase of the capital
stoc".
b. Dnly to the issuance of previously unissued portions of the outstanding
capital stoc".
c. To all issues of shares or dispositions of shares of any classA
d. To all issues or dispositions of shares of any class other than
redeemable or treasury shares.
11. The following are the re-uisites for the corporate power to ac-uire its own shares.
Which is the e2ception?
a. The corporation must have unrestricted earnings in its boo"s to cover
the purchase of the shares e2cept in the case of redeemable shares.
b. The ac-uisition must be for the sole purpose of ac-uiring shares in
order to eliminate fractional shares.
c. The ac-uisition must be for a legitimate purpose.
d. The corporation must have unrestricted earnings in its boo"s to cover
the purchase of shares.
12. Which of the following is correct?
a. 4ividends may be declared out of a reappraisal surplus or revaluation
increment because they constitute profits.
b. 4ividends are profits but not all profits are dividends.
c. All dividends are ta2able as income of the stoc"holder.
d. The declaration of any "ind of dividend re-uires the assent of at least
C& of the outstanding capital stoc".
13. ( subscribed to 1,/// shares of stoc" in A+C Be paid ./E of the subscription but
such subscription was later on declared delin-uent. The total liability of (, including the
balance, accrued interest, costs and other e2penses amounted to P./,///. Which
bidder is considered the highest bidder in the delin-uency sale?
a. A bid of P1.,/// for .// sharesA
b. A bid of P1&,/// for ./1 sharesA
c. A bid of P./,/// for 9// sharesA
d. A bid of P1/,/// for &// sharesA
14. 0o. 1 F Bolders of delin-uent shares are not entitled to dividends. 0o. F A transfer
of shares to a non%stoc"holder is binding to the corporation as long as the transfer is in a
public document.
a. +oth statements are true.
b. +oth statements are false.
c. 0o 1 is trueA 0o. is false.
d. 0o. is trueA no. 1 is false.
15. 0o. 1 F A foreign corporation intending to sue in Philippine courts must always have
a license to engage in business n the Philippines. 0o. F A foreign corporation engaged
in business in the Philippines may sue and be sued n the Philippines.
a. +oth statements are false.
b. +oth statements are true.
c. 0o. 1 is trueA 0o. is false.
d. 0o. 1 is falseA no. is true.
16. Which of the following is not a negotiation of a negotiable instrument?
a. 4elivery to the payee of an instrument payable to bearerA
b. 4elivery to the payee of an instrument payable to bearer 5ose.
c. 4elivery of an instrument payable to the order of #uperman.
d. indorsement and delivery of an instrument payable to the order of 5ose.
17. An indorsement is restrictive if3
a. it is indorsed to 5ose.
b. it is indorsed to 5ose or bearer.
c. it is indorsed to 5ose in trust for my child.
d. ,t is indorsed to the order of 5ose.
18. The instrument is payable to bearer if
a. it is payable to the order of cash.
b. it is payable to cash.
c. it is payable to the order of the Ging of the Philippine ,slands.
d. it is payable as in all of the above.
19. ( wants to lend money to third persons but as"s his friend, + to sign promissory
notes of the borrowers as the lenderC payee. As payee, + indorses the notes to (. +
receives no consideration for lending his name.
a. ( is a party accommodated.
b. + is an accommodation party.
c. + is not an accommodation party.
d. + is not a party to the note, but ( is.
20. 4 issues a note payable to the order of P. P indorses the note thus3 <To A. #gd P=.
a. A is an assignee.
b. A may negotiate to + by delivery alone.
c. A may negotiate to + by indorsement completed by delivery.
d. A cannot negotiate the note any further.
21. The following instrument is negotiable assuming all other re-uisites are present3
a. , promise to pay Pedro #antos P./,///
b. Pay to ( or his order P./,/// and deliver 1/ sac"s of rice.
c. , promise to pay to the order of P P./,/// and such other sums he may be
entitled to.
d. , promise to pay D or bearer P./,/// with interest.
22. Which among the following has a conditional promise hence, non%negotiable?
a. To 4. Pay to the order of P P./,///. #gd. 46.
b. To 4. Pay to the order of P P./,/// out of my money in your hands. #gd 46.
c. , promise to pay P or his order P&/,/// on the day his father passes away.
d. 0one of the above is conditional.
23. ( indorses a note sans recourse and delivers it to +.
a. ,f + cannot collect from the ma"er, + can never collect from (.
b. ,f + cannot collect from the ma"er, + can collect from ( after giving him a
notice of dishonor.
c. ,f + cannot collect from the ma"er because of forgery of the latter;s
signature, + cannot collect from (.
d. ,f + cannot collect from the ma"er because of forgery of the latter;s
signature, + can collect from (.
24. 4rawer issues a chec" to the order of P drawn against D +an". Through illegal
means, ' gets hold of the chec", indorses the chec" to himself by forging P;s signature,
and deposits it in his account in : +an" which indorses the chec" for clearing with the
words= All prior indorsements uaranteed!.Which is correct?
a. P can still collect from 4rawer.
b. D +an" is liable to 4rawer for reimbursement of the amount deducted from
the account of 4rawer.
c. : +an" is liable to D +an" as an indorser.
d. All of the above.
25. 0o. 1 F The ma"er engages to pay according to the tenor of his acceptance. 0o. %
The indorser warrants that the instrument is genuine only n certain cases.
a. +oth are false.
b. +oth are true.
c. 0o. 1 is trueA 0o. is false.
d. 0o. 1 is falseA 0o. is true.
26. Which of the following statements is not legally true?
a. Common carriers are re-uired to cater to every member of the public.
b. To be a common carrier, an entity must have a certificate of public
convenience.
c. Travel agencies as such are common carriers.
d. ,t is possible for a customs bro"er to be a common carrier if it transports
goods for a fee.
27. Which could be availed of as a complete defense by a common carrier?
a. All forms of fortuitous eventsA
b. The doctrine of last clear chance in case of collisions.
c. Contributory negligence of the plaintiff.
d. 0one of the above.
28. The common carrier;s duty to observe e2traordinary diligence in the vigilance over the
goodsA
a. ends when they are temporarily unloaded in transit.
b. ends when the goods are lost in transit.
c. begins upon the e2ecution of a bill of lading.
d. ends when the shipper has availed of his right of stoppage in transitu.
29. The doctrine of inscrutable fault applies
a. when there is collision.
b. when a vessel ma"es a wrong maneuver in the second $one of collision.
c. when there is no evidence as to which vessel is negligent.
d. whenever a collision occurs.
30. A commercial vessel was sun" when it was overta"en by a typhoon in the ocean. ,t
was established that the ship was unseaworthy but would have successfully completed
the voyage had it not been for the typhoon.
a. The ship owner may invo"e fortuitous event as a defense.
b. The ship agent may be held liable in case the ship owner is not found.
c. The ship agent may not be held liable because he is acting for a disclosed
principal.
d. 0o one is liable.
31. The doctrine of limited liability may not be availed of as a defense in the following
cases. Which is the e2ception?
a. The vessel is insured.
b. ,f there are e2penses incurred when the vessel was repaired before its loss.
c. ,f there are liabilities under the Wor"men;s Compensation Haw.
d. There is no e2ception.
32. Which stipulation is not void?
a. That the shipper will be liable only for P.//.// per baggage.
b. That the shipper will be liable for P.//.// only per luggage e2cept if the
shipper or passenger declares a higher value.
c. The shipper will be liable only for P.//.// per baggage whatever be the
value declared.
d. All are void.
33. When a passenger is carried gratuitously by a common carrierA
a. the duty of e2traordinary diligence of the carrier ceases.
b. the duty of e2traordinary diligence of the carrier continues for a limited
period.
c. the duty of e2traordinary diligence may be lessened by stipulation.
d. there is only a duty to observe ordinary diligence.
34. ( insured his house against fire. 4uring the effectivity of the insurance, he sold the
house to ) without a corresponding change in the policy but ( continued to pay the
premiums. ,f a loss occursA
a. ( can recover from the policy because there was no change in the policy.
b. ( can recover because he is the one who is paying the premiums.
c. ) can recover because he is the owner.
d. The insurer may legally refuse to pay.
35. ,n answer to a -uestion in the insurance application on whether or not he had
suffered from a heart ailment, ( answered <0D=. Two years after the policy became
effective, ( died of a liver ailment.
a. 6ecovery may be had under the policy because the ailment concealed was
not the cause of death.
b. 6ecovery cannot be had because of a material concealment.
c. 6ecovery cannot be had because of material misrepresentation.
d. 6ecovery can be had.
36. The insurer is entitled to the payment of premiums as soon as the thing insured is
e2posed to the peril insured against, e2cept
a. if there is an agreement to the contrary.
b. if the insurer waives the premium in the meantime.
c. if the insured deposits a chec".
d. none of the above.
37. Which is false?
a. Terrorists cannot be insured because they are public enemies.
b. A wife has an insurable interest in the life of her creditor.
c. The insured shall have the right to change his beneficiary as a rule.
d. The interest of a beneficiary continues even if his negligence caused the
death of the insured.
38. 0o. 1 % When there is double insurance, there is always over insurance. 0o. % A
contract of suretyship can never be an insurance contract.
a. +oth are true.
b. +oth are false.
c. 0o. 1 is falseA 0o. is true.
d. 0o. 1 is trueA 0o. is false.
39. 4 deposited .// bags of cement in the warehouse of W. The latter issued a
negotiable warehouse receipt to 4. 'ive months after, D came to the warehouse to claim
the goods alleging that the cement deposited by 4 were merely stolen by the latter. At
the same time 4 arrived in the warehouse claiming the cement and presenting the
warehouse receipt. Confronted with conflicting claims of ownership, W should A
a. deliver the cement to D because he is the owner.
b. deliver the cement to 4 because he is the depositor.
c. deliver the cement to 4 because he is the holder of the warehouse receipt.
d. compel the claimants to interplead so the court could decide who has the
right to the goods.
40. I is a vegetable buyer. Be goes to +aguio City, buys vegetable in bul" and after filing
up his truc", he travels to 4ivisoria and sells all the contents of his truc".
a. I must prepare an affidavit listing his creditors, the amount of their credits
and their due dates.
b. I must notify his creditors before selling all the contents of the truc".
c. I does not have to perform any of the above acts if his business is not
registered.
d. I does not have to perform any of the above because his sale is in the
ordinary course of business.
41. : mortgaged his concrete house located in a rented lot to +. The deed of mortgage
which is embodied in a public instrument is denominated as a chattel mortgage.
a. The mortgage is totally void because the house is a real property.
b. The mortgage is binding even to third persons because it is in a public
instrument.
c. ,f the debt is not paid, + cannot foreclose the mortgage.
d. ,f the debt is not paid, + can foreclose the mortgage.
42. Which among the following is not a function of the +ang"o #entral ng Pilipinas?
a. As official depositary of the Philippine government.
b. As financial adviser of the Philippine government.
c. As fiscal agent of the Philippine government.
d. As the watchdog of government funds.
43. 0o. 1 F A ban" may be may lend to a single borrower more than fifteen >1.E? of the
ban";s unimpaired capital. 0o. F A deposit in a ban" in foreign currency may be
in-uired into provided the depositor gives his consent, orally or in writing.
a. +oth are false.
b. +oth are true.
c. 0o. 1 is trueA no. is false.
d. 0o. 1 is trueA no. is false.
44. ,t is a ban" which creates or accepts demand deposits sub!ect to withdrawal by
chec"s and primarily organi$ed to carry on the business of accepting drafts and issuing
letters of credit, discounting and negotiating promissory notes, receiving deposits, buying
and selling foreign e2change and gold and silver bullion and lending money against the
borrower;s security in property.
a. 6ural ban"A
b. Thrift ban"A
c. Jniversal ban"A
d. Commercial ban".
45. 0o. 1 % The Dmbudsman may in-uire into the ban" deposit of a public officer whose
case is pending criminal investigation in the Dmbudsman even if there is no actual case
filed in court. 0o. % A writ of garnishment directed to a ban" deposit is prohibited by
law.
a. +oth are false.
b. +oth are true.
c. 0o. 1 is falseA 0o. is true.
d. 0o. 1 is trueA 0o. is false
46. ( imports goods from 5apan through a letter of credit issued by 0ational +an". When
the goods arrived in :anila, ( had no money to pay for the balance of the importation.
Be therefore, e2ecuted a trust receipt agreement with the ban". ( got hold of the gods
and sold the same but failed to remit to the ban" the proceeds of the sale corresponding
to his balance.
a. ( is only civilly liable to the ban".
b. ( may be sued for theft by the ban"A
c. ( may be sued for estafa.
d. ( may be deprived of his import license .
47. The distribution of dividends from capital and the ac-uisition of corporate shares
without corporate unrestricted retained earnings is not allowed by law because of3
a. The trust fund doctrine.
b. The corporate opportunity theory.
c. The corporate entity doctrine.
d. 0one of the above.
48. 5ose and his wife, Perla, opened and maintained the following accounts with Allied
+an" 6ecto. >a? #avings deposit F P&//,///A >b? 4emand deposit F P1//,///A >c?
Time deposit % P&./,///. They also have the same deposits with the same
amount in Allied +an" :a"ati. ,f Allied ban" becomes insolvent the Philippine 4eposit
,nsurance Corporation will be bound to be liable to the spouses for its insurance
liability e-uivalent to
a. two deposits.
b. one deposit.
c. si2 deposits.
d. three deposits.
49. :endo$a claims P ./,///.// for the loss of both of his suitcases during his flight
from :anila to 4avao via Philippine Air Hines. Bowever, PAH is willing to pay only P
1,///.// on the ground that the airline tic"et stipulates that unless a higher value is
declared, any claim for loss cannot e2ceed P ,///.// for each baggage. :r.
:endo$a has not declared a greater value, despite the fact that the cler" had called
his attention to the stipulation in the tic"et. :r. :endo$a sues the airline company.
The refusal of the airline company to pay the claim is3
a. not valid as it is not in accordance with law.
b. not valid as it is contrary to public policy.
c. valid because :r. :endo$a did not pay any freight.
d. valid because no declaration had been made on the actual value of the
baggage and :r. :endo$a did not pay the corresponding freight charges.
50. A chec" upon which the holder;s signature must appear twice, one to be affi2ed by
him at the time it is issued and the second or counter%signature, to be affi2ed by him
before it is paid, otherwise it is incomplete, is called3
a. certified chec"
b. stale chec"
c. traveller;s chec"
d. answer not given
51. Dne of the following has no insurable interest in the life of Alberto3
a. his wife
b. his mother
c. his mistress
d. his daughter
52. An instrument is rendered non%negotiable ifA
a. there is an indication of a particular fund out of which reimbursement is to be
made.
b. there is an indication of a particular account to be debited with the amount.
c. the instrument is payable out of a particular fund.
d. answer not given.
53. When can a corporation deny pre%emptive right to stoc"holders?
a. Where a stoc"holder is delin-uent in the payment of unpaid balance of his
subscription.
b. Where the articles of incorporation so provides.
c. Where the shareholder does not pay fifty percent of the value of the shares to
be subscribed.
d. 0one of the above
54. The following shall produce the effect of payment of debts3
a. 4elivery of chec"
b. Tender of Central +an" notes
c. 4elivery of promissory note
d. answer not given
55. What are watered stoc"s?
a. #toc"s issued for a consideration less than P1/.
b. #toc"s issued for a consideration more than its par or issued value.
c. #toc"s issued for a consideration less than its par or issued value.
d. 0one of the above
56. When does a stoc" become delin-uent?
a. When no payment is made within fifteen >1.? days from the date as fi2ed in
the subscription contract or in the call made by the +oard of 4irectors.
b. When no payment is made within two >? months as fi2ed in the contract or
call.
c. When no payment is made within one >1? month from date as fi2ed in the
contract or call.
d. 0one of the above.
57. This is not negotiation of a negotiable instrument.
a. Assignment
b. 4elivery of a bearer instrument
c. ,ndorsement completed by delivery of an instrument payable to order
d. 4elivery of an instrument to the payee
58. Jltra vires acts are acts of a corporation which are3
a. @2ercised by the +oard of 4irectors but not ratified by the stoc"holders.
b. 0ot within the corporate powers conferred by the Code or articles of
incorporation.
c. 0ecessary and incidental to the e2ercise of the powers conferred upon the
corporation.
d. 0one of the above
59. Contracts for water transportation from foreign ports to Philippine ports are primarily
governed by3
a. The Civil Code of the Philippines
b. The Code of Commerce
c. #alvage Haw
d. Public #ervice Act
e. Carriage of Koods by #ea Act
60. Why is a de facto corporation not considered a de !ure corporation?
a. +ecause it failed to incorporate under e2isting statutory authority.
b. The corporation;s e2ercise of corporate powers is not recogni$ed by the
courts for reason of public policy.
c. ,ts corporate e2istence may be challenged in court by any ta2payer.
d. 0one of the above.
61. Which one of the following is not a characteristic of a voting trust agreement?
a. A voting trust is created for the purpose of conferring upon the trustee the
right to vote and other rights pertaining to the shares.
b. A voting trust is irrevocable during the time stipulated.
c. The stoc"holder remains the beneficial or e-uitable owner of the shares while
the trustee is the legal owner.
d. All voting trust agreements shall not e2ceed five >.? years.
62. As used in the Corporation Code, <outstanding capital stoc"= means3
a. The same as authori$ed capital stoc".
b. The same as subscribed capital stoc".
c. ,t represents the paid up capital stoc".
d. The total shares issued to subscribed or stoc" holders, whether or not, fully or
partially paid, as long as there is a binding subscription agreement, e2cept
treasury shares.
63. Which is not a conse-uence of the corporation;s separate personality?
a. The corporation has a nationality or citi$enship.
b. The corporation may sue but it cannot be sued.
c. The corporation may ac-uire and dispose of properties.
d. The corporation may enter into contracts with another corporation.
64. Jnder the provisions of the Carriage of Koods by #ea Act, claim has to be made for
the damage sustained by goods.
a. The claim should be made upon receipt when the damage or average could
be ascertained from the outside.
b. The claim should be made within twenty four >1? hours from receipt when
the damage or average could be ascertained from the outside.
c. The claim should be made within twenty four >1? hours from receipt when
the damage or average could be ascertained only upon opening the pac"age.
d. The claim should be made within three >&? days from receipt when the
damage or average could be ascertained from the outside.
65. A policy of insurance is contestable3
a. if it is a life insurance policy
b. within years from its inception or last reinstatement
c. on the ground of concealment or misrepresentation
d. if all the above is present
66. Which of the following conforms with the re-uirements of the Corporation Code?
a. @very incorporator must be residents of the Philippines, must be a natural
person and must own or subscribe to at least one share of stoc".
b. Corporators are those who compose a corporation and is a term which
includes stoc"holders, members and incorporators.
c. ,ncorporators are those who originally compose the corporation, whose
names are mentioned in the articles of incorporation ma!ority of whom have
signed the said articles.
d. An incorporator in a domestic corporation may be an alien and a non%
resident.
67. The pre%emptive right if not denied by the corporation generally e2tends to all issues
of shares in proportion to a stoc"holder;s shareholdings. @ven if not denied, the right
does not e2tend to certain specified issuances enumerated below. Which is the
e2ception?
a. #hares to be issued in compliance with laws re-uiring stoc" offerings to the
public.
b. #hares to be issued in good faith with the approval of the stoc"holders
representing C& of the outstanding capital stoc" in e2change for property
needed for corporate purposes.
c. #hares to be issued to incorporators.
d. #hares to be issued in payment of a previously contracted debt.
68. The ac-uisition of shares and the declaration of cash dividends re-uire that the
corporation has unrestricted retained earnings. The law also re-uires that shares
should not be issued below its par or issued value. These re-uirements is a
conse-uence of the.
a. The theory of separate personality.
b. The doctrine of limited capacity.
c. The trust fund doctrine.
d. The doctrine of general capacity.
69. The +oard of 4irectors alone may declare the following type of dividends, e"cept in
case ofA
a. cash dividends
b. property dividends
c. stoc" dividends
d. script dividends
70. The following are the corporate officers of a corporation, e"cept:
a. President
b. Iice%President
c. Treasurer
d. #ecretary
71. ,n the following cases, the Trust 'und 4octrine is violated, e"cept:
a. When the corporation allows the issuance of watered stoc"s.
b. When there is payment of dividends without unrestricted retained earnings.
c. When the corporation releases or condones payment of the unpaid
subscription.
d. 0one of the above.
72. Which of the following are prohibited considerations for the issuance of stoc"s?
a. goodwill
b. past services
c. accounts receivables
d. 0one of the above
73. The following are remedies available to a corporation to enforce payment of stoc"s
e2cept3
a. :andamus
b. @2tra%!udicial sale
c. Withholding of stoc" dividends
d. 4eduction from cash dividends
74. ,n the following instances, appraisal right may be e2ercised, e2cept3
a. ,nvestment of corporate funds in another business or purpose.
b. @2tension of term
c. Appointment of an e2ecutive committee.
d. 6eduction of term.
75. Which of the following cannot be a close corporation?
a. mining corporation
b. stoc" e2change
c. educational institution
d. All of the above
76. ,n the following instances, approval of the ma!ority of the board and concurrence of
the stoc"holders representing C& of the outstanding capital stoc" is necessary in the
e2ercise of the powers e2cept3
a. To deny pre%emptive right.
b. To adopt, amend or repeal the by%laws.
c. To increase or decrease capital stoc".
d. To declare stoc" dividends.
77. A person has an insurable interest on the life of his3
a. friend
b. grandfather
c. spouse
78. All provisions and stipulations in insurance contracts are prepared by the ,nsurer,
thus they are3
a. pro%forma contracts
b. contracts of adhesion
c. unilateral contracts
79. The cause or consideration in insurance contracts is3
a. the premium
b. the proceeds
c. gratuitous
80. Concealment in insurance is3
a. hiding the truth
b. failure to communicate
c. telling lies
81. The e2tent of insurable interest in non%life insurance depends on3
a. the desire of the assured
b. the value of the thing to be insured
c. unlimited
82. ,f a thing insured under a fire insurance policy is lost or destroyed by some other
means other than fire, the policy remains compensable.
a. if the loss or destruction was a conse-uence of the effort to save the
thing insured from being burnedA
b. if lost or destroyed because of volcanic lava
c. if lost or destroyed because of an earth-ua"e
83. ,nsurable interest on the thing insured and insurance interest on the policy in
property insurance or non%life insurance must be reposed on one and the same
person3
a. at the inception of the contract and at the time of the lossA
b. at the tine of the loss
c. at the inception of the contract of insurance.
84. A life insurance policy could no longer be -uestioned after two >? years that the
policy had been in force counted from3
a. the inception of the policy
b. the last reinstatement
c. at the inception of the policy or from its last reinstatement
85. To be compensable, the thing insured under a fire insurance policy must be lost or
destroyed3
a. by a hostile fire
b. by a friendly fire
c. by voluntary scorching
86. A public enemy who cannot be the ob!ect of a life insurance contract is one3
a. who is a fugitive and has a pri$e on his head
b. an American or Canadian
c. a citi$en of a country with whom the Philippines is at war.
87. ,t is a written statement by the master of vessel, attested by a proper !udicial officer
or a notary, to the effect that damage suffered by the ship or her voyage was caused
by storms or other perils of the sea, without any negligence or misconduct on his
part.
a. :aster;s Certificate
b. +ill of Hading
c. Affidavit of 4esistance
d. :aritime Protest
e. :aritime Complaint
88. This established rule provides that the liability of the ship owner or agent, arising
from the operation of a ship, is limited to the vessel, e-uipment and freight during the
voyage.
a. @rror in @2tremis 6ule
b. 4octrine of 4eclared Himitation in :aritime Haw
c. 6eal 0ature of :aritime Haw
d. 4octrine of Presumed 0egligence of Common Carriers
89. This doctrine is a recognition by the courts that the fiduciary standards could not be
upheld where the fiduciary is acting for two entities with competing interests. ,t rests
on fundamentally on the unfairness of a corporate officer or director ta"ing
advantage of a prospect for his own personal benefit when the interest of the
corporation !ustly needs protection.
a. Corporate @ntity 4octrine
b. Corporate ,nterest 4octrine
c. +usiness 5udgment 6ule
d. Corporate Dpportunity 4octrine.
90. ,t is a legal scheme whereby a debtor, who has sufficient assets but who may be
unable to meet his obligations as and when they fall due, may petition for more time
within which to settle such obligations.
a. ,nsolvency Proceedings
b. #uspension of Payments
c. Corporate 6ehabilitation
d. Ioluntary ,nsolvency
91. ,t is a business or service engaged in regularly supplying the public with some
commodity or service of public conse-uence such as electricity, gas, water,
transportation, telephone or telegraph service.
a. Public #ervice
b. Public Corporation
c. Public Jtility
d. Commodities Trader
92. As applied in Transportation Haws, which of the following is a not an element of a
fortuitous event?
a. The cause of the unforeseen and une2pected occurrence, or the failure
of the debtor to comply with his obligations, must be independent of human
willA
b. ,t must be impossible to foresee the event which constitutes the case
fortuito, or if it can be foreseen, it must be impossible to avoidA
c. The debtor was blameless
d. The occurrence must be such as to render it impossible for the debtor
to fulfill his obligation in a normal mannerA
e. The obligor must be free from any participation in the aggravation of
the in!ury resulting to the creditor.
93. ,t is the substitution of one person in the place of another with reference to lawful
claim or right, so that he who is substituted succeeds to the rights of the other in
relation to a debt or claim, including its remedies or securities.
a. Assignment of 6ights
b. #ubstitution of Creditors
c. #ubrogation
94. #amsung invented a cellular phone that can also play digital music or :P&s. ,t
applied for the issuance of letters patent.
a. The invention is not patentable because it is a combination of old
functions which does not produce a new result.
b. The invention is patentable because it is a new product which is
beneficial to the public.
c. The invention is not patentable because #amsung is a foreign
corporation and it should file its application in its home country.
d. The invention is patentable because it combines e2isting elements, a
cellular phone and a digital music player, and produces a new and useful
result, namely, the convenience of having two gadgets in one.
95. Huc"y :e registered its trademar", <Ang #arap Pancit Palabo"= with the ,ntellectual
Property Dffice. 0issin subse-uently introduced its new product, <Ang #arap Pinoy
6amen=. Huc"y :e sued for trademar" infringement.
a. 0issin is not guilty of trademar" infringement because the trademar"
<Ang #arap= is descriptive, hence not capable of e2clusive appropriation.
b. 0issin is not guilty of trademar" infringement because its product,
Pinoy 6amen, belongs to a different category from Huc"y :e;s product,
Pancit Palabo".
c. 0issin is guilty of trademar" infringement because it did not register its
trademar" <Ang #arap Pinoy 6amen=.
d. 0issin is guilty of trademar" infringement because the trademar" <Ang
#arap= is fanciful and arbitrary, hence capable of e2clusive appropriation.
96. Center +oo" #tore is the publisher of the boo" Hegal 5ournal. ,t donated one copy to
the Hibrary of the J.@. College of Haw. The Hibrary, in order to preserve the original
boo", reproduced one copy of the 5ournal for lending to the Jniversity;s students for
room use. ,s the J.@. Haw Hibrary liable for copyright infringement.
a. 0o. The reproduction is consistent with fair use.
b. )es. Dnly the 0ational Hibrary is allowed to reproduce boo"s and other
wor"s.
c. 0o. The copy of the 5ournal is mar"ed <'or 6oom Jse Dnly= and is
therefore not made available to the public outside of the Hibrary.
d. )es. The law only allows a library to photocopy a boo" if it is fragile or
rare.
97. The Credit 'oundation of the Philippines is a non%stoc" corporation, which handles
deposit of funds from its members and lends the same funds to the general public. ,t
is composed of at least 1// natural persons, each of whom has deposited some
amount of money into the 'oundation. ,t applied with the +ang"o #entral for authority
to organi$e itself into a ban". :ay the 'oundation be granted the said authority?
a. )es. ,t -ualifies as a ban" because its funds are obtained from more
than / persons.
b. )es. The +ang"o #entral has the full discretion and e2pertise to grant
authorities to register as ban"ing institution.
c. 0o. Dnly stoc" corporations can be organi$ed as a ban".
d. 0o. The word <Philippines= as part of a corporate name is reserved for
government owned or controlled corporations.
98. Allan purchased //. Civic I%tech from Bonda Cars :anila >BC:? for P9./,///,
payable in twenty%four >1? monthly installments. Allan e2ecuted a promissory note
and a chattel mortgage to secure payment thereof. Allan failed to pay four >1?
installments. Thereafter, Allan sold the car to :agtanggol, a purchaser in good faith
and for value. What would be the effect of the sale on the chattel mortgage contract?
a. The chattel mortgage is e2tinguished as :agtanggol is a purchaser
in good faith and for the value.
b. The chattel mortgage is not e2tinguished as it is an accessory
contract. Bence, BC: can still foreclose the same.
c. The chattel mortgage is e2tinguished because the #C: is stopped
in not foreclosing the mortgage after Allan is in default in two installments.
d. The chattel mortgage is not e2tinguished because the mortgagee;s
right to foreclose the same is in rem.
99. What is the so%called <Krandfather 6ule= under the Corporation Code?
a. ,t is a rule that determines the nationality of a corporation on the
basis of the place where the foreign corporation is incorporated or registered?
b. ,t is a rule that determines the nationality of a corporation on the
basis of the nationality of the ma!ority of the stoc"holders.
c. ,t is a rule that determines the nationality of the corporation on the
basis of the nationality of its officers and directors.
d. All of the above
e. 0one of the above
100. The following are the outstanding characteristics of an insurance contract @(C@PT3
a. ,t is an aleatory contract.
b. ,t is a contract of indemnity
c. ,t is a ris" distributing device
d. All of the above
e. 0one of the above
ANSWER KEY IN COMMERCIAL LAW
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