Suggested Answers To 2022 JOAP Commercial Law Mock Bar Examination

JURISTS BAR REVIEW CENTER™
JURISTS ONLINE ADVANCE PREBAR REVIEW
SUGGESTED ANSWERS TO THE

2022 COMMERCIAL LAW MOCK BAR EXAMINATION
1
Marikit Export Corp. (MEC), thru Rody, its president, negotiated with
Mahusay Motors Corp. (MMC) for the delivery of several vehicles imported from China
to be sold and distributed to various car dealers in Manila. MMC delivered the China-made
cars to MEC after the latter obtained a letter of credit and trust receipt issued by Magaling
Bank. The vehicles arrived at the Port of Manila, and Magaling Bank released them to the
custody of MEC as an entrustee under a trust receipt signed by MEC, through its
President. When MEC examined the imported China-made cars in its warehouse, it found
that they were not only of inferior quality but also did not fit the descriptions contained in
the bill of lading. MEC, upon the instance of Rody, refused to pay Magaling Bank the
amount owed under the trust receipt. Magaling Bank thereafter commenced a criminal suit
against MEC and its President for estafa, and sought the payment of the amount covered
in the trust receipt. The defense of Rody is that he cannot be held liable for a transaction
of the corporation, of which he only acted as an officer, and that it is MEC as the principal
that should be held liable under the trust receipt, which was entered into in the name of
MEC and pursuant to MEC's corporate purposes. He cited as his legal ground the
"Doctrine of Separate Juridical Personality."
a) Explain the "Doctrine of Separate Juridical Personality." (5%)

b) Is the Rody's contention meritorious? Why? (5%)
SUGGESTED ANSWER:
a) The "Doctrine of Separate Juridical Personality" is a doctrine that holds that a

corporation is vested by law with a personality separate and distinct from the people
comprising it. Thus, a corporate officer as a rule is not liable for the obligations of the
corporation, which is a separate entity.
b) No, the contention of Rody that he cannot be held liable under the “Doctrine of
Separate Juridical Personality” is not meritorious.
Under the Law on Corporations, a director is personally liable for his corporate
action when so provided by specific provision of law. [MAM Realty Development
Corporation v. NLRC, 314 Phil. 838 (1995)]
Here, Rody signed the Trust Receipt on behalf of MEC and there is a law, the Trust
Receipts Law, which specifically holds the representative of the corporation liable in case
of failure of the corporation to comply with the terms of the trust receipt agreement.
Hence, Rody’s contention that he cannot be held liable for a transaction of MEC is
wrong.
K opened a securities trading account with RCBC Securities Inc., a firm engaged
in securities brokerage. Later K discovered that X, an employee of RCBC Securities had
made unauthorized trades and diverted some of K’s securities to other accounts. K thus
Suggested Answers to 2022 JOAP Commercial Law Mock Bar Examination. © 2022 by Jurists Review
Center Inc. Copying, dissemination, storage, use, modification, uploading, and downloading without the
express written consent of Jurists Review Center Inc. is strictly prohibited and is subject to criminal
prosecution and administrative charges, including the appropriate complaint with the Bar Confidant’s Office
and IBP. Page 1 of 10
filed with the RTC of Makati a complaint against RCBC Securities wherein he prayed for
recovery of the money from unauthorized trades and the securities diverted to other
accounts. The case was raffled to Branch 63, a non-commercial court, which referred it
back to the Executive Judge because it was an “intra-corporate dispute.” Was the referral
proper?
SUGGESTED ANSWER:
No, the referral on the ground that the action was an “intra-corporate dispute” is not
proper.
In a case involving similar facts, the Supreme Court held that there is no intra-
corporate relation between K and RCBC Securities, since K is not a stockholder, director,
or officer of RCBC Securities. The parties' relationship is limited to that of an investor and
a securities broker and hence, no intra-corporate dispute between them will arise. [Ku v.
RCBC Securities Inc., 17 Oct 2018, Peralta, J.]
Professor Charles Queensfield lectures before lawyers in Mandatory Continuing

Legal Education (MCLE) seminars on the field of Banking Law & Practice. In the course
of his lectures, Prof. Queensfield gives hand-outs to the attendees on the contents of his
lectures. Prof. Queensfield cautions the attendees that the hand-outs he is giving are for
their exclusive use and should not be disseminated without his express written consent.
No copies of his handouts are registered and deposited with the National Library and the
Supreme Court library. However, one of the attendees, Atty. James Hurt, uploads without
Prof. Queensfield’s consent his handouts to the website, www.scribd.com, where they can
be viewed and downloaded by anyone who visits the website. What crimes if any did
Atty. James Hurt commit? Explain.
SUGGESTED ANSWER:
Atty. James Hurt committed the crimes of copyright infringement and online piracy.
Under the Intellectual Property Code, a person who publishes the work of an author
without his consent is liable for copyright infringement. Registration and deposit of the
work with the National Library is no longer required for the author to sue for infringement.
Here, Atty. Hurt published the work of Prof. Queensfield without his consent by
uploading it to a website where it became freely available to the public and Atty. Hurt’s
criminal intent is emphasized by the fact that he uploaded the material despite a warning.
Hence, Atty. James Hurt is liable for the crime of copyright infringement.
Atty. Hurt is also liable for the crime of online piracy.
Under the Electronic Commerce Act, online piracy is committed through the
unauthorized uploading of protected material or copyrighted work through the use of the
internet.
X applied for life insurance with Metropolitan Life Insurance Company. The
application contained this question: “Have you ever had any ailment or disease of the
stomach or intestines, liver, kidney or genitourinary organ?” X, a laundry woman who has
no medical knowledge answered “No.” The application was approved, premium was paid
and six months later, X died from stomach cancer. The post-mortem examination of X
shows that she had the cancer at the time she applied for a policy. Can the beneficiary of
X collect on the policy? Explain.
SUGGESTED ANSWER:
No, the beneficiary of X cannot collect on the policy.
The Supreme Court has held that concealment or misrepresentation, even if

unintentional, is a defense against an action to collect on an insurance policy.
Here, the fact that X had no knowledge of her cancer will not negate the defense
of concealment or misrepresentation as the same may be unintentional.
Hence, the insurer can raise the defense of concealment or misrepresentation and
the beneficiary thus cannot collect on the policy.
ALTERNATIVE ANSWER:
Yes, the beneficiary of X can collect on the policy.
The Supreme Court has held that if the insured dies within two years from the
issuance of the policy, the insurer should pay the proceeds of the policy to the beneficiary
regardless of whether there was concealment or misrepresentation on the part of the
insured.
Here, X died within six months from the issuance of the policy.
Hence, the insurer should still pay the proceeds of the policy to the beneficiary.
[Sun Life of Canada v. Sibya, 8 June 2016; Manila Bankers Life Ins. Corp. v. Aban, 715
Phil. 404 (2013)]
A student reproduces, without consent from the author, chapters 1-7 of a ten-
chapter law book for his personal study use. Did he infringe on the rights of the author?
SUGGESTED ANSWER:
Yes, the student infringed on the rights of the author.
Under the Law on Intellectual Property, there is infringement if the reproduction

diminishes the commercial value of the work
Here, reproduction of 7 chapters of a 10-chapter law book would diminish the

commercial value of the book because it is substantial.
Hence, the student infringed on the rights of the law book author.
On 3 May 2003, a life insurance policy was issued by the insurer to Brenda payable
upon her death. She designated her husband Joseph as her beneficiary. In the
application form for the life policy, there was a question whether Brenda had ever
consulted a psychiatrist. Brenda answered never although the truth was that she had
undergone psychiatric counseling for depression. On 10 May 2005, Brenda deliberately
jumped off the plane she was riding without a parachute and perished. Joseph filed a
claim on the policy. The insurer denied the claim on the ground that Brenda committed
suicide and on the ground that Brenda was guilty of fraudulent misrepresentation. Is the
insurer’s refusal to pay the proceeds of the policy justified?
SUGGESTED ANSWER:
No, the insurer’s refusal to pay the proceeds of the policy is not justified.
Under the Insurance Code, the insurer in life insurance shall be liable in case of
suicide when it is committed after the policy has been in force for a period of two years.
Also, once a policy payable upon the death of the insured has been in force for two years,
it may no longer be rescinded on the ground of fraudulent misrepresentation.
Here, the policy was in force for more than two years since it was issued on 3 May
2003.
Hence, the insurer can no longer raise as defenses to payment the grounds of
suicide and fraudulent misrepresentation.
Jurists Review Center Inc. owns and operates the Jurists Bar Review Center, a
review center which provides bar review lectures and coaching for those intending to take
the bar examination. Jurists Review Center Inc. applied with the Intellectual Property
Office for the registration as a trademark of “Jurists Bar Review Center.” The examiner
denied the trademark application on the ground that the word “Jurists” is a generic or
descriptive term. Was the denial of the trademark application proper? Explain.
SUGGESTED ANSWER:
No, the denial of the trademark application on the ground that “Jurists” is a generic
or descriptive term was not proper.
The Supreme Court has held that a generic term must be one which tells the buyer
what the product or service is and that a descriptive term must be one which is used to
describe the product or service adequately. Suggestive terms, which only give a hint as
to the nature of the product or service, are registrable.
Here, the word “Jurists” is not generic since it does not tell the buyer what Jurists’
product or service is nor is it descriptive of bar review services. At the most it only
suggests or gives a hint as to what Jurists offers.
Hence, it is registrable and thus the denial of the trademark application was not
proper.
Alex was an incorporator in Scriptoria Corporation (Scriptoria for brevity), a

corporation which Alex and his friends incorporated for the purpose of engaging in the
call-center business. Alex invested P10 million as paid-up capital in Scriptoria. After
incorporation, Scriptoria obtained a 10-year, P50 million peso loan from Citibank. As
security for the loan, Scriptoria executed a real estate mortgage in favor of Citibank over
its parcel of land in Dasmariñas, Cavite.
Scriptoria’s business did not prosper and it sustained heavy losses within 3 years
from its incorporation. Alex wants the corporation to return his P10 million investment.
The other stockholders have no objection to returning Alex’s investment to him. May the
corporation return Alex’s investment to him? Explain.
SUGGESTED ANSWER:
No, the corporation may not return Alex’s investment to him.
Under the trust fund doctrine, an incorporator’s capital investment may not be
returned if the rights of creditors would be impaired.
Here, Scriptoria has an outstanding 10-year P50 million loan from Citibank. The
return of P1 million capital investment to Alex would impair the right of Citibank as creditor
since it would reduce the net worth of Scriptoria and adversely affect its ability to pay off
its loan in violation of the trust fund doctrine.
Hence, the corporation may not return Alex’s investment to him.
Acme Corporation registered its mark “Hyena” for sports shoes and socks. It did
not use its mark for any of its products during the first 6 years after its registration.
a) Will Acme Corporation automatically lose its registration?

b) Can Acme Corporation retain protection over its mark?
SUGGESTED ANSWER:
a) Yes, Acme Corporation will automatically lose its registration.
Under the Law on Intellectual Property, failure on the part of registrant to file a
declaration of actual use and evidence to that effect within one year from the 5 th
anniversary of the date of registration will result in the automatic cancellation of the
registration.
b) Yes, Acme Corporation can retain protection over its mark.
Under the Law on Intellectual Property, the registrant who lost his registration may
still file a new application for the mark; provided that at the time of filing, there is no existing
registration or pending application for an identical or confusingly similar mark for the same
class of goods. Said new application, if it matures into a registration, will renew and retain
protection over the mark.
10
A petition for rehabilitation was filed by X Corporation on February 1, 2021. A

month thereafter, March 1, 2021, the court where the case was raffled issued a
Commencement Order containing a Stay Order. In the meantime, considering that the
commencement order had not yet been published, on February 15, 2021, Y Bank set-off
and applied the balance of the deposit of X Corporation in the said bank to the outstanding
loan of X Corporation. Is the set-off valid?
SUGGESTED ANSWER:
No, the set-off made by Y Bank is not valid.
The Supreme Court has held that a stay-order, which prohibits creditors from
collecting or enforcing their claims against the debtor, retroacts to the day of the filing of
the petition for rehabilitation and is effective even prior to publication of the
commencement order; any such act of collecting or enforcing the claim is not valid. (Alllied
Bank v. Equitable Bank, G.R. No. 191939, 14 March 2018).
Here, Y Bank’s act of setting off the deposit of X Corporation is an act of collecting
or enforcing its claim against X Corporation. The stay-order was in effect since it
retroacted to the day of the filing of the petition on February 1, 2021, notwithstanding that
it had not yet been published.
Hence, the set-off made by Y Bank is not valid.
11
Mr. O and his wife Mr. N were set to attend an international seminar in Paris,
France. Prior to the event, they planned to go on a cruise. They contacted X Travel
Agency to assist them in their travel preparations. X Travel Agency made arrangements
for their 18-day trip. However, the arrangements made by X Travel Agency were marred
by mistakes, an inadequate visa duration, and other issues. The spouses were beset by
problems all throughout their cruise which they had to cut short. Later, when they
returned to the Philippines, the spouses sued X Travel Agency for damages for breach of
contract of carriage. Will the action for breach of contract of carriage prosper?
SUGGESTED ANSWER:
No, the action for breach of contract of carriage will not prosper.
In a case involving similar facts, the Supreme Court held that a travel agency is not
engaged in a contract of carriage since it merely provides services which do not include
transportation of passengers or goods; thus, no contract of carriage which could be
breached arose. [Ona v. Northstar International Travel,. G.R. No. 209581. January 15,
2020]
12
Pacita and Jovita are co-authors and copyright owners of a certain workbook in
English. Felicidad, on the other hand, is the author of another published workbook in
English. In the course of revising their published works, Pacita and Jovita went around
various bookstores to check on other textbooks dealing with the same subject matter.
They discovered the book written by Felicidad. Upon perusal of said book they were
surprised to see that the book was strikingly similar to the contents, scheme of
presentation, illustrations and illustrative examples in their own book. Also, after an
itemized examination and comparison of their book and that of Felicidad, they found that
several pages of their book were copied by Felicidad. Thus, they filed a case for copyright
infringement.
Will a complaint for infringement of copyright prosper if only a portion and not the
entire copyrighted work were copied? Explain?
SUGGESTED ANSWER:
Yes, a complaint for infringement of copyright will prosper even if only a portion and
not the entire copyrighted work were copied.
The Supreme Court has held that it is not necessarily required that the entire
copyrighted work, or even a large portion of it, be copied. If so much is taken that the
value of the original work is substantially diminished, there is an infringement of copyright
and to an injurious extent, the work is appropriated.
Here, the act of lifting from the book of the copyright owner substantial portions of
discussions and examples, and the failure of Felicidad to acknowledge the same in her
book, would substantially diminish the value of Pacita and Jovita’s work.
Hence, the complaint for infringement of copyright will prosper.
13
Loreto obtained a life insurance policy and designated Eva and their three children
as beneficiaries. In his application, Loreto represented that Eva was his wife. When Loreto
died, his legitimate spouse Vicenta sought the disqualification of Eva as beneficiary and
the declaration of the three children-beneficiaries as inofficious since Loreto’s legitimate
family should not be deprived of their legitimes and their claims should be satisfied first
from the proceeds of the insurance policy. Vicenta theorized that the disqualification of
Eva as beneficiary due to adultery should entitle her and her children, as the legitimate
spouse and children of Loreto, to the proceeds of his life insurance policy.
Is the theory of Vicenta correct? Answer with legal reason.
SUGGESTED ANSWER:
No, Vicenta’s theory that Eva’s disqualification as beneficiary due to adultery should
entitle Victoria and her children to Eva’s share in the proceeds of the life insurance policy
is not correct.
Under Insurance Law, the proceeds of an insurance policy shall be applied

exclusively to the interest of the beneficiaries designated therein.
Here, the illegitimate children of the insured Loreto are exclusively entitled to the
proceeds of the life policy since they were the ones designated as beneficiaries. There is
no prohibition in naming the insured’s illegitimate children as his beneficiaries in a life
insurance policy. The fact that Eva is disqualified to be a beneficiary is of no moment since
her share in the proceeds would then devolve upon the illegitimate children as the
beneficiaries.
Hence, Vicenta’s theory is not correct. (Heirs of Loreto C. Maramag vs. Maramag,
588 SCRA 774).
14
Based on its discreet investigation, the Anti-Money Laundering Council (AMLC)

determined that there was probable cause to believe that the bank accounts of the Hala
Bara Corporation were being used to finance the activities of the CPP-NPA. On its own
initiative, the AMLC forthwith issued an ex parte order to freeze the bank accounts of Hala
Bara Corporation in Banco Grande. Was the issuance of the ex parte order to freeze
proper?
SUGGESTED ANSWER:
Yes, the AMLC’s issuance of the ex parte order to freeze was proper.
Under the Law on Money Laundering, the AMLC may upon its own initiative issue
an ex parte order to freeze without delay funds of any association, in relation to whom
there is probable cause to believe that it is committing financing of terrorism or acts of
terrorism. [RA 10168 (Terrorism Financing Prevention & Suppression Act)]
Here, there was probable cause to believe that Hala Bara’s bank accounts were
being used to finance the activities of the CPP-NPA, a terrorist organization.
Hence, the issuance by the AMLC of the ex parte freeze order was proper.
15
Upon learning that his nephew Lex Magtanggol had passed the 2018 bar exam,
Tito Magtanggol called up Lex through his iPhone and told him, “Because of the pride that
you have brought to our clan, I donate to you ₱500,000!” Lex texted back (also through
his iPhone), “Thanks, Uncle Tito! That’s so generous of you!” Tito texted back, “You’re
welcome Attorney!”
However, Tito died the next day, leaving behind an estate with an estimated value
of P500 million.
a) May Lex successfully file a money claim for the donation in the proceedings for
the settlement of Tito’s estate?
b) Assume that instead of calling up Lex, Tito had texted his message to Lex.
Would your answer be the same?
SUGGESTED ANSWER:
a) No, Lex may not successfully file a money claim for the donation in the
proceedings for the settlement of Tito’s estate.
Under the Civil Code provisions on Property, a donation of movable property with
a value exceeding ₱5,000 must be in writing, otherwise the donation would be void.
Here, the donation was not in writing but was made orally through a phone call.
The donation is thus void.
Hence, Lex may not successfully file a money claim for the donation.
b) Assuming that instead of calling, Tito had texted his message to Lex, my answer
would not be the same. In such a case, Lex may successfully file a money claim for the
donation.
Under the E-Commerce Act, where the law requires a document to be in writing,
that requirement is met by an electronic document. [Sec. 7(a) ECA]
Here, the donation and the acceptance were made by text messages, which are
electronic documents as they are produced, transmitted, and stored by electronic means.
Thus, the donation and acceptance are considered to be in writing and therefore valid.
Hence, Lex may successfully file a money claim for the donation.
16
Identify whether the following acts of the foreign corporation constitutes “doing
business” in the Philippines:
a) A foreign corporation engaged in ports operation which participated in a bidding
to operate the Subic Bay ports.
b) The corporation engaged in the manufacture and sale of electronic products

appointed a local electronics firm to be its local technical representative and to create a
service center for the former’s products sold locally and the latter was obliged to provide
the foreign corporation with a monthly report detailing the failure and repair of the products
and to requisition monthly the materials and components needed to replace stock
consumed.
c) Publication of a general advertisement through any print or broadcast media.
d) Hiring of an attorney-in-fact by a foreign corporation, which owns the copyright

to foreign films and exclusive distribution rights in the Philippines, to file criminal cases for
the protection of its property rights, wherein the contracts are consummated abroad.
SUGGESTED ANSWER:
a) The act of a foreign corporation engaged in ports operation which participated

in a bidding to operate the Subic Bay ports constitutes “doing business” in the Philippines.
In a case involving similar facts, the Supreme Court held that the act of such foreign
corporation, even though only one act, shows the intention of the foreign corporation to
engage in business in the Philippines. [Hutchison Ports Phils. Ltd. v. SBMA, 31 August
2000, Ynares-Santiago, J.]
b) The act of the corporation engaged in the manufacture and sale of electronic
products in so appointing a local electronics firm to be its local technical representative
and to create a service center for the former’s products sold locally is considered as “doing
business.”
In a case involving similar facts, the Supreme Court held that the highly restrictive
nature of the appointment of the local technical representative, who was obliged to provide
the foreign corporation with a monthly report detailing the failure and repair of the products
and to requisition monthly the materials and components needed to replace stock
consumed, showed that the local representative was a mere extension or instrument of
the foreign corporation which was actually the one engaged in business in the Philippines.
[Communications Materials & Designs v. CA, 22 August 1996, Torres, J.]
c) Publication of a general advertisement through any print or broadcast media by

a foreign corporation does not constitute “doing business” as specifically provided for
under the Law on Foreign Investments. [Sec. 1(f), Rule I of the IRR of the Foreign
Investments Act]
d) Such hiring of an attorney-in-fact by a foreign corporation, which owns the
copyright to foreign films and exclusive distribution rights in the Philippines, to file criminal
cases for the protection of its property rights, does not constitute “doing business.”
The Supreme Court has held that foreign corporation not doing business in the
Philippines may sue here to protect its intellectual property rights, including its copyright,
pursuant to the Philippines’ obligation under the Paris Convention as incorporated in the
Intellectual Property Code. [Sec. 3, Intellectual Property Code]
-oOo-

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JURISTS BAR REVIEW CENTER™

JURISTS ONLINE ADVANCE PREBAR REVIEW

SUGGESTED ANSWERS TO THE

a) Explain the "Doctrine of Separate Juridical Personality." (5%)

a) The "Doctrine of Separate Juridical Personality" is a doctrine that holds that a

Professor Charles Queensfield lectures before lawyers in Mandatory Continuing

Atty. Hurt is also liable for the crime of online piracy.

No, the beneficiary of X cannot collect on the policy.

The Supreme Court has held that concealment or misrepresentation, even if

Yes, the beneficiary of X can collect on the policy.

Yes, the student infringed on the rights of the author.

Under the Law on Intellectual Property, there is infringement if the reproduction

Here, reproduction of 7 chapters of a 10-chapter law book would diminish the

Alex was an incorporator in Scriptoria Corporation (Scriptoria for brevity), a

No, the corporation may not return Alex’s investment to him.

Hence, the corporation may not return Alex’s investment to him.

a) Will Acme Corporation automatically lose its registration?

a) Yes, Acme Corporation will automatically lose its registration.

b) Yes, Acme Corporation can retain protection over its mark.

A petition for rehabilitation was filed by X Corporation on February 1, 2021. A

No, the set-off made by Y Bank is not valid.

Hence, the set-off made by Y Bank is not valid.

Hence, the complaint for infringement of copyright will prosper.

Is the theory of Vicenta correct? Answer with legal reason.

Under Insurance Law, the proceeds of an insurance policy shall be applied

Based on its discreet investigation, the Anti-Money Laundering Council (AMLC)

b) The corporation engaged in the manufacture and sale of electronic products

c) Publication of a general advertisement through any print or broadcast media.

d) Hiring of an attorney-in-fact by a foreign corporation, which owns the copyright

a) The act of a foreign corporation engaged in ports operation which participated

c) Publication of a general advertisement through any print or broadcast media by

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