mercantile law mcq answers

8/18/2019 Mercantile Law Mcq Answers

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MERCANTILE

1. P rode a Sentinel Liner bus going to Baguio from Manila. At a stop-over in Tarlac, the busdriver, the conductor, and the passengers disembared for lunch. P decided, ho!ever, to remainin the bus, the door of !hich !as not loced. At this point, ", a vendor, sneaed into the bus ando#ered P some refreshments. $hen P rudel% declined, " attaced him, resulting in P su#eringfrom bruises and contusions. &oes he have cause to sue Sentinel Liner'

A.Yes, since the carrier’s crew did nothing to protect a passenger who remained in the bus during the stop-over.

B. (o, since the carrier)s cre! could not have foreseen the attac.

*. +es, since the bus is liable for an%thing that goes !rong in the course of a trip.&. (o, since the attac on P too place !hen the bus !as at a stop-over. . A cargo ship of Shipping, *o. ran aground o# the coast of *ebu during a storm and lost all itscargo amounting to Php/ Million. The ship itself su#ered damages estimated at Php0/ Million.

The cargo o!ners led a suit against Shipping but it invoed the doctrine of limited liabilit%since its vessel su#ered an Php0/ Million damage, more than the collective value of all lostcargo. 2s Shipping correct'A. +es, since under that doctrine, the value of the lost cargo and the damage to the ship can beset-o#.B. (o, since each cargo o!ner has a separate and individual claim for damages.*. +es, since the e3tent of the ship)s damage !as greater than that of the value of the lost cargo.D. No, since X Shipping neither incurred a total loss nor abandoned its ship.

4. A !rites a promissor% note in favor of his creditor, B. 2t sa%s5 6Sub7ect to m% option, 2 promiseto pa% B Php1 Million or his order or give Php1 Million !orth of cement or to authori8e him to sellm% house !orth Php1 Million. Signed, A.9 2s the note negotiable'

A. No, because the exercise o the option to pa! lies with A, the ma"er and debtor.

B. (o, because it authori8es the sale of collateral securities in case the note is not paid atmaturit%.*. +es, because the note is reall% pa%able to B or his order, the other provisions being merel%optional.&. +es, because an election to re:uire something to be done in lieu of pa%ment of mone% doesnot a#ect negotiabilit%.

;. AB* *orp. increased its capital stocs from Php1/ Million to Php1 Million and, in the process,issued 1,/// ne! shares divided into *ommon Shares 6B9 and *ommon Shares 6*.9 T, astocholder o!ning // shares, insists on bu%ing the ne!l% issued shares through a right of pre-emption. The compan% claims, ho!ever, that its B%-la!s den% T an% right of pre-emption. 2s thecorporation correct'

A.No,since the #!-$aws cannot den! a shareholder his right o pre-emption.

B. +es, but the denial of his pre-emptive right e3tends onl% to // shares.*. +es, since the denial of the right under the B%-la!s is binding on T.&. (o, since pre-emptive rights are governed b% the articles of incorporation. . M maes a promissor% note that states5 62, M, promise to pa% Php,///.// to B or bearer.

Signed, M.9 M negotiated the note b% deliver% to B, B to (, and ( to


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Tre Bus Liner for contractual breach but the latter argues that S has no cause of action based onsuch breach since the loss occurred !hile the goods a!aited transport. $ho is correct'A. The bus liner since the goods !ere not lost !hile being transported.#. S since the goods were unconditionall! placed with & or transportation.

*. S since the freightage for the goods had been paid.&. The bus liner since the loss !as due to a fortuitous event. >. *orp. operates a call center that received orders for pi88as on behalf of + *orp. !hichoperates a chain of pi88a restaurants. The t!o companies have the same set of corporate

o?cers. After %ears, *orp. dismissed its call agents for no apparent reason. The agents led acollective suit for illegal dismissal against both *orp. and + *orp. based on the doctrine ofpiercing the veil of corporate ction. The latter set up the defense that the agents are in theemplo% of *orp. !hich is a separate 7uridical entit%. 2s this defense appropriate'A. (o, since the doctrine !ould appl%, the t!o companies having the same set of corporateo?cers.B. (o, the real emplo%er is + *orp., the pi88a compan%, !ith *orp. serving as an arm forreceiving its outside orders for pi88as.'. Yes, it is not shown that one compan! completel! dominates the inances, policies, and business practices o the other.

&. +es, since the t!o companies perform t!o distinct businesses. 0. A negotiable instrument can be indorsed b% !a% of a restrictive indorsement, !hich prohibits

further negotiation and constitutes the indorsee as agent of the indorser. As agent, the indorseehas the right, among others, toA. demand pa%ment of the instrument onl%.B. notif% the dra!er of the pa%ment of the instrument.'. receive pa!ment o the instrument.

&. instruct that pa%ment be made to the dra!ee. @. nder the (egotiable 2nstruments La!, a signature b% procuration operates as a notice thatthe agent has but a limited authorit% to sign. Thus, a person !ho taes a bill that is dra!n,accepted, or indorsed b% procuration is dut%-bound to in(uire into the e3tent of the agent)sauthorit% b%5A. e3amining the agent)s special po!er of attorne%.

#. examining the bill to determine the extent o such authorit!.*. asing the agent about the e3tent of such authorit%.&. asing the principal about the e3tent of such authorit%. 1/. nder the (egotiable 2nstruments La!, if the holder has a lien on the instrument !hich ariseseither from a contract or b% implication of la!, he !ould be a holder for value to the e3tent of A. his successor)s interest.B. his predecessor)s interest.'. the lien in his avor.

&. the amount indicated on the instrument)s face. 11. The liabilit% of a common carrier for the goods it transports begins from the time of

A. conditional receipt.B. constructive receipt.*. actual receipt.D. either actual or constructive receipt.

1.


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B. unenforceable.'. void.

&. voidable. 14. e3ecuted a promissor% note !ith a face value of Php/,///.//, pa%able to the order of +. +indorsed the note to E, to !hom + o!ed Php4/,///.//. 2f has no defense at all against +, forho! much ma% E collect from 'A. Php/,///.//, as he is a holder for value to the e3tent of the di#erence bet!een +)s debt andthe value of the note.

B. Php4/,///.//, as he is a holder for value to the e3tent of his lien.'. )hp*+,+++.++, but with the obligation to hold )hp+,+++.++ or Y’s beneit.

&. (one, as E)s remed% is to run after his debtor, +. 1;. nder the Anti-Mone% Laundering La!, a covered institution is re:uired to maintain a s%stemof verif%ing the true identit% of their clients as !ell as persons purporting to act on behalf of A. those doing business !ith such clients.B. unno!n principals.*. the covered institution.D. such clients.

1. 2t is settled that neither par value nor boo value is an accurate indicator of the fair value of

a share of stoc of a corporation. As to unpaid subscriptions to its shares of stoc, as the% areregarded as corporate assets, the% should be included in theA. capital value.#. boo" value.

*. par value.&. maret value. 1=. P sold to M 1/ grams of shabu !orth Php,///.//. As he had no mone% at the time of thesale, M !rote a promissor% note promising to pa% P or his order Php,///. P then indorsed thenote to F!ho did not no! about the shabuG, and to +. nable to collect from P, + then sued on the note. set up the defense of illegalit% of consideration. 2s he correct'A. (o, since , being a subse:uent indorser, !arrants that the note is valid and subsisting.

#. No, since X, a general indorser, warrants that the note is valid and subsisting.*. +es, since a void contract does not give rise to an% right.&. +es, since the note !as born of an illegal consideration !hich is a real defense. 1>. 2n a contract of carriage, the common carrier is liable for the in7ur% or death of a passengerresulting from its emplo%ee)s fault although the latter acted be%ond the scope of his authorit%.

This is based on the A. rule that the carrier has an implied dut! to transport the passenger sael!.

B. rule that the carrier has an e3press dut% to transport the passenger safel%*. &octrine of espondeat Superior.&. rule in culpa a:uiliana.

10. A holder in due course holds the instrument free from an% defect of title of prior parties andfree from defenses available to prior parties among themselves. An e3ample of such a defense isH

A. raud in inducement.

B. duress amounting to forger%.*. fraud in esse contractus.&. alteration. 1@. 2n elections for the Board of Trustees of non-stoc corporations, members ma% cast as man%votes as there are trustees to be elected but ma% not cast more than one vote for one candidate.

This is true H


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A. unless set aside b% the members in plenar% session.B. in ever% case even if the Board of Trustees resolves other!ise.'. unless otherwise provided in the Articles o ncorporation or in the #!-laws.

&. in ever% case even if the ma7orit% of the members decide other!ise during the elections. /. The rule is that the valuation of the shares of a stocholder !ho e3ercises his appraisalrights is determined as of the da% prior to the date on !hich the vote !as taen. This is true H

A. regardless o an! depreciation or appreciation in the share’s air value.

B. regardless of an% appreciation in the share)s fair value.

*. regardless of an% depreciation in the share)s fair value.&. onl% if there is no appreciation or depreciation in the share)s fair value. 1. T Shipping, *o. insured all of its vessels !ith 2nsurance, *o. The insurance policies statedthat the insurer shall ans!er for all damages due to perils of the sea.


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=. An insured, !ho gains no!ledge of a material fact alread% after the e#ectivit% of theinsurance polic%, is not obliged to divulge it. The reason for this is that the test of concealment ofmaterial fact is determinedA. at the time of the issuance of the polic%.B. at an% time before the pa%ment of premium.*. at the time of the pa%ment of the premium.D. at an! time beore the polic! becomes eective.

>. T, the captain of M" &on Alan, !hile asleep in his cabin, dreamt of an 2ntensit% 0 earth:uaealong the path of his ship.


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'. un(ualiied ree disposal o his car.

&. registered the car in his name. 44. B borro!ed Php1 million from L and o#ered to him his BM$ car !orth Php1 Million ascollateral. B then e3ecuted a promissor% note that reads5 62, B, promise to pa% L or bearer theamount of Php1 Million and to eep m% BM$ car Floan collateralG free from an% otherencumbrance. Signed, B.9 2s this note negotiable'A. +es, since it is pa%able to bearer.B. +es, since it contains an unconditional promise to pa% a sum certain in mone%.

*. (o, since the promise to 7ust pa% a sum of mone% is unclear.D. No, since it contains a promise to do an act in addition to the pa!ment o mone!.

4;. A ban can be placed under receivership !hen, if allo!ed to continue in business, itsdepositors or creditors !ould incur

A. probable losses

B. inevitable losses*. possible losses&. a slight chance of losses4. CIJ Ioundation, 2nc., a non-prot organi8ation, scheduled an election for its si3-memberBoard of Trustees. , + and E, !ho are minorit% members of the foundation, !ish to e3ercisecumulative voting in order to protect their interest, although the Ioundation)s Articles and B%-

la!s are silent on the matter. As to each of the three, !hat is the ma3imum number of votes thatheKshe can cast'

A.2

B. @*. 1&. 44=. 2f the dra!er and the dra!ee are the same person, the holder ma% present the instrument forpa%ment !ithout need of a previous presentment for acceptance. 2n such a case, the holdertreats it as aA. non-negotiable instrument.#. promissor! note.

*. letter of credit.

&. chec. 4>. & dra!s a bill of e3change that states5 6


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sale of the goods or return the ones unsold despite demand, he !as charged in court for estafa. C moved to dismiss on the ground that his liabilit% is onl% civil. 2s he correct'A. (o, since he committed fraud !hen he promised to pa% for the goods and did not.#. No, since his breach o the trust receipt agreement sub3ects him to both civil and criminal liabilit! or estaa.

*. +es, since C cannot be charged !ith estafa over goods covered a trust receipt.&. +es, since it !as merel% a consignment sale and the bu%er could not pa%. ;/. The authori8ed alteration of a !arehouse receipt !hich does not change its tenor renders the!arehouseman liable according to the terms of the receipt

A. in its original tenor if the alteration is material.#. in its original tenor.

*. as altered if there is fraud.&. as altered. ;1. An% agreement binding upon the holder to e3tend the time of pa%ment or to postpone theholder)s right to enforce the instrument results in the discharge of the part% secondaril% liableunless made !ith the latter)s consent. This agreement refers to one !hich the holder made !iththe

A. principal debtor.

B. principal creditor.*. secondar% creditor.

&. secondar% debtor. ;. pon e3ecution of a trust receipt over goods, the part% !ho is obliged to release such goodsand !ho retains securit% interest on those goods, is called theA. holder.B. shipper.*. entrustee.D. entrustor.

;4. , !arehouseman, sent a te3t message to +, to !hom had issued a !arehouse receipt for

+)s // sacs of corn, notif%ing him of the due date and time to settle the storage fees. Themessage stated also that if + does not settle the !arehouse charges !ithin 1/ da%s, he !ill

advertise the goods for sale at a public auction. $hen + ignored the demand, sold 1// sacsof corn at a public auction. Ior )s failure to compl% !ith the statutor% re:uirement of !rittennotice to satisf% his lien, the sale of the 1// sacs of corn isA. voidable.B. rescissible.*. unenforceable.D. void.

;;.


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A. No, since b! accepting, 1 admits the existence o the drawer.

B. (o, since b% accepting, C !arrants that he is solvent.*. +es, if C !as not a!are of that fact at the time of acceptance.&. +es, since a bill of e3change !ith a ctitious dra!er is void and ine3istent. ;=. &ue to his debt to *, & !rote a promissor% note !hich is pa%able to the order of *. *)sbrother, M, misrepresenting himself as agent of *, obtained the note from &. M then negotiatedthe note to ( after forging the signature of *. Ma% ( enforce the note against &'A. +es, since & is the principal debtor.#. No, since the signature o ' was orged.*. (o, since it is * !ho can enforce it, the note being pa%able to the order of *.&. +es, since &, as maer, is primaril% liable on the note. ;>. T *orp. has a corporate term of / %ears under its Articles of 2ncorporation or from Dune 1,1@0/ to Dune 1, ///.


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*. Php1 Million since he !arrants his solvenc% and that he has a good title to the note.D. )hp4 5illion since he warrants that the note is genuine and in all respects what it purports to be.

1. *orp., !hose business purpose is to manufacture and sell vehicles, invested its funds in +*orp., an investment rm, through a resolution of its Board of &irectors. The investment gre!tremendousl% on account of + *orp.)s e3cellent business 7udgment. But a minorit% stocholder in *orp. assails the investment as ultra vires. 2s he right and, if so, !hat is the status of theinvestment'A. +es, it is an ultra vires act of the corporation itself but voidable onl%, sub7ect to stocholders)

ratication.B. +es, it is an ultra vires act of its Board of &irectors and thus void.'. Yes, it is an ultra vires act o its #oard o Directors but voidable onl!, sub3ect to stoc"holders’ ratiication.

&. +es, it is an ultra vires act of the corporation itself and, conse:uentl%, void. . (otice of dishonor is not re:uired to be made in all cases.


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&. +es, since +)s article failed to mae an% attribution to . >. 2n case of disagreement bet!een the corporation and a !ithdra!ing stocholder !hoe3ercises his appraisal right regarding the fair value of his shares, a three-member group shall b%ma7orit% vote resolve the issue !ith nalit%. Ma% the !ife of the !ithdra!ing stocholder benamed to the three- member group'

A. No, the wie o the withdrawing shareholder is not a disinterested person.

B. +es, since she could best protect her husband)s shareholdings.*. +es, since the rules do not discriminate against !ives.

&. (o, since the stocholder himself should sit in the three-member group. 0. Apart from economic rights, the author of a cop%right also has moral rights !hich he ma%transfer b% !a% of assignment. The term of these moral rights shall last

A. during the author’s lietime and or *+ !ears ater his death.

B. forever.*. / %ears from the time the author created his !or.&. during the author)s lifetime. @. $hich of the follo!ing indorsers e3pressl% !arrants in negotiating an instrument that 1G it isgenuine and trueO G he has a good title to itO 4G all prior parties have capacit% to negotiateO and;G it is valid and subsisting at the time of his indorsement'

A. The irregular indorser.B. The regular indorser.'. &he general indorser.

&. The :ualied indorser. =/. $here the insurer !as made to pa% the insured for a loss covered b% the insurancecontract, such insurer can run after the third person !ho caused the loss through subrogation.$hat is the basis for conferring the right of subrogation to the insurer'A. Their e3press stipulation in the contract of insurance.#. &he e(uitable assignment that results rom the insurer’s pa!ment o the insured.

*. The insured)s formal assignment of his right to indemnication to the insurer.&. The insured)s endorsement of its claim to the insurer.

=1. invented a device !hich, through the use of noise, can recharge a cellphone batter%. eapplied for and !as granted a patent on his device, e#ective !ithin the Philippines. As it turnsout, a %ear before the grant of )s patent, +, also an inventor, invented a similar device !hich heused in his cellphone business in Manila. But les an in7unctive suit against + to stop himfrom using the device on the ground of patent infringement. $ill the suit prosper'A. (o, since the correct remed% for is a civil action for damages.#. No, since Y is a prior user in good aith.

*. +es, since is the rst to register his device for patent registration.&. +es, since + un!ittingl% used )s patented invention. =. P, a sales girl in a o!er shop at the A%ala Station of the Metro ail Transit FMTG bought t!o

toens or ticets, one for her ride to !or and another for her ride home. She got to her o!ershop !here she usuall% !ored from 0 a.m. to p.m. At about 4 p.m., !hile P !as attending toher duties at the o!er shop, t!o cre!s of the MT got into a ght near the o!er shop, causingin7uries to P in the process. *an P sue the MT for contractual breach as she !as !ithin the MTpremises !here she !ould shortl% tae her ride home'A. (o, since the incident too place, not in an MT train coach, but at the MT station.#. No, since ) had no intention to board an 57& train coach when the incident occured.

*. +es, since she alread% had a ticet for her ride home and !as in the MTs premises at the timeof the incident.&. +es, since she bought a round trip ticet and MT had a dut% !hile she !as at its station toeep her safe for her return trip.


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=4. Iorger% of bills of e3change ma% be subdivided into, aG forger% of an indorsement on the billand bG forger% of the dra!er)s signature, !hich ma% either be !ith acceptance b% the dra!ee, orA. !ith acceptance but the bill is paid b% the dra!ee.B. !ithout acceptance but the bill is paid b% the dra!er.'. without acceptance but the bill is paid b! the drawee.

&. !ith acceptance but the bill is paid b% the dra!er. =;. 2f an insurance polic% prohibits additional insurance on the propert% insured !ithout the

insurer)s consent, such provision being valid and reasonable, a violation b% the insuredA. reduces the value of the polic%.#. avoids the polic!.

*. o#sets the value of the polic% !ith the additional insurances)s value.&. forfeits premiums alread% paid. =. found a chec on the street, dra!n b% + against AB* Ban, !ith E as pa%ee. forged E)ssignature as an indorser, then indorsed it personall% and delivered it to &CI Ban. The latter, inturn, indorsed it to AB* Ban !hich charged it to the +)s account. + later sued AB* Ban but itset up the forger% as its defense. $ill it prosper'A. (o, since the pa%ee)s signature has been forged.B. (o, since +)s remed% is to run after the forger, .

*. +es, since forger% is onl% a personal defense.D. Yes, since A#' #an" is bound to "now the signature o Y, its client.

==. The rule is that no stoc dividend shall be issued !ithout the approval of stocholdersrepresenting at least K4 of the outstanding capital stoc at a regular or special meeting calledfor the purpose. As to other forms of dividends5A. a mere ma7orit% of the entire Board of &irectors applies.#. a mere ma3orit! o the (uorum o the #oard o Directors applies.

*. a mere ma7orit% of the votes of stocholders representing the outstanding capital stocapplies.&. the same rule of K4 votes applies.

=>. , at +)s re:uest, e3ecuted a eal Cstate Mortgage FCMG on his F)sG land to secure +)s loanfrom E. E successfull% foreclosed the CM !hen + defaulted on the loan but half of +)s obligationremained unpaid. Ma% E sue to enforce his right to the decienc%'A. +es, but solidaril% !ith +.B. +es, since )s is deemed to !arrant that his land !ould cover the !hole obligation.*. (o, since it is the bu%er at the auction sale !ho should ans!er for the decienc%.D. No, because X is not ’s debtor.

=0. Ma% a publicl% listed universal ban o!n 1//N of the voting stocs in another universal banand in a commercial ban'A. +es, if !ith the permission of the Bango Sentral ng Pilipinas.B. (o, since it has no po!er to invest in e:uities.

*. +es, as there is no prohibition on it.D. No, since under the law, the 4++6 ownership on voting stoc"s must be in either ban" onl!.

=@. Perils of the ship, under marine insurance la!, refer to loss !hich in the ordinar% course ofevents results from

A. natural and inevitable actions o the sea.

B. natural and ordinar% actions of the sea.*. unnatural and inevitable actions of the sea.&. unnatural and ordinar% actions of the sea.


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>/. nder the 2ntellectual Propert% *ode, lectures, sermons, addresses or dissertations preparedfor oral deliver%, !hether or not reduced in !riting or other material forms, are regarded asA. non-original !ors.#. original wor"s.

*. derivative !ors.&. not sub7ect to protection. >1. *an a dra!ee !ho accepts a materiall% altered chec recover from the holder and thedra!er'

A. No, he cannot recover rom either o them.B. +es from both of them.*. +es but onl% from the dra!er.&. +es but onl% from the holder. >. The rule is that the intentional cancellation of a person secondaril% liable results in thedischarge of the latter. $ith respect to an indorser, the holder)s right to cancel his signature is5A. !ithout limitation.B. not limited to the case !here the indorsement is necessar% to his title.'. limited to the case where the indorsement is not necessar! to his title.

&. limited to the case !here the indorsement is necessar% to his title.

>4. , in the hospital for idne% d%sfunction, !as about to be discharged !hen he met his friend +. told + the reason for his hospitali8ation. A month later, applied for an insurance coveringserious illnesses from AB* 2nsurance, *o., !here + !as !oring as *orporate Secretar%. Since had alread% told + about his hospitali8ation, he no longer ans!ered a :uestion regarding it in theapplication form. $ould this constitute concealment'

A. Yes, since the previous hospitali8ation would inluence the insurer in deciding whether to grant X’s application.

B. (o, since + ma% be regarded as AB*)s agent and he alread% ne! of )s previoushospitali8ation.*. +es, it !ould constitute concealment that amounts to misrepresentation on )s part.&. (o, since the previous illness is not a material fact to the insurance coverage. >;. Several American doctors !anted to set up a group clinic in the Philippines so the% could

render modern medical services. 2f the clinic is to be incorporated under our la!s, !hat is there:uired foreign e:uit% participation in such a corporation'A. ;/N#. +6

*. =/N&. >/N >. e3ecuted a promissor% note in favor of + b% !a% of accommodation. 2t sa%s5 6Pa% to + ororder the amount of Php/,///.//. Signed, .9 + then indorsed the note to E, and E to T. $hen Tsought collection from +, the latter countered as indorser that there should have been apresentment rst to the maer !ho dishonors it. 2s + correct'

A. No, since Y is the real debtor and thus, there is no need or presentment or pa!ment and dishonor b! the ma"er.

B. +es, since as an indorser !ho is secondaril% liable, there must rst be presentment forpa%ment and dishonor b% the maer.*. (o, since the absolute rule is that there is no need for presentment for pa%ment and dishonorto hold an indorser liable.&. +es, since the secondar% liabilit% of + and E !ould onl% arise after presentment for pa%mentand dishonor b% the maer. >=. The Board of &irectors of +E *orp. unanimousl% passed a esolution approving the taing of steps that in realit% amounted to !illful ta3 evasion.


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invoed the defense that the% have no personal liabilit%, being mere directors of a ctional being.Are the% correct'A. (o, since as a rule onl% natural persons lie the members of the board of directors can commitcorporate crimes.B. +es, since it is the corporation that did not pa% the ta3 and it has a personalit% distinct from itsdirectors.*. +es, since the directors o?ciall% and collectivel% performed acts that are imputable onl% to thecorporation.D. No, since the law ma"es directors o the corporation solidaril! liable or gross negligence and bad aith in the discharge

o their duties. >>. T is the registered trademar o!ner of 6*@. T delivers t!o refrigerators to the !arehouse of $ !ho then issues a negotiable receiptundertaing the deliver% of the refrigerators to 6T or bearer.9 T entrusted the receipt to B forsafeeeping onl%. B negotiated it, ho!ever, to I !ho bought it in good faith and for value. $ho isentitled to the deliver% of the refrigerators'

A. T, since he is the real o!ner of the refrigerators.#. /, since he is a purchaser in good aith and or value.

*. B, since T entrusted the receipt to him.&. $, since he has as a !arehouseman a lien on the goods. 0/. The Articles of 2ncorporation must be accompanied b% a Treasurer)s A?davit certif%ing underoath, among others, that the total subscription paid is5A. not less than P,///.//.B. not more than P,///.//.'. not less than )*,+++.++.

&. not more than P,///.//.

01. 2n a special meeting called for the purpose, K4 of the stocholders representing theoutstanding capital stoc in . *o. authori8ed the compan%)s Board of &irectors to amend its B%-la!s. B% ma7orit% vote, the Board then approved the amendment. 2s this amendment valid'

A. No since the stoc"holders cannot delegate their right to amend the #!-laws to the #oard.

B. +es since the ma7orit% votes in the Board !as su?cient to amend the B%-la!s.*. (o, because the voting in the Board should have been b% ma7orit% of a :uorum.&. +es since the votes of K4 of the stocholders and ma7orit% of the Board !ere secured. 0. A group of Mala%sians !anted to invest in the Philippines) insurance business. Afternegotiations, the% agreed to organi8e 6I2MA 2nsurance *orp.9 !ith a group of Iilipinobusinessmen. I2MA !ould have a PhP/ Million paid up capital, PhP;/ Million of !hich !ould


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come from the Iilipino group. All corporate o?cers !ould be Iilipinos and 0 out of its 1/-memberBoard of &irectors !ould be Iilipinos. *an I2MA operate an insurance business in the Philippines'

A. No, since an insurance compan! must have at least )h)9* 5illion paid-up capital.

B. +es, since there is substantial compliance !ith our nationali8ation la!s respecting paid-upcapital and Iilipino dominated Board of &irectors.*. +es, since I2MA)s paid up capital more than meets the countr%)s nationali8ation la!s.&. (o, since an insurance compan% should be 1//N o!ned b% Iilipinos. 04. nder the Public Service Act, an administrative agenc% has the po!er to approve

provisionall% the rates of public utilities !ithout a hearing in case of urgent public needs. Thee3ercise of this po!er isA. supervisor%.B. absolute.'. discretionar!.

&. mandator%. 0;. , creditor of +, obtained a 7udgment in his favor in connection !ith +)s unpaid loan to him.

The court)s sheri# then levied on the goods that + stored in T)s !arehouse, for !hich the latterissued a !arehouse receipt. A month before the lev%, ho!ever, E bought the !arehouse receiptfor value. $ho has a better right over the goods'A. T, being the !arehouseman !ith a lien on the goods#. , being a purchaser or value o the warehouse receipt*. , being +)s 7udgment creditor&. +, being the o!ner of the goods 0. A promissor% note states, on its face5 62, , promise to pa% + the amount of Php ,///.// veda%s after completion of the on-going construction of m% house. Signed, .9 2s the notenegotiable'A. +es, since it is pa%able at a 3ed period after the occurrence of a specied event.#. No, since it is pa!able at a ixed period ater the occurrence o an event which ma! not happen.

*. +es, since it is pa%able at a 3ed period or determinable future time.&. (o, since it should be pa%able at a 3ed period before the occurrence of a specied event.

0=. P sold to M a pair of geco FtuoG for Php/,///.//. M then issued a promissor% note to Ppromising to pa% the mone% !ithin @/ da%s. nno!n to P and M, a la! !as passed a monthbefore the sale that prohibits and declares void an% agreement to sell geco in the countr%. 2f ac:uired the note in good faith and for value, ma% he enforce pa%ment on it'

A. No, since the law declared void the contract on which the promissor! note was ounded.

B. (o, since it !as not !ho bought the geco.*. +es, since he is a holder in due course of a note !hich is distinct from the sale of geco.&. +es, since he is a holder in due course and P and M !ere not a!are of the la! that prohibitedthe sale of geco. 0>. P authori8ed A to sign a bill of e3change in his FP)sG name. The bill reads5 6Pa% to B or orderthe sum of Php1 million. Signed, A Ffor and in behalf of PG.9 The bill !as dra!n on P. B indorsed

the bill to *, * to &, and & to C. Ma% C treat the bill as a promissor% note'A. (o, because the instrument is pa%able to order and has been indorsed several times.#. Yes, because the drawer and drawee are one and the same person.

*. (o, because the instrument is a bill of e3change.&. +es, because A !as onl% an agent of P. 00. E !rote out an instrument that states5 6Pa% to the amount of Php1 Million for collectiononl%. Signed, E.9 indorsed it to his creditor, +, to !hom he o!ed Php1 million. + no! !ants tocollect and satisf% )s debt through the Php1 million on the chec. Ma% he validl% do so'A. +es, since the indorsement to + is for Php1 Million.B. (o, since E is not a part% to the loan bet!een and +.


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'. No, since X is merel! an agent o , his onl! right being to collect.

&. +es, since o!ed + Php1 Million. 0@. Shipping, *o., insured its vessel M" &on Teodoro for Php1// Million !ith AB* 2nsurance,*o. through T, an agent of Shipping. &uring a vo%age, the vessel accidentall% caught re andsu#ered damages estimated at Php0/ Million. T personall% informed AB* 2nsurance that Shipping !as abandoning the ship.Later, AB* insurance denied Shipping)s claim for loss on the ground that a notice ofabandonment through its agent !as improper. 2s AB* 2nsurance right'

A. +es, since Shipping should have ratied its agent)s action.#. No, since &, as agent o X Shipping who procured the insurance, can also give notice o abandonment or his principal.

*. +es, since onl% the agent of Shipping rela%ed the fact of abandonment.&. (o, since in the rst place, the damage !as more than Q of the ship)s value. @/. A la! !as passed dis:ualif%ing former members of *ongress from sitting in the Board of&irectors of government-o!ned or controlled corporations. Because of this, the Board of&irectors of AB* *orp., a government-o!ned and controlled corporation, dis:ualied *, a former*ongressman, from continuing to sit as one of its members. * ob7ected, ho!ever, insisting thatunder the *orporation *ode members of the board of directors of corporations ma% onl% beremoved b% vote of stocholders holding K4 of its outstanding capital stoc in a regular orspecial meeting called for that purpose. 2s * correct'

A. +es, since the ne! la! cannot be applied to members of the board of directors alread% electedprior to its passage.#. No, since the dis(ualiication ta"es eect b! operation o law, it is suicient that he was declared no longer a membero the board.

*. +es, since the provisions of the *orporation *ode applies as !ell to government-o!ned andcontrolled corporations.&. (o, since the board has the po!er to oust him even !ithout the ne! la!. @1. J, a grocer% goods supplier, sold 1// sacs of rice to !ho promised to pa% once he hassold all the rice. meantime delivered the goods to $, a !arehouseman, !ho issued a!arehouse receipt. $ithout the no!ledge of J and $, negotiated the receipt to P !hoac:uired it in good faith and for value. P then claimed the goods from $, !ho released them.

After the rice !as loaded on a ship bound for Manila, J invoes his right to stop the goods intransit due to his unpaid lien. $ho has a better right to the rice'

A. ), since he has superior rights as a purchaser or value and in good aith.

B. P, regardless of !hether or not he is a purchaser for value and in good faith.*. J, since as an unpaid seller, he has the right of stoppage in transitu.&. $, since it appears that the !arehouse charges have not been paid. @. 2n a signature b% procuration, the principal is bound onl% in case the agent acted !ithin theactual limits of his authorit%. The signature of the agent in such a case operates as notice that hehasA. a :ualied authorit% to sign.#. a limited authorit! to sign.

*. a special authorit% to sign.&. full authorit% to sign. @4. 2n return for the / %ears of faithful service of as a househelper to +, the latter promised topa% Php1//,///.// to )s heirs if he FG dies in an accident b% re. agreed. 2s this an insurancecontract'A. +es, since all the elements of an insurance contract are present.B. +es, since ) services ma% be regarded as the consideration.'. No, since Y actuall! made a conditional donation in X’s avor.

&. (o, since it is in fact an innominate contract bet!een and +.


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@;. A bill of e3change states on its face5 6//,///.//G. Signed, 9. $hat amount should be construed as true in such acase'

A. )hp9++,+++.++.

B. Php>//.//.*. Php>,///.//.&. Php>//,1//.//. @>. Shipo!ner , in appl%ing for a marine insurance polic% from AB*, *o., stated that his vesselusuall% sails middle of August and !ith normall% 1// tons of cargo. 2t turned out later that thevessel departed on the rst !ee of September and !ith onl% 1/ tons of cargo. $ill this avoid thepolic% that !as issued'A. +es, because there !as breach of implied !arrant%.B. (o, because there !as no intent to breach an implied !arrant%.*. +es, because it relates to a material representation.D. No, because there was onl! representation o intention.

@0. The Articles of 2ncorporation of AB* Transport *o., a public utilit%, provides for ten F1/Gmembers in its Board of &irectors. $hat is the prescribed minimum number of Iilipino citi8ens inits Board'A. 1/#. 2

*. >&. @@. P authori8ed A to sign a negotiable instrument in his FP)sG name. 2t reads5 6Pa% to B or orderthe sum of Php1 million. Signed, A Ffor and in behalf of PG.9 The instrument sho!s that it !asdra!n on P. B then indorsed to *, * to &, and & to C. C then treated it as a bill of e3change. 2s

presentment for acceptance necessar% in this case' A. No, since the drawer and drawee are the same person.

B. (o, since the bill is non-negotiable, the dra!er and dra!ee being the same person.*. +es, since the bill is pa%able to order, presentment is re:uired for acceptance.&. +es, in order to hold all persons liable on the bill. 1//. The corporate term of a stoc corporation is that !hich is stated in its Articles of2ncorporation. 2t ma% be e3tended or shortened b% an amendment of the Articles !hen approvedb% ma7orit% of its Board of &irectors and5A. approved and ratied b% at least K4 of all stocholders.B. approved b% at least K4 of the stocholders representing the outstanding capital stoc.


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*. ratied b% at least K4 of all stocholders.D. ratiied b! at least :; o the stoc"holders representing the outstanding capital stoc"

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