2013 COMMERCIAL LAW EXAM MCQs

1. Claude, the registered stocholder o! 1000 shares i" A#C Cor$.,

$ledged the shares to Co"rad %& e"dorse'e"t i" %la" o! the co(eri"g
stoc certi)cates a"d, e*ecutio" o! a +eed o! Assig"'e"t o! ,hares o!
,toc, i"te"ded as collateral !or a loa" o! -h$1.0 Millio" that .as also
su$$orted %& a se$arate $ro'issor& "ote.
/A.0 1"der these !acts, is there a (alid $ledge o! the shares o! stoc to
Co"rad2 /130
A. No, because shares of stock are intangible personal properties whose
possession cannot be delivered and, hence, cannot be the subject of a pledge.
B. No, because the pledge of shares of stock requires double registration with
the Register of Deeds of the principal place of business of the corporation and
of the residence of the pledgor.
C. es, because endorse!ent and deliver" of the certi#cates of stock is
equivalent to the transfer of possession of the covered shares to the pledgee.
D. es, because the e$ecution of the Deed of Assign!ent of %hares of %tock is
equivalent to a lawful pledge of the shares of stock.
/#.0A!ter Claude de!aulted o" the loa", Co"rad sought to ha(e the shares
registered i" his "a'e i" the %oos o! the cor$oratio". I! &ou are the
Cor$orate ,ecretar& o! A#C Cor$oratio", .ould &ou register the shares
i" the "a'e o! Co"rad .ithout a"& .ritte" i"structio" !ro' Claude2
/130
A. es, since the endorse!ent and deliver" of the certi#cates of stock e$ecuted
b" Claude constitute the legal authorit" to cancel the shares in his na!e and
to place the! in Conrad&s na!e.
B. es, since the e$ecution of the Deed of Assign!ent b" Claude would
constitute the legal authorit" to cancel the shares in his na!e and place the!
in Conrad&s na!e.
C. No, because corporate o'cers can onl" take direct instructions fro! the
registered owners on the proper disposition of shares registered in their
na!es.
D. No, because the corporation has a pri!ar" lien on the shares covering the
unpaid subscription.
2. A !oreig" delegatio" o! %usi"ess'e" a"d i"(est'e"t %a"ers called o"
&our la. )r' to discuss the $ossi%ilities o! i"(esti"g i" (arious $ro4ects
i" the -hili$$i"es, a"d .a"ted &our thoughts o" certai" issues
regardi"g !oreig" i"(est'e"ts i" the -hili$$i"es.
/A.0 5he delegatio" has %ee" told a%out the 6oreig" I"(est'e"ts Act o!
1771, as a'e"ded /6IA 8710, a"d the& ased .hat e*actl& is the la.8s
esse"tial thrust regardi"g !oreig" i"(est'e"ts i" -hili$$i"e %usi"ess
a"d i"dustries.
9ou re$lied that 6IA 871 esse"tiall& re:ects ;;;;;;;;; /130
A. the ()ilipino )irst *olic"+
B. the ()oreign ,nvest!ents *ositive -ists+ concept
C. the ()oreign ,nvest!ents Negative -ists+ concept
D. the (Control .est+ concept
/. All of the above.
/#.0 5he delegatio" ased< aside !ro' 6ili$i"o citi=e"s, .hat e"tities
.ould !all u"der the de)"itio" o! >-hili$$i"e ?atio"al8 u"der 6IA 8712
9ou re$lied that the de)"itio" o! >-hili$$i"e "atio"al8 u"der 6IA 871 co(ers
;;;;;;;;;;;;./130
A. do!estic partnerships wholl" co!posed of )ilipino citi0ens
B. do!estic corporations 123 of whose capital stock, outstanding and entitled to
vote, are owned and held b" )ilipino citi0ens
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C. foreign corporations considered as doing business in the *hilippines under the
Corporation Code, 5223 of whose capital stock, outstanding and entitled to
vote, are wholl"7owned b" )ilipino citi0ens
D. All of the above, because the law considers the juridical personalit", whether
do!estic or foreign, as a !ere !ediu!8 the test of nationalit" is on the
individuals who control the !ediu!
/. None of the above, because the ter! *hilippine national can onl" cover
individuals and not juridical entities.
/C.0 5he delegatio" heard that !oreig"ers ca" i"(est u$ to 1003 o! the
eAuit& i" >e*$ort orie"ted e"ter$risesB a"d &ou .ere ased e*actl& .hat
the ter' co(ers.
9ou re$lied that a" >e*$ort orie"ted e"ter$riseB, u"der 6IA 871, is a"
e"ter$rise that ;;;;;;;;;;. /130
A. onl" engages in the e$port of goods and services, and does not sell goods or
services to the do!estic !arket
B. e$ports consistentl" at least 923 of its goods or services, and sells at least
123 of the rest to the do!estic !arket
C. e$ports consistentl" at least 123 of the goods or services produced, and sells
at least 923 of the rest to the do!estic !arket
D. e$ports consistentl" at least 123 of its goods or services produced, and can
sell goods or services to the do!estic !arket
/. None of the above.
/+.0 As a last Auestio" a"d %& .a& o! a co"crete e*a'$le, a delegatio"
'e'%er )"all& i"Auired C .hich o! the !ollo.i"g cor$oratio"s or
%usi"esses i" the -hili$$i"es 'a& it i"(est i" a"d u$ to .hat e*te"t2 /130
A. A lifest"le !aga0ine publication corporation, up to 923 equit"
B. An advertising corporation, up to 5223 equit"
C. A co!!ercial bank, up to 123 equit"
D. A jeepne" !anufacturing corporation, up to 5223 equit"
/. A real estate develop!ent corporation, up to 123 equit"
3. +e""is su%scri%ed to 10,000 shares o! X9D Cor$oratio" .ith a $ar (alue
o! -100 $er share. Eo.e(er, he $aid o"l& 2F3 o! the su%scri$tio" or
-h$2F0,000.00. ?o call has %ee" 'ade o" the u"$aid su%scri$tio".
Eo. 'a"& shares is +e""is e"titled to (ote at the a""ual 'eeti"g o! the
stocholders o! X9D2 /130
A. 52,222 shares
B. 4,:22 shares
C. 522 shares
D. 2 shares
/. None of the above.
G. A#C Cor$. issued redee'a%le shares. 1"der the ter's o! the issua"ce,
the shares shall %e redee'ed at the e"d o! 10 &ears !ro' date o!
issua"ce, at $ar (alue $lus a $re'iu' o! 103.
Choose the correct state'e"t relati"g to these redee'a%le shares. /130
A. ABC Corp. would need unrestricted retained earnings to be able to redee! the
shares.
B. Corporations are not allowed to issue redee!able shares8 thus, the .issuance
b" ABC Corp. is ultra vires.
C. ;olders of redee!able shares enjo" a preference over creditors.
D. ABC Corp. !a" redee! the shares at the end of 52 "ears without need for
unrestricted retained earnings provided that, after the rede!ption, there are
su'cient assets to cover its debts.
/. All of the above are incorrect.
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F. Ar"old, re$rese"ti"g hi'sel! as a" age"t o! #ria" !or the sale o! #ria"8s
car, a$$roached +e""is .ho a$$eared i"terested i" %u&i"g the car. At
Ar"old8s $roddi"g, +e""is issued a crossed chec $a&a%le to #ria" !or
-2F,000.00 o" the u"dersta"di"g that the chec .ould o"l& %e sho." to
#ria" as e(ide"ce o! +e""is8 good !aith a"d i"terest i" %u&i"g the car.
I"stead, Ar"old used the chec to $a& !or the 'edical e*$e"ses o! his .i!e
i" #ria"8s cli"ic a!ter #ria", a doctor, treated her.
Is #ria" a holder i" due course /EI+C02 /130
A. es, Brian is a ;,DC because he was the pa"ee of the check and he received it
for services rendered.
B. es, Brian is a ;,DC because he did not need to go behind the check that was
pa"able to hi!.
C. No, Brian is not a ;,DC because Dennis issued the check onl" as evidence of
good faith and interest in bu"ing the car.
D. No, Brian is not a ;,DC because Brian should have been placed on notice< the
check was crossed in his favor and Arnold was not the drawer.
/. No, Brian is not a ;,DC because the requisite consideration to Dennis was not
present.
@. Ha.se"gsit Cor$. is a cor$oratio" i"cor$orated i" ,i"ga$ore. It i"(ested
i" #u'%le%ee Cor$., a -hili$$i"e cor$oratio", %& acAuiri"g 303 o! its
shares. As a result, Ha.se"gsit Cor$. "o'i"ated 303 o! the directors o!
#u'%le%ee Cor$., all o! .ho' are ,i"ga$orea"s a"d oIcers o! Ha.se"gsit
Cor$.
Choose the correct state'e"t relati"g to Ha.se"gsit Cor$. /130
A. =awsengsit Corp. is doing business in the *hilippines and requires a license
fro! the %ecurities and /$change Co!!ission >%/C?.
B. =awsengsit Corp. is not doing business in the *hilippines b" its !ere
invest!ent in a *hilippine corporation and does not need a license fro! the
%/C.
C. =awsengsit Corp. has to appoint a resident agent in the *hilippines.
D. =awsengsit Corp. cannot elect directors in Bu!blebee Corp.
/. All the above choices are incorrect.
J. 5he #IR assessed A#C Cor$. !or de)cie"c& i"co'e ta* !or ta*a%le &ear
2010 i" the a'ou"t o! -h$2@,J31,20K.00, i"clusi(e o! surcharge a"d
$e"alties.
5he #IR ca" ;;;;;;;;;;; /130
A. run after the directors and o'cers of ABC Corp. to collect the de#cienc" ta$
and their liabilit" will be solidar"
B. run after the stockholders of ABC Corp. and their liabilit" will be joint
C. run after the stockholders of ABC Corp. and their liabilit" will be solidar"
D. run after the unpaid subscriptions still due to ABC Corp., if an"
/. None of the above choices is correct.
K. A"to" i'$orted $er!u'es !ro' 5ai.a" a"d these .ere released to hi'
%& the %a" u"der a trust recei$t. While the $er!u'es .ere i" A"to"8s
.arehouse, thie(es %roe i" a"d stole all o! the'.
Who .ill shoulder the loss o! the stole" $er!u'es2 /130
A. .he loss of the perfu!es will be borne b" the bank in whose behalf the
perfu!es were held in trust.
B. Anton will bear the loss.
C. .he e$porter can hold both the bank and Anton liable for the loss.
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D. .he e$porter fro! who! Anton bought the perfu!es will bear the loss.
/. No one bears the loss for an unforeseen event.
7. A %a" 'a& acAuire real $ro$ert& ;;;;;;;;;;; /130
A. b" purchase at a public sale of properties levied to satisf" ta$ delinquencies
B. b" purchase fro! a real estate corporation in the ordinar" course of the
bank&s business
C. through dacion en pago in satisfaction of a debt in favor of the bank
D. in e$change for the purchase of shares of stocks of the bank
/. All of the above.
). None of the above.
10. 1"der the A"tiLMo"e& Lau"deri"g Act, a de$ositor8s %a" accou"t 'a&
%e !ro=e". /130
A. b" the bank when the account is the subject of a suspicious or covered
transaction report
B. b" the Anti76one" -aundering Council >A6-C? when the account belongs to a
person alread" convicted of !one" laundering
C. b" the Regional .rial Court, upon ex parte !otion b" the A6-C, in a cri!inal
prosecution for !one" laundering pending before it
D. b" the Court of Appeals motu proprio in an appeal fro! a judg!ent of
conviction of a cri!inal charge for !one" laundering
/. ,n none of the above.
11. 1""o." to the other !our $ro$o"e"ts, E"rico /.ho had %ee" gi(e"
the tas o! atte"di"g to the Articles o! I"cor$oratio" o! the $ro$osed
cor$oratio", Auto Mo, Ayos Ko0 'isa$$ro$riated the )li"g !ees a"d "e(er
)led the Articles o! I"cor$oratio" .ith the ,ecurities a"d E*cha"ge
Co''issio" /,EC0. I"stead, he $re$ared a"d $rese"ted to the $ro$osed
i"cor$orators a !alsi)ed ,EC certi)cate a$$ro(i"g the Articles. Rel&i"g o"
the !alsi)ed ,EC certi)cate, the latter %ega" assu'i"g a"d dischargi"g
cor$orate $o.ers.
Auto Mo, Ayos Ko is a ;;;;;;;;;;; /130
A. de jure corporation
B. de facto corporation
C. corporation b" estoppel
D. general partnership
/. None of the above.
12. -re!erred shares ca""ot (ote o" the $ro$osal ;;;;;;;;;;;;;./130
A. to include other corporate o'cers in the corporation&s b"7laws
B. to issue corporate bonds
C. to shorten the corporate ter!
D. All of the above.
/. None of the above.
13. I" 2010, the -hili$$i"e ?atio"al -olice declared Madda!& #e"4ela"i
>-u%lic E"e'& ?o. 1 %ecause o! his terrorist acti(ities i" the cou"tr& that
ha(e resulted i" the death o! thousa"ds o! 6ili$i"os. A ra"so' o! -I,
'illio" .as $laced o" Madda!& #e"4ela"i8s head.
Worried a%out the !uture o! their !a'il&, Madda!& #e"4ela"i8s estra"ged
.i!e, Aurelia, secured i" +ece'%er 2010 a li!e i"sura"ce $olic& o" his li!e
a"d desig"ated hersel! as the %e"e)ciar&.
Is the $olic& (alid a"d %i"di"g2 /130
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A. es, the polic" is valid and binding because Aurelia has an insurable interest
on the life of @addaf" Benjelani.
B. No, the polic" is not valid and binding because @addaf" Benjelani has been
o'ciall" declared a public ene!".
C. es, the polic" is valid and binding because it has been in force for !ore than
two "ears.
D. No, the polic" is not valid and binding since the spouses& estrange!ent
re!oved Aurelia&s insurable interest in Benjelani&s life.
/. None of the above.
1G. Mue%les Classico, I"c. /MC0, a Ma"ilaL%ased !ur"iture sho$, $urchased
hard.ood lu'%er !ro' ,urigao 5i'%er, I"c. /,5I0, a Mi"da"aoL%ased
loggi"g co'$a"&. MC .as to $a& ,5I the a'ou"t o! -h$F.0 'illio" !or F0
to"s o! lu'%er. 5o $a& ,5I, MC o$e"ed a letter o! credit .ith #a"co de
-lata /#+-0. #+- dul& i"!or'ed ,5I o! the o$e"i"g o! a letter o! credit i"
its !a(or.
I" the 'ea"ti'e, MC C .hich had %ee" u"dergoi"g )"a"cial re(erses C
)led a $etitio" !or cor$orate reha%ilitatio". 5he reha%ilitatio" court
issued a ,ta& Order to sta& the e"!orce'e"t o! all clai's agai"st MC.
A!ter shi$$i"g the lu'%er, ,5N .e"t to #+-, $rese"ted the shi$$i"g
docu'e"ts, a"d de'a"ded $a&'e"t o! the letter o! credit o$e"ed i" its
!a(or. MC, o" the other ha"d, i"!or'ed the %a" o! the ,ta& Order a"d
i"structed it to de"& $a&'e"t to ,5I %ecause o! the ,ta& Order.
#+- co'es to &ou !or ad(ice. 9our %est ad(ice is to ;;;;;;;;;;;;;; /130
A. grant %.,&s clai!. Ander the (,ndependence *rinciple,+ the bank deals onl"
with the docu!ents and not the underl"ing circu!stances8 hence, the
presentation of the letter of credit is su'cient.
B. den" %.,&s clai!. .he %ta" Brder covers all clai!s against the debtor and
binds all its creditors. .he letter of credit is a clai! against the debtor that is
covered b" the %ta" Brder.
C. grant %.,&s clai!. .he letter of credit is not a clai! against the debt or under
rehabilitation, but against the bank which has assu!ed a solidar" obligation.
D. den" %.,&s clai!. ,f the bank disregards the %ta" Brder, it !a" be subject to
conte!pt b" the rehabilitation court. %., should #le its clai! with the
rehabilitation court.
/. #le an action for interpleader to resolve the parties& co!peting clai!s.
1F. Airo o! 5o&o, Na$a" se"t (arious goods to his !rie"d Nua" i" Ce%u
Cit&, -hili$$i"es, through o"e o! the (essels o! Worth.ell ,hi$$ers, I"c.,
a" A'erica" cor$oratio". E" route to Ce%u Cit&, the (essel had t.o sto$s,
)rst i" Eo"g Mo"g, a"d seco"d, i" Ma"ila.
/A.0 While tra(elli"g !ro' 5o&o to Eo"g Mo"g, the goods .ere da'aged.
What la. .ill go(er"2 /130
A. Capanese law
B. ;ong @ong law
C. Chinese law
D. *hilippine law
/. A!erican law
/#.0 Assu'i"g -hili$$i"e la. to %e a$$lica%le a"d Nua" !ails to )le a clai'
.ith the carrier, 'a& he still co''e"ce a" actio" to reco(er da'ages .ith
the court2 /130
A. No, the failure to #le a clai! with the carrier is a condition precedent for
recover".
B. es, provided he #les the co!plaint within 52 "ears fro! deliver".
C. es, provided he #les the co!plaint within 52 "ears fro! discover" of the
da!age.
D. es, provided he #les the co!plaint within 5 "ear fro! deliver".
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/. es, provided he #les the co!plaint within 5 "ear fro! discover" of the
da!age.
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