MCQ on Commercial law of _____________________ 1.

The insurance contract between the insurance and the insured is base on their relationship of : a. uberrimae fides b. mutual trust c. good faith d. cestui qui trust 2. It is an entity created by operation of law or by agreement of the individual parties : a. corporation b. partnership c. joint venture d. sole proprietorship 3. Masagana Corporation purchased a piece of land for its building site. The money used in buying the said property came from the subscriptions of the stockholders. Hence, who owns the same ? a. corporation b. stockholders c. directors d. members 4. The fund paid by the stockholders was used by the corporation as dividend to make it appear that the corporation is financially stable in order to attract more investors. This process is known as : a. violation of the trust fund doctrine b. window dressing c. kitting d. ulta vires act 5. The stockholders is invoking their rights to subscribed to the newly issued shares of stocks : a. preemptive right b. right of first refusal c. appraisal rights d. derivative right .6. The management is asking who is entitled to the dividend between the pledgor and the pledgee as against the original stockholder on record. a. pledgor b. pledge c. original stockholder d. stockholder on record 7. Corporation is an artificial being created by __________________________, having the ___________________________. 8. 5 people of different nationalities is asking your opinion whether they could organized a corporation in the Philippines ? a. yes. provided they comply the requirements of capitalization; b. yes. provided they are not prohibited under the law; c. yes. provided they engaged in business not exclusively devoted for Filipinos; d. yes. provided they complied all the above requirements. 8.1 If ever their corporation is approved by the SEC, what would be the nationality of their corporation ? a. Filipino corporation b. foreign corporation c. mixed nationality d. stateless 8.2 What would be the basis of drawing a conclusion that that is its nationality ? a. situs rule b. domicilliary theory c. lex re sitae d. creating law 9. To evade from such liabilities, Don Pepot organized a corporation where he, wife, son, labandera and driver were made as the incorporators. He owns 99% of the said corporation. does it follow that the corporation and Don Pepot are one and the same person ? a. yes. because the ownership of the corporation belongs to Don Pepot; b. yes. Don Pepot is considered the owner of the corporation; c. no. the corporation has a separate personality from Don Pepot; d. no. the corporation is a juridical person while Don Pepot is a natural person;

9.1 As creditors, what is the remedy in order to collect the liabilities of Don Pepot where all his properties were transferred to the corporation ? a. file a collection case against Don Pepot b. file a petition before the SEC to pierce the veil of corporate entity of the corporation c. send a demand letter d. foreclose the properties of the corporation. 10. Marina Fishing Corporation licensed to engage in fishing purchased a helicopter to track down its vessels in the ocean. Whether the such act of buying a helicopter is within its corporate power ? a. yes. it is an equipment for the business; b. yes. helicopter is a part of the operation; c. no and constitute as an ultra-vires act of the corporation; d. no and unnecessary. 10.1 On the other hand, the corporation is asking whether it is within its proper to engage in bakery ? a. constitute as ultra-vires; c. proper. It is incidental to its operation; b. constitute as illegal; d. proper. Provided it is licensed. 11. A director is asking whether a corporation may be criminally liable ? a. no. only natural person can be held criminally; b. no. the criminal liability is imposable against its officer; c. yes. when the criminal liability is in form of fine; d. yes. when the criminal liability is punishable by fine. 11.1 In what possible crime a corporation is itself criminally liable ? a. violation of BP 22; b. violation of anti-money laundering act; c. violation of the dangerous drugs d. violation of bank secrecy law 12. Johnny announced to the public that X corporation was tikasan. Hence, the corporation filed a libel case against Johnny. The court is asking whether the corporation is entitled to moral damages ? a. the corporation is entitled to moral damages for besmirched reputation; b. the corporation is entitled to moral damages for wounded feeling; c. the corporation is not entitle to moral damages because a juridical person has no feeling d. the corporation is entitled to actual damages in lieu of moral damages 13. Susan was operated by Dr. NO, a physician-consultant of Caretaker Hospital. Unfortunately, the operating gauze was left inside the stomach of Susan which caused her death. Hence, the heirs consulted you as to whom they could demand damages. a. Dr. No. b. Caretaker Hospital c. Dr. No and Caretaker Hospital d. none of them 13.1 What would be the basis of your conclusion that DR. NO is liable ? a. el que de la cause es causa del mal causado; c. torts b. medical malpractice; d. medical negligence 13. 2 If you consider that the hospital is liable, what would be your basis ? a. respondeat superior b. command responsibility c. master-servant rule d. no liability 14. Due to personal quarrel between director Juan and director Max, Director Juan campaigned for the non re-election of Max as director. Hence, Max was not re-elected. If Max would complain for his non-reelection before the RTC as a corporate controversy. Would the RTC have jurisdiction over the case ?

a. yes. the RTC was granted jurisdiction over corporate controversy which was originally belongs to the SEC; b. yes. the RTC exercise jurisdiction over corporate controversy per mandate of the Revised Security Code; c. yes. due to transferred jurisdiction from SEC; d. yes. due to transferred of authority from the SEC. 15. Maligaya Corporation has 5 directors. Before the end of their term, 2 of them resigned. The remaining members of the board of directors is asking how would the vacancy be filled-up ? a. by general stockholders meeting b. by special stockholders meeting c. by appointment made by the remaining 3 directors d. just wait until the next election of the directors 15.1. On the other hand, the 2 directors resigned due to failure of the corporation to call for election. They have been acting directors in a hold-over capacity. How would the vacancy be filled up ? a. by general stockholders meeting b. by special stockholders meeting c. by appointment made by the remaining 3 directors d. just wait until the next election of the directors 15.2. During the vacancy, may the remaining 3 directors validly transact business ? a. yes. due to the rule of majority; b. yes. in the absence of any restriction in it by-laws, the majority rule in deciding transactions is observed. c. No. due to absence of the other 2 directors vote ; d. No. all the 5 must be present; 16. 17. whenever a stockholder wanted to surrender his certificate of stock, the right involved is : a. pre-emptive right b. appraisal right c. subscription right d. demand right Hagibis Bus Line corporation was owned by 60% Filipinos and 40% foreigner headed by Marc Dean. Later, in order to control the operation, Marc Dean organized the Stone Cold Investment Corporation which was duly registered before the SEC and purchased of the 60% Filipino ownership. Would you consider the act of acquiring of the 60% Filipino ownership proper ? a. proper. The buyer is a filipino corporation b. proper. The acquisition is valid; c. improper. Such acquisition is considered as an act of grandfather rule which is prohibited d. improper. It is one way of circumventing the law Each of the Directors has obtained a behest loan from the corporation which is almost ten years now. May a non-voting shareholder, Max, files a collection case against the debtors-directors. If so, what particular action may be instituted ? a. No. The aggrieved party is the corporation b. No. being not the real party in interest c. Yes. under the so-called derivative suit d. Yes. as a representative suit;

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18.1 Unfortunately, The court is asking you what should be done to the case because of the death of Max ? a. dismiss the case due to the death of Max;

b. proceed with the case and have Max be substituted; c. dismiss the case for absence of the complainant d. proceed with the case, the real party in interest is the corporation ; 19. After serving his life imprisonment sentence, he won the lotto jackpot prize worth P30M and used the money in subscribing the shares of stock of Ajax corporation where he became the major stockholder. On the regular stockholders meeting, he was elected as a director. However, the losing rivals questioned his election before the SEC on the ground that he is a former convict. Decide . a. he should be disqualified from the position. A person convicted of a crime punished by more than 6 years imprisonment is disqualified to be an officer of the corporation; b. he should be disqualified for being non-knowledgeable about the operation of a corporation; c. he should be allowed to hold on to his position because it is a right of any stockholder to vote and be voted; d. he should be allowed to be a director by virtue of his election. The stockholders had already spoken their choice. The by-laws is the contract between the corporation and the stockholders and stockholders among themselves. When the terms provided by the by-laws contradict BP 68 which should prevail ? a. The by-laws. being approved by the SEC, it becomes the governing law between them; b. The by-laws, being a personal contract between the parties; c. BP 68 prevails, parties may stipulates provided it is not contrary to law d. BP 68 prevails. BP 68 is the creating and governing law of the corporation . Go Taw purchased a substantial number of shares of stock of Masarap Restaurant Inc., specializing GOTO. After knowing the secret of cooking GOTO he decided to established his own GOTO business competing the Masarap Restaurant. The officers of the Masarap Restaurant complained and wanted to oust Go Taw from being a director. Decide how to oust (recall) a director. a. thru a special or regular stockholders meeting; b. thru an order of the board of the directors ousting such director; c. thru a petition filed before the SEC d. thru a petition filed before the RTC

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21.1 Could the Masarap Restaurant Inc., prohibits Go Taw from operating his own GOTO business ? a. yes. being an act of disloyalty to the corporation ; b. yes. being destructive to the Masarap Restaurant; c. no. Go Taw is exercising his rights to property; d. no. Go Taw is free to engage in any form of legitimate business. 21.2 As Corporate lawyer, what would be your suggestion to the stockholders of the Masarap Restaurant ? a. recall Go Taw from his position as a director; b. oust GoTaw from the corporation; c. repurchase Go Taws stocks d. prohibits the operation of his own GOTO business. 22. Many loan applicants from the Masusi banks were disapproved due to disgusting appearance although they have complied all the requirements. Hence, bank director Bolero opened a financing business of his own where the disapproved applicants were accommodated. The financing business grows faster

than the bank. Hence, other directors of the bank became jealous and consulted you what to do with the said financing business ? a. recall director Bolero from his post as a director; b. oust director Bolero from being a stockholder of the Bank c. demand for the surrender of the income of the financing business because it was derived from the lost corporate business opportunity which originally belongs to the bank d. let the financing continue its operation but the income of which belongs to the Bank due to the principle of corporate opportunity. 23. 24. The theory being followed in commercial contracts is the theory of : a. manifestation b. cognition c. uberrimae fides d. mutual trust Would you allow X corporation to be a director of Y corporation ? a. yes. being a person itself; b. yes. provided it owns at least 1 share of stock of Y corporation c. no. only natural person can be a director of a corporation d. no. X corporation can not perform the acts required of a natural person Redeemable shareholder Marilyn was disgusted as the manner the directors are directing the affairs of the corporation. Hence, she ask you whether she could compel the corporation to pay back the value of her shares? a. no. the corporation can not be compelled to repurchase its own share in the absence of unrestricted retained earnings; b. no. the corporation can not be compelled to repurchase its own shares prior to the agreed date of re-acquisition. c. Yes. the corporation is mandated to repurchase its own shares particularly the redeemable shares irrespective of the presence or absences of retained earnings d. Yes. the corporation is obliged to repurchase its redeemable share because, by nature, it is a loan obtained by the corporation from a creditor guaranteed by certificate of stocks Stockholders were complaining for failure of the corporation to declare dividends despite of enormous profits earning during the past 3 consecutives years which accumulated to P3M which is 10 times greater than its capitalization. Decide as to whether the management be compelled to declare dividends ? a. no. to declare dividend is a management prerogative; b. no. the management is not under obligation to declare dividends c. yes. because dividends are considered the return (income) of the stockholders d. yes. the management is obliged to declare dividend particularly when its retained earning equal to the value of its capitalization; Max mortgaged his Pajero to BA finance for P100,000.00 subject to condition that it be insured against all forms of damages or losses and shall be payable to BA Finance. Later, the Pajero was carnapped. Hence, the insurance issued a China Bank crossed check with notation within the two parallel line for the accounts of the payees only payable to BA Finance and Max in the amount of P80,000.00. Upon receipt by Max, he deposited it to his account with Metro Bank without indorsement of BA Finance. After clearing it from the China Bank, Max withdraw the entire amount without paying BA Finance. Hence, BA Finance is now in dilemma how to collect the P100,000.00 considering that Max is now pordoy and the Pajero is already dilapidated. Decide.

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a. b. c. d.

file a case of collection of sum of money against Max with preliminary attachment; file a case of swindling or estafa with preliminary attachment; foreclose the collateral (Pajero) file a collection case against Metro Bank for allowing the deposit and the withdrawal of the amount without the participation as a violation of the negotiable instrument law

27 .1 What possible violation(s) does Metro bank had committed under the NIL ? a. When an instrument is payable to 2 or more payees, all of the payees must indorse the same; b. Metro Bank allows the withdrawal of the amount without the knowledge of the other payee; c. The act of Max is fraudulent; d. Metro Bank is negligent in the performance of its duties as a bank is vested with public interest. 27.2 What would be the nature of the liability of Metro Bank and Max towards BA Fianace ? a. joint obligation b. solidary obligation c. alternative obligation d. cumulative obligation 27.3 Would you consider China Bank be partly to be blame on clearing the check in favor of Matro Bank ? a. yes, for failure to observe the instruction of the Insurance to notify the payees (BA Finance and Max) as manifested by crossing the check; b. yes. for violation of the instruction of the Insurance; c. no. the duty of the drawee bank is limited to whether the signature of the drawer is genuine and as to the available funds held in their possession; d. no. the drawee bank is assured by the genuiness of the prior indorsement as guaranteed by the indorsement of the collecting bank (Metro Bank) 27.4. As counsel of China Bank, Would it be deemed proper to required China Bank to contribute in the losses suffered by BA Finance ? e. yes, for failure to observe the instruction of the Insurance to notify the payees (BA Finance and Max) as manifested by crossing the check; f. yes. for violation of the instruction of the Insurance; g. no. the duty of the drawee bank is limited to whether the signature of the drawer is genuine and as to the available funds held in their possession; h. no. the drawee bank is assured by the genuiness of the prior indorsement as guaranteed by the indorsement of the collecting bank (Metro Bank) 27.4 As a banker, whom do you think the liabilty should fall ? a. insurance b. Metro Bank c. China Bank d. Max 28. After completing the check payable to Davao Light, he entrusted it to his secretary for delivery to Davao Light. Unfortunately, the check which was placed inside an envelope was left inside the taxi cab. The driver opened the envelope and notice the cross check worth P2,000.00 payable to Davao Light. He proceed to Davao light and endorsed the check to pay his own bill amounting to P800.00 which the Davao light make a change of P1,200.00. It was already late when the Secretary called up the bank for stopped payment order because the drawee bank had already cleared the check in favor of the collecting bank of Davao light. Decide whether the drawee bank may be held liable for the erroneous payment. a. the drawee bank is liable for being negligent; b. the drawee bank is more negligent than the drawer; c. the drawee bank should not be made liable for the negligent act of the secretary;

d. the drawee bank be held liable for negligence for failure to notify the drawer regarding the clearing of the check 28.1 Instead of using the check for payment of his bill, the taxi driver indorsed it to his creditor who indorsed it to Max and indorse it to Bruno. Would you consider Bruno as a holder in due course ? a. Bruno is considered a holder in due course based on the presumption that any holder is considered a holder in due course; b. Bruno is considered a holder in due course for having received it in good faith and for value; c. Bruno is not considered a holder in due course because the instrument is payable to order; d. Bruno can not be a holder for value because the indorser is not a holder in due course. The indorser can not transmit a right which he does not possess. 29. AA issued a check payable to BB who indorse it to CC and who indorse it to DD who finally deposited to the latters bank. However, the bank refuses to accept the deposit due to 3 indorsements made by BB, CC and DD. The bank observed the 1 indorsement policy which the Banker Ass. of the Philippines had approved. As counsel of DD, what possible remedy his client may availed of : a. demand payment from CC as an indorser; b. demand payment from AA as a drawer; c. compel the bank to accept the for deposit; d. file an action against the bank for violation of the NIL. The different modes of indorsements are : a. Blank b. special c. restrictive d. qualified e. all of those indorsements Aling Osang received a check from Mario as payment of his debt. Aling Osang indorsed the check as payment for her purchases from NCCC. Unfortunately, the check bounced. Aling Osang is asking you whether she could be liable to the value of the check ? a. yes, due to her indorsement which will make any indorser as liable; b. yes. every person whose signature appears on the check as drawer or indorsee is liable thereon; c. no. Aling Osang is not liable. she is also a victim of the fraudulent act of Mario. d. No. Aling Osang cannot be held liable because she is not the owner of the check; Considering that X corporation could no longer pay its obligations as they matures, as its corporate counsel, what should be the proper remedy ? a. file a petition for insolvency; b. file a petition for rehabilitation and receivership with suspension of payment ; c. file a petition for moratorium on its obligations d. file a petition for bankruptcy

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32.1 Max was a payee to a check issued by X corporation, is now consulting you whether his pending action (violation of BP 22) would be affected if any of the above-remedy is instituted by the corporation ? a. no. the BP 22 was instituted ahead of whatever remedy the corporation may instituted. Hence, the principle of priority is time, priority in rights b. no. BP 22 is a criminal action which is a crime against the state and can not be suspended c. yes. considering that BP 22 is a claim against the corporation, it will be suspended d. yes. suspension of payment covers all forms of claims against the corporation.

32.2 If suspension of payment is granted, will the unpaid salaries/wages of its employees be suspended ? a. yes. all claims against the corporation, in whatever form/nature, are all suspended; b. yes. although claims of salaries/wages has priority in case of payment c. no. salaries/wages are exempted from the coverage of the suspension d. no. the employees are not covered by the suspension of payment 32.3 Creditor Bruno, with a secured collateral, wanted to foreclose the collateral of the debtor X corporation and will no longer wait for the rehabilitation of the corporation. Decide. a. yes, foreclose the collateral ; b. yes. collaterals served as a security for payment in case the debtor could not pay c. no. during the rehabilitation of the corporation, all secured or unsecured creditors stand in equal footing; d. no. all creditors must wait for the payment when the debtor corporation undergo rehabilitation 33. TV show going bulilit star Nash was able to purchased a P1M condo unit out of his earnings. And obtained a fire insurance before the Malay Insurance for P1M and before the Indo Insurance for P1M. Unfortunately, the entire building collapsed due to intensity 4 earthquake. The building engineers guaranteed that the building can withstand up to intensity 8. Is the insurance liable for the losses incurred by Nash ? a. the insurance is exonerated from liability because of misrepresentation; b. the insurance is not liable. the proximate cause of the losses is earthquake which is not covered by the insurance; c. the insurance is liable. The contract of insurance is independent from the guaranty of the engineers; d. the insurance is liable. insurance is intended to cover losses that may arise from unknown event; e. the insurance is not liable. earthquake is a fortuitous event and no one is responsible for the happening of which; f. the insurance is not liable because the contract is voidable. Nash, being a minor, can not validly enter into a contract.

33.1 Supposing the insurances would be made liable, how much would be the liability ? a. P1M for each insurance b. Only P1M for the 2 insurance; c. This is a case of over-insurance. Hence, in case of loss, the insurance companies will share the losses proportionately d. The insurance should pay the agreed coverage less depreciation of the thing insured. 33.2 After the issuance of the policy, Nash sold the condo unit to Cocoy, a co-actor in their going bulilit show payable after 2 years. The insurance acknowledged the endorsement of the policy. Thereafter, the entire building collapsed due to intensity 4. who would be entitled to the insurance indemnification, if there is any ? a. Nash because he is still the owner of the property a the time of the loss b. Nash. The sale to Cocoy is unenforceable considering that both parties are incapable of giving consent to the contract; c. Cocoy. He is now the policy holder and recognized by the insurance

d. Cocoy. By virtue of such endorsement, all rights that Nash may have over it are deemed transferred to Cocoy by virtue of sale and endorsement of the policy; e. No one is entitle. 34. For failure to participate in the Willing-willie show, Susan commits suicide. Records shows that she was already on the 5th year of her 10 years life plan. Decide whether her heirs would be entitled for the indemnification ? a. no. suicide is not compensable b. no. suicide is an excepted peril c. yes. the act of suicide occurs during the incontestability period d. yes. the act of suicide whether committed by a sane or insane insured is compensable when committed after the contestability period. Susan insured all her household appliances against fire as a condition to avail the installment payment. The insurance policy is payable to the seller-on-installment. One night, a fire occurs within the neighborhood and sensing that her house would be caught by fire, she brought out her TV set and place it at the side of road and again went back to the house to save more. Upon her return, she noticed that her TV set is being carried by neighbor Arnel for unknown destination. Fortunate enough that her house was spared from the fire due to the timely arrival of the firemen. As counsel of Susan, what would be the proper remedy under the situation ? a. file a case of qualified theft against Arnel b. demand indemnification from the insurance c. charge the loss to her personal account d. ask for the extinguishment of the unpaid installments, if there is any. Juan mortgaged his house worth P100,000.00 to a financing firm for P100,000.00, subject to condition that in case of loss of the collateral, the insurance shall be payable to the financing firm. Unfortunately, the house was loss according to the perils insured against and after deducting the depreciation, the insurance issued a check in favor of the financing firm worth P80,000.00. Secretly, Juan insured the same house before another insurance company for P100,000.00. What would be effect of the such P80,000.00 indemnification ? a. the entire loan is extinguish b. only P80,000.00 is extinguish. Hence, a balance of P20,000.00 remains as an obligation c. the entire loan is extinguish due to the loss of the collateral d. the P100,000.00 loan remains standing

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36.1 Whether the other P100,000.00 coverage makes the insurance an over-insurance ? a. yes. because it exceeds the total value of the property insured b. yes. being an over-insurance, only P100,000.00 could be indemnified; c. no. there are 2 separate insurance coverage. One is the insurance for the loan and the other one is for the loss d. no. this is not a case of over insurance. 37. Karlo was kidnapped and was made to issue a P10,000.00 worth check as a condition for his release. Hence, without hesitation, he issued a bearer check worth P10,000.00, However, the kidnappers were wise enough and indorsed it to another group of kidnappers who have it discounted to a legitimate financer who finally indorse it to a money changer for P5,000.00. The money changer deposited it at

the bank which bounced due to insufficiency of funds. Decide whether an action against Karlo for violation of BP 22 would prosper ? a. BP 22 would prosper. Mere issuance of a check without sufficient fund constitute the violation b. BP 22 would prosper. For having insufficient fund c. BP 22 would not prosper. The check is void for absence of consideration to constitute a contract d. BP 22 would not prosper. The check originated from illegal act; 37.1 As counsel of the money changer, what best defense would you present in order that the P10, 000.00 worth of the check be recovered ? a. that the money changer is a holder in good faith and for value. b. that the money changer is not liable for whatever defect by previous indorsement of the check and entitled to a real defense; c. that the money changer is a remote party to the illegal act of kidnapping d. avail the benefits of shelter rule 38. For involuntary insolvency to prosper, at least how many unpaid creditors needed to institute an action for insolvency ? a. 1 b. 2 c. 3 d. 4 e. 5 38.1 for voluntary insolvency to prosper, at least how many unpaid creditors needed to institute an action for insolvency ? a. 1 b. 2 c. 3 d. 4 e. 5 39 Johnny married Susan. Due to heavy losses from business and could no longer meet the obligations as it due. What possible advise would you give to Johnny ? a. commit suicide b. abscond c. ask for condonation d. petition for insolvency

40. Due to such heavy losses, Susan, together with their 2 minor children abandoned Johnny and live with another man. Will the obligation to give support be extinguished by reason of the courts declaration of insolvency of Johnny ? a. yes. all obligations of whatever nature are deemed extinguished upon declaration of insolvency b. yes. a person is relieved from all obligations upon pronouncement that he is insolvent. The intention of the law it to give him a fresh start of life without any worries of any obligation; c. no. obligation to give support is between members of the family and is not extinguish by reason of insolvency; d. no. to give support is a natural obligation of the parents towards their children. 41. Johnny had a total obligations of P100,000.00 from various creditors. On February 5, 2011, he institute a petition for declaration of insolvency. He borrowed P5,000.00 from Max for payment of the filling fee. Thereafter, he was declared as insolvent. Max is asking whether th eP5,000.00 is also extinguish ? a. no. because it was obtained not due to business transaction b. no. because it was used for payment of the filing fee c. yes. all obligations existing at the date of cleavage are extinguish upon declaration of insolvency d. yes. the P5,000.00 is an obligation incurred before the declaration 42. Karlo insured his Pajero against thief with own damage and authorized driver clause. On one occasion, Max carnapped the Pajero and while driving it away, he was bumped by a bus. Decide whether the insurance is liable for the damage of the Pajero ?

a. the insurance is liable based on the thief b. the insurance is liable for the damage on the vehicle resulting from bumping c. the insurance is not liable due to unauthorized driver d. the insurance is not liable for the damage for damages 42.1 As counsel of karlo, what would be the basis of his claim against the insurance ? a. against thief b. against unauthorized driver c. against own damage d. against the bus 43. While still single, Carlos purchased a Pajero. Thereafter, Carlos executed a deed of sale in favor of his wife, Marilyn. Marilyn insured the Pajero before Malaya Insurance against thief. As counsel of Malaya Insurance, is Marilyn entitled to indemnification when the Pajero was carnapped ? a. no. the insurance contract is void. Husband and wife is prohibited to sell properties between each other b. no. the insurance contract is void. Marilyn is not the owner of the Pajero. And therefore, has no insurable interest at the time of the execution of the contract and the occurrence of the loss. c. yes. the loss was the peril insured against d. yes. the insurance contract is valid and the insurance is estopped from questioning its validty due to its acceptance. The prohibition on the sale of properties between husband and wife is intended for the protection of the public creditor. Insurance obligations to indemnify arise from the insurance contract and the insurance is not a creditor. 44. John had a P1M deposit with the Metro Bank. He consulted you on what to do in order that he could recover the P1M in case the Bank incurred a holiday ? a. withdraw the P500,000.00 and deposit it with another bank b. insured the P500,000.00 which is an excess from the coverage of the PDIC c. insured the entire P1M d. open another account within the same bank and transfer the other P500,000.00 45. The Homeowners Association, Inc. purchased a 30 setter Mitsubishi van to transport children of the members of the association to and from their respective schools. This idea was brought about during the membership meeting of the Association and to defray its operational cost, each students must pay P20.00 per ride. For corporation issue. Whether it is within the corporate power to purchase the said van ? a. yes. in the exercise of its power incidental to its operation; b. no. the purchase of the van is an ultra-vires act of the association; 45.1 For taxation issue : Whether the income of P20.00 per ride is subject to taxation ? a. yes. all income derived from whatever source is subject to taxation; b. no. the P20.00 is not considered as income and therefore, not subject to tax 45.2 For transportation law issue : whether the van is classified as a common carrier or private carrier ? a. common carrier because it transport passengers of different classification to different destination for a fee; b. private carrier because it is intended to transport only children of the members of the homeowners; 45.3 For insurance law issue : whether the Homeowners Association, Inc. may insured the van (vehicle) and its passengers (children) ?

a. yes. the Homeowners Ass. Inc, has an insurable interest over the van being the owner and the passengers for its liability; b. no. the Homeowners Ass. Inc. has no insurable interest over the Van because the ownership belongs to the members homeowners. 45.3 Makoy, an OFW, was employed at New Jersey, USA. sent a balikbayan box thru the NJ cargo carrier, New Jersey, who contracted the APL lines to transport the same from New Jersey to Davao City, Philippines. Since APL lines has route limited from New Jersey to New York, USA. upon arrival at New York USA sea port. The box was transshipped via Stolk Lines up to Hongkong. And to be transshipped to Manila via HK Lines and via Lorenzo shipping Lines to Davao City. Unfortunately, when the box was opened by the consignee, it was in a damaged condition. Decide as to who would be held liable ? a. NJ cargo carrier b. APL line c. Stolk Lines d. Lorenzo Shipping ========================================================================= 46. While on board a bachelor bus bound for Butuan City and maneuvering for a sharp curb, Passenger Teban fell from his sit and suffered injury which cost P10,000.00 nedication. Investigation shows that he was drunk. Decide whether he is entitled for indemnification from the bus operator ? a. yes. the bus operator is liable to indemnify the P10,000.00 medication; b. yes. the bus operator must indemnify the passenger for it failure to exercise the utmost diligence towards its passenger; c. no. the cause of his injury was due to drunkenness and therefore, the bus operator is not liable under the theory that the common carrier is not an insurer of absolute safety; d. yes. the bus operator is liable for the injury of the passenger. However, its liability should be mitigated due to the contributory negligence on the part of the passenger for being drunk; 47. Juan purchased texas eggs from Texas, USA, worth $10.00 per egg, loaded it on a vessel (APL lines) bound for Manila. Due to heat inside the container, the eggs were hatched upon arrival in Manila. Since the purpose of the eggs are for fried egg as topping for the tapsilog meals, he considered it as damaged. Accordingly, such egg cost $15.00 in the local market. The bill of lading stated $5.00 per egg to minimize the cost of freight. What law should govern in order to recover damages from the common carrier ? a. Civil code on damages b. Carriage of goods by sea act c. Code of Commerce d Warsaw convention. 47.1 how much would be liability based on the common carrier (per egg valuation), if there is any ? a. $5.00 b. $10.00 c. $ 15.00 d. agreed price between the common carrier and the shipper. 47.2. What is the prescriptive period for recovery of damages ? a. 1 day upon arrival when the damage is apparent b. 3 days when the damages is non-apparent c. 1 year from delivery to the consignee d. 1 year from the arrival of the vessel 48. Mario was allowed to board a non-aircon Bachelor Bus bound for Butuan City with his box falsely declaring it as containing used clothing when in truth it contains firecrackers.. Due to the heat of the sun, the firecrackers exploded inside the bus while waiting for the time of its departure. Mario was injured together with other passengers already on board. The injured passengers ask your opinion whether they are entitled to demand damages from the bus operator ?

a. no. while the bus is still waiting for its departure, there is no passenger and common carrier relationship that exist. Therefore, the obligation of the common carrier to exercise utmost diligence had not commenced yet; b. no. the bus operator is not the insurer of absolute safety of each passenger c. yes. the bus operator is liable, by allowing a person to board on a bus establishes the passenger and common carrier relationship which now commence the obligation to exercise the utmost diligence d. yes. the injuries suffered was sustained from the act of passenger Mario which could have been prevented had the common carrier exercise the required diligence. For failure to do so, the common carrier is considered negligent. 48.1 Would your answer be the same if the common carrier involved is a commercial airplane ? a. Yes. whether it be a commercial airline or a PUB. Both belongs to the category of common carrier; b. Yes. for failure of the commercial airplane to exercise the required diligence which amount to negligence. c. No. for failure of the air carrier to exercise the required diligence (inspection of the baggage) which amount to negligence. d. No. the airline is liable under the theory of insurer of all risk towards it passengers.

48. When the Bangkerohan bridge collapsed, the nearby residents provided service Bangka to ferry passengers/cargoes from one side to the other side of the bangkerohan river for a fee. Unfortunately, a bangka loaded with cement capsized when it losses it balance. Decide whether such act of providing Bangka requires a license/permit issued by the : a. barangay b. Mayors office c. Coast Guard d. Collector of customs 50. Max insured his house against fire before the Malayan Insurance effective January 1, 2010. On February 14, 2010, he had a heated quarrel with Bruno due to a lady valentine. Later, Max heard a gossip that Bruno will burn the said house. On February 20, 2010. the house was burn and the investigation reveals that it was an arson case. Max is asking as to whom he could demand for the indemnification ? a. Bruno because of the gossip that he will burn the hosue b. Malayan Insurance due to contract of insurance c. no is responsible. The proximate cause of the loss was due to fortuitous event d. this is a case of Damnum absque injuria 50.1 The house of Max was separated by a fire wall from his neighbor Susans house which was also insured against fire from Malayan Insurance. Due to the extreme heat of the fire, the cemented firewall melted and collapsed and fall on Susans house resulting a damage to the latters house. Susan is asking as to who is liable for the lost of his house ? a. Bruno because of the gossip that he will burn the house b. Malayan Insurance due to contract of insurance c. no one is responsible. The proximate cause of the loss was due to fortuitous event d. Max because Max is the owner of the firewall. 50.1 As per estimate of the insurance adjuster, the extent of the damage was almost of the value of the house. What is the proper remedy of Susan ? a. send a notice to the insurance and declares the entire house as abandoned and claim for the whole coverage;

b. demand for the indemnification from the insurance equivalent to the damage incurred c. demand for the reconstruction of the house from Max. d. demand from Bruno the reconstruction of the house. 51. Matibay shoe manufacturing registered and patented its newly manufacture air shoes as Michael. Its competitor, Hagibis shoe manufacturing secretly copied exactly the Michael air shoes but colored it differently and called as Jordan air shoes. Both shoes carries Michael Jordan as its model. As counsel of Matibay, what proper action may be instituted against the Hagibis, if there is any ? a. infringement b. unfair competition c. damages d. no cause of action 51.1 Mang levi opened a tailoring shop specializing in JEAN. He adopted LEVIS JEAN as its trade mark and trade name. What is your comment on this ? a. such trade mark should be changed. The trade mark/name is already patented and existing; b. such trade mark is covered by the US patent office and the Philippines is a signatory to the UN convention on patent/copyright. Hence, any act of using the Levis Jean constitute an infringement; c. Mang Levi can continue using it because it symbolizes his name d. Mang Levi may register the Levis Jean as his trade mark/name before the DTI. The government is sovereign by itself and not subject to foreign laws/regulations 51.2 A Certain school in Mindano applied for registration of its trade name as University of Mindanao with an initial of UM. The application was opposed by the University of Manila on the ground that the word University and the initial UM. was already registered in their behalf, Decide . a. the application should be denied. Otherwise, it would constitute as a duplication b. the opposition should be allowed. Otherwise, it would constitute as unfair competition c. the application should be granted. The word University is a generic term which no one has exclusive control over it. Likewise, the initials are not registrable d. the opposition should be denied. Prior registration does not amount to the exclusion of another.

52. A $50M worth vessel sunk including its cargoes worth $1M. And a salvaging company offers to salvage the same at the price of $10M, including its repair and rehabilitation. The cargoes were insured for $1M while the vessel was insured against all risk for $12M. As a corporate marine adjuster, what would be best advantageous to the ship owner in this case ? a. declare the ship as abandoned and claim for the $12M insurance coverage b. enter into the $10M contract of salvaging; c. demand from the insurance the $50M worth of the vessel d. enter into the $10M contract of salvaging and let the insurance pay the salvage fee 53. MV Princess loaded with cargoes and passengers turn upside down when she was hit by a successive crushing waves. To refloat the same, a salvaging company offers $2M. the vessel, the passengers and its cargoes were insured by a fly-by night insurance but had a re-insurance. How should the salvage fee be treated ? a. as particular average b. as general average c. as claim from the re-insurance d. as weighted average ============================================================================

54. For fear that he may die anytime and would left nothing for his 4 wives and children, Abu Sayaff member, Khalaki, tag as public enemy no. 1 in Basilan, insured himself for accident, including physical injuries and death. True enough, he died in one encounter with the government troops. His wives were now asking you as their counsel whether they could demand from the insurance for the indemnification. ? a. no. the contract of insurance is void. Khlaki being a public enemy of the government . b. no. Khlaki, being a public enemy can not enter into a contract of insurance. And therefore, the contract is void. No right springs from a void contract; c. yes. the insurance contract is valid. the term public enemy refers to foreigners as enemy of the country; d. yes. being a Filipino, Khalaki can not be considered as a public enemy. Therefore, any person has insurable interest over his life, spouse or children may validly enter into a contract of insurance. 55. Teban mortgaged his house worth P1M for P50,000.00. The mortgagee insured it for P200,000.00 designating themselves as the assured-mortgagee. Unfortunately, the house was partially damaged according to the peril insured against which the adjuster determine as P100,000.00. The mortgagee wanted to know how much they could claim from the insurance ? a. P1M b. 50,000.00 c. P200,000.00 d. P100,000.00 55.1 The above-mentioned house was, at the same time, was insured by Teban for P500,000.00 designating the mortgagee as the beneficiary. Who is entitled to the proceeds of the insurance ? a. Teban-mortgagor b. insurance-mortgagee c. insurance - beneficiary d. none 56. Skate roller blade shoes was invented by the Lefan Brothers and having it patented in USA patent office. The skating hobby become so popular through out the world and that almost all the countries have invented their own version of skate roller blade shoes, including the Philippines. Juan Tamban, a Filipino inventor, improvished the skate roller blade shoes by using bakya instead of the shoes and wanted it to be patented. What is your comment regarding his application for patent ?. a. the application should be denied. His invention is not considered new b. the application should be denied. The USA patent is recognized thru out the countries and any manufacturing/ production of the same, without the consent of the patentee constitute infringement; c. the application should be granted. The invention of Juan is a bakya with skate roller blade and can not be confusing with a shoes; d. the application should be granted. In case of doubt, it should be resolved in favor of the applicant 57. Prohibitions imposed on patent also applies to copyright. This process is known as : a. reciprocity clause b. mutatis mutandis c. common prohibition clause d. separability clause

58. Passenger Mang Jose boarded a PAL plane bound for Manila from London. While on flight, he got a mild heart attacked and the plane diverted its flight to Dubai, KSA, for medication which cost 50,000 francs. Due to failure of the PAL to pay the hospitalization, Mang Jose hired your service as his counsel to advice any proper act in order to recover the hospitalization and damages. a. b. c. d. e. file a claim under the Warsaw convention for the indemnification of the hospital bill file a damage suit under the civil code file a breach of contract of carriage which is to transport the passenger safe and sound file a claim from the airline insurance for indemnification no action at all

58.1 OFW Teban boarded a JAL from Taiwan for Manila. His check-in baggage could no longer be found when claim at the NAIA. What should be the basis of claiming damages against the JAL ? a. Warsaw convention b. Code of Commerce c. Civil code on damages d. Civil code on transportation 59. Hagibis bus line applied for a franchise for the route Davao City to Mati City.what would be the basis if the existing Bachelor bus line would contest the said application ? a. third operator rule b. prior operator rule c. first to file rule d. prior applicant rule e. benefit of the incumbent rule 60. In case of national emergency, the state may temporarily take over the operation of privately owned public utilities. In so doing, passenger Mang Pandoy was injured while in transit. Against whom should he demand for damages ? a. the state b. the private operator c. the driver/conductor d. none of those mentioned 61. Due to denial of his application for franchise, Mang Jose ask you whether there is a possiblilty of engaging in taxi operation with a semblance of legality ? a. yes. adopt the kabit system c. yes, adopt the padrino sytem b. yes, adopt the tong/lagay system d. yes. adopt the payroll sytem 62. Don Pepot subscribed a P500,000.00 share of the Davao Golf club. The member is entitled to use of the facilities of the Davao Golf Club but not entitle to any dividend. Is the share considered required to be registered before the SEC ? a. no. its not a stock which generally entitled to a dividend b. no. its a membership requirement only c. yes, the benefit derived being a member may be treated as dividend d. yes. share may not be entitled to dividend when provided in its by-laws 63. The fraternal order of Kulafu requires that to be a member, he must subscribe a non-negotiable share. Determine whether such share is consider shares of stock under contemplation of the BP 68 ? a. not considered as a share. Shares of stocks are considered negotiable b. not considered as share. It is intended for membership only c. considered as a share because it has a valuation d. considered as share because the holder of which possesses right/power just an ordinary shareholder 64. The manufacturer of airplane develop a model known as double body plane. Because of its popularity, a bakery baked with shape of a double body plane bread and called it as double body. Knowledge about the bread reaches the airplane manufacturer and filed a case of unfair competition against the bakery. Decide. a. unfair competition case will not prosper. There can be no competition with bread and plane b. unfair competition case will not prosper. The buying public can not be deceived between a bread and a plane particularly in size and price c. there is unfair competition due to similarity of the name of the 2 products d. unfair competition is committed due to absence of the plane manufacturers consent 64.1 When the confusions arise due to similarity of the 2 products particularly on its prevalent features, such confusion is determine thru a test known as : a. holistic test b. dominancy test c. domiciliary test d. visual test

64.2 Red Ribbon bake shoppe bakes chiffon cake for diabetic patients and had it patented. Its rival, White Ribbon bake shoppe also bakes chiffon cake for diabetic patients. Since the 2 cakes have similarity in appearances, particularly the icing decorations. Is there a right violated by the White Ribbon ? a. the patent right of Red Ribbon was violated. An infringement was committed. b. the patent right of Red Ribbon was violated due to production of cake without its consent c. there is no violation. Such chiffon cake is not patentable. d. the patent of Red Ribbon is void. Food/breads/edible matters are not patentable 65. Justice X wrote a book and have it copyrighted which contains his biography, including his pictures since childhood up to the present. Its cover is strongly worded as Copying of this work without the consent of the author, in any form, is subject to lethal injection. Student Gorio was caught reproducing the pictures of the author. During the court proceedings for violation of the authors copyright, what would be correct answer when ask why he is reproducing it without the consent of the author ? a. personal used for educational instruction b. as an avid admirer of the author c. as a class assignment work d. as a deterrent to the rats and mice at home 65 Script writer TATA wrote and produced a stage play entitled Putok sa Buho which stars Dingdong as si Malakas and Marian as si Maganda. Due to constant kissing and embracing during the rehearsals, it leads to their real life romantic relationship. The story revolves around the creation of earth and the first inhabitant couple with mission to go to the world and multiply. With out the knowledge of TATA. Dingdong and Marian perform the play during the private birthday party of Pres. Noynoy inside the Malacanang Palace. May TATA have a cause of action against Dingdong and Marian for such unauthorized performance ? a. violation of neighborhood rights c. unfair competition b. infringement d. illegal performance