1. A domestic insurance corporation was issued a certificate of incorporation on December 5, 2010. Its articles of incorporation classified its shares into common par value and preferred no par value shares. It was issued a certificate of incorporation. May its existence be assailed?

A. No, because it was issued a certificate of incorporation which indicates governmental recognition of its existence.B. Yes, because it was not organized in accordance with the law and its existence may be assailed even collaterally.C. Yes, because it was not organized in accordance with law and the state can question its existence only in a direct proceeding.D. No, because the SEC would not have issued a certificate of incorporation had it violated the law.

2. Which of the following instrument is negotiable?

A. “I promise to pay P P 10,000.00 ten days after the death of his grandfather” (Sgd. M)B. “Pay to the order of Superman P 10, 000.00 and reimburse yourself out of money in your possession” (Sgd. D, addressed to X)C. “Ten days after passing the 2011 Bar Exams, I promise to pay P or order P 10, 000.00” (Sgd. M)D. Pay to the order of P the amount of P 10, 000.00 (Sgd. D, addressed to X or Y)

3. Which of the following is not a characteristic of chattel mortgage?A. It must be registered in the Chattel Mortgage Registry.B. It is a security for the performance of a principal obligation.C. The thing mortgaged must be delivered to the mortgagee.D. The excess amount after foreclosure belongs to the mortgagor.

4. If damage is deliberately caused due to a marine peril and both the vessel and cargo are saved, such damage is called:

A. Particular averageB. General averageC. Partly particular and partly general averageD. None of the 

5. Before a certificate of public convenience may be granted, the following requisites must be present except one.

A. The applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner.B. The applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incidental to its operation.C. The applicant must prove that no certificate of public convenience had been issued to another person for the same business.D. The applicant must be a citizen of the Philippines or if a corporation or association, at least sixty percent (60%) of its stock or paid up capital must belong entirely to Filipino citizens.

6. Which of the following is not included in the three important roles of a bill of lading?

A. It is proof of the receipt of the cargo by the carrier.B. It determines the liability of the carrier.C. It is the best evidence of the contract or carriage of cargo.D. It is a document of title which may be negotiable or not.

7. Which of the following defenses is not available to a common carrier in case there is loss or damage to the goods or passengers?

A. Natural disasterB. Proper diligence in the selection and supervision of employeesC. Act of the public enemy in warD. Order of act of competent public authority

8. In interisland trade, the period for filing action for damages shall be:

A. Within twenty-four hours from delivery if the damage is not apparent.B. Immediately after delivery if the damage is apparent.C. Within eight years from delivery if a bill of lading was issued.D. Within ten years from delivery if a bill of lading was issued.

9. The following securities may be sold without the need of registration, except:

A. Those issued and guaranteed by the Philippine government.

B. Those issued and guaranteed by the government of any country with which the Philippines has diplomatic relations.C. Those shares of stocks owned and issued by a bank.D. Those securities issued by a receiver or by a trustee in bankruptcy duly approved by proper adjudicatory body.

10. Where no certificate of incorporation was issued to a business transacting under the name ABC Marketing Corporation but it engages in business as a corporation is it necessary to file a quo warranto proceeding against it to question its existence?

A. No, because it does not legally exist and its existence may be attacked even collaterally.B. Yes, because it actually operates as a corporation and exercise corporate powers.C. No, because it is a corporation by estoppal and acts as a corporation.D. Yes, in order to formalize the attack against its existence.

11. A, B, C and D transact business under the name, Sunrise Corporation knowing that they have not been authorized to operate as a corporation. In the course of their business operations, they became the creditors of E for P 3 million. E knows them to be not constituting a corporate entity.

A. They may sue E under the name Sunrise Corporation which suit E cannot resist on the ground that the plaintiff is not a corporation.B. E may be sued by A, B, C and D which suit E can resist on the ground that the plaintiffs do not constitute a corporation.C. Had E been the creditor, E may sue them under the name of Sunrise Corporation as defendant.D. There can be no suit between the creditors, A, B, C, and D, and the debtor, E under the principle of in pari delicto.

12. Under the Corporation Code, a private corporation

A. Is formed, organized or regulated under a special law like government-owned or controlled corporations which are also created by special laws or charters subject to the requirements of the common good and the test of economic viability.

B. Has a separate personality separate and distinct from the personality of its stockholders but a stockholder who owns at least 95% of its outstanding capital stock may be held liable for corporate debts when the corporation no longer operates.C. Is an artificial being created by law, having the right of succession, its powers, attributes and properties expressly authorized by law or incident to its existence.D. Continues to exist despite the death of all its officers or of its stockholders because it has the right of succession.

13. ABC Corporation, a corporation formed, organized and existing under the laws of California has been engaged in the manufacture of designer shoes distributed under the brand name “US Gear”. Shining Light Corporation, a domestic corporation has exclusively sold the shoes in the Philippines on its own account. The latter’s representative would travel to California twice a year and purchase a minimum of 3,000 pairs annually which were shipped to the country from Los Angeles. Shipping costs were paid by ABC Corporation. In case someone in the Philippines infringes upon the trade name and mark of ABC Corporation, may it use in the country even if it has no license to engage in business in the Philippines? Why?

A. No, because every sale to an exclusive agent in the Philippines by a foreign corporation would constitute the latter as doing business in the Philippines as when the local company or representative is selling the foreign corporation’s goods. It therefore needs a license.B. No, because the mere act of appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account constitutes “doing business” in the Philippines.C. Yes, because it is not engaged in business in the Philippines and thus, needs no license. The mere act of exporting from one’s own country, without doing any specific commercial act within the territory of the importing country, cannot be deemed as doing business in the importing country.D. Yes, because any corporation has the right to protect its business interests and all its property rights anywhere in the world.

14. Under the Corporation Code, it is implied that

A. A private corporation exists because the law allows it to exist, and cannot exist apart from statutory authority.B. A private corporation exists independently of the will of the statutory

authority as long as its members will it to exist.C. A private corporation may exercise all powers and prerogatives as long as in doing so, it violates no law.D. A private corporation takes its authority from the necessity of its existence, the consent of its members and of those who organized it.

15. Which of the following statements reflects a correct legal principle?

A. A private corporation may be entitled to moral damages if it suffers from a besmirched reputation or serious anxiety.B. A private corporation is at all times considered to have a personality separate and distinct from the personality of its corporators.C. A private corporation may possibly be held liable for a quasi-delict.D. The separate personality of a corporation is protected by law under all circumstances.

16. To what pertains, that banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or of the general and /or particular conditions stipulated in the documents or superimposed thereon nor do they assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods represented by any documents, or for the good faith or acts and/or omissions, solvency, performance or standing of the consignor, the carriers, or the insures of the goods, or any other person whomsoever.

A. Independence principleB. Fraud exception principleC. Doctrine of Strict complianceD. Res perit domino

17. A security transaction intended to aid in financing importers and retail dealers who do not have sufficient funds or resources to finance the importation or purchase of merchandise, and who may not be able to acquire credit except through utilization, as collateral of the merchandise imported or purchased.

A. Trust receiptB. Letters of creditC. Warehouse receipts

D. Loan

18. A warehouseman is bound to deliver the goods upon demand made either (i) by the holder of a receipt for the goods or (ii) by the depositor, if such demand is accompanied with:

A. (An offer) Offer to pay the principal obligation.B. Readiness and willingness to sign an acknowledgement that they have been delivered, if such signature is requested by the warehouseman.C. Readiness and willingness to transfer the receipt. If negotiable, with such indorsement as would be necessary for the negotiation of the receipt.D. An offer to pay the balance of the deposit and satisfy creditor’s claim.

19. In Maritime Commerce, when a vessel strikes another moving vessels, it is calledA. CollisionB. Allision C. HypothecaryD. Deviation

The following facts are for numbers 20 to 24.

S subscribed for 4,000 shares of stock from X Corporation with a par value of P10.00 per share and he initially paid P15,000.00. There are nine (9) directors in the Board of Directors of X Corporation.

20. How many votes may be cast by S in the election of the directors of X corporation?

A. 1,500B. 4,500C. 36,00D. 40,000

21. How many shares have been paid by S?

A. 1,500B. 4,000C. 40,000D. None

22. If one of the directors of X Corporation resigned and two directors are abroad, how many directors must be present in the board meeting to validly transact business?A. 3B. 4C. 5D. 6

23. The by-laws of X Corporation do not provide for the salaries of the directors and in 2011, the Board Directors issued a resolution, for the approval by the stockholders, granting salaries to the directors. To be valid, how much should be the maximum amount of their salaries?

A. 5% of the corporation’s income before taxation of the preceding yearB. 10% of the corporation’s income before taxation of the preceding yearC. 12% of the corporation’s income before taxation of the preceding yearD. 15% of the corporation’s income before taxation of the preceding year

24. How many of the shares of S are entitled to dividends?A. 1,500B. 4,000C. 2,000D. None

The following facts are for numbers 25 to 28.

M issued a promissory note payable to P or order as payment for a cell phone to be delivered by P after seven days. P failed to perform his obligation, but he indorsed it specially to A, who also indorsed it specially to B. B negotiated the note in blank to C, who delivered it to H as payment for his loan. A, B, C and H are all holders in due course.

25. May H validly enforce the instrument against M?

A. No, there is failure of consideration.B. Yes, because failure of consideration is not valid defense against H.C. No, because failure of consideration is a real defense.D. Yes, because he has nothing to do with the failure of consideration.

26. Is the delivery of the instrument by C to H a valid negotiation?

A. Yes, because the order note is negotiable by mere delivery.B. No, because an order note must be indorsed before delivery.C. Yes, because an order note indorsed in blank becomes a bearer note.D. No, because B indorsed the note before delivery to C.

27. If H is aware of the defect in P’s title, can he validly collect from M?28. A. Yes, because he has no participation in the failure of consideration and he acquired he note from a holder in due course.B. No, because he is not a holder in due course and personal defenses can be used against him.C. Yes, because M, as the maker, is primarily liable on the instrument.D. No, because failure of consideration is a real defense which can be used even against a holder in due course.

29. In relation to No. 27, H is consideredA. Not a holder in due courseB. A holder in due courseC. A holder through a holder in due courseD. A mere assignee

29. Anti-Money Laundering Council is composed ofA. The governor of the Bangko Sentral ng Pilipinas as Chairman the Commissioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission as member.B. The Governor of the Bangko Sentral ng Pilipinas as ex-officio Chairman, the Commissioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission as member.C. The Commissioner of the Bangko Sentral ng Pilipinas as Chairman, the Commissoner of the Insurance Commission as Vice-Chairman and the Chairman of the Securities and Exchange Commission as member.D. The Governor of the Bangko Sentral ng Pilipinas as Chairman, the Commissioner of the Insurance Commission and the Secretary of the Department of Finance as member.

30. It shall mean an enterprise wherein a manufacturer, processor or service enterprise exports 60% or more of its output, or wherein a trader purchases products domestically and exports 60% or more of such purchases.

A. Domestic market enterpriseB. Export enterpriseC. Foreign investmentD. Doing business in the Philippines

31. The following are the basic responsibilities of the Bangko sentral ng Pilipinas except one.A. The Bangko Sentral shall provide policy directors in the areas of money, banking, and credit.B. It shall have supervision over the operation of banks.C. It shall exercise such regulatory powers as provided in this act and other pertinent laws over the operations of finance companies and non-bank financial institutions performing quasi-banking functions, hereafter referred to as quasi-banks, and institutions performing similar functions.D. It shall promote and maintain monetary stability and theconvertibility of the peso.

32. It shall refer to entities engaged in the borrowing of funds through the issuance, endorsement or assignment with the recourse or acceptance of deposit substitutes as defined in Section 95 of Republic Act No. 7653 (“New Central Bank Act”) for purposes of re-lending or purchasing of receivables and other obligations.

A. Commercial BankB. Rural BankC. Quasi-BankD. Universal Bank

33. Where the articles of incorporation provide for non-voting shares in the cases provided for under the Corporation Code, the holders of such shares may be entitled to vote on certain matters like:

A. Transfer of corporate assets to another corporation.B. Every investment of corporate funds.C. Merger or consolidation of the corporation with another juridical person.D. Increase or decrease of capital stock.

34. Which does not constitute “doing business” in the Philippines by a foreign corporation?

A. Appointing a distributor domiciled in the Philippines with such distributor transacting business in its own name and for its own account.B. Participating in the management, supervision or control of any domestic corporation.C. Opening a liaison office in the Philippines to solicit orders or business in the country.D. Publication of a general advertisement through any print or broadcast media in the Philippines.

35. A corporation was organized with an authorized capital stock of P20 million pesos. Which is correct?

A. A subscription of P5 million and paid up of P1 million.B. A subscription of P5 million and paid up of P1.2 million.C. A subscription of P5 million and paid up of P5 million.D. A subscription of P8 million and paid up of P1.5 million.

36. Unless otherwise prescribed by the Corporation Code or by a special law, the articles of incorporation may be amended by

A. A majority vote of the board and the vote or written assent of at least 2/3 of the stockholders holding the outstanding capital stock.B. A majority vote of the board and the vote or written assent of the stockholders holding the outstanding capital stock.C. A majority vote of the board and vote or written assent of the stockholders representing 2/3 of the outstanding capital stock.D. A majority note of the board and vote or written assent of the stockholders representing at least 2/3 of the outstanding capital stock.

37. What remedy is available to the carrier, if the owner/consignee refused to accept or take delivery?

A. Action for annulmentB. Action for rescissionC. Action for consignationD. Action for damages

38. Due to negligence of D, a bus driver of X Company, the bus collided with another vehicle which resulted to P, a passenger, being injured. P may avail of any of the following causes of action except one

A. Culpa ContractualB. Culpa AcquilianaC. Culpa criminalD. None of the above

40. Mr. X, as charter enters into a bareboat charter party agreement with ABC Shipping Company. In one port, Mr. X agreed to transport the goods were damaged during the voyage.

A. As ship owner, ABC Shipping Company may be held liable in any event.B. Mr. X as charterer may be held liable only when so stipulated in his contract with Mr. YC. Mr. X is presumed liable as a ship owner pro hac vice.D. Mr. X is not liable because he is not the ship owner.

41. Which of the following is NOT TRUE regarding insurable interest?

A. Insurable interest in life or health must exist when the insurance takes affect and thereafter or when the loss occurs.

B. When the insurance is taken by the creditor on the life of the debtor, the creditor is required to have an insurable interest not only at the time the insurance takes effect but also at the time of the debtor’s death.C. When the insurance is taken by the employee on the life of the employee, insurance takes effect and at the time of the employee’s death.D. In property insurance, insurable interest must exist when the insurance takes effect and the when the loss occurs, but need not exist in the meantime.

42. On January 1, 2008, Mr. S. Magler applied for a life insurance policy with Sun Insurance Corp. stating that he was in good health even if he was already suffering from AIDS by that time. The policy was issued to Mr. S. Magler on July 1, 2008. He died on July 3, 2010. Is the Sun Insurance Corp. Liable to pay the insurance proceeds?

A. Yes, because the policy had been in forced for more than one year.B. No, because of the material concealment made by Mr. S. Magler which effectively rescinded the contract.C. Yes, because the policy had been in force more than two years.

D. No, because the policy had never became effective because of the material concealment.

43. May a parent insure the life of his son who is no longer a minor and who is now married?

A. Yes, because a parent has insurable interest in the life of his son and law does not distinguish between a married child and a minor child.B. No, because the insurable interest of a parent over his child is cut-off upon the latter’s marriage.C. Yes, because a person can insure any person whom he likes.D. No, because his son is longer a minor.

44. Mr. Mat Anda insured the life of his wife Mrs. Anda. Latter, they were legally separated pursuant to a judgment of a court. Mrs. Anda died after legal separation. Can Mr. Mat Anda recover?

A. No, because Mr. mat Anda’s insurable interest over Mrs. Anda was already cut-off from the time of the finality of decree of legal separation.B. Yes, because a person has an insurable interest over his wife and this is not affected by the decree of legal separation.C. No, because he is already disqualified by law because of the decree of legal separation.D. Yes because there was no proof that he is the guilty spouse.

45. M/V Sea Princess sunk in the waters of Corregidor when it collided with M/V Ocean Trekker. It cannot be determined which ship is at fault. How shall the liabilities of the ship-owners be decided?

A. Each vessel shall bear its own loss and both shall be solidarily liable to others.B. No vessel is liable because the negligence of either vessel cannot be determined.C. the doctrine of error in extremis should apply.D. Each vessel shall bear its own loss and both shall be jointly liable to others.

46. Which statement in relation to the issuance of watered stocks is correct?

A. A director or officer consenting to the issuance of watered stocks is liable

solidarily with the recipient stockholder in favor of the corporation and the corporate creditors for the difference between the fair value received at the time of issuance of the stock and the par or issued value of the same.

B. A director or officer consenting to the issuance of watered stocks is liable jointly with the recipient stockholder in favor of the corporation and the corporate creditors for the difference between the fair value received at the time of issuance of the stock and the par or issued value of the same.

C. A director or officer who has knowledge of the issuance of watered stocks and who expresses his objections, orally or in writing, is not liable for such issuance.

D. watered stocks may be legally issued provided the issuance was for a reasonable consideration.

47. In relation to stocks, which statement conforms to the Corporation Code?

A. X subscribed to 1,000 shares paying only an amount equivalent to 500 of the shares. He is entitled to a certificate of stock corresponding to the shares fully paid.

B. In letter A, if the subscription is declared delinquent, only 500 shares shall be covered by the delinquency declaration.

C. In letter A, before the subscription becomes delinquent, the 1,000 shares are entitled to dividends even if the amount paid is equivalent only to 500 shares.

D. When the subscription becomes delinquent, A is no longer entitled to dividends on his shares.

48. Valuable cargoes were lost when M/V Lady Star sunk in the waters of Romblon. The ship-owner, OO is nowhere to fund. When sued, the ship agent denied liability because he was merely working for his principal, OO. Is the ship agent liable for the liabilities of OO?A.No because an agent is never liable for liabilities of the principalB. No, if he dislosed his principalC. Yes, if he did not disclosed his principal.D. Yes because a ship agent is solidarily liable with the ship owner

Even if he disclosed his principal

49. Generally, the written notice of regular stockholders’ meetings should be sent to all stockholders’ at least:

A. One week prior to the meetingB. Two weeks prior to the meetingC. One day prior to the meetingD. Two days prior to the meeting

50. Any change in the instrument which affects or changes the liabilities of the parties in any way is called:

A. To establish a socially conscious, free market that regulates itself.B. Increase the volume of securities sold to the publicC. protect investors and ensure free and fair disclosure about Securities.D. Promote the development of the capital market.

51. Any change in the instrument which affect or changes the Liabilities of the parties in any way is called:

A. ForgeryB. SpoliationC. Qualified AcceptanceD. Material Alteration

52. Portia owns a condominium unit presently insured with FSL insurance Corp. She later sells the condominium unit to Sai but the former fails to obtain the transfer of the insurance policy in the name of Sai. Subsequently a lightning struck the condominium and caused fire which completely destroyed it. Who may collect the insurance?

A. Portia should collect because the insurance policy is in her name.B. Sai should collect because she is the one who has insurable interestC. Both Portia and Sai should collect and divide the proceeds accordingly in portion to the time they possessed the condominium.D. Both Portia and Sai may not collect because either one or the other lacks insurable interest when the insurance was taker or at the time of the loss.

53. Mr. Popeye took out a policy of insurance on his own life and making his boyfriend Brutus, the beneficiary. May Brutus collect from the insurance proceeds?

A. Yes because he has insurable interest being the boyfriend of popeye.B. No because he has no insurable interest in the life of popeye.C. Yes because the non-existence of insurable interest of the beneficiaryIn this case does not matter.E. No because his relationship with Popeye is prohibited by law.

54. Which corporation will not be considered de facto corporation?

A. A mining corporation organized as a closed corporation.B. A corporation with a subscribed capital of P5 million and an Authorized capital stock of P30 million.C. A corporation with a paid up capital of P5 million where the subscribe the capital is P25 million.D.A private corporation incorporated under a special law.

55. Which best describes the liability of directors?

A. Directors or trustees who vote for or assent to unlawful acts are liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.B. Directors or trustees who are guilty of negligence in directing the affairs of the corporation are liable solidarily for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.C. Directors or trustees who are guilty of gross negligence in directing the affairs of the corporation are liable solidarily for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.D. When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, an interest adverse to the corporation, he shall be considered a trustee of the profits he may acquire when so directed by the board through a duly approved resolution.

56. B bought a car from X Company on installment basis. He paid a down payment of P 200, 000 and the balance amounting to P 800, 000 shall be paid within a period of five years. To secure the balance, the said car was mortgaged by B to X Company. When B failed to pay three successive

installments, X Company foreclosed the mortgage, but after the foreclosure sale, there is still a deficiency amounting to P 160, 000.00. Can X Company validly demand payment of the deficiency from B?

A. Yes, in chattel mortgage, the mortgagee is entitled to recover the deficiencyB. No, under the Recto Law, the buyer-mortgagor is no longer liable for the deficiencyC. No, under the law on pledge, the debtor’s obligation is extinguished once the object is foreclosedD. Yes, under the Maceda Law, the creditor-mortgagor has the right to demand deficiency from the debtor-mortgagor.

57. XX owns a helicopter which he uses in his regular business for carrying expensive goods from Manila to Cebu. Every Sunday during his spare time, he accepts amateur paratroopers who jump from the helicopter. He is paid a sum for transporting them to 10, 000 feet. Is XX a common carrier?

A. No, because the carriage of the paratroopers is not the regular business of XX.B. No, because it is not registered as a common carrier.C. Yes, if the agreement with the paratroopers specify XX to be a common carrier.D. Yes, because XX transports people for a fee.

58. Which of the following vacancies cannot be filled up by the remaining directors although they still have a quorum?

A. Vacancy caused by removal of a director or directorsB. Vacancy caused by the expiration of the termC. Vacancy caused by the resignation of a directorD. Vacancy caused by the increase in the number of directors

59. A bus with body number 001, owned by ABC lines, a common carrier was hired by PP. PP also hired DV one of the off-duty drivers of the carrier. The contract stipulated that PP could determine the destinations of the bus, could have complete control of the trips as long as the bus rental is paid and the bus is returned after five days. It was also further agreed that ABC Lines would not interfere with the conduct of the travel and the destinations. Paragraph 7 of the contract provides that ABC Lines shall not be liable for the

negligence of DV. Is the stipulation in Paragraph 7 valid?

A. No. because it is contrary to public policy and is void whether the carries is private or common.

B. No, because it is contrary to public policy because under the facts, ABC line is a common carrier.

C. yes, because in the particular contract, aBC line shall be deemed a private carrier. 

D. tes because the stipulation was agreed upon without duress.

60. which of the following complies with the legal requisites for incorporation?

Authorized capital stock Subscribed capital Paid-up capitalA. 1 million 250k 50kb. 1m 2.4m 600kc. 60k 15k 5kd. 76k 19k 4.750k

61. Under the Securities regulation Code, the following are considered insiders, except:

A. The issuerB. A director or officer of or a person controlling or controlled by the issuer.C. A government employee, or director, or officer of an exchange, clearing agency or Securities Regulation office.D. A person whose relationship or former relationship to the issuer gives him access to a fact of special significance about the issuer or the security that is not generally available.

The following facts are for numbers 62 to 69.

S subscribed 10,000 shares with a par value of P10.00 per share from X Corporation and he initially paid P40, 000.00.

62. In the stockholders’ meeting for the amendment of the corporate by-

laws, how many of his shares car, be voted by S?

A. 10,000 C. 20,000B. 4,000 D. 50,000

63. How many shares have been paid by S?A. 10,000 C. 6,000B. 4,000 D. None

64. If there are seven directors to be elected in the corporation, how many votes can be cast by S?

A. 10,000 C. 42,000B. 28,000 D. 70,000

65. If the shares of S had been declared delinquent and dividends will be declared by the Board of Directors, how many of his shares, if any, are entitled to dividends?

A. 4,000 C. 10,000B. 6,000 D. None

66. If the subscription contract is silent as regards the payment of the balance, when must S pay the balance of P60, 000.00?

A. Within 30 days from the date of subscriptionB. Within one year from the date of subscriptionC. As stated in the callD. Anytime his means permit him to do so

67. If S will fail to pay the balance as required and his shares shall be declared delinquent, what right of S will not be suspended?

A. Right to vote C. Preemptive rightB. Right to dividend D. Right to attend meetings

68. If the amount due from the delinquent shares of S is P67, 350.00 and the delinquent shares are to be sold at public auction, whom shall they be sold?

A. W, who offered to pay P67, 350 for 6,000 shares

B. X, who offered to pay P65, 000 for 4,000 sharesC. Y, who offered to pay P60, 000 for 3,000 sharesD. Z, who offered to pay P67, 000 for 3,500 shares

69. May S demand for the issuance of certificate of Stocks from X Corporate?

A. Yes, but for 4,000 shares onlyB. No, until the Board has issued a callC. Yes, because he has the right to do soD. No, until the shares have been fully paid

70. Which of the following is beyond the scope of the negotiable Instruments law?

A. Trade Acceptance C. Manager’s checkB. Postal Money Order D. Certificate of deposit

The following facts are for numbers 71 to 78.

On January 11, 2011, W issued an undated bill of exchange worth P10,000.00 payable to P or bearer ten days after date. The bill is addressed to X, as the drawee. From P it was negotiated by special endorsements A and then to B. B indorsed it in blank to C, who delivered it to H as payment for his loan.

71. If X accepted the bill on January 20, 2011, when shall be its maturity date for payment?

A. January 11, 2011 C. January 21, 2011B. January 20, 2011 D. January 30, 2011

72. If X will destroy the bill when it was presented for acceptance, what right is available to H?

A. Treat the bill as dishonored by non-acceptance.B. Sue X for the destruction of his propertyC. Treat the bill as accepted and held X liable thereon.D. Send notice of dishonor to persons secondarily liable.

73. If P wrote January 7, 2011 as the date of the instrument and the parties subsequent to him are holders in due course, can H validly compel W to pay

on January 17, 2011?

A. Yes, because January 7, 2011 is the actual date of the bill.B. No, because an undated instrument is considered dated as of the date of issue.

D. Yes, because the insertion of a wrong date is a personal defense not available against a holder in due course.

D. No, because the insertion of a wrong date is a real defense available against any holder.

74. If H presented it for acceptance on January 18, 2011 at 11:00 A.M. at the office of X, when may X accept the bill?

A. Within office hours not later than the following dayB. Immediately upon presentment for acceptance.C. Within a reasonable time upon presentment for acceptance.D. On or before 11:00 AM on January 19, 2011.

75. If X refused to accept the bill, can H validly demand payment from P, A and B?

A. Yes, because as indorsers, they are secondarily liable thereon.B. No, because C is the last person who negotiated the bill to him.C. Yes, because they are parties to the bill.D. No, because he did not acquire his title through the indorsement of P, A and B.

76. If X refused to accept the bill, can H sue him for the payment of the instruments?

A. No, because X is not liable until he accepts the bill.B. Yes, because the drawee is primarily liable on the bill.C. No, because the drawee is only secondarily liable on the bill.D. Yes, because the drawee is the one ordered to pay the bill.

77. What will be the effect if H will fail to present the bill for acceptance within a reasonable time from its negotiation to him?

A. P, A, B and C shall be discharged from liability thereon.B. Only P, A and B shall be discharged.C. Only W and C shall be discharged.D. All persons secondarily liable shall be discharged.

78. Is the mere delivery of the bill from C to H valid?

A. Yes, because the last indorsement is an indorsement in blank.B. No, because the bill was not indorsed to H by C.C. Yes, because a bearer the bill was not instrument remains a bearer instrument even if specially indorsed.D. No, because H acquired the bill only by assignment.

79. A bill of lading provides: “The shipping company shall be liable for P1,000 per baggage unless a higher value is declared and a higher freight is paid”. The passenger was reminded of the provision which was written in bold letters but the passenger did not declare a higher value. If the baggage is lost, shall the shipping company be liable for P10,000, the value of the baggage and the goods therein? Why?

A.Yes, because of the tenets of justice and equity.B. Yes, because of the tenets of justice and equity.B. Yes, because the stipulation limiting the liability of the carrier was not a product of mutual agreement.C. No, because a carrier has a right to limit its liability.D. No, because there was a waiver of a valid stipulation.

80. PP a passenger in a bus operated by ABC Lines, a common carrier, wants to sue after he was injured in a mishap caused by the negligence of the employee-driver.

A. PP may sue the employee-driver for breach of contract of carriage.B. PP may sue the driver based on a quasi-delict theory only.C. PP may sue the carrier based on a quasi-delict theory only.D. PP may sue the carrier based on a breach of contract or a quasi-delict theory.

81. Which does not describe the correct rule on dividends? 

A. Dividends must be declared by the corporation whenever it obtains profits from its operations.B. Stock dividends are not taxable because it represents capitalization of surplus.C. The declaration of stock dividends requires the approval of the stockholders.D. The declaration of cash dividends does not require the approval of the stockholders.

82. Which of the following applies to a close corporation?

A. By virtue of a board resolution the business of the corporation shall be managed by the stockholders rather than by the board of directors.B. By virtue of both a board and a stockholders’ resolution, the corporation shall not list any of its stocks in any stock exchange.C. By virtue of the articles of incorporation, all of the stock of all classes shall be subject to restrictions on transfer.D. By virtue of the articles of incorporation, all of the corporations issued stock, including treasury shares, shall be held of record by not more than 20 persons.

83. It is not a ground for the exercise of appraisal right.

A. Shortening of the corporate term.B. Deprivation of the right to vote of holders of common shares.C. Merger or consolidation.D. Increase in the capital stock.

84. The right of the mortgagor or a person holding a subsequent mortgage or a subsequent attaching creditor to extinguish the mortgage by paying or delivering to the mortgage the amount due on such mortgage and the reasonable costs and expenses incurred.

A. Right of redemption.B. Equity of redemptionC. Right to purchase the property by mortgagorD. Right to purchase the property by mortgagee

85. Warehouseman is justified in delivering the goods to one who is:

A. In possession of the receiptB. The holder of the non-negotiable receiptC. The holder of a negotiable receipt by which goods are deliverable to himD. The transferee of a negotiable receipt by which goods are deliverable to him

86. An instrument to be negotiable must be payable at a fixed or determinable future time. Among the following does not comply with the said requisite?

A. “I promise to pay P or order on Christmas day 2 years from now”B. “I promise to pay P or order on the death of X”C. “I promise to pay P or order 10 days before the death of X”D. “I promise to pay P or order before Valentine’s Day next year”

87. On August 1, 2003, M executed a promissory note for P50, 000.00 payable to the order of P which is payable 30 days after date. Thereafter, P indorsed the note A, A, to B, B to C, C to D, and D to M. The indorsement by the D to M was made on August 29, 2003.

A. The obligation on the note was extinguished by merger or confusion on August 29, 2003.B. M may reissue/renegotiate the promissory note after it was indorsed to him.C. M can go after P, A, B, C and D to collect.D. M may strike out the indorsement to him by D.

88. PP, a passenger, was carried gratuitously in one of the buses of Red Lines. Transport services, a common carrier, from Manila to Dagupan. Somewhere in Tarlac, the bus collided with a dump truck, causing massive injuries to PP.

A. The liability of the common carrier shall be equitably reduced because no fare was paid by PP.B. The common carrier shall not be liable because there was no contract of carriage. Since there was no fare paid, the essential element of a contract called consideration is absent.C. The common carrier still has the duty to exercise extraordinary diligence in transporting PP and is liable as if PP were a paying passenger.

D. PP is not considered a passenger but a guest.

89. The articles of incorporation may be rejected by the SEC on certain grounds. Which is not that ground?

A. Not all of the incorporate are citizens of the Philippines.B. The articles of incorporation are not substantially in accordance with the prescribed form.C. The treasurer’s affidavit concerning the subscription and paid up is false.D. The corporate purpose is patently illegal.

90. Clyde invented a method of improving the tenderness of meat by injecting an enzyme solution into the liver of the animal shortly before slaughter. Is the invention patentable?

A. No, it is a mere discovery of a new form of a new substance which does not result to the enhancement of that substance.B. Yes, it is a technical solution of a problem in any field of human activity which is new, involves an inventive step and is industrially applicable.C. No, for the reason that it is a plain use of an already known process.D. Yes, as it is a method practiced on animal body.

91. The following are copyrightable objects except one.

A. Models or designs for works of artB. Lectures, sermons, dissertations that are reduced in writingC. Choreographic entertainment in dump showsD. Photographic works including works produced by a process analogous to photography

92. In an action for damages on account of infringement of a copyright, the defendant raised the defense that he was unaware that what he had copied was copyright material. Is the defense valid?

A. Yes, his knowledge will be material in the pursuance of the action for damagesB. Yes, good faith is a valid defense in infringementC. No, the copyright of the owner exists from the time he registered it, thus the defendant is liableD. No, the right conferred by RA 8293 insofar as copyright is concerned

subsists from the moment of creation.

93. How is trademark infringement committed?

A. If a person, without the owner’s consent, reproduce, counterfeit, copy or colorably imitate a dominant feature thereof and apply such to labels, sign, etc used in commerce.B. If a person, without the owner’s consent, takes so much that the value of the original work is substantially diminished.C. If a person, without owner’s consent, makes, use, offers for sale a product obtained directly or indirectly from a processing.D. If a person, without owner’s consent, reproduces and communicates to the public the mark which will likely to cause confusion, mistakes or to deceive.

94. How are marks acquired?

A. By registration onlyB. Registration and prior useC. Registration and actual use after registrationD. By filing a declaration of actual use only

95. The following acts do not constitute copyright infringement. Which is the exception?

A. Single copy reproduction of a published work by a natural person exclusively for research and private study.B. Recitation of a work accessible to the public, privately done, and free for educational institutions.C. Making quotations from a published work.D. One back up copy of a computer program.

96. Which of the following does not require the assent or vote of the stockholders representing at least 2/3 of the outstanding capital stock?

A. Granting compensation to members of the board.B. Sale of substantially all of corporate property.C. Increase in the corporation’s capital stock.D. Change in the corporate name.

97. The ship owner may not invoke the “limited liability rule” in the following situations, except.

A. When the claim is based on the expenses for the last repairs of the ship prior to its loss.B. When the carrier and the cargoes are fully insured.C. When the claim is based on the Workmen’s Compensation Law.D. When the loss is due to the fault or negligence of the ship captain alone.

The following facts are for numbers 98 to 100.

X signed a bill of exchange in the amount of P10,000.00 payable to P or order with Y as the drawee. After issuance to P, it was negotiated to A, B, C, D, E and H all by special indorsements. The Bill is payable 5 days after sight.

98. Assuming that Y accepted the bill on January 24, 2011, but he learned on January 26, 2011 that X’s signature on the bill was forged, can be validly refuse to pay the bill on January 29, 2011?

A. Yes, because forgery is a real defense available against any holder.B. No, because as acceptor, he admits the existence of the payee and his then capacity to endorse.C. No, because by his acceptance, he admits the existence of the drawer, the genuineness of his signature and his authority to draw the bill.D. Yes, because if he will pay it, he cannot demand reimbursement from X.

99. What will be the effect if H cancelled the signature of C?

A. The bill is dischargedB. D, P, A, B, C D and E are dischargedC. C, D and E are dischargedD. Only C is discharged

100. If Y refused to accept the bill, when is there no need to send notice of dishonor to the drawer?

A. When he is an accommodation partyB. When the drawer and the drawee are the same personC. When the bill is payable to the order of a fictitious personD. When he countermanded payment of the bill