BAR EXAMINATION 2008

MERCANTILE LAW
21 September 2008

8:00 A.M. - 12 Noon

INSTRUCTIONS

This questionnaire consists of fourteen (19) numbers contained in nine (9) pages. Read each
question very carefully. Answer legibly, clearly and concisely. Start each number on a separate page;
an answer to a subquestion under the same number may be written continuously on the same page
and on the immediately succeeding pages until completed. Do not repeat the question.
You will be given credit for your knowledge of legal doctrine and for the quality of your legal
reasoning. A mere "Yes" or "No" answer without any corresponding discussion will not be given any
credit.
HAND IN YOUR NOTEBOOK WITH THIS QUESTIONNAIRE
GOOD LUCK!!!

Signed DANTE O. TINGA

Chairperson
2008 Bar Examination Committee

PLEASE CHECK THE NUMBER OF PAGES IN THIS SET

WARNING: NOT FOR SALE OR UNAUTHORIZED USE
MERCANTILE LAW
I
X corporation entered into a contract with PT Contruction Corp. for the latter to construct and build a
sugar mill within six (6) months. They agreed that in case of delay, PT Construction Corp. will pay X
Corporation P100,000 for every day of delay. To ensure payment of the agreed amount of damages,
PT Construction Corp. secured from Atlantic Bank a confirmed and irrevocable letter of credit which
was accepted by X Corporation in due time. One week before the expiration of the six (6) month
period, PT Construction Corp. requested for an extension of time to deliver claiming that the delay
was due to the fault of X Corporation. A controversy as to the cause of the delay which involved the
workmanship of the building ensued. The controversy remained unresolved. Despite the
controversy, X Corporation presented a claim against Atlantic Bank by executing a draft against the
letter of credit.
a. Can Atlantic Bank refuse payment due to the unresolved controversy? Explain. (3%)

b. Can X Corporation claim directly from PT Construction Corp.? Explain. (3%)

II
Tom Cruz obtained a loan of P 1 Million from XYZ Bank to finance his purchase of 5,000 bags of
fertilizer. He executed a trust receipt in favor of XYZ Bank over the 5,000 bags of fertilizer. Tom Cruz
withdrew the 5,000 bags from the warehouse to be transported to Lucena City where his store was
located. On the way, armed robbers took from Tom Cruz the 5,000 bags of fertilizer. Tom Cruz now
claims that his obligation to pay the loan to XYZ Bank is extinguished because the loss was not due
to his fault. Is Tom Cruz correct? Explain. (4%)
III
a. As a rule under the Negotiable Instruments Law, a subsequent party may hold a prior party
liable but not vice-versa. Give two (2) instances where a prior party may hold a subsequent
party liable. (2%)
b. How does the "shelter principle" embodied in the Negotiable Instruments Law operate to
give the rights of a holder-in-due course to a holder who does not have the status of a
holder-in-due course? Briefly explain. (2%)
IV
AB Corporation drew a check for payment to XY Bank. The check was given to an officer of AB
Corporation who was instructed to deliver it to XY Bank. Instead, the officer, intending to defraud the
Corporation, filled up the check by making himself as the payee and delivered it to XY Bank for
deposit to his personal account. AB Corporation come to know of the officer's fraudulent act after he
absconded. AB Corporation asked XY Bank to recredits its amount. XY Bank refused.
a. If you were the judge, what issues would you consider relevant to resolve the case? Explain
(3%)
b. How would you decide the case? Explain. (2%)
V
Pancho drew a check to Bong and Gerard jointly. Bong indorsed the check and also forged Gerard's
endorsement. The payor bank paid the check and charged Pancho's account for the amount of the
check. Gerard received nothing from the payment.
a. Pancho asked the payor bank to recredit his account. Should the bank comply? Explain fully.
(3%)
b. Based on the facts, was Pancho as drawerdischarged on the instrument? Why?(2%)