2013 (Mercantile Law) Bar Exam Questions: Essay Question 10

[Answer/discuss the question below. Or check Mercantile Law Instructions; Mercantile Law Essay Questions: 1, 2, 3, 4, 5, 6, 7, 8 and 9; Mercantile Multiple Choice Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]


Bell Philippines, Inc. (BelPhil) is a public utility company, duly incorporated and registered with the Securities and Exchange Commission. Its authorized capital stock consists of voting common shares and non-voting preferred shares, with equal par values of P100.00/share. Currently, the issued and outstanding capital stock of BelPhil consists only of common shares shared between Bayani Cruz, a Filipino with 60% of the issued common shares, and Bernard Fleet, a Canadian, with 40%.

To secure additional working fund, BelPhil issued preferred shares to Bernard Fleet equivalent to the currently outstanding common shares. A suit was filed questioning the corporate action on the ground that the foreign equity holdings in the company would now exceed the 40% foreign equity limit allowed under the Constitution for public utilities.

Rule on the legality of Bernard Fleet’s current holdings. (8%)


  1. galing ni anon. that was the case that was running in my mind when i answered this question. pero hindi ko talaga maalala ang title kaya kaya parang ganito ang sagot ko :

    “Bernard Fleet’s current shareholdings are legal.

    Well-settled in our jurisprudence that limitation on ‘capital’ provided for under the Constitution pertains only to shares of stock which are entitled to vote.

    Here, only the holders of Belphil’s common shares are entitled to vote and the preferred shares are not entitled to the same.

    Accordingly, the issuance of non-voting preferred shares which are equivalent to Bernard Fleet’s 40% common shares does not violate the equity limit provided for under the Constitution.”

    1. Benj ok naman sana ang sagot mo, kaya lng original case lang yang sagot mo, medyo kulang lang. Under the MFR case ng Gamboa vs. Teves medyo nabago na kasi yung ruling sa original case, the second case already enunciated that in partly nationalized industries there is no longer any distinction as to the capital holdings between foreign and filipino, it should be based on all classes of share whether common, preferred or any other classes of shares. For example, an industry which require 60 percent filipino ownership which naturally gives at the maximum 40 percent foreign ownership, that 40 percent should pertain to all kinds of share without any distinction. Anyway im not trying to impose my answer since im not the one who will tell whether it is right or wrong , suggested answer lang po, we are at the mercy of the same examiner. Tnx for your comment.

      1. Pare panong nabago sa MFR? Hindi ba denied with finality nga yung ruling sa MFR? Saka yung facts hindi naman pasok sa Gamboa v Teves, yung doctrinal definition lang na base din bro sa FIA.

      2. @peevy alam mo pare yung mga sinusulat namin dito ay puro mga naisagot namin sa bar, if you disagree with it just post your better answer. Wag naman yung sinusupalpal mo head on na medyo napapansin ko sa mga comments mo. Wala naman kami sinasabi na tama yung samin kaya nga may word of caution parati. You can always contradict it by explaining exhaustively yung point mo which if we find more accurate ina acknowledge naman namin. Yung sinasabi ko namang nabago is the definition of “capital” , kung mali man ako eh di mali pero yun ang nasa case na ibinigay samin during the review, im not saying na pareho ng facts yung sa gamboa at sa question but a factual situation need not be in all four corners with a case in order for such case or part of its ruling to be applicable in a given situation, so whatever is the dispositive portion of that case does not really concern me because ang discussion ko lang naman is the meaning of capital. Kahit pa sabihin mo na yung doctrinal definition was based din dun sa FIA it would not matter because sa kopya ko ng case the definition was also cited in the case of Gamboa, so if I cite the case or the FIA itself wala namang deprensya because I have a legal basis.

  2. aww ganun ba? so mali rin pala ang sagot ko. honestly, sa sobrang dami ng binasa kong case digests (na ginawa ko during my law school days) halo-halo na ang info sa utak ko. at sa limitadong panahon ng review, hindi ko na na-check kung may updates sa mga rulings ng mga case na ni-digest ko. anyways, sana bigyan ng points ang effort ko haha

    1. i agree. nahirapan talaga ako.

      imo, in order to hurdle the bar exam, it all really boils down to an examinee’s preparation.

      well, i thought i was quite prepared to take the 2013 bar exam na but it turned out marami pa pala akong kailangang basahin pa uli (kahit na nadaan ko na at least twice ang bawat syllabus).

      during the examination days, konti lang ang sure ako sa mga sagot ko at karamihan sa mga question, kailangan kong pag-isipan ang mga law or jurisprudence na pwedeng kung i-apply base sa given facts at doon napunta lahat ang oras ko sa pagsagot.

      i just i made it sure na ang bawat answer ko ay isang legal basis lang gagamitin ko, unless a question required more than one legal basis for an answer.

    2. Dont lose hope because eto nga ang maganda sa 2013 bar exam, kahit mukhang mahirap at may isang definite answer, one bar reviewer who is famous to all of us said that open ended daw ang questions and when they meet in the UP law center to discuss suggested answers, he would push for the acceptance of dissenting opinions as valid answers basta may basis.

      1. Hahaha, in my dreams. Hindi naman cguro magiging top ten kung commercial law lang ang comfortable ako. Hirap na nga yung pumasa top ten pa, hehehe.

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