2015 Bar Exam Suggested Answers in Mercantile Law by the UP Law Complex

JANUARY 13, 2019

I.

(A) Nadine has a checking account with Fair & Square Bank. One day, she lost her checkbook and the
finder was able to forge her signature and encash the forged check. Will Nadine be able to recover the
amount debited from her checking account from Fair & Square Bank? Justify your answer. (3%)

(B) is a manager’s check as good as cash? Why or why not? (2%)

(C) When can you treat a bill of exchange as a promissory note? (3%)

SUGGESTED ANSWER

(A) Yes, Nadine should be able to recover the amount debited from her checking account from Fair and
Square Bank. The Bank is supposed to know the signature of its clients. The Bank was thus negligent in
not detecting the forgery of Nadine’s signature, and paying the check. Under the circumstances, there
was no negligence on the part of Nadine which would preclude her from invoking forgery (Philippine
National Bank v. Quimpo, G.R. No. 53194, March 14, 1988, 158 SCRA 582).

(B) Yes, the Supreme Court held in various decisions that a manager’s check is good as cash. A manager’s
check is a check drawn by the bank against itself. It is deemed pre-accepted by the bank from the
moment of issuance. The check becomes the primary obligation of the bank which issues it and
constitutes its written promise to pay. By issuing it, the bank in effect commits its total resources,
integrity and honor behind the check (Tan v. Court of Appeals, G.R. No. 108555, December 20, 1994, 239
SCRA 310; International Corporate Bank V. Gueco, G.R. No. 141968, February 12, 2001. 351 SCRA 516;
Metrobank and Trust Company v. Chiok, G.R. No. 172652, November 26, 2014).

1. C) A bill of exchange may be treated as a promissory note in the following

instances:

1. the drawee is a fictitious person or a person not having the capacity to contract;

1. the drawer and the drawee are one and the same person;

1. where the instrument is so ambiguous that there is a doubt as to whether the instrument is a
bill or a note, the holder may treat it either as a bill or note, at the option of the holder (Sections
130 and 17 of the Negotiable Instruments Law).

ALTERNATIVE ANSWER
(B) Manager’s check is not legal tender because under Article 1249 of the Civil Code, checks do not
produce the effect of payment until encashed, or through the fault of the creditor, their value has been
impaired. Moreover, under the Central Bank Act, the debtor cannot compel the creditor to accept
checks in payment of a debt whether public or private (Article 60 of RA No. 7653).

II

(A) Novette entered into a contract for the purchase of certain office supplies. The goods were shipped.
While in transit, the goods were insured by Novette. Does she have an insurable interest over the goods
even before delivery of the same to her? Explain. (2%)

(B) Will an insurance policy be binding even if the premium is unpaid?

What if it were partially paid? (3%)

SUGGESTED ANSWER

(A) Yes, Novette has an insurable interest in the goods. The contract of sale was already perfected and
Novette acquired interest thereon, although the goods have yet to be delivered.

(B) As a general rule, the insurance policy is not valid and binding, unless the premium thereof has been
paid. This is the cash-and-carry rule under the Insurance Code. Premium is the consideration for the
undertaking of the insurer to indemnify the insured against a specified peril. There are exceptions,
however, one of them is, when there is an agreement allowing the insured to pay the premium in –
installments and partial payment has been made at the time of the loss (Makati Tuscany Condominium
Corporation v. Court of Appeals, G.R. No. 95546, November 6, 1992, 215 SCRA 463).

III.

(A) Discuss the three-fold character of a bill of lading. (3%)

(B) What is a “Jason clause” in a charter party? (2%)

(C) Are common carriers liable for injuries to passengers even if they have observed ordinary diligence
and care? Explain. (2%)

SUGGESTED ANSWER

(A) A bill of lading is considered a receipt for the goods shipped to the common carrier. It also serves as
the contract by which three parties, namely, the shipper, the carrier, and the consignee undertake
specific responsibilities and assumed stipulated obligations. Third, it is the evidence of the existence of
the contract of carriage providing for the terms and conditions thereof (Keng Hua Paper Products Co.,
Inc. v. Court of Appeals, G.R. No. 116863, February 12, 1998, 286 SCRA 257).

(B) The Jason clause derives its name from The Jason (225 US 32 [1912]) decided by the US Supreme
Court under the Harter Act. By the Jason clause, a shipowner (provided he had exercised due diligence
to make the ship seaworthy and properly manned, equipped and supplied) could claim a general
average contribution from cargo, even where the damage was caused by faulty navigation of the vessel,
provided that the bill of lading excluded liability for such faults.

[NB. This is not a familiar principle in Philippine maritime commerce and the question is not consistent
with the norm of asking questions to test the knowledge of entry level lawyers. It is respectfully
submitted that the question should be given outright credit in favor of the examinees regardless of their
answer]

(C) Yes, common carriers are liable for injuries to passengers even if the carriers observed ordinary
diligence and care, because the obligation imposed upon them by law, is to exercise extraordinary
diligence. Common carriers are bound to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with a due regard for all the
circumstances (Article 1755 of the Civil Code).

IV.

(A) Maine Den, Inc. opened an irrevocable letter of credit with Fair Bank, annection with Maine Den,
Inc.’s importation of spare parts for startile mills. The imported parts were released to Maine Den, Inc.
after it executed a trust receipt in favor of fair Bank. When Maine Dan Inc. was unable to pay its
obligation under the trust receipt, Fair Rank sued Maine Den, Inc. for estafa under the Trust Receipts
Law. The court, however, dismissed the suit. Was the dismissal justified? Why or why not? (3%)

(B) Does the rule “res perit domino” apply in trust receipt transactions? Explain. (2%)

SUGGESTED ANSWER

(A) The dismissal of the complaint for estafa is justified. Under recent jurisprudence, the Supreme Court
held that transactions referred to in relation to trust receipts, mainly involved sales, and if the entruster
knew even before the execution of the alleged trust receipt agreement that the goods subject of the
trust receipt were never intended by the entrustee for resale or for the manufacture of items to be sold,
the agreement is not a trust receipt transaction but a simple loan, notwithstanding the label. In this
case, the object of the trust receipt, spare parts for textile mills, were for the use of the entrustee and
never intended for sale. As such, the transaction is a simple loan (Ng v. People of the Philippines, G.R.
No. 173905, April 2010, 619 SCRA 291; Land Bank v. Perez, G.R. No. 166884, June 2012, 672 SCRA 117:
and Hur Ting Yang v. People of the Philippines, G.R. No. 195117, August 14, 2013, 703 SCRA 606).

(B) No. This is because the loss of the goods, documents or instruments which are the subject of a trust
receipt pending their disposition, irrespective of whether or not it was due to the fault or negligence of
the entrustee, shall not extinguish the entrustee’s obligation to the entruster for the value thereof. Also,
while the entruster is made to appear as owner of the goods covered by the trust receipt, such
ownership is only a legal fiction to enhance the entruster’s security interest over the goods (Section 10
of Pres. Decree No. 115; Rosario Textile Mills Corp. v. Home Bankers Savings and Trust Company, G.R.
No. 137232, June 29, 2005, 462 SCRA 88).
V.

(A) A standby letter of credit was issued by ABC Bank to secure the oblistion of X Company to Y
Company. Under the standby letter of credit, if there is failure on the part of X Company to perform its
obligation, then y Company will submit to ABC Bank a certificate of default (in the form prescribed under
the standby letter of credit) and ABC Bank will have to pay Y Company the defaulted amount.
Subsequently, Y Company submitted to ABC Bank a certificate of default notwithstanding the fact that X
Company was not in default. Can ABC Bank refuse to honor the certificate of default? Explain. (3%)

(B) Is the Uniform Customs and Practice for Documentary Credits of the International Chamber of
Commerce applicable to commercial letters of credit issued by a domestic bank even if not expressly
mentioned in such letters of credit? What is the basis for your answer? (3%)

SUGGESTED ANSWER

(A) No. Under the doctrine of independence in a letter of credit, the obligation of the issuing bank to pay
the beneficiary is distinct and independent from the main and originating contract underlying the letter
of credit. Such obligation to pay does not depend on the fulfillment or non-fulfillment of the originating
contract. It arises upon tender of the stipulated documents under the letter of credit. In the present
case, the tender of the certificate of default entitles Y to payment under the standby letter of credit,
notwithstanding the fact that X Company was not in default. This is without prejudice to the right of X
Company to proceed against Y Company under the law on contracts and damages (Insular Bank of Asia
and America v. Intermediate Appellate Court, G.R. No. 74834, November 17, 1988, 167 SCRA 450).

1. B) Yes, the Supreme Court has held that the observance of the Uniform Customs and Practice in
the Philippines, is justified by Article 2 of the Code of Commerce, which enunciates that in the
absence of any particular provision in the Code of Commerce, commercial transactions shall be
governed by generally-observed usages and customs (Bank of the Philippine Islands v. De Reny
Fabric Industries, Inc., G.R. No. L-24821, October 16, 1970, 35 SCRA 253).

ALTERNATIVE ANSWER

(A) Under the fraud exception principle, the beneficiary may be enjoined from collecting on the letter of
credit in case of fraudulent abuse of credit. The issuance of a certificate of default, despite the fact that
X company is not in default, constitutes fraudulent abuse of credit (Transfield Philippines v. Luzon Hydro
Corporation, G.R. No. 146717, November 22, 2004, 443 SCRA 307).

VI

(A) DEF Corporation has retained surplus profits in excess of 100% ofite paid-in capital stock. However, it
is unable to declare dividends, because it had entered into a loan agreement with a certain creditor
wherein the declaration of dividends is not allowed without the consent of such creditor. If DEF
Corporation cannot obtain this consent, will it be justified in not declaring dividends to its stockholders?
Explain. (3%)

(B) What is “watered stock” and what is the legal consequence of the issuance of such stock? (3%)
SUGGESTED ANSWER

(A) Yes. Stock corporations are prohibited from retaining surplus profits in excess of 100% of their paid-
in capital stock except among others, when the corporation is prohibited under any loan agreement
with any financial institution or creditor, whether local or foreign, from declaring dividends without the
consent of the creditor, and such consent has not been secured (Section 43 of the Corporation Code).

(B) Watered stocks are stocks issued for a consideration less than its par or issued value or for a
consideration in any form other than cash, valued in excess of its fair value. Any director or officer of a
corporation consenting to the issuance of watered stocks or who, having knowledge thereof, does not
forthwith express his objection in writing and file the same with the corporate secretary, shall be
solidarily liable with the stockholder concerned to the corporation and its 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 (Section 65 of the Corporation Code).

VII

(A) A foreign company has been exporting goods to a Philippine company for several years now. When
the Philippine company failed to pai the latest exportation, the foreign company sued to collect in the
Philippines. The Philippine company interposed the defense thai the foreign company was doing
business in the Philippines without license; hence, could not sue before a Philippine court. Is this
defence tenable? Explain your answer. (3%)

(B) Define:

1. Doctrine of apparent authority (2%)

2. Trust fund doctrine (2%)

SUGGESTED ANSWER

(A) The defense is not tenable. The mere act of exporting from one’s own country, without doing any
specific commercial act within the territory of the importing country, can not be deemed as doing
business in the importing country. Thus, the foreign company may sue in the Philippines despite lack of
license to do business in the Philippines (B. Van Zuiden Bros Ltd. v. GTVL Manufacturing Industries, G.R.
No. 147905, May 28, 2007, 523 SCRA 233).

(B)1.

By the doctrine of apparent authority, the corporation will be estopped from denying the agent’s
authority if it knowingly permits one of its officers or any other agent to act within the scope of an
apparent authority, and it holds him out to the public as possessing the power to do those acts (Advance
Paper Corporation v. Arma Traders Corporation, G.R. No. 176897, December 11, 2013, 712 SCRA 313).

2. By the trust fund doctrine, subscriptions to the capital stock of a corporation constitute a fund
to which the creditors have the right to look for satisfaction of their claims. The scope of the
doctrine encompasses not only the capital stock, but also other property and assets generally
 regarded in equity as a trust fund for the payment of corporate debts (Halley v. Printwell, Inc.,
G.R. No. 157549, May 30, 2011, 649 SCRA 116; Ong v. Tiu, G.R. Nos. 144476 & 144629, April 8,
2003, 401 SCRA 1).

VIII

Barn filed an action to enjoin SN Company’s Board of Directors from selling a parcel of land registered in
the corporation’s name, to compel the corporation to recognize Barn as a stockholder with 50 shares, to
allow him to inspect the corporate books, and to claim damages against the corporation and its officers.
Subsequently, the corporation and the individual defendants moved to dismiss the complaint since the
corporation’s certificate of registration was revoked by the SEC during the pendency of Barn’s case on
the ground of non-compliance with reportorial requirements. The special commercial court granted the
motion and reasoned that only an action for liquidation of assets can be maintained when a corporation
has been dissolved and Barn cannot seek reliefs which in effect lead to the continuation of the
corporation’s business. The court also ruled that it lost jurisdiction over the intra-corporate controversy
upon the dissolution of the corporation.

(A) Was the court correct? (3%)

(B) Four years later, SN Company files an action against Barn to recover corporate assets allegedly held
by the latter for liquidation. Will this action prosper? (3%)

SUGGESTED ANSWER

(A) The court is not correct. An action to be recognized as a stockholder

and to inspect corporate documents, is an intra-corporate dispute which does not constitute a
continuation of business. The dissolution of the corporation simply prohibits it from continuing its
business. Moreover, under Section 145 of the Corporation Code, no right or remedy in favor of or
against any corporation, its stockholders, members, directors and officers shall be removed or impaired
by the subsequent dissolution of the corporation. The dissolution does not automatically convert the
parties into strangers or change their intra corporate relationship. Neither does it terminate existing
causes of action which arose because of the corporate ties of the parties. The cause of action involving
an intra-corporate controversy remains and must be filed as an intra-corporate dispute despite the
subsequent dissolution of the corporation (Aguirre v. FQB +7, Inc., G.R. No. 170770, January 9, 2013, 688
SCRA 242).

(B) The action cannot prosper because the corporation has no more legal capacity to sue after three
years from its dissolution (Alabang Development Corporation v. Alabang Hills Village Association, G.R.
No. 187456, June 2, 2014, 724 SCRA 321).

IX

(A) Able Corporation sold securities to 21 non-qualified buyers during a 15 month period, without
registering the securities with the Securities and Exchange Commission. Did Able Corporation violate the
Securities Regulation Code? Explain. (2%)
(B) Securities issued by the Philippine government are “exempt securities”. and, therefore, need not be
registered with the Securities and Exchange Commission prior to their sale or offering to the public in
the Philippines. What is the rationale behind this exemption? (2%)

(C) Why is the Securities Regulation Code called a “truth in securities law”? (2%)

SUGGESTED ANSWER

(A) Yes, because under the Securities Regulation Code (SRC), securities shall not be sold or offered to be
sold to the public within the Philippines unless the securities are registered with and approved by the
Securities and Exchange Commission. Public means twenty (20) or more inventors. The fact that the
securities were sold during a fifteen (15) month period is immaterial. However, the sale of securities to
less than 20 investors if done during a twelve (12) month period is an exempt transaction under the
Securities Regulation Code.

(B) The rationale for the exemption is that the public is amply protected

even without the registration of the securities to be issued by the government, since the government is
presumed to be always solvent.

(C) The Securities Regulation Code is called a “truth in securities law” because it requires the issuer to
make full and fair disclosure of information about securities being sold or offered to be sold within the
Philippines, and penalizes manipulative and fraudulent acts, devices and schemes.

X.

Mr. and Mrs. Reyes invested their hard-earned savings in securities iss by LEAD Bank. After discovering
that the securities sold to them were me registered with the SEC in violation of the Securities Regulation
Code. th spouses Reyes filed a complaint for nullity of contract and for recovery of a sum of money with
the RTC. LEAD Bank moved to dismiss the case on the ground that it is the SEC that has primary
jurisdiction over actions involving violations of the Securities Regulation Code. If you were the judge,
how would you rule on the motion to dismiss? (3%)

SUGGESTED ANSWER

The motion should be denied. Civil suits falling under the SRC (like liability for selling unregistered
securities) are under the exclusive original jurisdiction of the RTC and hence, need not be first filed
before the SEC unlike criminal cases, wherein the latter body exercises primary jurisdiction (Pua v.
Citibank, G.R. No. 180064, September 16, 2013, 705 SCRA 677),

XI

(A) Why is the Bangko Sentral ng Pilipinas considered a lender of last resort? (2%)

(B) Distinguish a conservator from a receiver of a bank. (2%)

(C) What is insider trading? (2%)

SUGGESTED ANSWER

(A) It is considered the lender of last resort because it lends to banks and similar institutions under
financial distress when they have no other means to raise funds.

(B) A conservator is appointed if a bank or quasi-bank is in a state of continuing inability or unwillingness

to maintain a condition of liquidity, deemed adequate to protect the interest of creditors and
depositors. The conservator shall take charge of the assets and liabilities of the bank and exercise
management and other powers to restore the bank’s viability. The conservatorship shall not exceed one
year. A receiver is appointed generally, if the realizable value of the bank’s assets as determined by BSP
is less than its liabilities. The receiver shall take charge of the assets and liabilities of the institution and
administer the same for the benefit of its creditors. The receiver shall determine within 90 days whether
the bank can be rehabilitated, otherwise, he shall recommend the closure of the institution,

(C) Insider trading is the buying or selling by securities by an insider while che possession of a material
non-public information.

XII

(A) Raymond invested his money in securities issued by the Philippine government, through his bank.
Subsequently, the Bureau of Internal Revenue asked his bank to disclose his investments. His bank
refused the request for disclosure on the ground that the investments are confidential under the
Secrecy of Bank Deposits Law (Republic Act No. 1405, as amended). Is the bank’s refusal justified?
Defend your answer. (2%)

(B) First Bank received an order of garnishment over a client’s peso and dollar deposits in First Bank.
Should First Bank comply with that order? Explain. (3%)

SUGGESTED ANSWER

(A) It is justified. Under RA No. 1405, investment in bonds issued by the Philippine government are also
absolutely confidential and may not be examined, inquired or looked into by any person, government
official, bureau or office, save for the exceptions provided by law. None of the exceptions apply in the
present case.

(B) First Bank should comply with the order of garnishment over a client’s peso deposits, because there
is nothing in RA No. 1405 that places bank deposits beyond the reach of judgment creditor. And the
disclosure of information on bank deposits pursuant to the writ of garnishment, is only incidental to the
execution process (PCIB v. Court of Appeals, G.R. No. 73610, April 19, 1991, 193 SCRA 452). The dollar
deposits, however, are exempt from garnishment or court order under the Foreign Currency Act (RA No.
6426). Thus, the bank should not comply with this part of the garnishment.

XIII

(A) A commercial bank wants to acquire shares in a cement manufacturing company. Do you think it can
do that? Why or why not? (2%)
(B) A court found the interest charged by a bank as excessive and unconscionable and struck down the
contractual stipulation on interest. If you were the judge, what would you impose as the applicable
interest rate? State your legal basis. (2%)

(C) What is the single borrower’s limit? (2%)

SUGGESTED ANSWER

(A) A commercial bank cannot acquire shares in a cement manufacturing

company, because a commercial bank can only invest in the equity of allied undertakings, meaning,
undertakings related to banking (Section 30 of RA No. 8791).

(B) I will impose the legal rate of interest which is currently set at 6% per annum.

(C) Under the single borrower’s limit, the total amount of loans, credit accommodations and guarantee
that the bank may extend to any person, shall not exceed 25% of the bank’s net worth. While the law
sets the ceiling at 20% of the bank’s net worth, it also empowers the BSP to modify the ceiling. The
current SBL as set by BSP, is 25% of the Bank’s net worth

XIV

(A) Differentiate trademark, copyright and patent from each other. (6%)

(B) What is the doctrine of equivalents? (2%)

(C) In what ways would a case for infringement of trademark be different from a case for unfair
competition? (3%)

SUGGESTED ANSWER

(A) 1.) As to definition:

1. Trademark is any visible sign capable of distinguishing goods.

2. Copyright is an incorporeal right granted by statute to the author or creator of original literary
and artistic works whereby he is invested for a limited period of time with the right carry out,
authorize and prevent the reproduction, distribution, transformation, rental, public
performance and other forms of communication of his work to the public.

3. Patent is any technical solution of any problem in any field of human activity which is new,
requires an inventive step and industrially applicable.

2.) As to object:

1. The object of trademark are goods.

2. The object of copyright are original literary and artistic works.

3. The object of patent is invention.

3.) As to term:
 1. The term of trademark is ten years.

2. The term of copyright is generally 50 years.

3. The term of patent is 20 years from application.

4.) As to how acquired:

1. Trademark is acquired through registration and use.

2. Copyright is acquired from the moment of creation.

3. Patent is acquired through application with the IPO.

(B) Under the doctrine of equivalents, infringement of patent occurs when a device appropriates a prior
invention by incorporating its innovative concept and albeit with some modifications and changes which
performs the same function in substantially the same way to achieve the same result (Godines v. Court
of Appeals, G.R. No. 97343, September 13, 1993, 226 SCRA 338).

(C)

1. In infringement of trademark, prior registration of the trademark is a prerequisite to the action,

whereas in unfair competition, trademark registration is not necessary.

2. Trademark infringement is the unauthorized use of the registered trademark, while unfair
competition is the passing off one’s goods as those of another.

3. In infringement of trademark, fraudulent intent is unnecessary, whereas in unfair competition,

fraudulent intent is essential (Del Monte Corporation v. Court of Appeals, G.R. No. 78325,
January 25, 1990, 181 SCRA 410).

XV

CHEN, Inc., a Taiwanese company, is a manufacturer of tires with the mark Light Year. From 2009 to
2014, Clark Enterprises, a Philippine registered corporation, imported tires from CHEN, inc. under
several sales contracts and sold them here in the Philippines. In 2015, CHEN, Inc. filed a trade. mark
application with the Intellectual Property Office (IPO) for the mark Light Year to be used for tires. The
IPO issued CHEN, Inc. a certificate of registration (COR) for said mark. Clark Enterprises sought the
cancellation of the COR and claimed it had a better right to register the mark Light Year. CHEN, Inc.
asserted that it was the owner of the mark, and Clark Enterprises was a mere distributor. Clark
Enterprises argued that there was no evidence on record that the tires it imported from CHEN, Inc. bore
the mark Light Year, and Clark Enterprises was able to prove that it was the first to use the mark here in
the Philippines. Decide the case. (4%)

SUGGESTED ANSWER

While RA No. 8293 removed the previous requirement of proof of actual use prior to the filing of an
application for registration of a mark, proof of prior and continuous use is necessary to establish
ownership of trademark. Such ownership of the trademark confers the right to register the trademark.
Since Chen owns the trademark as evidenced by its actual and continuous use prior to the Clark
Enterprises, then it is the one entitled to the registration of the trademark. The fact that Clark was the
first one to use the mark here in the Philippines, will not matter. Chen’s prior actual use of the
trademark even in another country, bars Clark from applying for the registration of the same trademark.
Also, a mere distributor does not own the trademark to the goods he distributes, and his right over the
trademark cannot prevail over the owner (E.Y. Industrial Sales v. Shien Dar Electricity and Machinery,
G.R. No. 184850, October 20, 2010, 634 SCRA 363; Ecole de Cuisine Manille v. Renaud Cointreau, G.R.
No. 185830, June 5, 2013, 697 SCRA 345).

XVI

(A) On the anti-money laundering laws:

What is the distinction between a “covered transaction report” and a “suspicious transaction report”?
(2%) Does the Anti-Money Laundering Council have the authority to freeze deposits? Explain. (2%)

(B) On foreign investments:

A foreign company has a distributor in the Philippines. The latter acts in his own name and account. Will
this distributorship be considered as doing business by the foreign company in the Philippines? (3%) 2.
ABC Corporation was organized in Malaysia but has a branch in the Philippines. It is entirely owned by
Filipino citizens. Can you consider ABC Corporation a Philippine national? (2%)

SUGGESTED ANSWER

(A)

1. A covered transaction report involves transaction/s in cash or other equivalent monetary

instrument involving a total amount in excess of P500,000 within one banking day, while
suspicious transaction report involves transactions with covered institutions regardless of the
amounts involved made under any of the suspicious circumstances enumerated by law.

2. No. The authority to freeze deposits is lodged with and based upon the order of the Court of
Appeals (Section 10 of RA No. 9160 as amended).

(B)

1. The appointment of a distributor in the Philippines is not sufficient to constitute doing business
unless it is under the full control of the foreign corporation. If the distributor is an independent
entity doing business for its own name and account, the latter cannot be considered as doing
business (Steelcase, Inc. v. Design International Selections, Inc., G.R. No. 171995, April 18, 2012,
670 SCRA 64).

2. Yes, it is considered a Philippine national, as long as it is registered as doing business in the

Philippines under the Corporation Code (Section 1 of RA No. 7042, as amended by Section 1 of
RA No. 8179).
2015

Bar Questions and Suggested Answers

Political Law

I. The Philippines and the Republic of Kroi Sha established diplomatic relations and
immediately their respective Presidents signed the following: (1) Executive
Agreement allowing the Republic of Kroi Sha to establish its embassy and consular
offices within Metro Manila; and (2) Executive Agreement allowing the Republic of
Kroi Sha to bring to the Philippines its military complement, warships, and
armaments from time to time for a period not exceeding one month for the purpose
of training exercises with the Philippine military forces and exempting from
Philippine criminal jurisdiction acts committed in the line of duty by foreign military
personnel, and from paying custom duties on all the goods brought by said foreign
forces into Philippine territory in connection with the holding of the activities
authorized under the said Executive Agreement.

Senator Maagap questioned the constitutionality of the said Executive Agreements

and demanded that the Executive Agreements be submitted to the Senate for
ratification pursuant to the Philippine Constitution. Is Senator Maagap correct?
Explain. (4%)

SUGGESTED ANSWER:

Senator Maagap is correct in so far as the second Executive Agreement is concerned. The first
Executive Agreement is in such a nature that such need not be concurred in by the Senate. In Bayan
Muna v. Romulo, the right of the Executive to enter into binding agreements without the necessity
of subsequent congressional approval has been confirmed by long usage. From the earliest days of
our history, we have entered executive agreements covering such subjects as commercial and
consular relations, most favored nation rights, patent rights trademark and copyright protection,
postal and navigation arrangements and the settlement of claims. However, for the second Executive
Agreement which is in the nature of an International agreements involving political issues or
changes on national policy and those involving international arrangements of a permanent
character, is deemed as a treaty (Commissioner of Customs v. Eastern Sea Trading), in which case
must be concurred in by the Senate (Section 21, Article VI, 1987 Constitution). Hence Senator
Maagap is only correct as regards the second Executive Agreement which must be submitted for the
concurrence of the Senate.
 II. (1) A bill was introduced in the House of Representatives in order to implement
faithfully the provisions of the United Nations Convention on the Law of the Sea
(UNCLOS) to which the Philippines is a signatory. Congressman Pat Rio Tek
questioned the constitutionality of the bill on the ground that the provisions of
UNCLOS are violative of the provisions of the Constitution defining the Philippine
internal waters and territorial sea. Do you agree or not with the said objection?
Explain. (3%)

SUGGESTED ANSWER:

No, the objection is not tenable. UNCLOS has nothing to do with the redefinition of our
territory. It merely regulates sea-use rights over maritime zones, contiguous zones, exclusive
economic zones, and continental shelves which it delimits. Whether the bodies of water
lying landward of the baselines of the Philippines are internal waters or archipelagic waters,
the Philippines retains jurisdiction over them (Magallona v. Ermita, GR No. 187167, July
16, 2011, 655 SCRA 476).

(2) Describe the following maritime regimes under UNCLOS (4%)

(a) Territorial sea

(b) Contiguous zone
(c) Exclusive economic zone

(d) Continental shelf

SUGGESTED ANSWER:

(a) Territorial sea – is the belt of waters adjacent to the coasts of the State, excluding
internal waters in bays and gulfs, over which the state claims sovereignty and
jurisdiction and which is 12 nautical miles from the baseline.
(b) Contiguous zone – is that belt of waters measured 24 nautical miles from the same
baseline used to measure the breadth of the territorial sea. In this zone, the coastal
state may exercise the control necessary to
i) Prevent infringement of its customs, fiscal, immigration or sanitary laws
and regulations within its territory or territorial sea.
 ii) Punish infringement of the above laws and regulations committed within
its territory or territorial sea (Article 53, UNCLOS)
(c) Exclusive Economic Zone is an area beyond and adjacent to the territorial sea, over
which a state has special rights over the exploration and utilization of marine
resources. It shall not extend beyond 200 nautical miles from the baselines from
which the breadth of the territorial sea is measured. In case of archipelagic states, its
breadth shall be measured from the archipelagic baseline (Article 57, 58, 48,
UNCLOS)
(d) Continental shelf - The continental shelf of a coastal State comprises the seabed and
subsoil of the submarine areas that extend beyond its territorial sea throughout the
natural prolongation of its land territory to the outer edge of the continental margin,
or to a distance of 200 nautical miles from the baselines from which the breadth of
the territorial sea is measured where the outer edge of the continental margin does
not extend up to that distance (Article 76, UNCLOS).

III. Professor Masipag who holds a plantilla or regular item in the University of the
Philippines (UP) is appointed as an Executive Assistant in the Court of Appeals
(CA). The professor is considered only on leave of absence in UP while he reports for
work at the CA which shall pay him the salary of the Executive Assistant. The
appointment to the CA position was questioned, but Professor Masipag countered
that he will not collect the salary for both positions; hence, he can not be accused of
receiving double compensation. Is the argument of the professor valid? Explain. (4%)

SUGGESTED ANSWER:

No, the argument is not valid. The prohibition of dual employment does not apply to Professor
Masipag because Section 5 [c], Canon III of the Code of Conduct for Court Personnel allows court
personnel to acquire outside employment provided, among others, that the outside employment
does not require the practice of law; and provided, however, that court personnel may render
services as professor, lecturer, or resource person in law schools, review or continuing education
centers or similar institutions. Dual employment applies to appointive officials who are not allowed
to hold any other office or employment in the Government or any subdivision, agency or
instrumentality thereof, including government-owned corporation or their subsidiaries, unless
otherwise allowed by law or the primary functions of his position (Article IX B Section 7 of the 1987
Constitution; Sections 1 and 2, Rule XVIII of the Omnibus Rules Implementing Book V of E.O. No.
292).
 IV. When is a facial challenge to the constitutionality of a law on the ground of
violation of the Bill of Rights traditionally allowed? Explain your answer. (3%)

SUGGESTED ANSWER:

Facial challenge to the constitutionality of a law is traditionally allowed when it operates in the area
of freedom of expression. The established rule is that a party can question the validity of a statute
only if, as applied to him, it is unconstitutional. The exception is the so-called “Facial challenge".
But the only time a facial challenge to a statute is allowed is when it operates in the area of freedom
of expression. ln such instance, the "overbreadth doctrine" permits a party to challenge the validity
of a statute even though, as applied to him, it is not unconstitutional, but it might be if applied to
others not before the Court whose activities are constitutionally protected. lnvalidation of the statute
"on its face", rather than "as applied", is permitted in the interest of preventing a "chilling effect" on
freedom of expression (Justice Mendoza's concurring opinion in Cruz v. DENR, G.R. No. 135385,
December 06, 20001). A facial challenge to a legislative act is the most difficult challenge to mount
successfully since the challenge must establish that no set of circumstances exists under which the act
would be valid (Estrada v. Sandiganbayan, G.R. No. 148560, November 19,20011).

V. BD Telecommunications, Inc. (BDTI), a Filipino-owned corporation, sold its 1,000

common shares of stock in the Philippine Telecommunications Company (PTC), a
public utility, to Australian Telecommunications (AT), another stockholder of the
PTC which also owns 1,000 common shares. A Filipino stockholder of PTC
questions the sale on the ground that it will increase the common shares of AT, a
foreign company, to more than 40% of the capital (stock) of PTC in violation of the
40% limitation of foreign ownership of a public utility. A T argues that the sale does
not violate the 60-40 ownership requirement in favor of Filipino citizens decreed in
Section II, Article XII of the 1987 Constitution because Filipinos still own 70% of the
capital of the PTC. AT points to the fact that it owns only 2,000 common voting
shares and 1,000 non-voting preferred shares while Filipino stockholders own 1,000
common shares and 6,000 preferred shares, therefore, Filipino stockholders still own
a majority of the outstanding capital stock of the corporation, and both classes of
shares have a par value of Php 20.00 per share. Decide. (5%)

SUGGESTED ANSWER:
AT’s contention does not hold water. The determination of the percentage of Filipino ownership in
a corporation is no longer primarily based on the number of apparent shares of a stockholder, nor to
the class of stock a shareholder holds. In the latest ruling of the Supreme Court in Narra Nickel
Mining v. Redmont Consolidated Mines (G.R. No. 195580 January 28, 2015), the computation of
the total percentage of the Filipino ownership in a corporation is applied to BOTH (a) the total
outstanding shares of stock entitled to vote in the election of directors; AND (b) the total number of
outstanding shares of stock, whether or not entitled to vote in the election of directors.

In Narra v. Redmont, foreign corporations have resorted to elaborate corporate layering as to make
it appear that there is compliance with the minimum Filipino ownership in the Constitution. The
corporate layering employed by certain foreign corporation was evidently designed to circumvent
the constitutional caveat allowing only Filipino citizens and corporations 60%-owned by Filipino
citizens to explore, develop, and use the country’s natural resources. The application of the Control
Test and the Grandfather Rule must be applied where doubts or various indicia that the "beneficial
ownership" and "control" of the corporation do not in fact reside in Filipino shareholders but in
foreign stakeholders. Hence, AT cannot claim that PTC is Filipino-owned based only on the
apparent number of stocks belonging to Filipinos.

VI. (1) Distinguish the President's authority to declare a state of rebellion from the
authority to proclaim a state of national emergency. (2%)

SUGGESTED ANSWER:

(1) The authority to declare a state of rebellion emanates from the President’s powers as Chief
Executive (Sec. 4, Chapter 2, Book II, Administrative Code of 1997). Its declaration is deemed
harmless and without legal significance (Canlakas v. Executive Secretary). In declaring a state of
national emergency in PP1017, President Arroyo did not only rely on Sec. 18, Art. VII of the
Constitution, but also on Sec. 17, Article Xll of the Constitution, calling for the exercise of awesome
powers which cannot be deemed as harmless or without legal significance [David v. Macapagal -
Arroyo, supra].

(2) What are the limitations, if any, to the pardoning power of the President? (3%)

SUGGESTED ANSWER:
The limitations to the pardoning power of the President are that, it:

i. Cannot be granted in cases of impeachment (Sec. 19, Art. VII)

ii. Cannot be granted in cases of violation of election laws without the favorable
recommendation of the Commission on Elections [Sec. 5, Art. IX-C].
iii. Can be granted only after conviction by final judgment
iv. Cannot be granted in cases of legislative contempt (as it would violate separation of
powers), or civil contempt (as the State is without interest in the same)
v. Cannot absolve the convict of civil liability.
vi. Cannot restore public offices forfeited [Monsanto v. Factoran, supra].

VII. Senator Fleur De Lis is charged with plunder before the Sandiganbayan. After
finding the existence of probable cause, the court issues a warrant for the Senator's
arrest. The prosecution files a motion to suspend the Senator relying on Section 5 of
the Plunder Law. According to the prosecution, the suspension should last until the
termination of the case. Senator Lis vigorously opposes the motion contending that
only the Senate can discipline its members; and that to allow his suspension by the
Court would violate the principle of separation of powers. Is Senator Lis' contention
tenable? Explain. (4%)

SUGGESTED ANSWER:

No, Senator Lis’, contention is not tenable. The suspension contemplated in the Constitution to
discipline Member of the Senate is not the suspension contemplated under the Sec. 5 of the Plunder
Law. The latter is not a penalty but a preliminary preventive measure and is not imposed upon the
petitioner for misbehavior as a member of Congress. In a synonymous case (Miriam Defensor-
Santiago v. Sandiganbayan, G.R. No. 128055, April 18,2001) it appears to be a ministerial duty of
the court to issue the order of suspension upon a determination of the validity of the criminal
information filed before it. The order of suspension provided in RA 3019 is distinct from the power
of Congress to discipline its own ranks. Neither does the order of suspension encroach upon the
power of Congress. The doctrine of separation of powers, by itself, is not deemed to have effectively
excluded the members of Congress from RA 3019.

VIII. A law provides that the Secretaries of the Departments of Finance and Trade
and Industry, the Governor of the Central Bank, the Director General of the
National Economic Development Authority, and the Chairperson of the Philippine
 Overseas Construction Board shall sit as ex-officio members of the Board of
Directors (BOD) of a government owned and controlled corporation (GOCC). The
other four (4) members shall come from the private sector. The BOD issues a
resolution to implement a new organizational structure, staffing pattern, a position
classification system, and a new set of qualification standards. After the
implementation of the Resolution, Atty. Dipasupil questioned the legality of the
Resolution alleging that the BOD has no authority to do so. The BOD claims
otherwise arguing that the doctrine of qualified political agency applies to the case. It
contends that since its agency is attached to the Department of Finance, whose head,
the Secretary of Finance, is an alter ego of the President, the BOD's acts were also
the acts of the President. Is the invocation of the doctrine by the BOD proper?
Explain. (4 %)

SUGGESTED ANSWER:

The contention of the BOD is proper. Under the doctrine of qualified political agency or
alter ego principle, all executive and administrative organizations are adjuncts of the
Executive Department, the heads of the various executive, and, except in cases where the
Chief Executive is required by the Constitution 0r law t0 act in person or the exigencies of
the situation demand that he acts personally, the multifarious executive and administrative
functions of the Chief Executive are performed by and through the executive departments,
and the acts of the Secretaries of Executive departments when performed and promulgated
in the regular course of business or unless disapproved or reprobated by the Chief Executive,
are presumptively the acts of the Chief Executive (Villena v. Secretary of the lnterior, No.
46574, April 21, 1939).

Under our governmental set-up, corporations owned or controlled by the government… partake of
the nature of government bureaus or offices, which are administratively supervised by (one) “whose
compensation and rank shall be that of a head of an Executive Department” and who “shall be
responsible to the President of the Philippines under whose control his functions ... shall be
exercised.” (Executive Order No. 386 of December 22, 1950, section 1, issued under the
Reorganization Act of 1950). (in Namarco v. Arca, 29 SCRA 648). Through the Secretary of
Finance, any act of the BOD shall be subject to the constitutional power of control by the President
over all executive departments, bureaus and offices.

IX. Several senior officers of the Armed Forces of the Philippines received
invitations from the Chairperson of the Senate Committees on National Defense and
Security for them to appear as resource persons in scheduled public hearings
 regarding a wide range of subjects. The invitations state that these public hearings
were triggered by the privilege speeches of the Senators that there was massive
electoral fraud during the last national elections. The invitees Brigadier General
Matapang and Lieutenant Coronel Makatuwiran, who were among those tasked to
maintain peace and order during the last election, refused to attend because of an
Executive Order banning all public officials enumerated in paragraph 3 thereof from
appearing before either house of Congress without prior approval of the President to
ensure adherence to the rule of executive privilege. Among those included in the
enumeration are "senior officials of executive departments who, in the judgment of
the department heads, are covered by executive privilege." Several individuals and
groups challenge the constitutionality of the subject executive order because it
frustrates the power of the Congress to conduct inquiries in aid of legislation under
Section 21, Article VI of the 1987 Constitution. Decide the case. (5%)

SUGGESTED ANSWER:

The subject executive order is unconstitutional. The Court in Senate v. Ermita (GR No. 169777)
declared that the executive privilege is the power of the government to withhold information from
the public, the courts, and the Congress. But this is recognized only for certain types of information
of a sensitive character. When Congress exercises its power of inquiry, the only way for department
heads to exempt themselves therefrom is by a valid claim of privilege. They are not exempt by the
mere fact that they are department heads. Only one official may be exempted from this power -- the
President.

Under the Constitution, there are two different functions of the Legislature: The power to conduct
inquiries in aid of legislation and the power to conduct inquiry during question hour. The objective
of conducting a question hour is to obtain information in pursuit of Congress’ oversight function.
When Congress merely seeks to be informed on how department heads are implementing the
statutes which it had issued, the department heads’ appearance is merely requested. The power of
inquiry in aid of legislation is inherent in the power to legislate. A legislative body cannot legislate
wisely or effectively in the absence of information respecting the conditions which the legislation is
intended to affect or change. And where the legislative body does not itself possess the requisite
information, recourse must be had to others who do possess it. The executive privilege is the
exception under this type of inquiry.

When an official is being summoned by Congress on a matter which, in his own judgment, might be
covered by executive privilege, he must be afforded reasonable time to inform the President or the
Executive Secretary of the possible need for invoking the privilege. This is necessary to provide the
President or the Executive Secretary with fair opportunity to consider whether the matter indeed
calls for a claim of executive privilege. If, after the lapse of that reasonable time, neither the
President nor the Executive Secretary invokes the privilege, Congress is no longer bound to respect
the failure of the official to appear before Congress and may then opt to avail of the necessary legal
means to compel his appearance. (Senate v. Ermita)

X. The Secretary of the Department of Environment and Natural Resources (DENR)

issued Memorandum Circular No. 123-15 prescribing the administrative
requirements for the conversion of a timber license agreement (TLA) into an
Integrated Forestry Management Agreement (IFMA). ABC Corporation, a holder of
a TLA which is about to expire, claims that the conditions for conversion imposed
by the said circular are unreasonable and arbitrary and a patent nullity because it
violates the non-impairment clause under the Bill of Rights of the 1987 Constitution.

ABC Corporation goes to court seeking the nullification of the subject circular. The
DENR moves to dismiss the case on the ground that ABC Corporation has failed to
exhaust administrative remedies which is fatal to its cause of action. If you were the
judge, will you grant the motion? Explain. (4%)

SUGGESTED ANSWER:

The motion by the DENR to dismiss the case for ABC’s failure to exhaust administrative remedies
should be set aside. The rule on exhaustion of administrative remedies applies only to decisions of
administrative agencies made in the exercise of their quasi-judicial powers [Association of Philippine
Coconut Desiccators v. Philippine Coconut Authority, G.R. No. 110526, February 10, 1 9981.
Thus, where what is assailed is the validity or constitutionality of a rule or regulation issued by the
administrative agency in the performance of its quasi-legislative function, the regular courts have
jurisdiction to pass upon the same (Smart communications v. National telecommunications
commission, G.R. No. 151908, August 12, 2003).

XI. (1) What is the concept of expanded judicial review under the 1987
Constitution? (3%)

SUGGESTED ANSWER:
The 1987 Constitution has narrowed the reach of the political question doctrine when it
expanded the power of judicial review of this court not only to settle actual controversies
involving rights which are legally demandable and enforceable but also to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of government. Heretofore, the
judiciary has focused on the "thou shalt not's" of the Constitution directed against the
exercise of its jurisdiction. With the new provision, however, courts are given a greater
prerogative to determine what it can do to prevent grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of government.
Clearly, the new provision did not just grant the Court power of doing nothing. (Belgica v.
Ochoa, G.R. No. 208566 November 19, 2013)

(2) Differentiate the rule-making power or the power of the Supreme Court to promulgate
rules under Section 5, Article VIII of the 1987 Constitution and judicial legislation. (2%)

SUGGESTED ANSWER:

The Rule-making power of the Supreme Court was vested by the 1987 Constitution to
promulgate rules that would protect the constitutional rights of our people, pleadings,
practice and proceedings in all courts. This is recognized power exclusive to the Supreme
Court. But while the power of the judiciary is to interpret laws, judicial legislation takes
place when a court steps in to craft missing parts or to fill in the gaps in laws or when it
oversteps its discretional boundaries and goes beyond the law to coin doctrines or principles
where none was before (Judicial Legislation: Dissected. M. Vidal). This is frowned upon
because the courts should merely interpret laws, and not make new laws.

XII. Discuss the evolution of the principle of jus sanguinis as basis of Filipino
citizenship under the 1935, 1973, and 1987 Constitutions. (3%)

SUGGESTED ANSWER:
Under the 1935 Constitution, Filipino citizens under the principle of jus sanguinis are only
those whose fathers are citizens of the Philippines. Under the 1973 and 1987 Constitutions,
Filipino citizens are those whose fathers or mothers are Filipino citizens.

XIII. On August 15, 2015, Congresswoman Dina Tatalo filed and sponsored House
Bill No. 5432, entitled "An Act Providing for the Apportionment of the Lone District
of the City of Pangarap." The bill eventually became a law, R.A. No. 1234. It
mandated that the lone legislative district of the City of Pangarap would now consist
of two (2) districts. For the 2016 elections, the voters of the City of Pangarap would
be classified as belonging to either the first or second district, depending on their
place of residence. The constituents of each district would elect their own
representative to Congress as well as eight (8) members of the Sangguniang
Panglungsod. R.A. No. 1234 apportioned the City's barangays. The COMELEC
thereafter promulgated Resolution No. 2170 implementing R.A. No. 1234.

Piolo Cruz assails the COMELEC Resolution as unconstitutional. According to him,

R.A. No. 1234 cannot be implemented without conducting a plebiscite because the
apportionment under the law falls within the meaning of creation, division, merger,
abolition or substantial alteration of boundaries of cities under Section 10, Article X
o f the 1987 Constitution. Is the claim correct? Explain. (4%)

SUGGESTED ANSWER:

No, Piolo Cruz’s claim in incorrect. While the Constitution and the Local Government
Code expressly require a plebiscite to carry out any creation, division, merger, abolition or
alteration of the boundary of a local government unit, no plebiscite requirement exists under
the apportionment or reapportionment provision (Bagabuyo v. COMELEC). In the case at
bar, RA 1234 merely increased its representation in the House of Representatives. There
was no creation, division, merger, abolition or alteration of a local government unit that
took place. RA 1234 did not bring about any change in the City of Pangarap’s territory,
population and income classification. Hence no plebiscite is required.

XIV. Congress enacted R.A. No. 14344 creating the City of Masuwerte which took
effect on September 25, 2014. Section 23 of the law specifically exempts the City of
Masuwerte from the payment of legal fees in the cases that it would file and/or
 prosecute in the courts of law. In two (2) cases that it filed, the City of Masuwerte
was assessed legal fees by the clerk of court pursuant to Rule 141 (Legal Fees) of the
Rules of Court. The City of Masuwerte questions the assessment claiming that it is
exempt from paying legal fees under Section 23 of its charter. Is the claim of
exemption tenable? Explain. (4%)

SUGGESTED ANSWER:

The claim of exemption is not tenable. Section 23 of the RA 14344 runs contrary to the
provisions of the Constitution. Under the 1987 Constitution, only the Supreme Court has
the power to promulgate its rules on pleadings, practice and procedures in court (Section 5,
Article VIII, 1987 Constitution).

Payment of legal fees is a vital component of the rules promulgated by this Court
concerning pleading, practice and procedure, it cannot be validly annulled, changed or
modified by Congress. As one of the safeguards of this Court’s institutional independence,
the power to promulgate rules of pleading, practice and procedure is now the Court’s
exclusive domain. That power is no longer shared by this Court with Congress, much less
with the Executive (AM No. 12-2-03-0). Such act by Congress also transgresses the fiscal
autonomy of the Courts.

Hence the City of Masuwerte cannot question the assessment of legal fees for the cases it
filed before the court.

XV. The President appointed Dexter I. Ty as Chairperson of the COMELEC on

June 14, 2011 for a term of seven (7) years pursuant to the 1987 Constitution. His
term of office started on June 2, 2011 to end on June 2, 2018. Subsequently, the
President appointed Ms. Marikit as the third member of the COMELEC for a term
of seven (7) years starting June 2, 2014 until June 2, 2021. On June 2, 2015,
Chairperson Ty retired optionally after having served the government for thirty (30)
years. The President then appointed Commissioner Marikit as COMELEC
Chairperson. The Commission on Appointments confirmed her appointment. The
appointment papers expressly indicate that Marikit will serve as COMELEC
Chairperson "until the expiration of the original term of her office as COMELEC
Commissioner or on June 2, 2021." Matalino, a tax payer, files a petition for
certiorari before the Supreme Court asserting that the appointment of Marikit as
COMELEC Chairperson is unconstitutional for the following reasons: (1) The
 appointment of Marikit as COMELEC Chairperson constituted a re- appointment
which is proscribed by Section 1(2), Article IX of the 1987 Constitution; and (2) the
term of office expressly stated in the appointment papers of Marikit likewise
contravenes the aforementioned constitutional provision. Will the constitutional
challenge succeed?

SUGGESTED ANSWER:

No, the constitutional challenge will not succeed. It is well settled in the case of Matibag v.
Benipayo, the Supreme Court said that when an ad interim appointment (of the Chairman
of the Commission on Elections) is not confirmed (as it was by-passed, or that there was not
ample time for the Commission on Appointments to pass upon the same), another ad
interim appointment may be extended to the appointee without violating the Constitution.

XVI.

(1) Gandang Bai filed her certificate of candidacy (COC) for municipal mayor stating
that she is eligible to run for the said position. Pasyo Maagap, who also filed his
COC for the same position, filed a petition to deny due course or cancel Bai's COC
under Section 78 of the Omnibus Election Code for material misrepresentation as
before Bai filed her COC, she had already been convicted of a crime involving moral
turpitude. Hence, she is disqualified perpetually from holding any public office or
from being elected to any public office. Before the election, the COMELEC
cancelled Bai's COC but her motion for reconsideration (MR) remained pending
even after the election. Bai garnered the highest number of votes followed by Pasyo
Maagap, who took his oath as Acting Mayor. Thereafter, the COMELEC denied
Bai's MR and declared her disqualified for running for Mayor. P. Maagap asked the
Department of Interior and Local Government Secretary to be allowed to take his
oath as permanent municipal mayor. This request was opposed by Vice Mayor
Umaasa, invoking the rule on succession to the permanent vacancy in the Mayor's
office. Who between Pasyo Maagap and Vice Mayor Umaasa has the right to occupy
the position of Mayor? Explain your answer.

Explain. (4%)

SUGGESTED ANSWER:
Vice Mayor Umaasa has the right to occupy the position of Mayor. This was settled in Talaga v.
COMELEC (G.R. No. 196804 October 9, 2012). where the court upheld that the disqualification of
Bai created a situation of a permanent vacancy in the office of the Mayor. A permanent vacancy is
filled pursuant to the law on succession defined in Section 44 of the LGC which states the “If a
permanent vacancy occurs in the office of the governor or mayor, the vice-governor or vice-mayor
concerned shall become the governor or mayor. “

Pasyo Maagap who garnered only the second highest number of votes lost to Gandang Bai.
Applying the Labo case cited in Talaga, Maagap could not assume office for he was only second
placer despite the disqualification of the Gandang Bai because the second placer was "not the choice
of the sovereign will."60 Surely, the Court explained, a minority or defeated candidate could not be
deemed elected to the office.61 There was to be no question that the second placer lost in the
election, was repudiated by the electorate, and could not assume the vacated position.62 No law
imposed upon and compelled the people of Lucena City to accept a loser to be their political leader
or their representative.

The only time that a second placer is allowed to take the place of a disqualified winning candidate is
when two requisites concur, namely: (a) the candidate who obtained the highest number of votes is
disqualified; and (b) the electorate was fully aware in fact and in law of that candidate’s
disqualification as to bring such awareness within the realm of notoriety but the electorate still cast
the plurality of the votes in favor of the ineligible candidate.64 Under this sole exception, the
electorate may be said to have waived the validity and efficacy of their votes by notoriously
misapplying their franchise or throwing away their votes, in which case the eligible candidate with
the second highest number of votes may be deemed elected.65 The facts of the case at bar did not
state the existence of such exception, thus it cannot apply in favor of Maagap simply because the
second element was absent.

(2) How do you differentiate the petition filed under Section 68 from the petition filed
under Section 78, both of the Omnibus Election Code? (3%)

SUGGESTED ANSWER:

The two remedies available to prevent a candidate from running in an electoral race are
under Section 68 and under Section 78 of the Omnibus Election Code. The candidate who
is disqualified based on the grounds under Section 68 (i.e., prohibited acts of candidates,
and the fact of a candidate’s permanent residency in another country when that fact affects
the residency requirement of a candidate) is merely prohibited to continue as a candidate.
On the other hand, a candidate whose certificate is cancelled or denied due course based on
a statement of a material representation in the said certificate that is false under Section 78,
is not treated as a candidate at all, as if he/she never filed a Certificate of Candidacy.
(Talaga v. COMELEC)

XVI. The Gay, Bisexual and Transgender Youth Association (GBTYA), an

organization of gay, bisexual, and transgender persons, filed for accreditation with
the COMELEC to join the forthcoming party-list elections. The COMELEC denied
the application for accreditation on the ground that GBTYA espouses immorality
which offends religious dogmas. GBTY A challenges the denial of its application
based on moral grounds because it violates its right to equal protection ofthe law.

(I) What are the three (3) levels of test that are applied in equal protection cases?
Explain. (3%)

SUGGESTED ANSWER:

The three kinds of tests applied in equal protection cases are:

a. Strict Scrutiny Test – requires the government to show that the challenged
classifications serve a compelling state interest and that the classification is necessary
to serve that interest. This is used in cases involving classifications based on race,
national origin, religion, alienage, denial of right to vote, interstate migration, access
to courts and other rights recognized as fundamental
b. Immediate or middle-tier scrutiny test – requires government to show that the
challenged classification serves as an important state interest and that the
classification is at least substantially related to serving that interest. This applies to
suspect classification like gender or illegitimacy.
c. Minimum or rational basis scrutiny – according to which the government need only
to show that the challenged classification is rationally related to serving a legitimate
state interest. This is the traditional rationality test and it applies to all subjects other
than those listed above. (see Bernas Commentary, in Ang Ladlad v. COMELEC,
GR No. 190582, April 8, 2010 for the explanation)

(II) Which of the three (3) levels of test should be applied to the present case?
Explain. (3%) Rational Basis Test
SUGGESTED ANSWER

The Rational Basis Test should be applied to the present case. In our jurisdiction, the
Supreme Court declared that the standard of analysis of equal protection challenges is the
rational basis test. Jurisprudence has affirmed that if a law neither burdens a fundamental
right nor targets a suspect class, the classification shall be upheld as long as it bears a
rational relationship to some legitimate end. In the case at bar, in so far as the party-list
system is concerned, GBTYA is similarly situated as all other groups which are running for
a party-list seat in Congress (Ang Ladlad v. COMELEC).

XVII. Around 12:00 midnight, a team of police officers was on routine patrol in
Barangay Makatarungan when it noticed an open delivery van neatly covered with
banana leaves. Believing that the van was loaded with contraband, the team leader
flagged down the vehicle which was driven by Hades. He inquired from Hades what
was loaded on the van. Hades just gave the police officer a blank stare and started to
perspire profusely. The police officers then told Hades that they will look inside the
vehicle. Hades did not make any reply. The police officers then lifted the banana
leaves and saw several boxes. They opened the boxes and discovered several kilos of
shabu inside. Hades was charged with illegal possession of illegal drugs. After due
proceedings, he was convicted by the trial court. On appeal, the Court of Appeals
affirmed his conviction.

In his final bid for exoneration, Hades went to the Supreme Court claiming that his
constitutional right against unreasonable searches and seizures was violated when
the police officers searched his vehicle without a warrant; that the shabu confiscated
from him is thus inadmissible in evidence; and that there being no evidence against
him, he is entitled to an acquittal.

For its part, the People ofthe Philippines maintains that the case ofHades involved a
consented warrantless search which is legally recognized. The People adverts to the
fact that Hades did not offer any protest when the police officers asked him if they
could look inside the vehicle. Thus, any evidence obtained in the course thereof is
admissible in evidence.

Whose claim is correct? Explain. (5%)

SUGGESTED ANSWER
Hades’ claim is correct. The evidence obtained was illegally seized and is thus inadmissible
in evidence.

A consented warrantless search, if it exists or whether it was in fact voluntary is a question

of fact to be determined from the totality of all the circumstances. Hades’ mere silence does
not amount to consent. In the absence of such consent, evidence obtained thereof shall be
inadmissible in evidence, in which case precludes conviction and calls for the acquittal of
the accused (Ong v. People, GR No. 197788, Feb. 29, 2012).

XVIII. Pursuant to its mandate to manage the orderly sale, disposition and
privatization of the National Power Corporation's (NPC) generation assets, real
estate and other disposable assets, the Power Sector Assets and Liabilities
Management (PSALM) started the bidding process for the privatization of Angat
Hydro Electric Power Plant (AHEPP). After evaluation of the bids, K-Pop Energy
Corporation, a South Korean Company, was the highest bidder. Consequently, a
notice of award was issued to K-Pop. The Citizens' Party questioned the sale arguing
that it violates the constitutional provisions on the appropriation and utilization of a
natural resource which should be limited to Filipino citizens and corporations which
are at least 60% Filipino-owned. The PSALM countered that only the hydroelectric
facility is being sold and not the Angat Dam; and that the utilization of water by a
hydroelectric power plant does not constitute appropriation of water from its natural
source of water that enters the intake gate of the power plant which is an artificial
structure. Whose claim is correct? Explain. (4%)

SUGGESTED ANSWER

PSALM’s claim is correct. Under the Water Code, a foreign company may not be said to be
“appropriating” our natural resources if it utilizes the waters collected in the dam and
converts the same into electricity through artificial devices such as the hydroelectric facility
as in the case case at bar. Since the NPC remains in control of the operation of the dam by
virtue of water rights granted to it, there is no legal impediment to foreign-owned companies
undertaking the generation of electric power using waters already appropriated by the NPC,
the holder of the water permit. With the advent of privatization of the electric power
industry which resulted in its segregation into four sectors, NPC’s generation and
transmission functions were unbundled. Hence the acquisition by a foreign company of the
hydroelectric facility did not violate any constitutional provision (IDEALS v. PSALM, GR
No. 192088).
 XIX. Typhoon Bangis devastated the Province of Sinagtala. Roads and bridges
were destroyed which impeded the entry of vehicles into the area. This caused food
shortage resulting in massive looting of grocery stores and malls. There is power
outage also in the area. For these reasons, the governor of the province declares a
state of emergency in their province through Proclamation No. 1. He also invoked
Section 465 of the Local Government Code of 1991 (R.A. No. 7160) which vests on
the provincial governor the power to carryout emergency measures during man-
made and natural disasters and calamities, and to call upon the appropriate national
law enforcement agencies to suppress disorder and lawless violence. In the same
proclamation, the governor called upon the members of the Philippine National
Police, with the assistance of the Armed Forces of the Philippines, to set up
checkpoints and chokepoints, conduct general searches and seizures including
arrests, and other actions necessary to ensure public safety. Was the action of the
provincial governor proper? Explain. (4%)

SUGGESTED ANSWER

No, the action of the governor is not proper. Under the Constitution, it is only the President, as
Executive, who is authorized to exercise emergency powers as provided under Section 23, Article
VI, as well as the calling-out powers under Section 7, Article VII thereof. In the case at bar, the
provincial governor is not endowed with the power to call upon the state forces at his own bidding.
It is an act which is ultra vires and may not be justified by the invocation of Section 465 of the Local
Government Code (Kulayan v. Gov. Tan, GR No. 187298, July 3, 2012).

XX. The Partido ng Mapagkakatiwalaang Pilipino (PMP) is a major political party

which has participated in every election since the enactment of the 1987
Constitution. It has fielded candidates mostly for legislative district elections. In fact,
a number of its members were elected, and are actually serving, in the House of
Representatives. In the coming 2016 elections, the PMP leadership intends to join
the party-list system.
Can PMP join the party-list system without violating the Constitution and Republic
Act (R.A.) No. 7941? (4%)

SUGGESTED ANSWER
Yes, the PMP can join the party-list system in accordance with the rules enunciated in
Atong Paglaum v. COMELEC. Accordingly, political parties can participate in party-list
elections provided they register under the party-list system and do not field candidates in
legislative district elections. A political party, whether major or not, that fields candidates in
legislative district elections can participate in party-list elections only through its sectoral
wing that can separately register under the party-list system. The sectoral wing is by itself an
independent sectoral party, and is linked to a political party through a coalition (Atong
Paglaum v. COMELEC, GR Nos. 203766, 203818-19, et al.)

XXI. The President appoints Emilio Melchor as Chairperson of the Civil Service
Commission. Upon confirmation of Melchor's appointment, the President issues an
executive order including him as Ex-Officio member of the Board of Trustees of the
Government Service Insurance System (GSIS), Employees Compensation
Commission (ECC), and the Board of Directors of the Philippine Health Insurance
Corporation (PHILHEALTH). Allegedly, this is based on the Administrative Code
of 1997 (E.O. No. 292), particularly Section 14, Chapter 3, Title I-A, Book V. This
provision reads: "The chairman ofthe CSC shall be a member of the Board of
Directors of other governing bodies of government entities whose functions affect the
career development, employment, status, rights, privileges, and welfare of
government officials and employees..." A taxpayer questions the designation of
Melchor as ex-officio member of the said corporations before the Supreme Court
based on two (2) grounds, to wit: (1) it violates the constitutional prohibition on
members of the Constitutional Commissions to hold any other office or employment
during his tenure; and (2) it impairs the independence of the CSC. Will the petition
prosper? Explain. (4%)

SUGGESTED ANSWER:

Yes, the petition will prosper. The appointment of Melchor as ex-officio member of the GSIS, ECC
and PHILHEALTH during his tenure as the chairperson of the CSC is unconstitutional for violating
Section 2, Article IX-A of the 1987 Constitution, prohibiting members of Constitutional
Commissions from holding any other office or employment and impairing the independence of the
CSC (Section 1, Article IX-A). This has been a settled case where the Court ruled that the CSC
Chairperson’s holding other offices resulted in double compensation and impairment to CSC’s
independence because other offices held by the CSC chairperson are under the Office of the
President (Funa v. Duque, GR No. 191672, November 25, 2014).
 Bar Exam 2015 Suggested Answers in Labor Law by the UP Law Complex

FEBRUARY 26, 2019

Source: (https://www.pinayjurist.com/bar-exam-2015-suggested-answers-in-labor-law-by-the-up-law-
complex/)

I.

(A) Rocket Corporation is a domestic corporation registered with the SEC, with 30% of its authorized
capital stock owned by foreigners and 70% of its authorized capital stock owned by Filipinos. Is Rocket
Corporation allowed to engage in the recruitment and placement of workers, locally and overseas?
Briefly state the basis for your answer. (2%)

(B) When does the recruitment of workers become an act of economic sabotage? (2%)

SUGGESTED ANSWER

(A) No. Article 27 of the Labor Code mandates that pertinently, for

a Corporation to validly engage in recruitment and placement of workers, locally and overseas, at least
seventy-five percent (75%) of its authorized and voting capital stock must be owned and controlled by
Filipino citizens. Since only 70% of its authorized capital stock is owned by Filipinos, it consequently
cannot validly engage in recruitment and placement of workers, locally and overseas.

(B) Under Section 6(m) of RA 8042, illegal recruitment is considered economic sabotage if it is
committed by a syndicate or is large scale in scope. It is syndicated illegal recruitment if the illegal
recruitment is carried out by three (3) or more conspirators; and it is large scale in scope when it is
committed against three (3) more persons, individually or as a group.

II.

LKG Garments Inc. makes baby clothes for export. As part of its measures to meet its orders, LKG
requires its employees to work beyond eight (8) hours everyday, from Monday to Saturday. It pays its
employees an additional 35% of their regular hourly wage for work rendered in excess of eight (8) hours
per day. Because of additional orders, LKG now requires two (2) shifts of workers with both shifts
working beyond eight (8) hours but only up to a maximum of four (4) hours. Carding is an employee who
used to render up to six (6) hours of overtime work before the change in schedule. He complains that
the change adversely affected him because now he can only earn up to a maximum of four (4) hours’
worth of overtime pay. Does Carding have a cause of action against the company? (4%)

SUGGESTED ANSWER

No. A change in work schedule is a management prerogative of LKG. Thus, Carding has no cause of
action against LKG if, as a result of its change to two (2) shifts, he now can only expect a maximum of
four (4) hours overtime work. Besides, Art. 97 of the Labor Code does not guarantee Carding a certain
number of hours of overtime work. In Manila Jockey Employees’ Union v. Manila Jockey Club (G.R. No.
167760, March 7, 2007,517 SCRA 707), the Supreme Court held that the basis of overtime claim is an
employee’s having been “permitted to work”. Otherwise, as in this case, such is not demandable.

III.

Benito is the owner of an eponymous clothing brand that is a top seller. He employs a number of male
and female models who wear Benito’s clothes. in promotional shoots and videos. His deal with the
models is that Benito will pay them with 3 sets of free clothes per week. Is this arrangement allowed?
(2%)

SUGGESTED ANSWER

No. the arrangement is not allowed. The models are Benito’s employees. As such, their services require
compensation in legal tender (Art. 102, Labor Code). The three sets of clothes, regardless of value, are in
kind; hence, the former’s compensation is not in the form prescribed by law.

ANOTHER SUGGESTED ANSWER

Under Article 102 of the Labor Code, wages of an employee are to be paid only in legal tender, even
when expressly requested by the employee. Hence, no lawful deal in this regard can be entered into by
and between Benito and his models.

ALTERNATIVE ANSWER

The models are not employees. Therefore, Art. 102 of the Labor Code applies. The payment does not
have to be in legal tender. But even if they are employees, the wage arrangement between Benito and
the models is allowed by Art: 97(f) of the Labor Code which defines wage as the remuneration or
earning paid to an employee, however designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating
the same, which is payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for services rendered or to be rendered. It includes the fair
and reasonable value, as determined by the Secretary of Labor, of board, lodging or other facilities
customarily furnished by the employer. to the employee.

IV.

Far East Bank (FEB) is one of the leading banks in the country. Its compensation and bonus packages are
top of the industry. For the last 6 years, FEB had been providing the following bonuses across-the-board
to all its employees:

(a) 13th month pay; (b) 14th to 18th month pay; (c) Christmas basket worth P6,000; (d) Gift check worth
P4,000; and (e) Productivity-based incentive ranging from a 20% to 40% increase in gross monthly salary
for all employees who would receive an evaluation of “Excellent” for 3 straight quarters in the same
year.

Because of its poor performance over-all, FEB decided to cut back on the bonuses this year and limited
itself to the following:
(a) 13th month pay; (b) 14th month pay; (c) Christmas basket worth P4,000; and (d) Gift check worth
P2,000.

Katrina, an employee of FEB, who had gotten a rating of “Excellent” for the last 3 quarters was looking
forward to the bonuses plus the productivity incentive bonus. After learning that FEB had modified the
bonus scheme, she objected. Is Katrina’s objection justified? Explain. (3%)

SUGGESTED ANSWER

Katrina’s objection is justified. Having enjoyed the across-the-board bonuses, Katrina has earned a
vested right. Hence, none of them can be withheld or reduced. In the problem, the company has not
proven its alleged losses to be substantial. Permitting reduction of pay at the slightest indication of
losses is contrary to the policy of the State to afford full protection to labor and promote full
employment (Linton Commercial Co. v. Hellera, G.R. No. 163147, October 10, 2007,535 SCRA 434). As to
the withheld productivity-based bonuses, Katrina is deemed to have earned them because of her
excellent performance ratings for three quarters. On this basis, they cannot be withheld without
violating the Principle of Non-Diminution of Benefits.

Moreover, it is evident from the facts of the case that what was withdrawn by FEB was a productivity
bonus. Protected by RA No. 6791 which mandates that the monetary value of the productivity
improvement be shared with the employees, the “productivity-based incentive” scheme of FEB cannot
just be withdrawn without the consent of its affected employees.

V.

Soledad, a widowed school teacher, takes under her wing one of her students, Kiko, 13 years old, who
was abandoned by his parents and has to do odd jobs in order to study. She allows Kiko to live in her
house, provides him with clean clothes, food, and a daily allowance of 200 pesos. In exchange, Kiko does
routine housework, consisting of cleaning the house and doing errands for Soledad. One day, a
representative of the DOLE and the DSWD came to Soledad’s house and charged her with violating the
law that prohibits work by minors. Soledad objects and offers as a defense that she was not requiring
Kiko to work as the chores were not hazardous. Further, she did not give him chores regularly but only
intermittently as the need may arise. Is Soledad’s defense meritorious? (4%)

SUGGESTED ANSWER

Soledad’s defense is meritorious. Sec. 4(d) of the Kasambahay Law (RA No. 10361) provides that the
term “Domestic Worker” shall not include children who are under foster family arrangement, and are
provided access to education and given an allowance incidental to education, i.e. “baon”,
transportation, school projects and school activities.

VI.

Ador is a student working on his master’s degree in horticulture. To make ends meet, he takes on jobs to
come up with flower arrangements for friends. His neighbor, Nico, is about to get married to Lucia and
needs a floral arranger. Ador offers his services and Nico agrees. They shake hands on it, agreeing that
Nico will pay Ador P20,000.00 for his services, but that Ador will take care of everything. As Ador sets
about to decorate the venue, Nico changes all of Ador’s plans and ends up designing the arrangements
himself with Ador simply executing Nico’s instructions.
(A) Is there an employer-employee relationship between Nico and

Ador? (4%)

(B) Will Nico need to register Ador with the Social Security System

(SSS)? (2%)

SUGGESTED ANSWER

(A) Yes. With Ador’s simply executing Nico’s instruction, Nico, who now has control over Ador’s work,
has become the employer of Ador. In Royale Homes Marketing Corp. v. Fidel Alcantara (G.R. No. 195190,
July 28, 2014), the Supreme Court held that control is the most important determinant of employer-
employee relationship.

(B) Yes, as under Section 9 of the Social Security Law (Art. 1161 as

amended), coverage in the SSS shall be compulsory upon all employees not over sixty (60) years of age
and their employers:

ANOTHER SUGGESTED ANSWER

(B) If Ador is a purely casual employee, then, no. Casual employees are not subject to the compulsory
coverage of the SSS by express provision of law (Section 8(5) (3), RA No. 1161, as amended).

ALTERNATIVE ANSWER

(A) There is no employer-employee relationship. The case at hand

pertains to a civil law arrangement. There is no business undertaken by Lucia; what the parties have is a
contract for a specific service.

VII.

Don Don is hired as a contractual employee of CALLHELP, a call center. His contract is expressly for a
term of 4 months. Don Don is hired for 3 straight contracts of 4 months each but at 2-week intervals
between contracts. After the third contract ended, Don Don is told that he will no longer be given
another contract because of “poor performance.” Don Don files a suit for “regularization” and for illegal
dismissal, claiming that he is a regular employee of CALLHELP and that he was dismissed without cause.
You are the Labor Arbiter. How would you decide the case? (4%)

SUGGESTED ANSWER

As Labor Arbiter, I will decide the case in favor of Don Don. Given the nature of Don Don’s work, which
consist of activities usually or desirable in the usual business of CALLHELP, Don Don should be
considered a regular employee.

CALLHELP’s termination of Don Don’s service in the guise of “poor performance” is not valid. Whether
for a probationary or regular employee, the requisites of dismissal on that ground do not appear to have
been complied with by the employer here.

VIII
Star Crafts is a lantern maker based in Pampanga. It supplies Christmas lanterns to stores in
Luzon, Metro Manila, and parts of Visayas, for the months of August to November being the busiest
months. Its factory employs a workforce of 2,000 workers who make different lanterns daily for the
whole year. Because of increased demand, Star Crafts entered into a contractual arrangement with
People Plus, a service contractor, to supply the former with 100 workers for only 4 months, August to
November, at a rate different from what they pay their regular employees. The contract with People
Plus stipulates that all equipment and raw materials will be supplied by Star Crafts with the express
condition that the workers cannot take any of the designs home and must complete their tasks within
the premises of Star Crafts.

Is there an employer-employee relationship between Star Crafts and the 100 workers from People Plus?
Explain. (4%)

Yes. People Plus is a labor-only-contractor because it is not substantially capitalized. Neither does it
carry on an independent business in which it uses its own investment in the form of tools, equipment,
machineries or work premises. Hence, it is just an agent or recruiter of workers who perform work
directly related to the trade of Star Crafts. Since both the essential element and the conforming element
of labor-only contracting are present, Star Crafts becomes the employer of the supplied worker.. As
principal; Star Crafts will always be an employer in relation to the workers supplied by its contractor. Its
status as employer is either direct or indirect depending on whether the contractor is legitimate or not.
Thus even if People Plus were a legitimate job contractor, still Star Crafts will be treated as a statutory
employer for purposes of paying the workers’ unpaid wages and benefits.

IX

Din Din is a single mother with one child. She is employed as a sales executive at a prominent
supermarket. She and her child live in Quezon City and her residence and workplace are a 15-minute
drive apart. One day, Din Din is informed by her boss that she is being promoted to a managerial
position but she is now being transferred to the Visayas. Din Din does not want to uproot her family and
refuses the offer. Her boss is so humiliated by Din Din’s refusal of the offer that she gives Din Din
successive unsatisfactory evaluations that result in Din Din being removed from the supermarket.

Din Din approaches you, as counsel, for legal advice. What would you advise her? (4 %)

SUGGESTED ANSWER

I will advise Din Din to sue her boss and the supermarket for illegal dismissal. Din Din cannot be
compelled to accept the promotion. Her unsatisfactory evaluations as well as her boss’ insistence that
she should agree to the intended transfer to Visayas are badges of an abuse of management
prerogative. In Pfizer Inc. v. Velasco (G.R. No. 177467, March 9, 2011, 645 SCRA 135), the Supreme Court
held that the managerial prerogative to transfer personnel must be exercised without abuse of
discretion, bearing in mind the basic elements of justice and fair play. Hence, Din Din’s dismissal is
illegal.

Karina Santos is a famous news anchor appearing nightly in the country’s most watched newscast. She is
surprised, after one newscast, to receive a notice of hearing before the station’s Vice-President for
Human Resources and calls the VP immediately to ask what was wrong. Karina is told over the phone
that one of her crew filed a complaint against her for verbal abuse and that the management is duty
bound to investigate and give her a chance to air her side. Karina objects and denies that she had ever
verbally assaulted her crew. The VP then informed her that pending the investigation, she will be placed
on a 30-day preventive suspension without pay, and that she will not be allowed to appear in the
newscast during this time.

Is the preventive suspension of Karina valid? Discuss the reasons for your answer. (4%)

SUGGESTED ANSWER

No. The preventive suspension of Karina is not valid. The employer may place an employee under
preventive suspension if his/ her continued employment would pose a serious and imminent threat to
the life or property of the employer or of his/her co-employees. These requirements are not present
here.

XI

Rico has a temper and, in his work as Division Manager of Matatag Insurance, frequently loses his
temper with his staff. One day, he physically assaults his staff member by slapping him. The staff
member sues him for physical injuries. Matatag Insurance decides to terminate Rico, after notice and
hearing, on the ground of loss of trust and confidence. Rico claims that he is entitled to the presumption
of innocence because he has not yet been convicted. Comment on Matatag’s action in relation to Rico’s
argument. (4%)

SUGGESTED ANSWER:

Matatag Insurance does not have to await the result of the criminal case before exercising its
prerogative to dismiss. Dismissal is not affected by a criminal case. Under the Three-fold Liability Rule, a
single act may result in three liabilities, two of which are criminal and administrative. To establish them,
the evidence of the crime must amount to proof beyond reasonable doubt; whereas, the evidence of
the ground for dismissal is substantial evidence only. In this regard, the company has some basis already
for withholding the trust it has reposed on its manager. Hence, Rico’s convic tion need not precede the
employee’s dismissal.

XII

Blank Garments, Inc. (BLANK), a clothing manufacturer, employs more than 200 employees in its
manufacturing business. Because of its high overhead, BLANK decided to sell its manufacturing business
to Bleach Garments, Inc. (BLEACH) lock, stock and barrel which included goodwill, equipment, and
personnel. After taking on BLANK’s business, BLEACH reduces the workforce by not hiring half the
workers specifically the ones with séniority, BLANK and BLEACH are still discerned to be sister
companies with identical incorporators. The laid-off employees sue both BLANK and BLEACH for
unlawful termination.

(A). How would you decide this case? (4%)

(B) What is the “successor employer” doctrine? (2%)

SUGGESTED ANSWER
(A) In transfer of ownership, the buyer corporation, as a general rule, is not duty-bound to absorb the
employees of the selling corporation. The buyer corporation becomes liable to the displaced employees
only if the change of ownership is done in bad faith or is used to defeat the rights of labor. In such a
case, the successor employer is duty-bound to absorb the displaced employees (Peñafrancia Tours and
Travel Transport, Inc., v. Sarmiento, G.R. No. 178397, October 20, 2011, 634 SCRA 279).

Since the facts of the case do not show any bad faith in BLEACH’S sale to BLANK, BLEACH, consequently,
is not obliged to absorb the displaced employees of BLANK.

The case at hand involves sales of assets as differentiated from sales of stocks. The ruling in SME Bank v.
De Guzman (G.R. No. 184517, October 8, 2013), which reversed Manlimos v. NLRC (G.R, No. 113337,
March 2, 1995, 312 Phil. 178), pointed out that in asset sales, the rule is that the seller. in good faith is
authorized to dismiss the affected employees, but is liable for the payment of separation pay under the
law. The buyer in good faith, on the other hand, is not obliged to absorb the employees affected by the
sale, nor is it liable for the payment of their claims. In contrast with asset sales, in which the assets of
the selling corporation are transferred to another entity, the transaction in stock sales takes place at the
shareholder level. Because the corporation possesses a personality separate and distinct from that of its
shareholders, a shift in the composition of its shareholders will not affect its existence and continuity.
Hence the corporation continues to be the employer and continues to be liable for the payment of their
just claims. Absent a just or authorized cause, the corporation or its new majority shareholders are not
entitled to lawfully dismiss corporate employees.

SUGGESTED ANSWERS

(B) The “successor employer” doctrine refers to a sale or transfer in

ownership of an entity that has been done in bad faith or to defeat the rights of labor. In such a case, it
is as if there have been no changes in employer-employee relationship between the seller and its
employees. The buyer becomes a “successor employer” and is obliged to absorb the displaced
employees.

XIII

Luisa is an unwed mother with three (3) children from different fathers. in 2004, she became a member
of the Social Security System (SSS). That same year, she suffered a miscarriage of a baby out of wedlock
from the father of her third child. She wants to claim maternity benefits under the SSS Act. Is she
entitled to claim? (3%)

SUGGESTED ANSWER

Yes, provided Luisa has reported to her employer her pregnancy and date of expected delivery, and paid
at least three monthly contributions during the 12-month period immediately preceding her
miscarriage, then she is entitled to maternity benefits up to four deliveries. As to the fact that she got
pregnant outside wedlock, as in her past three pregnancies, this will not bar her claim because the SSS is
non-discriminatory.

IV
Luis, a PNP officer, was off duty and resting at home when he heard a scuffle outside his house. He saw
two of his neighbors fighting and he rushed out to pacify them. One of the neighbors shot Luis by
mistake, which resulted in Luis’ death. Marian, Luis’ widow, filed a claim with the GSIS seeking death
benefits. The GSIS denied the claim on the ground that the death of Luis was not service related as he
was off duty when the incident happened. Is the GSIS correct? (3 %)

SUGGESTED ANSWER

No. The GSIS is not correct: Luis, a policeman, just like a soldier, is covered by the 24-Hour, Duty Rule. He
is deemed on round-the-clock duty unless on official leave, in which case his death outside performance
of official peace-keeping mission will bar death claim. In this case, Luis was not on official leave and he
died in the performance of a peace-keeping mission. Therefore, his death is compensable.

XV

Victor was hired by a local manning agency as a seafarer cook on board a luxury vessel for an eight-
month cruise. While on board, Victor complained of chronic coughing, intermittent fever, and joint
pains. He was advised by the ship’s doctor to take complete bed rest but was not given any other
medication. His condition persisted but the degree varied from day to day. At the end of the cruise,
Victor went home to Iloilo and there had himself examined. The examination revealed that he had
tuberculosis.

(A) Victor sued for medical reimbursement, damages and attorney’s fees, claiming that tuberculosis was
a compensable illness. Do you agree with Victor? Why or why not? (2%)

(B) Due to his prolonged illness, Victor was unable to work for more than 120 days. Will this entitle him
to claim total permanent disability benefits? (2%)

SUGGESTED ANSWER

(A) TB is listed under Sec. 32-A of the POEA-SEC as a work-related disease. It was also either contracted
or aggravated during the effectivity of Victor’s contract. Having shown its manifestations on board,
Victor should have been medically repatriated for further examination and treatment in the Philippines.
This obligation was entirely omitted in bad faith by the company when it waited for his contract to
expire on him before signing him off. On this basis, Victor is entitled to medical reimbursement,
damages and attorney’s fees.

(B) No. Victor’s TB is work-related and it developed on board, thereby satisfying the twin requisites of
compensability. However, despite , his knowledge of his medical condition, he failed to report to his
manning agent within three days from his arrival as required by Sec. 20-B(3) of the POEA-SEC. Since he
already felt the manifestations of TB before his sign-off, he should have submitted to post-employment
medical examination (Jebsens Maritime Inc. v. Enrique Undag, G.R. No. 191491, December 14, 2011, 662
SCRA 670). The effect of his omis sion is forfeiture by him of disability benefits (Coastal Safeway
Marine Services, Inc. v. Elmer T. Esguerra, G.R. No. 185352, August 10, 2011, 655 SCRA 300). In effect,
the 120-day rule has no application at all.

XVI
The Alliance of independent Labor Unions (AILU) is a legitimate labor federation which represents a
majority of the appropriate bargaining unit at the Lumens Brewery (LB). While negotiations were
ongoing for a renewal of the collective bargaining agreement (CBA), LB handed down a decision in a
disciplinary case that was pending which resulted in the termination of the AILU’s treasurer and two
other members for cause. AILU protested the decision, claiming that LB acted in bad faith and asked that
LB reconsider. LB refused to reconsider. AILU then walked out of the negotiation and declared a strike
without a notice of strike or a vote.AILU members locked in the LB management panel by barricading
the doors and possible exits (including windows and fire escapes). LB requested the DOLE to assume
jurisdiction over the dispute and to certify it for compulsory arbitration. The Secretary of Labor declined
to assume jurisdiction, finding that the dispute was not one that involved national interest. LB then
proceeds to terminate all of the members of the bargaining agent on the ground that it was unlawful to:
(1) barricade the management panel in the building, and (2) participate in an illegal strike.

(A) Was AILU justified in declaring a strike without a strike vote and a notice of strike? Why or why not?
(3%)

(B) Was the Secretary of Labor correct in declining to assume jurisdiction over the dispute? (2%)

(C) Was LB justified in terminating all those who were members of AILU on the two grounds cited? (3%)

SUGGESTED ANSWER

(A) No. Firstly, a Notice of Strike is always required by Art. 263(c) of

the Labor Code before a strike may be staged-be it grounded on bargaining deadlock or unfair Labor
Practice. Secondiy, the Supreme Court already held in Sukothai that while AILU may not exhaust the 15-
day cooling-off period in case of dismissal from employment of its officers who were duly elected in
accordance with the Union constitution and by-laws and the dismissal constitutes union busting and a
threat to AILU’s existence, still, Art. 263 (f) requires that a strike vote be undertaken through a secret
ballot and approved by a majority of the total union membership in the bargaining unit. Devoid of a
notice of strike and a strike vote, AILU’s strike is therefore illegal.

(B) The refusal of the Secretary to assume jurisdiction is valid. Par. (g) of Art. 263 (old) of the Labor Code
leaves it to his sound discretion to determine if national interest is involved. Assumption power is full
and complete. It is also plenary and discretionary (Philtranco Service Enterprises, Inc. v.
Philtranco Workers Union-AGLO, G.R. No. 180962, February 26, 2014). Thus, if in his opinion national
interest is not involved, then the company cannot insist that he assume jurisdiction.

(C) If dismissal is based on illegal strike:

The company has to file a complaint for illegal strike first. Once the strike is declared by final judgment
to be illegal, it can dismiss the union officers. As to members, their dismissal must be based on their
having committed illegalities on the occasion of their illegal strike. Since the company prematurely and
indiscriminately dismissed the AILU members then their dismissal is illegal.

If dismissal is based on the unlawful acts of barricading to lock the AILU members: Yes. Article 264 (a) of
the Labor Code authorizes the employer to declare the loss of employment status of “ANY WORKER” or
union officer who knowingly participates in the commission of illegal acts during a strike.
XVII

The Collective Bargaining Agreement (CBA) between Libra Films and its union, Libra Films Employees’
Union (LFEU), contains the following standard clauses:

1. Maintenance of membership;

2. Check off for union dues and agency fees; and

3. No strike, no lock-out.

While Libra Films and LFEU are in re-negotiations for an extension of the CBA, LFEU discovers that some
of its members have resigned from the union, citing their constitutional right to organize (which includes
the right NOT to organize). LFEU demands that Libra Films institute administrative proceedings to
terminate those union members who resigned in violation of the CBA’s maintenance of membership
clause. Libra Films refuses, citing its obligation to remain a neutral party. As a result, LFEU declare’s a
strike and after filing a notice of strike and taking a strike vote, goes on strike. The union claims that
Libra Films grossly violated the terms of the – CBA and engaged in unfair labor practice.

(A) Are LFEU’s claims correct? Explain. (4%)

(B) Distinguish between a “closed shop” clause and a “maintenance of membership” clause. (2%).

(C) Distinguish between “union dues” and “agency fees.” (2%)

SUGGESTED ANSWERS

(A) LFEU’s claim that Libra Films committed ULP based on its violation of the CBA is not correct. For
violation of a CBA to constitute ULP, the violation must be violation of its economic
provisions. Moreover, said violation must be gross and flagrant. Based on the allegation of the union,
what was violated was the maintenance of membership clause which was a political or representational
provision; hence, no ULP was committed (BPI Employees Union-Davao City v. BPI, G.R. No. 164301,
August 10, 2010, 702 SCRA 42).

(B) In a “closed shop” clause, all employees are required to be members of the union at the time of
hiring. They too must remain members of good standing during the period of employment as a
condition of continued employment. Maintenance of membership clause, on the other hand, requires
all employees who are union members at the time of the execution of the CBA to maintain their
membership of good standing, as a condition of continued employment.

(C) Union dues are union funds paid by union members, normally through check-off by the employer on
the basis of an individual written autho rization duly signed by the employees pursuant to Art. 241. (o)
of the Labor Code. Agency fee, on the other hand, is a reasonable fee equi valent to the dues and other
fees paid by members of the recognized collective bargaining agent. Art. 248(e) of the Labor Code
mandates that only non-union members who accept the benefits under the CBĄ may be assessed
agency fees. Their check-off authorization is not required.

XVIII
George is an American who is working as a consultant for a local IT company. The company has a union
and George wants to support the union. How far can George go in terms of his support for the union?
(3%)

SUGGESTED ANSWER

George, as a general rule, is prohibited by Art. 270 (a) of the Labor Code from giving any donation, grant
or other form of assistance, in cash or in kind, directly or indirectly to the Union. He can give a support
only upon prior permission from the Secretary of Labor relative to “Trade Union activities” as defined in
said law.

George, in addition to his alien employment permit, must first prove that the country whereof he is a
national recognizes the right of Filipinos working therein to organize. Under these conditions, he is
allowed to support the existing union by joining it as to increase its membership.

XIX

What is the rule on the “equity of the incumbent”? (2%)

SUGGESTED ANSWER

The Equity of the Incumbent rule has it that all existing federations or national unions, possessing all
qualifications of an LLO and none of the grounds for CR cancellation, shall continue to maintain their
existing affiliates regardless of their location or industry to which they belong. In case of dissociation,
affiliates are not required to observe the one union-one industry rule.

XX

(A) XYZ Company and Mr. AB, a terminated employee who also happens to be the President of XYZ
Employees Union, agree in writing to submit Mr. AB’s illegal dismissal case to voluntary arbitration. Is
this agreement a valid one? (3%)

(B) XYZ Company and XYZ Employees Union (XYZEU) reach a deadlock in their negotiation for a new
collective bargaining agreement (CBA).

XYZEU files a notice of strike; XYZ Company proposes to XYZEU that the deadlock be submitted instead
to voluntary arbitration. If you are counsel for XYZEU, what advice would you give the union as to the:
(1) propriety of the request of XYZ Company, and (2) the

relative advantages/disadvantages between voluntary arbitration ‘ and compulsory arbitration? (4%)

SUGGESTED ANSWER

(A) The agreement is valid because the preferred mode of settling labor disputes is through voluntary
modes, like voluntary arbitration. The agreement is consistent with Sec. 3, Art. XIII of the Constitution.
Moreover, Art. 262 of the Labor Code authorizes a voluntary arbitrator to hear and decide by agreement
of the parties, all other labor disputes.

(B) (1) As counsel, I will advise the union to accede to the request of
the company. Besides being the constitutionally preferred mode of dispute settlement, voluntary
arbitration is less adversarial and more expeditious.

(B) (2) The advantages of voluntary arbitration are:

(a) the parties’ dispute is heard and resolved by a person whom both parties have chosen as their judge;
hence, likely to be impartial,

(b) if both parties are willing to submit their dispute, the decision is final and binding on them in general
by reason of their submission agreement; and

(c) in the event of a challenge, the decision is elevated to the CA and then to the SC, i.e., less one layer of
appeal because the NLRC is out of the way.

The disadvantages of voluntary arbitration are:

(a) in case of appeal by the employer to the CA, the monetary award will not be secured with an appeal
bond which Rule 43 of the Rules of Court does not require; and

(b) in case of enforcement of judgment, the Voluntary Arbitrator has no sheriff to enforce it.

The advantages of compulsory arbitration are:

(a) subject to pre-litigation mediation, a case can be initiated through the filing of a verified complaint
by a union member, unlike in voluntary arbitration where the Voluntary Arbitrator acquires jurisdiction
primarily through a submission agreement. In a case where the company is unwilling, the EBR (and only
the EBR) may serve a notice to arbitrate; hence, a union member may be left out in the process if the
EBR does not serve that notice; (b) a monetary award is secured with the employer’s appeal bond; and
(c) there is a system of restitution in compulsory arbitration.

The disadvantages of compulsory arbitration are: (a). State interference with the affairs of labor and
management is maxi

mized, disregarding the inter-party nature of the relationship; and (b) the system of appeals entails a
longer process.

XXI

Philippine News Network (PNN) engages the services of Anya, a prominent news anchor from a rival
station, National News Network (NNN). NNN objects to the transfer of Anya claiming that she is barred
from working in a competing company for a period of three years from the expiration of her contract.
Anya proceeds to sign with PNN which then asks her to anchor their nightly newscast. NNN sues Anya
and PNN before the National Labor Relations Commission (NLRC), asking for a labor injunction. Anya and
PNN object claiming that it is a matter cognizable by a regular court and not the NLRC.

(A) Is NNN’s remedy correct? Why or why not? (3%).

(B) What are the grounds for a labor injunction to issue? (2%)

(C) Distinguish the jurisdiction of a Labor Arbiter from that of the NLRC. (3%)

SUGGESTED ANSWER
(A) The NLRC has no jurisdiction. As to PNN, there is no employer-employee relationship between itself
and NNN; hence, the NLRC cannot hear and resolve their dispute (Reasonable Causal Connection Rule).
*As to Anya, the injunctive power of the NLRC is ancillary in nature; hence, it requires a principal case,
which is absent. Besides, the dispute between her and PNN is not resolvable solely through the
application of the Labor Code, other labor statutes; CBA or employment contract. (Reference to Labor
Law Rule)

(B) The NLRC may issue an injunctive writ to enjoin an illegal activity. under Art.264 (old) of the Labor
Code; as an ancillary remedy to avoid irreparable injury to the rights of a party in an ordinary labor
dispute pursuant to Rule X; 2011 NLRC Rules of Procedure, as amended; and to correct the Labor
Arbiter’s grave abuse of discretion pursuant to Rule XII of the 2011 NLRC Rules of Procedure, as
amended.

Moreover, for labor injunction to issue, it must be proven under Art. 218 (e), Labor Code:

i. that the prohibited or unlawful acts have been threatened and will be committed and will be
continued unless restrained;

ii. that substantial and irreparable injury to the complainant’s property will follow;

iii. that greater injury, will be inflicted upon complainant by the denial of relief than will be inflicted
upon defendants by the granting of relief;

iv. that complainant has no adequate remedy at law; and

v. that public officers charged with the duty to protect complainant’s property are unable or unwilling to
furnish adequate protection.

(C) As to jurisdiction, the LA can hear and resolve cases under Art. 217 (old) of the Labor Code, money
claims under Sec. 7 of RA No. 10022; and referred wage distortion disputes in unorganized
establishments, as well as the enforcement of compromise agreements pursuant to the 2011 NLRC
Rules of Procedure, as amended. ‘On the other hand, the NLRC reviews decisions rendered by the LA;
decisions or orders rendered by the RD under Art. 129 of the Labor Code; and conducts compulsory
arbitration in certified cases.

As to the power to issue a labor injunction, the NLRC can issue an injunctive writ. On the other hand, the
Labor Arbiter cannot issue an injunctive writ.

XXII

Mario comes from a family of coffee bean growers. Deciding to incorporate his fledgling coffee venture,
he invites his best friend, Carlo, to join him. Carlo is hesitant because he does not have money to invest
but Mario suggests a scheme where Carlo can be the Chief Marketing Agent of the company, earning a
salary and commissions. Carlo agrees and the venture is formed. After one year, the business is so
successful that they were able to declare dividends. Mario is so happy with Carlo’s work that he assigns
100 shares of stock to Carlo as part of the latter’s bonus. Much later on, it is discovered that Carlo had
engaged in unethical conduct which caused embarrassment to the company. Mario is forced to
terminate Carlo but he does so without giving Carlo the opportunity to explain. Carlo filed a case against
Mario and the company for illegal dismissal. Mario objected on the ground that the Labor Arbiter had no
jurisdiction over the case as it would properly be considered as an intra-corporate controversy
cognizable by the RTC. Further, Mario claimed that because Carlo’s dismissal was a corporate act, he
cannot be held personally liable.

(A) As the Labor Arbiter assigned to this case, how would you resolve the jurisdiction question. (3%)

(B) What is the rule on personal liability of corporate officers for a corporate act declared to be
unlawful? (2%)

SUGGESTED ANSWER

(A) The Labor Arbiter has jurisdiction over Carlo’s illegal dismissal

complaint as he was hired by Mario on a “salary and commission”. basis. In Grepalife v. Judico (G.R. No.
73887, December 21. 1989, 180 SCRA 445) it was held that a worker who is paid on a salary plus
commission basis is an employee. While regular courts have jurisdiction over Mario’s corporate act of
severing ties with Carlo, the Labor Arbiter, pursuant to Art. 217 A-(2) of the Labor Code, has jurisdiction
over Carlo’s illegal dismissal complaint.

(B) Corporate officers are not, as a general rule; personally liable for the corporate acts they performed
in behalf of the corporation they represent. They are, however, personally liable for their corporate acts
if they acted with malice or bad faith (Girly Ico V. Systems Technology Institute, Inc., G.R. No. 185100,
July 9, 2014).

ALTERNATIVE ANSWER

(A) Carlo is party to a joint-venture. Hence, he is not related to Mario as an employee. As a business
organization, the affairs of that joint-venture are not governed by Labor Law, except in relation to its
employees. Any issue arising from that affair, therefore, must be brought to the RTC. Thus, the NLRC has
no jurisdiction because the matter did not arise from employer-employee relationship and the issue
between the disputants is not resolvable solely through the application of Labor Law.

2015 Bar Exam Suggested Answers in Civil Law by the UP Law Complex

FEBRUARY 6, 2019

I.

Alden and Stela were both former Filipino citizens. They were married in the Philippines but they later
migrated to the United States where they were naturalized as American citizens. In their union they
were able to accumulate several real properties both in the US and in the Philippines. Unfortunately,
they were not blessed with children. In the US, they executed a joint will instituting as common heirs to
divide their combined estate in equal shares, the five siblings of Alden and the seven siblings of Stela.
Alden passed away in 2013 and a year later, Stela also died. The siblings of Alden who were all citizens of
the US instituted probate proceedings in a US court impleading the siblings of Stela who were all in the
Philippines.

(A) Was the joint will executed by Alden and Stela who were both former Filipinos valid? Explain with
legal basis. (3%) (B) Can the joint will produce legal effect in the Philippines with respect to the
properties of Alden and Stela found here? If so, how? (C) is the situation presented in Item I an example
of dépeçage?

SUGGESTED ANSWERS

(A) The joint will shall be valid if it was executed in accordance with U.S. law. At the time of the will’s
execution, Alden and Stela were U.S. citizens. The will of an alien who is abroad produces effect in the
Philippines if made with the formalities prescribed by the place of the law in which he resides, or
according to the formalities observed in his country (Art. 816, Civil Code). Art. 819 of the Civil Code does
not apply as it refers specifically to the invalidity of joint wills “executed by Filipinos in a foreign
country”.

(B) The joint will may produce legal effect in the Philippines if it was validly executed in accordance with
the laws of the U.S. To be given legal effect in the Philippines, it must be probated in this country. Since
the will was executed abroad by aliens, it must comply with Article 17 or Article 816 of the Civil Code.
Under Article 17, the forms and solemnities of contracts, wills, and other public instruments shall be
governed by the laws of the country in which they are executed. Under Article 816, the will of an alien
who is abroad produces effect in the Philippines if made with the formalities prescribed by the place of
the law in which he resides, or according to the formalities observed in his country, or in conformity
with those which this Code prescribes. Since Alden and Stela were both naturalized American citizens at
the time of the execution of the will, they are allowed to execute a will in accordance with the
formalities prescribed by the law of their country, where they reside, or Philippine law. Moreover,
Article 16(2) requires a will to be intrinsically in accordance with the national law of the testator, hence
should also be in accordance with US law. However, Alden’s siblings are all US citizens. Insofar as the
real properties situated in the Philippines, the prohibition regarding alien ownership of Philippine land
found in the Constitution is applicable. Article 17 of the Civil Code provides that prohibitive laws
concerning persons, their acts or property, and those which have for their object public order, public
policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by
determinations or conventions agreed upon in a foreign country.

(C) No, the situation presented in Item I is not an example of dépeçage. repeçage is a term used where
different aspects of a case involving a foreign element may be governed by different systems of law. In
this case, only one system of laws governs, that of U.S. law. Under Article 16 par. (2) of the Civil Code,
intestate and testamentary succession, with respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the
national law of the person whose succession is under consideration, whatever may be the nature of the
property and regardless of the country wherein said property may be found. For the will to be probated,
it must also comply with US law under Articles 17 and 816 of the Civil Code, as the US was the place of
the will’s execution, the residence of the spouses, and the country where they are nationals.

Note: It is suggested that the examinees be given full credit for I(C) as the term ‘dépeçage’ is not
commonly taught in this jurisdiction.

II.

Marco and Gina were married in 1989. Ten years later, or in 1999, Gina left Marco and lived with
another man, leaving their two children of school age with Marco. When Marco needed money for their
children’s education he sold a parcel of land registered in his name, without Gina’s consent, which he
purchased before his marriage. Is the sale by Marco valid, void or voidable? Explain with legal basis. (4%)

SUGGESTED ANSWER

The sale is void. The marriage was celebrated during the effectivity of the Family Code. In the absence of
a marriage settlement, the property relations between the spouses is governed by absolute community
of property, whereby all the properties owned by the spouses at the time of the celebration of the
marriage, as well as whatever they may acquire during the marriage, shall form part of the community
property, as a rule (Art. 91, Family Code). The parcel of land sold is part of the community property as
Marco owned it before the marriage. In an absolute community of property regime, the administration
and enjoyment shall belong to both spouses jointly (Art. 96, Family Code). Neither spouse may dispose
or encumber common properties without the authority of the court or the written consent of the other
spouse, and in the absence of such authority or consent, the disposition or encumbrance shall be void
(Art. 96, Family Code). Despite separation de facto for more than 10 years, Gina remains Marco’s
spouse, and her consent is still required for the sale to be valid. Since Marco sold the lot without Gina’s
consent, the sale is void.

III.

Julie had a relationship with a married man who had legitimate children. A son was born out of that
illicit relationship in 1981. Although the putative father did not recognize the child in his certificate of
birth, he nevertheless provided the child with all the support he needed and spent time regularly with
the child and his mother. When the man died in 2000, the child was already 18 years old so he filed a
petition to be recognized as an illegitimate child of the putative father and sought to be given a share in
his putative father’s estate. The legitimate family opposed, saying that under the Family Code his action
cannot prosper because he did not bring the action for recognition during the lifetime of his putative
father.

(A) If you were the judge in this case, how would you rule? (4%)

(B) Wishing to keep the peace, the child during the pendency of the case decides to compromise with his
putative father’s family by abandoning his petition in exchange for 1/2 of what he would have received
as inheritance if he were recognized as an illegitimate child. As the judge, would you approve such a
compromise? (2%)

SUGGESTED ANSWER

(A) I would rule against the illegitimate child. The action for recognition as an illegitimate child based on
the open and continuous possession the status of an illegitimate child may be brought during the
lifetime of the alleged parent (Art. 175, Family Code). Since the putative father has already died, the
action for recognition based on such ground, as indicated by the support and regular spending of time
with the child and mother, cannot prosper.

(B) I would not approve the compromise. The compromise involved herein is a compromise of the civil
status of the child, which is prohibited under Art. 2035 of the Civil Code.

ALTERNATIVE ANSWER

(B) I would approve the compromise. The subject matter of the compromise between the parties is
abandonment of the petition or the end of the litigation between the parties, not the child’s civil status;
there would be no ruling as to the civil status of the child. Hence, the prohibition against compromise of
the civil status of persons in Art. 2035 of the Civil Code does not apply.

IV.

Bert and Joe, both male and single, lived together as common law spouses and agreed to raise a son of
Bert’s living brother as their child without legally adopting him. Bert worked while Joe took care of their
home and the boy. In their 20 years of cohabitation they were able to acquire real estate assets
registered in their names as co-owners. Unfortunately, Bert died of cardiac arrest, leaving no will. Bert
was survived by his biological siblings, Joe, and the boy.

(A) Can Article 147 on co-ownership apply to Bert and Joe, whereby all properties they acquired will be
presumed to have been acquired by their joint industry and shall be owned by them in equal shares?
(2%)

(B) What are the successional rights of the boy Bert and Joe raised as their son? (2%)
(C) If Bert and Joe had decided in the early years of their cohabitation to jointly adopt the boy, would
they have been legally allowed to do so? Explain with legal basis? (3%)

SUGGESTED ANSWER

(A) No, Article 147 of the Family Code is not applicable to the case of Bert and Joe. Article 147 applies
only when a “man and a woman, who are capacitated to marry each other, live exclusively with each
other as husband and wife without the benefit of marriage or under a void marriage”. In this case, Bert
and Joe are both men; they ar also incapacitated from marrying each other since in this jurisdiction,
marriage may only take place between a man and a woman (Arts. 1 and 2, Family Code).

(B) The boy has no successional rights. Since Bert died without a will, intestate succession shall apply.
While the boy is the son of Bert’s living brother, and hence is Bert’s nephew, he cannot inherit from Bert
as a legal heir since he is excluded by his father under the proximity rule (Art. 962, Civil Code).
Moreover, he cannot invoke the rights of an adopted child to inherit from Bert since the boy was not
legally adopted.

(C) No, Bert and Joe could not have jointly adopted the boy. Under the Domestic Adoption Act, joint
adoption is permitted, and in certain cases mandated, for spouses. In this case, Bert and Joe are not
spouses.

V.

Mrs. L was married to a ship captain who worked for an interna maritime vessel. For her and her family’s
support, she would do monthly allotments from her husband’s company. One day, while en ro from
Hong Kong to Manila, the vessel manned by Captain L encounter a severe typhoon at sea. The captain
was able to send radio messages of distress to the head office until all communications were lost. In the
weeks that followed, the search operations yielded debris of the lost ship but the bodies of the crew and
the passengers were not recovered. The insurance company thereafter paid out the death benefits to all
the heirs of the passengers and crew. Mrs. L filed a complaint demanding that her monthly allotments
continue for the next four years until her husband may be legally presumed dead because of his
absence. If you were the magistrate, how would you rule? (3%)

SUGGESTED ANSWER

I would rule against Mrs. L. When a person disappears under circumstances involving danger of death as
enumerated in Article 391 of the Civil Code, the death of the person is presumed to have taken place at
the beginning of the four year period provided in said article. In this case, Captain L disappeared while
on board a vessel lost during a sea voyage, and thus is presumed dead when the vessel was lost at sea.
Hence, Mrs. L is not entitled to the monthly allotments for the next four years.

ALTERNATIVE ANSWER

I would rule in favor of Mrs. L. A person missing under the circumstances as those of Captain L may not
be legally considered as dead until the lapse of the period fixed by law on presumption of death. To
allow the argument that Captain L’s death should be considered on the very day of the occurrence of
the event from which death is presumed would mean that no claim for death compensation benefits
would ever prosper, since the heirs of a missing seaman have to wait for four years under Art. 391
before the seaman may be declared legally dead, and after four years, the prescriptive period for filing
money claims would lapse (Pantollano v. Korphil, G.R. 169575, March 30, 2011).

VI

Kardo as a young lieutenant, met Glenda, and after a whirlwind courtship they were married. In the
early part of his military career, Kardo was assigned to different places all over the country but Glenda
refused to accompany him as she preferred to live in her hometown. They did not live together until the
12th year of their marriage when Kardo had risen un the ranks and was given his own command. They
moved to living quarters in Fort Gregorio. One day, while Kardo was away on official business, one of his
military aides caught Glenda having sex with the corporal assigned as Kardo’s driver. The aide
immediately reported the matter to Kardo who rushed home to confront his wife. Glenda readily
admitted the affair and Kardo sent her away in anger. Kardo would later come to know the true extent
of Glenda’s unfaithfulness from his aides, his household staff, and former neighbors who informed him
that Glenda has had intimate relations with various men throughout their marriage whenever Kardo was
away on assignment.

Kardo filed a petition for declaration of nullity of marriage under Article 36. Based on interviews from
Kardo, his aide, and the housekeeper, a psychologist testified that Glenda’s habitual infidelity was due to
her affliction with Histrionic Personality disorder, an illness characterized by excessive emotionalism and
uncontrollable attention-seeking behavior rooted in Glenda’s abandonment as a child by her father.
Kardo himself, his aide, and his housekeeper also testified in court. The RTC granted the petition, relying
on the liberality espoused by Te v. Te (G.R. No. 161793, February 13, 2009) and Azcueta v. Republic (G.R.
No. 180668, May 26, 2009). However, the OSG filed an appeal, arguing that sexual infidelity was only a
ground for legal separation and that the RTC failed to abide by the guidelines laid down in the Molina
case. How would you decide the appeal? (5%)

SUGGESTED ANSWER
I would dismiss the appeal if the incapacity is incurable and so grave as to prevent Glenda from
performing her essential marital obligations. For the Histrionic Personality Disorder to be a ground for
declaration of nullity of marriage under Article 36 of the Family Code, it must be characterized by (1)
gravity; (2) juridical antecedence; and (3) incurability. The sexual infidelity in this case was not the
ground for the declaration of the nullity of the marriage, but merely the manifestation of Glenda’s
incapacity to comply with her obligation to Kardo as a spouse, and her inability to accord respect to
the sanctity of their marriage, satisfying the requisite of gravity. There was juridical antecedence since
the psychologist testified that the incapacity already existed at the time of the marriage, as it was
rooted in Glenda’s abandonment as a child by her father. The fact that Glenda was not personally
examined is immaterial. As held by the Supreme Court, “there is no requirement that the respondent
spouse be personally examined by a physician or psychologist as a condition sine qua non for the
declaration of nullity of marriage based on psychological incapacity. What matters is whether the
totality of evidence presented is adequate to sustain a finding of psychological incapacity” (Marcos v.
Marcos, G.R. No. 136490, October 19, 2000). Moreover, it has been held by the Supreme Court that
the Molina doctrine should not be rigidly or strictly applied. Molina is not set in stone and the
interpretation of Article 36 must rely on a case-to-case basis (Antonio v. Reyes, G.R. 155800, March
10, 2006).

ALTERNATIVE ANSWER

I would grant the appeal. First, there was no showing that the incapacity is incurable or that it was so
grave that she could not perform her essential marital obligations. Also, as held in the case of Ochosa v.
Alano (G.R. No. January 26, 2011), there was insufficient evidence that Glenda’s defects were already
present at the inception of, or prior to the marriage; psychological incapacity did not satisfy the
jurisprudential requisite of juridical antecedence, as laid down in Republic v. CA and Molina (G.R.
108763, February 13, 1997). It was not shown how the psychologist arrived at the conclusion that
Glenda’s habitual infidelity was due to her affliction with Histrionic Personality Disorder. It is possible
that the psychologist evaluated her condition only indirectly, from information gathered from Kardo and
his witnesses, which evokes the possibility that the information was biased in favor of Kardo’s cause.
Although the Supreme Court has held that personal examination of a party alleged to be psychologically
incapacitated is not a mandatory requirement (Marcos v. Marcos, G.R. 136490, October 19, 2000), it has
also ruled that to make conclusions and generalizations on a spouse’s psychological condition based on
the information fed by only one side, similar to the case at bar, is not different from admitting hearsay
evidence as proof of the truthfulness of the content of such evidence (Padilla-Rumbaua v. Rumbaua,
G.R. No. 166738, August 14, 2009, 596 SCRA 157). Mere sexual infidelity is not itself a ground for
dissolution of marriage under Article 36, even if habitual; at most, it can only be a ground for legal
separation.

VII.
Mr. and Mrs. X migrated to the US with all their children. As they had no intention of coming back, they
offered their house and lot for sale to their neighbors, Mr. and Mrs. A (the buyers) who agreed to buy
the property for 8 Million. Because Mr. and Mrs. A needed to obtain a loan from a bank first, and since
the sellers were in a hurry to migrate, the latter told the buyers that they could already occupy the
house, renovate it as it was already in a state of disrepair, and pay only when their loan is approved and
released. While waiting for the loan approval, the buyers spent P1 Million in repairing the house. A
month later, a person carrying an authenticated special power of attorney from the sellers demanding
that the buyers either immediately pay for the property in full now or vacate it and pay damages for
having made improvements on the property without a sale having been perfected.

(A) What are the buyers’ options or legal rights with respect to the expenses they incurred in improving
the property under the circumstances? (3%)

(B) Can the buyers be made to immediately vacate on the ground that the sale was not perfected?
Explain briefly. (3%)

SUGGESTED ANSWER

(A) The sale was perfected and Spouses A acquired ownership over thehouse and lot upon delivery.
Payment of the price was subject to an indefinite period, that is, after the approval of the bank loan. As
owners, they have the right to make improvements on the said properties, and to retain the same. Even
assuming for the sake of argument that the sale was not perfected and Spouses A had not acquired
ownership over the house and lot because of a notarized deed of sale, or in case or rescission, they may
be considered builders in good faith since they entered into the property believing in good faith that
they were the owners of the property in question. As builders in good faith, they are entitled to
reimbursement for necessary and useful expenses incurred upon the property, and may retain the
property until reimbursement therefore (Art. 448 and 546 Civil Code). The improvements in ques. tion
are necessary and useful since the house was already in a state of disrepair.

(B) No, the buyers may not be made to vacate the properties. A contract of sale is a consensual contract
which is perfected at the moment there is a meeting of the minds upon the thing which is the object of
the contract and upon the price (Art. 1475, Civil Code). In this case, the sale was already perfected since
there was already a meeting of the minds as to the object of the sale, which is the house and lot, and as
to the price, which is P8 Million. The fact that there was no payment yet is immaterial since it is not a
requisite for the perfection of the contract.

Even assuming that the sale was rescinded, the buyers may still not be made to vacate the properties.
Since the buyers made necessary and useful improvements upon the properties, they have the right to
retain the properties in question until the full reimbursement of such expenses (Arts. 448 and 546, Civil
Code).
VIII

X, Y, Z are siblings who inherited a 10-storey building from their parents, They agreed in writing to
maintain it as a co-owned property for leasing out and to divide the net profits among themselves
equally for a period of 20 years. On the 8th year, X wanted to get out of the co-ownership so he could
get his 1/3 share in the property. Y and Z refused, saying X is bound by their agreement to keep the co-
ownership for 20 years. Are Y and Z correct? Explain. (3%)

SUGGESTED ANSWER

Y and Z are partly correct. As a general rule, no co-owners shall be obliged to remain in the co-
ownership, and each co-owner may demand at any time the partition of the thing owned in common.
However, as one of the exceptions to the general rule, an agreement to keep the thing undivided for a
certain period of time, not exceeding ten years, shall be valid (Art. 494, CC). In this case, X, Y, and Z
stipulated for a period of indivision of 20 years, which exceeds the maximum allowed by law. The
stipulation would be void only as to the period beyond such maximum of ten years. Hence, X cannot yet
ask for the partition, as there remains two more years for the agreement to remain in force.

IX.

Jose, single, donated a house and lot to his only niece, Maria, who was of legal age and who accepted
the donation. The donation and acceptance thereof were evidenced by a Deed of Donation. Mana then
lived in the house and lot donated to her, religiously paying resway, a taxes thereon. Twelve years later,
when Jose had already passed away, a woman claiming to be an illegitimate daughter of Jose filed a
complaint against Maria. Claiming rights as an heir, the woman prayed that Maria be ordered to
reconvey the house and lot to Jose’s estate. In her complaint she alleged that the notary public who
notarized the Deed of Donation had an expired notarial commission when the Deed of Donation was
executed by Jose. Can Maria be made to reconvey the property? What can she put up as a defense?
(4%)

SUGGESTED ANSWER

Maria cannot be made to reconvey the property. In order for a donation of an immovable to be valid, it
must be made in a public document (Art. 749, Civil Code). Since the notary public before whom the deed
of donation was acknowledged had an expired notarial commission, the deed of donation remained a
private instrument; hence, the donation was void. However, assuming that the donation is not
inofficious, Maria can put up the defense of prescription. Since she possessed the house and lot in the
concept of an owner and in good faith that she had just title to the property by virtue of the donation,
she became the owner of the property by virtue of acquisitive prescription 10 years after she took
possession thereof, assuming that the land on which the house was built was not registered land (Arts.
1117, 1118, 1127 and 1134, Civil Code).
X.

X, a dressmaker, accepted clothing materials from Karla to make two dresses for her. On the day X was
supposed to deliver Karla’s dresses, X called up Karla to say that she had an urgent matter to attend to
and willI deliver them the next day. That night, however, a robber broke into her shop and took
everything including Karla’s two dresses. X claims she is not liable to deliver Karla’s dresses or to pay for
the clothing materials Considering she herself was a victim of the robbery which was a fortuitous event
and over which she had no control. Do you agree? Why? (3%)

SUGGESTED ANSWER

Yes, I agree that X is not liable. The contract between the parties is a contract for a piece of work
wherein the contractor, X, bound herself to execute a piece of work for the employer, Karla, in
consideration of a certain price or compensation (Art. 1713, Civil Code). Article 1717 of the Civil Code
provides that if the contractor bound himself to furnish the material, he shall suffer the loss if the work
should be destroyed before its delivery, save when there has been delay in receiving it. Since the
contractor X did not furnish the material, she shall not suffer the loss of the work which took place
before its delivery. There was no delay in the receipt of the work since the parties agreed to the delivery
of the dresses on the day after the original date of delivery. Hence, X is not bound to suffer the loss, and
is liable for neither the delivery of the dresses nor the cost of the materials.

ALTERNATIVE ANSWER

No, I do not agree. The obligation involved in this case is an obligation to do, since X’s obligation is to
make dresses for Karla. Under Article 1167 of the Civil Code, if a person obliged to do something fails to
do it, the same shall be executed at his cost. Although X may not be compelled to deliver the dresses to
Karla, she may be held liable for the cost of having another person to make the dresses for Karla, which
including the cost of the materials.

XI.

Jackie, 16, inherited a townhouse. Because she wanted to study in an exclusive school, she sold her
townhouse by signing a Deed of Sale and turning over possession of the same to the buyer. When the
buyer discovered that she was still a minor, she promised to execute another Deed of Sale when she
turns 18. When Jackie turned 25 and was already working, she wanted to annul the sale and return the
buyer’s money to recover her townhouse. Was the sale contract void, voidable or valid? Can Jackie still
recover the property? Explain. (4%)

SUGGESTED ANSWER
The contract of sale is voidable. Where one of the parties is incapable of giving consent to a contract,
the contract is voidable. (Art. 1390, Civil Code.) It appears that only Jackie was incapacitated by virtue of
her minority.

Jackie cannot recover the property. First, since the contract is voidable, Jackie had only 4 years from the
time she attained the age of majority to bring the action for annulment of the contract (Art. 1391, Civil
Code). In this case, Jackie should have brought the action for annulment of the contract within four
years after turning eighteen years old, or up until the age of twenty-two. Since she is already 25 years
old, the period for bringing the action has prescribed. Second, Jackie may be considered to have actively
misrepresented as to her age. Thus, she will be bound to the contract under the principle of estoppel.

XII

1. Iya and Betty owed Jun P500,000.00 for advancing their equity in a corporation they joined as
incorporators. Iya and Betty bound themselves solidarily liable for the debt. Later, Iya and Jun
became sweethearts so Jun condoned the debt of P500,000.00. May lya demand from Betty
P250,000.00 as her share in the debt? Explain with legal basis. (2%)

(B) Juancho, Don and Pedro borrowed P150,000.00 from their friend Cita to put up an internet café
orally promising to pay her the full amount after one year. Because of their lack of business know-how,
their business collapsed. Juancho and Don ended up penniless, but Pedro was able to borrow money
and put up a restaurant which did well. Can Cita demand that Pedro pay the entire obligation since he,
together with the two others, promised to pay the amount in full after one year? Defend your answer.
(2%)

SUGGESTED ANSWER

(A) No, Iya can not demand reimbursement from Betty. The remission of the whole obligation, obtained
by one of the solidary debtors, does not entitle him or her to reimbursement from his co-debtors (Art.
1220, Civil Code).

(B) No, Cita can not demand payment of the entire obligation from Pedro.

The concurrence of two or more creditors or of two or more debtors in one and the same obligation
does not imply that each one of the former has a right to demand, or that each one of the latter is
bound to render, entire compliance with the prestation. There is a solidary liability only when the
obligation expressly so states, or when law or the nature of the obligation requires solidarity (Art. 1207,
Civil Code). In this case, there is no indication that they bound themselves solidarily to pay Cita, nor does
the law or nature of the obligation require solidarity. Hence, Juancho, Don and Pedro’s obligation is
joint, and Cita can only demand payment of 1/3 of the obligation from Pedro, which is presumed to be
his share in the obligation in the absence of stipulation to the contrary (Art. 1208, Civil Code).
XIII

(A) X and Y are partners in a shop offering portrait painting. Y provided the capital and the marketing
while X was the portrait artist. They accepted the 50,000.00 payment of Kyia to do her portrait but X
passed away without being able to do it. Can Kyla demand that Y deliver the portrait she had paid for
because she was dealing with the business establishment and not with the artist personally? Why or
why not? (3%)

(B) In this jurisdiction, is a joint venture (i.e., a group of corporations contributing resources for a specific
project and sharing the profits therefrom) considered a partnership? (3%)

SUGGESTED ANSWER

(A) No, Kyla cannot validly demand that y deliver the portrait. Although she may be correct that it is the
partnership that she contracted with, Kyla cannot demand that Y deliver the portrait ‘if the intention of
the parties was that the portrait should be done by X and this is precisely why the obligation was
constituted. With the death of X, the obligation was extinguished because it is a purely personal
obligation which is extinguished upon the death of the obligor. Finally, the obligation is an obligation to
do. To oblige the surviving partner, Y, to deliver the painting (do the painting) would be tantamount to
an involuntary servitude, which is against the law.

ALTERNATIVE ANSWER

1. Yes. Art. 1768 states that a partnership has a juridical personality separate and distinct from that
of each of the partners. The facts do not allege that Kyla contracted for a purely personal
service, hence the partnership is the entity which she contracted with, so even upon the death
of X, she can demand that Y as the remaining partner deliver the portrait in fulfillment of the
obligation of the partnership to her.

SUGGESTED ANSWER

(B) Yes. The Supreme Court has ruled that a joint venture may be considered a species of partnership
(Aurbach v. Sanitary Wares Manufacturing Corp., G.R. No. 75875, December 15, 1989; Philex Mining v.
CIR, G.R. No. 148187, April 16, 2008). It has also ruled that “a joint venture is hardly distinguishable
from, and may be likened to, a partnership since their elements are similar, i.e., community of interests
in the business and sharing profits and losses. Being a form of partnership, a joint venture is generally
governed by the law on partnerships” (Litonjua v. Litonjua, G.R. Nos. 166299-300, December 13, 2005).
ALTERNATIVE ANSWER

(B) No, a joint venture is not considered a partnership. Although the Supreme Court has recognized that
for certain purposes, a joint venture is a form of partnership and should be governed by the law of
partnerships, it has also recognized a distinction between the two business forms, and has held that
although a corporation cannot ente into a partnership contract, it may however engage in a joint ven
with others. (Aurbach v. Sanitary Wares Manufacturing Corp., G.R. 75875, December 15, 1989).

XIV

A driver of a bus owned by company Z ran over a boy who died instantly. A criminal case for reckless
imprudence resulting in homicide was filed against the driver. He was convicted and was ordered to pay
P2 Million in actual and moral damages to the parents of the boy who was an honor student and had a
bright future. Without even trying to find out if the driver had assets or means to pay the award of
damages, the parents of the boy filed a civil action against the bus company to make it directly liable for
the damages.

(A) Will their action prosper? (4%)

(B) If the parents of the boy do not wish to file a separate civil action against the bus company, can they
still make the bus company liable if the driver cannot pay the award for damages? If so, what is the
nature of the employer’s liability and how may civil damages be satisfied? (3%)

SUGGESTED ANSWER

(A) Yes, the action will prosper. The cause of action against the company is different from the cause of
action against the driver in the criminal case. The civil action against the employer is rooted on the fact
that employers are vicariously liable for the damage caused by their employees while in the
performance of their functions. The vicarious liability of the employers under Art. 2180 of the Civil Code
does not require as a condition sine qua non that the driver should have been declared insolvent or
unable to pay the awards of damages. The cause of action against the driver, on the other hand, is
rooted in Art. 2176, which defines a quasi-delict. Moreover, if negligence was proven in the criminal
case which requires proof beyond reasonable doubt. then it can likewise be proven in a civil action
which requires only preponderance of evidence.

(B) Yes. The employer may still be held subsidiarily liable under Art. 103 of the Revised Penal Code. In
order that an employer may be held subsidiarily liable for the employee’s civil liability in the criminal
action, it should be shown (1) that the employer is engaged in any kind of industry, (2) that the
employee committed the offense in the discharge of his duties and (3) that he is insolvent. The
subsidiary liability of the employer, however, arises only after conviction of the employee in the criminal
action. If all these requisites are present, the employer becomes ipso facto subsidiarily liable upon the
employee’s conviction and upon proof of the employee’s insolvency, as ruled in Carpio v. Doroja (G.R.
No. 84516, December 5, 1989). For these requisites to be established adequately, however, there must
be a hearing which will determine the sufficiency or insufficiency of the properties of the employee to
compensate the plaintiffs, as well as to allow the employer to present his defenses.

XV

(A) Sara borrowed P50,000.00 from Julia and orally promised to pay it within six months. When Sara
tried to pay her debt on the 8th month, julia demanded the payment of interest of 12% per annum
because of Sara’s delay in payment. Sara paid her debt and the interest claimed by Julia. After
rethinking, Sara demanded back from Julia the amount she had paid as interest. Julia claims she has no
obligation to return the interest paid by Sara because it was a natural obligation which Sara voluntarily
performed and can no longer recover. Do you agree?Explain. (4%)

(B) Distinguish civil and natural obligations. (2%)

SUGGESTED ANSWER

(A) No, I do not agree with Julia. For a creditor to be entitled to compensatory interest, the debtor must
be in delay. As a rule, in order for delay to exist, demand must have been made. In this case, there was
no demand made upon the expiration of the 6-month period; thus, Sara cannot be considered in delay,
and is not liable to pay compensatory interest. There being no obligation to pay compensatory interest,
Julia must return the interest mistakenly paid since she was not entitled thereto, and delivery was made
merely through mistake. If something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises (Art. 2154, Civil Code).

(B) Civil obligations give a right of action to compel their performance.

Natural obligations, not being based on positive law but on equity and natural law, do not grant a right
of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the
retention of what has been delivered or rendered by reason thereof (Art. 1423, Civil Code).

XVI

Donna pledged a set of diamond ring and earrings to Jane for P200.0 She was made to sign an
agreement that if she cannot pay her debt w six months, Jane could immediately appropriate the
jewelry for heren After six months, Donna failed to pay. Jane then displayed the earring and ring set in
her jewelry shop located in a mall. A buyer, Juana, bou. the jewelry set for P300,000.00.
(A) Was the agreement which Donna signed with Jane valid? Explain with legal basis. (2%)

(B) Can Donna redeem the jewelry set from Juana by paying the amount she owed Jane to Juana?
Explain with legal basis. (2%).

(C) Give an example of a pledge created by operation of law. (2%)

SUGGESTED ANSWER

(A) No, the agreement that if Donna cannot pay her debt within 6 months, Jane could immediately
appropriate the jewelry for herself is void as it constitutes pactum commissorium, which is void under
the law. Under Art. 2088, pactum commissorium is a provision in a pledge or mortgage agreement
where the property pledged or mortgaged by the debtor automatically becomes the property of the
creditor in the event the debtor fails to pay the debt or commits a breach of the loan agreement.

(B) No. Donna cannot redeem the jewelry set from Juana because there is no privity of contract
between Donna and Juana. Moreover, Juana is a third person who purchased the thing in good faith
from a merchant store. Under Art. 1505, even if the seller does not have the right to sell the buyer
acquires absolute ownership over the thing if he bought it in a merchant store in good faith, the owner
neither having been unlawfully deprived thereof, nor was the thing lost (Sun Brothers v. Perez, G.R. No.
L-17527, April 30, 1963)

(C) [Any of the following answers should be given full credit] 1. Art. 546 states: “Necessary expenses
shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he
has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith
with the same right of retention, the person who has defeated him in the possession, having the option
of refunding the amount of the expenses or of paying the increase in value which the thing may have
acquired by reason thereof.” 2. Art. 1731 states: “He who has executed work upon a movable has a right
to retain it by way of pledge until he is paid.” 3. Art. 1994 states: “The depositarý may retain the thing in
pledge until the full payment of what may be due him by reason of the deposit.” 4. Art. 1914 states:
“The agent may retain in pledge the things which are the object of the agency until the principal effects
the reimbursement and pays the indemnity set forth in the two preceding articles.

XVII.

Z, a gambler, wagered and lost P2 Million in baccarat, a card.game. He was pressured into signing a
Deed of Absolute Sale in favor of the winner covering a parcel of land with improvements worth P20
Million. One month later, the supposed vendee of the property demanded that he and his family vacate
the property subject of the deed of sale. Was the deed of sale valid? What can Z do? (4%)
SUGGESTED ANSWER

No, the Deed of Sale was not valid. Under Article 2014 of the Civil Code, no action can be maintained by
the winner for the collection of what he has won in a game of chance. In this case, the Deed of Sale
represents the winnings in the baccarat game; hence, it was made for illegal consideration, and is void.

XVIII

A lawyer was given an authority by means of a Special Power of Attorney by his client to sell a parcel of
land for the amount of P3 Million. Since the client owed the lawyer P1 Million in attorney’s fees in a
prior case he handled, the client agreed that if the property is sold, the lawyer was entitled to get 5%
agent’s fee plus P1 Million as payment for his unpaid attorney’s fees. The client, however, subsequently
found a buyer of his own who was willing to buy the property for a higher amount. Can the client
unilaterally rescind the authority he gave in favor of his lawyer? Why or why not? (4%)

SUGGESTED ANSWER

No, the client cannot unilaterally rescind the authority he gave in favor of , his lawyer because the
agency is coupled with interest, the interest being the attorney’s fees which the client owed the lawyer.
Under Art. 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon it,
or if it is the means of fulfilling the obligation already contracted, or if a partner is appointed manager of
a partnership in the contract of partnership and his removal from the management is unjustifiable. In
this case, if the lawyer could sell his client’s property, the lawyer will be entitled not only to his
commission, but also to his attorney’s fees. These attorney’s fees were already owed by the client to his
lawyer before the SPA was executed. The agency is a means of fulfilling an obligation already
contracted.

XIX

Mr. A, a businessman, put several real estate properties under the name : or his eldest son X because at
that time, X was the only one of legal age among his four children. He told his son he was to hold those
assets for his siblings until they become adults themselves. X then got married. After 5 years, Mr. A
asked X to transfer the titles over three properties to his three siblings, leaving two properties for
himself. To A’s surprise, X said that he can no longer be made to transfer the properties to his siblings
because more than 5 years have passed since the titles were registered in his name. Do you agree?
Explain. (4%)

SUGGESTED ANSWER
No, I don’t agree with X. This is a clear case of an implied trust provided in Article 1453 of the Civil Code
which states that “when property is conveyed to a person in reliance upon his declared intention to hold
it for, or transfer it to another or the grantor, there is an implied trust in favor of the person for whose
benefit it is contemplated.” In this case, A is the trustor, X is the trustee, and the three other children of
A are the beneficiaries. A and/or his three children may file an action to compel X to transfer title in
favor of his three siblings within ten (10) years from the time the cause of action accrues upon an
obligation created by law – when the children attains the age of majority (Art. 1144, Civil Code).

XX

(A) Mr. and Mrs. Roman and Mr. and Mrs. Cruz filed an application for registration of a parcel of land
which after due proceedings was granted by the RTC acting as a land registration court. However, before
the decree of registration could be issued, the spouses Roman and the spouses Cruz sold the lot to Juan.
In the notarized deed of sale, the sellers expressly undertook to submit the deed of sale to the land
registration court so that the title to the property would be directly issued in Juan’s name. Is such a
stipulation valid? (2%)

(B) Distinguish a direct attack from a collateral attack on a title. (2%)

(C) If the title in Item XX.(A) is issued in the names of the original sellers, would a motion filed by Juan in
the same case to correct or amend the title in order to reflect as owner be considered a collateral
attack? (2%)

SUGGESTED ANSWER

(A) Yes, the stipulation is valid. Section 22 of P.D. No. 1529 expressly provides that “after the filing of the
application and before the issuance of the decree of registration, the land therein described may still be
the subject of dealings in whole or in part, in which case the interested party shall present to the court
the pertinent instruments together with a subdivision plan approved by the Director of Lands in case of
transfer of portions thereof, and the court, after notice to the parties, shall order such land registered
subject to the conveyance or encumbrance created by said instruments, or order that the decree of
registration be issued in the name of the person to whom the property has been conveyed by said
instruments”.

(B) An action is deemed an attack on a title when the object of the action is to nullify the title, and thus
challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of
the action is to annui or set aside the judgment, or enjoin its enforcement. The attack is indirect or
collateral when in an action to obtain a different relief, an attack on the judgment is nevertheless made
an incident thereof.

(C) No, it cannot be considered a collateral attack. A collateral attack exists when an attack on an
incidental matter is made on the judgment in an action to obtain a different relief. In this case, Juan’s
motion to correct or amend the title in order to reflect his name would not be attacking the judgment
directing the issuance of the title in the names of the sellers; rather, his motion impliedly admits the
validity of the title of the sellers or his predecessors-in-interest.

— BAR Q & A, REMEDIAL LAW —

2015 Bar Exam Suggested Answers in Remedial Law by the UP Law Complex

FEBRUARY 15, 2019

I.

Lender extended to Borrower a P100,000.00 loan covered by a promissory note. Later, Borrower
obtained another P100,000.00 loan again covered by a promissory note. Still later, Borrower obtained a
P300,000.00 loan secured by a real estate mortgage on his land valued at P500,000.00 Borrower
defaulted on his payments when the loans matured. Despite demand to pay the P500,000.00 loan,
Borrower refused to pay, Lender, applying the totality rule, filed against Borrower with the Regional Trial
Court (RTC) of Manila, a collection suit for P500,000.00.

(A) Did Lender correctly apply the totality rule and the rule on joinder of causes of action? (2%)

At the trial, Borrower’s lawyer, while cross-examining Lender, successfully elicited an admission from
the latter that the two promissory notes have been paid. Thereafter, Borrower’s lawyer filed a motion to
dismiss the case on the ground that as proven only P300,000.00 was the amount due to Lender and
which claim is within the exclusive original jurisdiction of the Metropolitan Trial Court. He further argued
that lack of jurisdiction over the subject matter can be raised at any stage of the proceedings.

(B) Should the court dismiss the case?(3%)

SUGGESTED ANSWER

(A) Yes. The Lender correctly applied the totality rule and the rule on joinder of causes of action because
where the claims in all the causes of action are principally for recovery of money, the aggregate amount
of the claim shall be the test of jurisdiction (Section 5 (d), Rule 2, Rules of Court). Here, the total amount
of the claim is P500,000.00. Hence, the Regional Trial Court (RTC) of Manila has jurisdiction over the suit.
At any rate, it is immaterial that one of the loans is secured by a real estate mortgage because the
Lender opted to file a collection of sum of money instead of foreclosure of the said mortgage.

(B) No. The court should not dismiss the case. What determines the jurisdiction of the court is the
nature of the action pleaded as appearing from the allegations in the complaint. The averments therein
and the character of the relief sought are the ones to be consulted (Navida v. Hon. Teodoro A. Dizon,
Jr., G.R. No. 125078, May 30, 2011).
Accordingly, even if the defendant is able to prove in the course of the trial that a lesser amount is due,
the court does not lose jurisdiction and a dismissal of the case is not in order (Paadlan v. Dinglasan, G.R.
No. 180321, March 20, 2013).

II.

Circe filed with the RTC a complaint for the foreclosure of real estate mortgage against siblings Scylla
and Charybdis, co-owners of the property and cosignatories to the mortgage deed. The siblings
permanently reside in Athens, Greece. Circe tipped oft Sherilt Pluto that Scylla is on a balikbayan and is
billeted at the Century Plaza Hotel in Pasay City, Sheriff Pluto went to the hotel and personally
served Scylla the summons, but the latter refused to receive summons for Charybdis as she was not
authorized to do so. Sheriff Pluto requested Scylla for the email address and has number of Charybdis
which the latter readily zave. Sheriff Pluto, in his return of the summons, stated that “Summons for
Scylla was served personally as shown by her signature on the receiving copy of the summons, Summons
on Charybdis was served pursuant to the amendment of Rule 14, by facsimile transmittal of the surmons
and complaint on defendant’s far number as evidenced by transmission verification report automatically
generated by the fax machine indicating that it was received by the fax number to which it was sent on
the date and time indicated therein.” Circe, sixty (60) days after her receipt of Sheriff Pluto’s return, filed
a Motion to Declare Charybdis in default as Charybdis did not file any responsive pleading.

1. A) Should the court declare Charybdis in default? (2%)

Scylla seasonably filed her answer setting forth therein as a defense that Charybdis had paid the
mortgage debt.

(B) On the premise that Charybdis was properly declared in default, what is the effect of Scylla’s answer
to the complaint? (2%)

SUGGESTED ANSWER

(A) No, the Court should not declare Charybdis in default because there was no proper service of
summons. Section 12, Rule 14 of the Rules of Court applies only to a foreign private juridical entity that is
not registered in the Philippines and has no resident agent in the country, and not to individuals
(A.M. No. 11-3-6-SC, March 15, 2011). The service of summons by facsimile under said rule is, therefore,
defective. A foreclosure of real estate mortgage is a quasi in rem action, thus, the court can render a
judgment as long as it has jurisdiction over the res and any of the modes of extra-territorial service of
summons under Sec. 15 of Rule 14 is complied with prior leave of court. There is, unfortunately, no
showing in the problem that a prior leave of court was obtained before resorting to extra-territorial
service of summons; hence, the service of summons is defective.

(B) Assuming that Charybdis was properly declared in default, the court shall try the case against all the
defendants upon the Answer filed by: Scylla, and render judgment upon the evidence presented
(Section 3 (c), Rule 9, Rules of Court).

III.
Juliet, invoking the provisions of the Rule on Violence Against Women and their Children filed with the
RTC designated as a Family Court a petition for the Issuance of a Temporary Protection Order (TPO)
against her husband Romeo.

The Family Court issued a 30-day TPO against Romeo. A day before the expiration of the TPO, Juliet filed
a motion for extension. Romeo in his opposition raised, among others, the constitutionality of R.A. No.
1992 (The VAWC LAW) arguing that the law authorizing the issuance of the TPO violates the equal
protection and due process clauses of the 1987 Constitution. The Family Court judge, in granting the
motion for extension of the TPO, declined to rule on the constitutionality of R.A. No. 9262. The Family
Court judge reasoned that Family Courts are without jurisdiction to pass upon constitutional issues,
being a special court of limited jurisdiction and R.A. No. 8369, the law creating the Family Courts, does
not provide for such jurisdiction. Is the Family Court judge correct when he declined to resolve the
constitutionality of R.A. No. 9262? (3%)

SUGGESTED ANSWER

No, the Family Court Judge is not correct when it declined to resolve the constitutionality of R.A. No.
9262. In Garcia v. Hon. Ray Allan Drilon (G.R. No. 179267, June 25, 2013), the Supreme Court held that
the “Family Courts have authority and jurisdiction to resolve the constitutionality of a statute. Inspite of
its designation as a family court, the RTC remains possessed of authority as a court of general original
jurisdiction to pass upon all kinds of cases whether civil, criminal, special proceedings, land registration,
guardianship, naturalization, admiralty any or insolvency. This authority is embraced in the
general definition of the judicial power to determine the valid and binding laws in conformity with the
fundamental law.”

IV

Strauss filed a complaint against Wagner for cancellation of title. Wagner moved to dismiss the
complaint because Grieg, to whom he mortgaged the property as duly annotated in the TCT, was not
impleaded as defendant.

(A) Should the complaint be dismissed? (3%)

(B) If the case should proceed to trial without Grieg being impleaded as a party to the case, what is his
remedy to protect his interest? (2%)

SUGGESTED ANSWER

(A) No. The complaint should not be dismissed because the mere non-joiner of an indispensable party is
not a ground for the dismissal of the action (Section 11, Rule 3, Rules of Court; Republic v. Hon.
Mangotara, G.R. No. 170375, July 7, 2010, 624 SCRA 360, 431).

(B) If the case should proceed to trial without Grieg being impleaded as a party, he may intervene in the
action (Section 1, Rule 19, Rules of Court). He may also file a petition for annulment of judgment under
Rule 47 of the Rules of Court. In Metrobank v. Hon. Floro Alejo (G.R. No. 141970, September 10, 2001),
the Supreme Court held that in a suit to nullify an existing Torrens Certificate of Title (TCT) in which a
real estate mortgage is annotate the mortgagee is an indispensable party. In such suit, a decision
canceling the TCT and the mortgage annotation is subject to a per for annulment of judgment, because
the non-joinder of the mor 80% deprived the court of jurisdiction to pass upon the controversy. “

V.

Ernie filed a petition for guardianship over the person and properties of his father, Ernesto. Upon receipt
of the notice of hearing, Ernesto filed an opposition to the petition. Ernie, before the hearing of the
petition, filed a motion to order Ernesto to submit himself for mental and physical examination which
the court granted. After Ernie’s lawyer completed the presentation of evidence in support of the
petition and the court’s ruling on the formal offer of evidence, Ernesto’s lawyer filed a demurrer to
evidence. Ernie’s lawyer objected on the ground that a demurrer to evidence is not proper in a special
proceeding.

(A) Was Ernie’s counsel’s objection correct?

(B) If Ernesto defies the court’s order directing him to submit to physical and mental examinations, can
the court order his arrest? (2%)

SUGGESTED ANSWER

(A) No. The Rule on demurrer to evidence is applicable to Special

proceedings (Matute v. CA, G.R. No. L-26751, January 31, 1969, 26 SCRA 768). Moreover, under Section
2, Rule 72 of the Rules of Court, in the absence of special rules, the rules provided for in ordinary actions
shall be applicable, as far as practicable, to special proceedings.”

(B) If the order for the conduct of physical and mental examination is issued as a mode of discovery and
Ernesto defies the said order, the court cannot validly order his arrest (Section 3 (d), Rule 29 of the Rules
of Court).

VI.

A law was passed declaring Mt. Karbungko as a protected area since it was a major watershed. The
protected area covered a portion located in Municipality of the Province I and a portion located in the
City of Z of Province II. Maingat is the leader of Samahang Tagapag-ingat ng Karbungko (STK), a people’s
organization. He learned that a portion of the mountain located in the City of Z of Province Il was
extremely damaged when it was bulldozed and leveled to the ground, and several trees and plants were
cut down and burned by workers of World Pleasure Resorts, Inc. (WPRI) for the construction of a hotel
and golf course. Upon inquiry with the project site engineer if they had a permit for the project, Maingat
was shown a copy of the Environmental Compliance Certificate (ECC) issued by the DENR-EMB, Regional
Director (RD-DENR-EMB). Immediately, Maingat and STK filed a petition for the issuance of a writ of
continuing mandamus against RD-DENR-EMB and WPRI with the RTC of Province I, a designated
environmental court, as the RD-DENR-EMB negligently issued the ECC to WPRI. On scrutiny of the
Petition, the Court determined that the area where the alleged actionable or omission subject of the
petition took place in the City of Z of Province II, and therefore cognizable by the RTC of Province II.
Thus, the court dismissed outright the petition for lack of jurisdiction.

(A) Was the court correct in motu proprio dismissing the petition? (3%)

Assuming that the court did not dismiss the petition, the RD-DENR–EMB in his Comment moved to
dismiss the petition on the ground that petitioners failed to appeal the issuance of the ECC and to
exhaust administrative remedies provided in the DENR Rules and Regulations.

(B) Should the court dismiss the petition? (3%)

SUGGESTED ANSWER

1. A) No. The court was not correct in motu propio dismissing the petition.

While it appears that the alleged actionable neglect or omission took place in the City of Z of Province II
and, therefore cognizable by the RTC of Province II, nonetheless, venue is not jurisdictional, and it can be
waived in a special civil action for continuing mandamus (Dolot v. Paje, G.R. No. 199199, August 27,
2013). Besides, under Section 1, Rule 9 of the Rules of Court, defenses and objections not pleaded in the
answer or in the motion to dismiss are deemed waived. Hence, the Court cannot motu proprio dismiss
the case on the ground of improper venue.

(B) Yes, the Court should dismiss the petition because the proper procedure to question a defect in an
ECC is to follow the DENR administrative appeal process in accordance with the doctrine of exhaustion
of administrative remedies (Dolot v. Hon. Paje, G.R. No. 199199, August 27, 2013; Paje v. Casiño, G.R.
No, 207257, February 3, 2015).

ALTERNATIVE ANSWER

(B) No, the Court should not dismiss the petition because the doctrine of exhaustion of administrative
remedies finds no application when the matter is of extreme urgency that may cause great and
irreparable damage to the environment involving strong public interest. After all, the Court may suspend
the rules of procedure in order to achieve substantial justice, and to address urgent and paramount
State inter ests vital to the life of our nation (Boracay Foundation, Inc. v. Province of Aklan, G.R. No.
196870, June 26, 2012; Paje v. Casiño, G.R. No, 207257, February 3, 2015).

VII.

Plaintiff sued defendant for collection of P1 million based on the la promissory note. The complaint
alleges, among others:

1) Defendant borrowed P1 million from plaintiff as evidenced by a duly executed promissory note;
2) The promissory note reads:

“Makati, Philippines Dec. 30, 2014

For value received from plaintiff, defendant ‘promises to pay plaintiff P1 million, Twelve (12) months
from the above indicated date without necessity of demand.

Signed defendant

A copy of the promissory note is attached as Annex “A.”

Defendant, in his verified answer, alleged among others:

1) Defendant specifically denies the allegation in paragraphs 1 and 2 of the complaint, the truth being
defendant did not execute any promissory note in favor of plaintiff, or 2) Defendant has paid 1 million
claimed in the promissory note (Annex

“A” of the Complaint) as evidenced by an “Acknowledgment Receipt” duly executed by plaintiff on

January 30, 2015 in Manila with his spouse signing as witness.

A copy of the “Acknowledgment Receipt” is attached as Annex “1” hereof

Plaintiff filed a motion for judgment on the pleadings on the ground that defendant’s answer failed to
tender an issue as the allegations therein on his defenses are sham for being inconsistent; hence, no
defense at all, Defendant filed an opposition claiming his answer tendered an issue.

(A) Is judgment on the pleadings proper? (3%)

Defendant filed a motion for summary judgment on the ground that there are no longer any triable
genuine issues of facts.

(B) Should the court grant defendant’s motion for summary judgment?(3%)

SUGGESTED ANSWER

(A) No, the judgment on the pleadings is not proper. Judgment on the pleadings is proper only when the
answer fails to tender an issue, or otherwise admits the material allegation of the adverse party’s
pleading (Section 1, Rule 34, Rules of Court). When it appears, however, that not all the material
allegations of the complaint were admitted in the answer, because some of them were either denied or
disputed, and the defendant has set up certain special defenses which, it proven, would have the effect
of nullifying plaintiff’s main cause of action, judgment on the pleadings cannot be rendered (Philippine
National Bank v. Aznar, G.R. No.171805, May 30. 2011).

Clearly, since the defendant’s verified Answer specifically denied the execution of the promissory note,
or raised the affirmative of payment, judgment on the pleadings is not proper.
(B) No, the court should not grant the motion for summary judgment because the defense of payment is
a genuine issue as to a material fact that must be resolved by the court upon presentation of evidence.
For a summary judgment to be proper, the movant must establish two requisites: (a) there must be no
genuine issue as to any material fact, except for the amount of damages, and (b) the party presenting
the motion for summary judgment must be entitled to a judgment as a matter of law. A genuine issue is
an issue of fact which requires the presentation of evidence as distinguished from an issue which is a
sham, fictitious, contrived or a false claim. Relative thereto, when the facts pleaded by the parties are
disputed or contested, proceedings for a summary judgment cannot take the place of a trial. The
evidence on record must be viewed in light most favorable to the party opposing the motion who must
be given the benefit of all favorable inferences as can reasonably be drawn from the evidence (Smart
Communications v. Aldecoa, G.R. No. 166330, September 11, 2013).

VIII

Aldrin entered into a contract to sell with Neil over a parcel of land. The contract stipulated a
P500,000.00 down payment upon signing and the balance payable in twelve (12) monthly installments
of P100,000.00. Aldrin paid the down payment and had paid three (3) monthly installments when he
found out that Neil had sold the same property to Yuri for P1.5 million paid in cash. Aldrin sued Neil for
specific performance with damages with the RTC. Yuri, with leave of court, filed an answer-in-
intervention as he had already obtained a TCT in his name. After trial, the court rendered judgment
ordering Aldrin to pay all the installments due, the cancellation of Yuri’s title, and Neil to execute a deed
of sale in favor of Aldrin. When the judgment became final and executory, Aldrin paid Neil all the
installments but the latter refused to execute the deed of sale in favor of the former. Aldrin filed a
“Petition for the Issuance of a Writ of Execution with proper notice of hearing. The petition alleged,
among others, that the decision had become final and executory and he is entitled to the issuance of the
writ of execution as a matter of right. Neil filed a motion to dismiss the petition on the ground that it
lacked the required affidavit against forum shopping.

(A) Should the court grant Neil’s Motion to Dismiss? (3%)

Despite the issuance of the writ of execution directing Neil to execute the deed of sale in favor of Aldrin,
the former obstinately refused to execute the deed.

(B) What is Aldrin’s remedy? (2%)

SUGGESTED ANSWER

(A) No. The motion to dismiss should be denied because certification against forum shopping is only
required in a complaint or other initiatory pleading (Section 5, Rule 7, Rules of Court; Arquiza v. CA, G.R.
NO 160479, June 8, 2005). Since a petition for the issuance of a writ of execution is not an initiatory
pleading, it does not require a certification against forum shopping.

[Note: The Committee respectfully recommends a liberal approach in checking the answer to Question
VIII, should the examinees consider the “Petition for the Issuance of a Writ of Execution” an initiatory
pleading or question the correct ness of the Trial Court’s decision. The contract with Aldrin is a contract
to sell with the purchase price not fully paid, while that of Yuri is a perfected contract of sale, plus
delivery of the public document and issuance of TCT, making Yuri the owner of the land].

(B) Aldrin may move for the issuance of a court order directing the execution of the Deed of Sale by
some other person appointed by it. Under Section 10, Rule 39 of the Rules of Court, if a judgment directs
a party to execute a conveyance of land or personal property, or to deliver deeds or other documents,
or to perform, any other specific act in connection therewith, and the party fails to comply within the
time specified, the court may direct the act to be done at the cost of the disobedient party by some
other person appointed by the court and the act when so done shall have like effect as if done by the
party. If real or personal property is situated v:ithin the Philippines, the court in lieu of directing a
conveyance thereof may by an order divest the title of any party and vest it in others, which shall have
the force and effect of a conveyance executed in due form of law.

The phrase “some other person appointed by the court” may refer to the Branch Clerk of Court, Sheriff
or even the Register of Deeds, and their acts when done under such authority shall have the effect of
having been done by Neil himself.

ALTERNATIVE ANSWER

(B) Aldrin may also move that Neil be cited for contempt because of his obstinate refusal to comply with
the judgment of the court to execute a Deed of Sale.

IX

Hades, an American citizen, through a dating website, got acquainted with Persephone, a Filipina. Hades
came to the Philippines and proceeded to Baguio City where Persephone resides. Hades and
Persephone contracted marriage, solemnized by the Metropolitan Trial Court judge of Makati City, After
the wedding, Hades flew back to California, United States of America, to wind up his business affairs. On
his return to the Philippines, Hades discovered that Persephone had an illicit affair with Phanes.
Immediately, Hades returned to the United States and was able to obtain a valid divorce decree from
the Superior Court of the County of San Mateo, California, a court of competent jurisdiction against
Persephone. Hades desires to marry Hestia, also a Filipina, whom he met at Baccus Grill in Pasay City.

(A) As Hades’ lawyer, what petition should you file in order that your client can avoid prosecution for
bigamy if he desires to marry Hestia? (%)

(B) In what court should you file the petition? (1%)

(C) What is the essential requisite that you must comply with for the purpose of establishing
jurisdictional facts before the court can hear the petition? (3%)

SUGGESTED ANSWER

(A) As Hades’ lawyer, I would file a petition for recognition of a foreign divorce decree, or at least file a
special proceeding for cancellation or correction of entries in the civil registry under Rule 108 of the
Rules of Court and include therein a prayer for recognition of the aforementioned divorce decree, CruZ
v. Sto. Tomas (G.R. No. 186571, August 11, 2010), the High declared that “[t]he recognition of the
foreign divorce decree made in a Rule 108 proceeding itself, as the object of special proceedings (such
as that in Rule 108 of the Rules of Court) is precisely establish the status or right of a party or a particular
fact”(Fujiki v. Marinay, G.R. No. 196049, June 26, 2013).

(B)

1. Petition for recognition of foreign divorce decree should be filed in the Regional Trial Court of
the place of residence of any of the parties, at the option of the petitioner; or

2. Petition for cancellation or correction of entries under Rule 108 should be filed in the Regional
Trial Court of Makati City, where the corresponding Local Civil Registry is located.

(c)

1. In a petition for recognition of foreign judgment, the petitioner only needs to prove the foreign
judgment as a fact under the Rules of Court. To be more specific, a copy of the foreign judgment
may be admitted in evidence and proven as a fact under Sections 24 and 25 of Rule 132 in
relation to Section 48(b), Rule 39 of the Rules of Court (Fujiki v. Marinay G.R. No. 196049, June
26, 2013).

2. Before the court can hear the petition under Rule 108 of the Rules of Court, Hades must satisfy
the following procedural requirements;(a) filing a verified petition; (b) naming as parties all
persons who have or claim any interest which would be affected; (c) issuance of an order fixing
the time and place of hearing; (d) giving reasonable notice to the parties named in the petition;
and (e) publication of the order once a week for three consecutive weeks in a newspaper of
general circulation (Rule 108, Rules of Court; Co v. Civil Register of Manila, G.R. No. 138496,
February 23, 2004, 423 SCRA 420; Corpuz v. Tirol, G.R. No. 186571, August 11, 2010).

ALTERNATIVE ANSWER

(A) As Hades’ counsel, I will not file any petition because my client is an American citizen, and only
Filipino citizens are required to file a petition for recognition of a foreign judgment. I will advise Hades,
nonetheless, to secure a certificate of legal capacity to marry in the Philippines if he desires to marry
Hestia, in order to avoid prosecution for bigamy.

X.

An information for murder was filed against Rapido. The RTC judge, after personally evaluating the
prosecutor’s resolution, documents and parties’ affidavits submitted by the prosecutor, found probable
cause and issued a warrant of arrest. Rapido’s lawyer examined the rollo of the case and found that it
only contained the copy of the information, the submissions of the prosecutor and a copy of the warrant
of arrest. Immediately, Rapido’s counsel filed a motion to quash the arrest warrant for being void, citing
as grounds:

a). The judge before issuing the warrant did not personally conduct a searching examination of the
prosecution witnesses in violation of his client’s constitutionally-mandated rights;

1. b) There was no prior order finding probable cause before the judge issued the arrest warrant.
May the warrant of arrest be quashed on the grounds cited by Rapido’s counsel? State your reason for
each ground. (4%)

SUGGESTED ANSWER

No, the warrant of arrest may not be quashed based on the grounds cited by Rapido’s counsel. In the
issuance of a warrant of arrest, the mandate of the constitution is for the judge to personally determine
the existence of probable cause. The words “personal determination,” was interpreted by the Supreme
Court in Soliven v. Makasiar, (G.R. No. 82585, November 14, 1988, 167 SCRA 393, 406), as the exclusive
and personal responsibility of the issuing judge to satisfy himself, as to the existence of probable cause.
What the law requires as personal determination on the part of a judge is that he should not rely solely
on the report of the investigating prosecutor. Thus, personal examination of the complainant and his
witnesses is, thus, not mandatory and indispensable in the determination of probable cause for the
issuance of a warrant of arrest (People v. Joseph “Jojo” Grey, G.R. No. 10109, July 26, 2010). At any rate,
there is no law or rule that requires the Judge to issue a prior Order finding probable cause before the
issuance of a warrant of arrest.

XI.

The Ombudsman found probable cause to charge with plunder d probable cause to charge with plunder
the provincial governor, vice governor, treasurer, budget officer, and accountant. An Information for
plunder was filed with the Sandiganbayan against the provincial officials except for the treasurer who
was granted immunity when he agreed to cooperate with the Ombudsman in the prosecution of the
case. Immediately, the governor filed with the Sandiganbayan a petition for certiorari against the
Ombudsman claiming there was grave abuse of discretion in excluding the treasurer from the
Information.

(A) Was the remedy taken by the governor correct? (2%)

(B) Will the writ of mandamus lie to compel the Ombudsman to include the treasurer in the
Information? (3%)

(C) Can the Special Prosecutor move for the discharge of the budget officer to corroborate the
testimony of the treasurer in the course of presenting its evidence. (2%)

SUGGESTED ANSWER

(A) No, the remedy taken by the Governor is not correct. The petition for certiorari is a remedy that is
only available when there is no plain, speedy and adequate remedy under the ordinary course of law;
hence, the Governor should have filed a Motion for Reconsideration. Besides, there is no showing that
the Ombudsman committed grave abuse of discretion in granting immunity to the treasurer who agreed
to cooperate in the prosecution of the case.

(B) No. Mandamus will not lie to compel the Ombudsman to include the treasurer in the Information. In
matters involving the exercise of judgment and discretion, mandamus may only be resorted to in order
to compel respondent tribunal, corporation, board, officer or person to take action, but it cannot be
used to direct the manner or the particular way discretion is to be exercised, or to compel the retraction
or reversal of an action already taken in the exercise of judgment or discretion (Ampatuan, Jr. v.
Secretary De Lima, G.R. No. 197291, April 3, 2013).

Evidently, the Ombudsman’s act of granting the treasurer immunity from prosecution under such terms
and conditions as it may deter mine (Section 17, R.A. 6770) is a discretionary duty that may not be
compelled by the extraordinary writ of mandamus.

(C) No. The special Prosecutor cannot move for the discharge of the budget officer to become a State
witness since his testimony is only corroborative to the testimony of the treasurer. Under Section 17,
Rule 119, the Court upon motion of the prosecution before resting its case, may direct one or more of
the accused to be discharged with their consent so that they may be witnesses for the State, provided
the following requisites are satisfied: (a) there is absolute necessity for the testimony of the accused
whose discharge is requested; (b) there is no other direct evidence available for the proper prosecution
of the offense committed, except the testimony of said accused; (c) the testimony of said accused can
be substantially corroborated in its material points; (d) said accused does not appear to be the most
guilty; and (e) said accused has not at any time been convicted of any offense involving moral turpitude.
Absolute necessity exists for the testimony of an accused sought to be discharged when he or she alone
has knowledge of the crime. In more concrete terms, necessity is not present when the testimony would
simply corroborate or otherwise strengthen the prosecution’s evidence. The requirement of absolute
necessity for the testimony of a state witness depends on the circumstances of each case regardless of
the number of the participating conspirators (Manuel J. Jimenez, Jr., v. People of the Philippines, G.R.
No. 209195, September 17, 2014).

ALTERNATIVE ANSWER

(A) The remedy taken by the Governor is correct. A petition for Certiorari under Rule 65 is the
appropriate remedy if the Ombudsman committed grave abuse of discretion in granting immunity to the
treasurer who agreed to cooperate in the prosecution of the case.

(C) No, the special Prosecutor cannot move for the discharge of the budget officer to become a State
witness. The Office of the Special Prosecutor is merely a component of the Office of the Ombudsman
and may only act under the supervision and control, and upon authority of the Ombudsman (Uy v.
Sandiganbayan, G.R. No 105965 70, March 20, 2001). Accordingly, in the absence of any express
delegation and authority from the Ombudsman, the Special Prosecutor does not have the power to
move for the discharge of the budget officer to corroborate the testimony of the treasurer in the course
of presenting its evidence (Section 11 (3), R.A. 6770).

XII

Paz was awakened by a commotion coming from a condo unit next to hers. Alarmed, she called up the
nearby police station. PO1 Remus and PO2 Romulus proceeded to the condo unit identified by Paz. PO1
Remus knocked at the door and when a man opened the door, PO1 Remus and his companions
introduced themselves as police officers. The man readily identified himself as Oasis Jung and gestured
to them to come in. Inside, the police officers saw a young lady with her nose bleeding and face swollen.
Asked by PO2 Romulus what happened, the lady responded that she was beaten up by Oasis Jung. The
police officers arrested Oasis Jung and brought him and the young lady back to the police station. PO1
Remus took the young lady’s statement who identified herself as AA. She narrated that she is a sixteen-
year-old high school student; that previous to the incident, she had sexual intercourse with Oasis Jung at
least five times on different occasions and she was paid P5,000.00 each time and it was the first time
that Oasis Jung physically hurt her. PO2 Romulus detained Oasis Jung at the station’s jail. After the
inquest proceeding, the public prosecutor filed an information for Violation of R.A. No. 9262 (The VAWC
Law) for physical violence and five separate informations for violation of R.A. No. 7610 (The Child Abuse
Law). Oasis Jung’s lawyer filed a motion to be admitted to bail but the court issued an order that
approval of his bail bond shall be made only after his arraignment.

(A) Did the court properly impose that bail condition? (3%)

Before arraignment, Oasis Jung’s lawyer moved to quash the other four separate informations for
violation of the child abuse law invoking the single larceny rule.

(B) Should the motion to quash be granted? (2%) (C) After his release from detention on bail, can Oasis
Jung still question the validity of his arrest? (2%)

SUGGESTED ANSWER

(A) No. The court Revised Rules of Court court did not properly impose that bail condition. The Rules of
Criminal Procedure do not require the arraignment he accused as a prerequisite to the conduct of
hearings in the bail on. A person is allowed to file a petition for bail as soon as he is inrived of his liberty
by virtue of his arrest or voluntary surrender. An accused need not wait for his arraignment before filing
the bail petition (Serapio v. Sandiganbayan, G.R. No. 149116, January 28, 2003).

Moreover, the condition that the approval of bail bonds shall be made only after arraignment would
place the accused in a position where he has to choose between: (1) filing a motion to quash (the
Information) and thus delay his released on bail because until his motion to quash can be resolved, his
arraignment cannot be held; and (2) foregoing the filing of a motion to quash (the Information) so that
he can be arraigned at once and thereafter be released on bail (Lavides v. Court of Appeals, G.R. No.
129670, February 1, 2000).

(B) No. The Court should not grant the motion to quash, because the “single larceny rule” does not find
application where the charges involve violations of R.A. 9262 (The VAWC Law) and R.A. No. 7610 (The
Child Abuse Law), considering that each criminal act is based on a different criminal impulse and intent.

In Santiago v. Garchitorena (G.R. No. 109266 December 2, 1993), the Supreme Court explained that the
“Single Larceny doctrine” applies only to crimes committed delito continuado, which exists if there
should be a plurality of acts performed during a period of time; unity of penal provision violated; and
unity of criminal intent or purpose, which means that two or more violations of the same penal
provisions are united in one and same instant or resolution leading to the perpetration of the same
criminal purpose or aim. The said rule applies in theft cases, where the taking of several things, whether
belonging to the same or different owners, at the same time and place constitutes but one larceny
(Santiago v. Garchitorena, G.R. No. 109266, December 2, 1993).
[Note: The Committee respectfully recommends that the examinees be given full credit to any answer
provided to the question because the single larceny rule is not included in the 2015 BAR Examination
Syllabus in Remedial Law).

(C) Yes. Oasis Jung can still question the validity of his arrest even after his release from detention on
bail. Under Section 26, Rule 114 of the Rules of Court, an application for or admission to bail shall not
bar the accused from challenging the validity of his arrest or the legality of the warrant issued therefor,
or from assailing the regularity or questioning the absence of a preliminary investigation of the charge
against him, provided that he raises them before entering his plea.

XIII.

Jaime was convicted for murder by the Regional Trial Court of Davao City. In a decision promulgated on
September 30, 2015. On October 5, 2015, Jaime filed a Motion for New Trial on the ground that errors
of law and irregularities prejudicial to his rights were committed during his trial. On October 7, 2015, the
private prosecutor, with the conformity of the public prosecutor, filed an Opposition to Jaime’s motion.
On October 9, 2015, the court granted Jaime’s motion. On October 12, 2015, the public prosecutor filed
a motion for reconsideration. The court issued an Order dated October 16, 2015 denying the public
prosecutor’s motion for reconsideration. The public prosecutor received his copy of the order of denial
on October 20, 2015, while the private prosecutor received his copy on October 26, 2015.

(A) What is the remedy available to the prosecution from the court’s order granting Jaime’s motion for
new trial? (3%)

(B) In what court and within what period should a remedy be availed of? (1%) (C) Who should pursue
the remedy? (2%)

SUGGESTED ANSWER

The remedy of the prosecution is to file a petition for certiorari under Rule 65 of the Rules of Court,
because the denial of a motion for reconsideration is merely an interlocutory order and there is no plain,
speedy and adequate remedy under the course of law. Be that as it may, it may be argued that appeal is
the appropriate remedy from an order denying a motion for reconsideration of an order granting a
motion for new trial because an order denying a motion for reconsideration was already removed in the
enumeration of matters that cannot be a subject of an appeal under Section 1, Rule 41 of the Rules of
Court.

(B) Following the principle of judicial hierarchy, the petition for certiorari should be filed before the
Court of Appeals within sixty (60) days from receipt of the copy of the order of denial of the public
prosecutor’s motion for reconsideration, or on October 20, 2015.

(C) The office of the Solicitor General should pursue the remedy. In criminal proceedings on appeal in
the Court of Appeals or in the Supreme Court, the authority to represent the people is vested solely in
the Solicitor General. Under Presidential Decree No. 478, among the specific powers and functions of
the OSG is to “represent the government in the Supreme Court and the Court of Appeals in all criminal
proceedings.” This provision has been carried over to the Revised Administrative Code particularly in
Book IV, Title III, Chapter 12 thereof. Without doubt, the OSG is the appellate counsel of the People of
the Philippines in all criminal cases (Cariño v. de Castro, G.R. No. 176084, April 30, 2008).

XIV.

Pedro was charged with theft for stealing Juan’s cellphone worth 0000.00. Prosecutor Marilag at the
pre-trial submitted the judicial affidavit of Juan attaching the receipt for the purchase of the cellphone
to prove civil liability. She also submitted the judicial affidavit of Mario, an eyewitness who narrated
therein how Pedro stole Juan’s cellphone. At the trial, Pedro’s lawyer objected to the prosecution’s use
of judicial affidavits of her witnesses considering the imposable penalty on the offense with which his
client was charged.

(A) Is Pedro’s lawyer correct in objecting to the judicial affidavit of Mario? (2%)

(B) Is Pedro’s lawyer correct in objecting to the judicial affidavit of Juan? (2%)

At the conclusion of the prosecution’s presentation of evidence, Prosecutor Marilag orally offered the
receipt attached to Juan’s judicial affidavit, which the court admitted over the objection of Pedro’s
lawyer. After Pedro’s presentation of his evidence, the court rendered judg. ment finding him guilty as
charged and holding him civilly liable for P20,000.00 Pedro’s lawyer seasonably filed a motion for
reconsideration of the decision asserting that the court erred in awarding the civil liability on the basis of
Juan’s judicial affidavit, a documentary evidence which Prosecutor Marilag failed to orally offer.

(C) is the motion for reconsideration meritorious? (2%)

SUGGESTED ANSWER

(A) Yes, Pedro’s lawyer is correct in objecting to the judicial affidavit of Mario. The Judicial Affidavit Rules
shall apply only to criminal actions where the maximum of the imposable penalty does not exceed six
years (Section 9 (a) (1) of A.M. No. 12-8-8-SC or the Judicial Affidavit Rule). Here, the maximum
impossible penalty for the crime of theft of a cell phone worth P20,000.00 is prision mayor in its
minimum to medium periods, or six years and one day to eight years and one day. Thus, Pedro’s lawyer
is correct in objecting to the judicial affidavit of Mario.

[Note: The Committee respectfully recommends that the examinees be given full credit to any answer
given to the question, because the specific imposable penalties for crimes or offenses charged are not
included in the 2015 BAR Examination Syllabus in Remedial Law).

(B) No, Pedro’s lawyer is not correct in objecting to the judicial affidavit of

Juan because the Judicial Affidavit Rules apply with respect to the civil aspect of the actions, regardless
of the penalties involved (Section 9 of A.M. No. 12-8-8-SC or the Judicial Affidavit Rule). Here, the
judicial affidavit of Juan was offered to prove the civil liability of Pedro. Thus, the objection of Pedro’s
lawyer to the judicial affidavit of Juan is not correct.

(C) No. The motion for reconsideration is not meritorious. The judicial
affidavit is not required to be orally offered as separate documentary evidence, because it is filed in lieu
of the direct testimony of the witness. It is offered, at the time the witness is called to testify, and any
objection to it should have been made at the time the witness was presented (Sections 6 and 8, A.M.
No. 12-8-8-SC or the Judicial Affidavit Rule). Since the receipt attached to the judicial affidavit was orally
offered, there was enough basis for the court to award civil liability.

ALTERNATIVE ANSWER (C) Yes the motion for reconsideration is meritorious The Judicial Affidavit Rules
require an oral offer of evidence upon the termination of the testimony of the last witness (Section 8,
AMNO, 12-8-8-SCO the Judicial Affidavit Rule).

XV.

Water Builders, a construction company based in Makati City, entered into a construction agreement
with Super Powers, Inc., an enero company based in Manila, for the construction of a mini hydro
electric plant. Water Builders failed to complete the project within the stipulated duration. Super
Powers cancelled the contract. Water Builders filed a request for arbitration with the Construction
Industry Arbitration Commission (CIAC). After due proceedings, CIAC rendered judgment in favor of
Super Powers, Inc. ordering Water Builders to pay the former P10 million, the full amount of the down
payment paid, and P2 million by way of liquidated damages. Dissatisfied with the CIAC’s judgment,
Water Builders, pursuant to the Special Rules of Court on Alternative Dispute Resolution (ADR Rules)
filed with the RTC of Pasay City a petition to vacate the arbitral award. Super Powers, Inc., in its
opposition, moved to dismiss the petition, invoking the ADR Rules, on the ground of improper venue as
neither of the parties were doing business in Pasay City.

Should Water Builders’ petition be dismissed? (3%)

SUGGESTED ANSWER

Yes, the petition should be dismissed on the ground of improper venue. Under the Special Rules of Court
on Alternative Dispute Resolution (ADR), the petition shall be filed with the Regional Trial Court having
jurisdiction over the place where one of the parties is doing business, where any of the parties reside or
where the arbitration proceedings were conducted (Rule 11.3 – A.M. No. 07-11-08-SC); hence, the
venue of the petition to vacate the arbitral award of Water Builders is improperly laid.

ANOTHER SUGGESTED ANSWER

Ves, the petition should be dismissed because venue is not included among the valid grounds to vacate
an arbitral award. The grounds to vacate an arbitral award are: a) The arbitrai award was procured
through corruption, fraud or other undue means; b) There was evident partiality or corruption in the
arbitral tribunal or any of its members; c) The arbitral tribunal was guilty of misconduct or any form of
misbehavior that has materially prejudiced the rights of any party such as refusing to postpone a hearing
upon sufficient cause shown or to hear evidence pertinent and material to the controversy; d) One or
more of the arbitrators was disqualified to act as such under the law and willfully refrained from
disclosing such disqualification; or
 1. e) The arbitral tribunal exceeded its powers, or so imperfectly executed them, such that a
complete, final and definite award upon the subject matter submitted to them was not made.

The award may also be vacated on any or all of the following grounds: a) The arbitration agreement did
not exist, or is invalid for any ground for the revocation of a contract or is otherwise unenforceable; or
b) A party to arbitration is a minor or a person judicially declared to be incompetent.

ALTERNATIVE ANSWER

Yes, the petition should be dismissed. Water Builders should have filed a petition for review under Rule
43 of the Rules of Court before the Court of Appeals because R.A. 9285, or the Alternative Dispute
Resolution Act of 2004, did not divest the Court of Appeals of jurisdiction to review the decisions or
award of the CIAC ( Plus Asia Development Corporation v. Utility Assurance Corporation, G.R. No.
199650, June 26, 2013).

XVI

AA, a twelve-year old girl, while walking alone met BB, a teenage boy who befriended her. Later, BB
brought AA to a nearby shanty where he raped her. The Information for rape filed against BB states:

“On or about October 30, 2015, in the City of S.P. and within the jurisdiction of this Honorable Court, the
accused, a minor, fifteen (15) years old with lewd design and by means of force, violence and
intimidation, did then and there, willfully, unlawfully and feloniously had sexual intercourse with AA, A
minor, twelve (12) years old, against the latter’s will and consent.”

At the trial, the prosecutor called to the witness stand AA as his first witness and manifested that he be
allowed to ask leading questions in conducting his direct examination pursuant to the Rule on the
Examination of a Child Witness. BB’s counsel objected on the ground that the prosecutor has not
conducted a competency examination on the witness, a requirement before the rule cited can be
applied in the case.

(A) Is BB’s counsel correct? (3%)

In order to obviate the counsel’s argument on the competency of AA as prosecution witness, the judge
motu proprio conducted his voir dire examination on AA.

(B) Was the action taken by the judge proper? (2%)

After the prosecution has rested its case, BB’s counsel filed with leave a demurrer to evidence, seeking
the dismissal of the case on the ground that the prosecutor failed to present any evidence on BB’s
minority as alleged in the Information.

(C) Should the court grant the demurrer? (3%)

SUGGESTED ANSWER
(A) No. BB’s counsel is not correct. Every child is presumed qualified to be a witness (Sec. 6, Rule on
Examination of Child Witness [RECW]). To rebut the presumption of competence enjoyed by a child, the
burden of proof lies on the party challenging his competence (Sec. 6 of A.M. No. 005-07-SC or the Rules
on Examination of Child Witness). Here, AA, a 12-year old child witness who is presumed to be
competent, may be asked leading questions by the prosecutor in conducting his direct examination
pursuant to the RECW and the Revised Rules on Criminal Procedure (People v. Santos, G.R. No. 171452,
October 17, 2008).

(B) Yes, the judge may motu proprio conduct his voir dire examination on AA. Under the Rules on
Examination of Child Witness, the court shall conduct a competency examination of a child, motu
proprio or on motion of a party, when it finds that substantial doubt exists regarding the ability of the
child to perceive, remember, communicate, distinguish truth from falsehood, or appreciate the duty to
tell the truth in court (Sec. 6 of A.M. No. 005-07-SC or the Rules on Examination of Child Witness).

[Note: The Committee respectfully recommends that the examiner be more liberal in checking the
answers to the question because the term voir dire examination is not normally used under the rules on
evidence in the Philippines).

(C) No, the court should not grant the demurrer. While it was alleged in the information that BB was a
minor at the time of the commission of the offense, the failure of the prosecutor to present evidence to
prove his minority is not a basis for the granting of the demurrer, because minority of the accused is not
an element of the crime of rape. Be that as it may, the Court should not consider minority in rendering
the decision. After all, the failure of the prosecutor to prove the minority of AA may only affect the
imposable penalty but may not absolve him from criminal liability.

XVII

Hercules was walking near a police station when a police officer signaled him to approach. As soon as
Hercules came near, the police officer frisked him but the latter found no contraband. The police officer
told Hercules to get inside the police station. Inside the police station, Hercules asked the police officer,
“Sir, may problema po ba?” Instead of replying, the police officer locked up Hercules inside the police
station jail.

(A) What is the remedy available to Hercules to secure his immediate release from detention? (2%)

(B) If Hercules filed with the Ombudsman a complaint for warrantless search, as counsel for the police
officer, what defense will you raise for the dismissal of the complaint? (3%)

(C) If Hercules opts to file a civil action against the police officer, will he have a cause of action? (3%)

SUGGESTED ANSWER

(A) The remedy available to Hercules is to file a petition for habeas corpus questioning the illegality of
his warrantless arrest. The writ of habeas corpus shall extend to all cases of illegal confinement or
detention by which any person is deprived of his liberty (Section 1, Rule 102, Rules of Court).
(B) As counsel of the policemen, I will raise the defense of presumption of regularity in the performance
of duty. I can also raise the defense that the police officer has the duty to search Hercules under the
“Stop and Frisk” rule. A stop-and-frisk situation must precede a warrantless arrest, be limited to the
person’s outer clothing, and should be grounded upon a genuine reason, in the light of the police
office and surrounding conditions, to warrant the belief that detained has weapons concealed about
him. (Valdez v. People, G.R. No. 170180, November 23, 2007).

The “stop and frisk” search should be used “[wJhen dealing rapidly unfolding and potentially criminal
situation in the city streets where unarguably there is no time to secure a search warrant. “Stop and
frisk” searches (sometimes referred to as Terry searches) necessary for law enforcement, that is, law
enforcers should be given the legal arsenal to prevent the commission of offenses. This should be
balanced, however, with the need to protect the privacy of citizens in accordance with Article III, Section
2 of the Constitution (People of the Philippines v. Victor Cogaed, G.R. No. 200334, July 30, 2014). In
addition, I may also assert the defense that the complaint for warrantless search charges no criminal
offense. The conduct of a warrantless search is not a criminal act, for it is not penalized under the
Revised Penal Code or any other special laws.

(C) Yes. Hercules has a cause of action to file a civil action against the police officer under Article 32 (4)
in relation to Article 2219 (6) and (10) of the New Civil Code, which provides that a public officer may be
liable for damages when the right to be secure in one’s person, house, papers and effects against
unreasonable searches and seizures is impaired. The indemnity includes moral damages. Exemplary
damages may also be adjudicated (Galvante v. Casimiro, G.R. No. 162808, April 22, 2008).

ALTERNATIVE ANSWER

(A) Hercules may also apply for bail. Under Section 17 (c), Rule 114 of the Rules of Court, any person in
custody who is not yet charged in court may apply for bail with any court in the province, city or
municipality where he is held.

(B) As counsel for the police officer, I will argue that the Ombudsman has no jurisdiction over the
complaint filed by Hercules. While the Ombudsman has disciplinary authority over officials and
members of the PNP concurrently with NAPOLCOM and PNP, the Memorandum of Agreement executed
by and among the Ombudsman, PNP and NAPOLCOM on September 12, 2012 specifies the
administrative cases that are within the primary jurisdiction of the Ombudsman. Since the complaint
filed against my client is not among those administrative cases under the primary jurisdiction of the
Ombudsman, the complaint should necessarily be dismissed.

XVIII

The residents of Mt. Ahohoy, headed by Masigasig, formed a non-governmental organization – Alyansa
Laban sa Minahansa Ahohoy (AMLA) to protest the mining operations of Oro Negro Mining in the
mountain. ALMA members picketed daily at the entrance of the mining site blocking the ingress and
egress of trucks and equipment of Oro Negro her its operations.

Masigasig had an altercation with Mapusok arising from the complaints the mining engineer of Oro
Negro that one of their trucks was destroyed by ALMA members. Mapusok is the leader of the
Association of Peace Keepers of Ahohoy (APKA), a civilian volunteer organization serving as auxiliary
force of the local police to maintain peace and order in the area. Subsequently, Masigasig disappeared.
Mayumi, the wife of Masigasig, and the members of ALMA searched for Masigasig, but all their efforts
proved futile. Mapagmatyag, a member of ALMA, learned from Maingay, a member of APKA, during
their binge drinking that Masigasig was abducted by other members of APKA, on order of Mapusok.
Mayumi and ALMA sought the assistance of the local police to search for Masigasig, but they refused to
extend their cooperation.

Immediately, Mayumi filed with the RTC, a petition for the issuance of the writ of amparo against
Mapusok and APKA.ALMA also filed a petition for the issuance of the writ of amparo with the Court of
Appeals against Mapusok and APKA. Respondents Mapusok and APKA, in their Return filed with the RTC,
raised among their defenses that they are not agents of the State; hence, cannot be impleaded as
respondents in an amparo petition.

(A) Is their defense tenable? (3%)

Respondents Mapusok and APKA, in their Return filed with the Court of Appeals, raised as their defense
that the petition should be dismissed on the ground that ALMA cannot file the petition because of the
earlier petition filed by Mayumi with the RTC.

1. B) Are respondents correct in raising their defense? (3%)

(c) Mayumi later filed separate criminal and civil actions against

Mapusok. How will the cases affect the amparo petition she earlier filed? (1%)

SUGGESTED ANSWER

(A) No. The defense is not tenable. The writ of amparo is a remedy avail

able to any person whose right to life, liberty and security has been violated or is threatened with
violation by an unlawful act or omission of a public officer or employee or of a private individual or
entity. The writ covers extralegal killing and enforced disappearances or threats thereof (Section 1, Rules
on the Writ of Amparo). Moreover, the rules do not require that the respondents should be agents of
the State in order to be impleaded as respondents in an amparo petition (Secretary of National Defense
v. Manalo, G.R. No. 180906, October 7, 2008).

(B) Yes. The respondents are correct in raising the defense. Under Section 2(c) of the Rules on the Writ
of Amparo, the filing of a petition by Mayumi who is an immediate member of the family of the
aggrieved party already suspends the right of all other authorized parties to file similar petitions. Hence,
ALMA cannot file the petition because of the earlier petition filed by Mayumi with the RTC.

(C) When a criminal action and a separate civil action are filed subsequent to a petition for a writ
of amparo, the latter shall be consolidated with the criminal action. After consolidation, the procedure
under the Rules shall continue to apply to the disposition of the reliefs in the petition (Sec. 23, Rule on
the Writ of Amparo).
https://www.pinayjurist.com/2015-bar-exam-suggested-answers-in-taxation-by-the-up-law-complex/

2015 Bar Exam Suggested Answers in Taxation by the UP Law Complex

FEBRUARY 8, 2019

I.

Explain the principles of a sound tax system. (3%)

SUGGESTED ANSWER

The principles of a sound tax system and their respective explanations, are as follows:

a) Fiscal adequacy which means that the sources of revenue should be sufficient to meet the demands
of public expenditures (Chavez v. Ongpin, G.R. No. 76778, June 6, 1990);

b) Equality or theoretical justice which means that the tax burden should be proportionate to the
taxpayer’s ability to pay (Sec. 28(1), Art. VI, 1987 Constitution); and

c) Administrative feasibility which means that the tax law should be capable of convenient, just and
effective administration, as well as, easy compliance by taxpayer.

II

Mr. A, a citizen and resident of the Philippines, is a professional boxer. In a professional boxing match
held in 2013, he won prize money in United States (US) dollars equivalent to P300,000,000.

(A) Is the prize money paid to and received by Mr. A in the US taxable in the Philippines? Why? (2%)

(B) May Mr. A’s prize money qualify as an exclusion from his gross income? Why? (2%)

(C) The US already imposed and withheld income taxes from Mr. A’s prize money. How may Mr. A use or
apply the income taxes he paid on his prize money to the US when he computes his income tax liability
in the Philippines for 2013? (4%)

SUGGESTED ANSWER

(A) Yes. Under the Tax Code, the income within and without of a resident citizen is taxable. Since Mr. A is
a resident Filipino citizen, his income worldwide is taxable in the Philippines (Sec. 23 A, NIRC).

(B) No. Under the law, all prizes and awards granted to athletes in local and international sports
competitions and tournaments whether held in the Philippines or abroad and sanctioned by their
national sports associations are excluded from gross income. The exclusion find application only to
amateur athletes where the prize was given in an event sanctioned by the appropriate national sports
association affiliated with the Philippine Olympic Committee and not to professional athletes like Mr. A.
Therefore, the prize money would not qualify as an exclusion from Mr. A’s gross income (Sec. 32 B [7]
[d], NIRC).
(C) The income taxes withheld and paid to the U.S. government maybe claimed by Mr. A, either as a
deduction from his gross income or as a tax credit from the income tax due, when he computes his
Philippine income tax liability for taxable year 2013 (Sec. 34(C)(1)(b), NIRC).

SUGGESTED ANSWER

(A) Yes, the income of Ms. B from the sale of ready-to-wear goods to C is taxable. A nonresident citizen
is taxable only on incorne derived from sources within the Philippines (Sec. 23(B), NIRC). In line with the
source rule of income taxation, since the goods are produced and sold within the Philippines, Ms. B’s
Philippine-sourced income is taxable in the Philippines.

(B) Yes, but only a proportionate part of the income. Gains, profits and income from the sale of personal
property produced by the taxpayer without and sold within the Philippines, shall be treated as derived
partly from sources within and partly from sources without the Philippines (Sec. 42E, NIRC).

Note: The problem does not indicate where the sale took place. The suggested answers in a and b above
assume that the sale took place in the Philippines. A non-resident alien is to be taxed by the Philippine
government only on her income derived from an activity conducted in the Philippines such as the sale of
goods irrespective where produced.

III.

Ms. C, a resident citizen, bought ready-to-wear goods from Ms. B, a non-resident citizen.

(A) If the goods were produced from Ms. B’s factory in the Philippines, is Ms. B’s income from the sale to
Ms. C taxable in the Philippines? Explain. (2%)

(B) If Ms. B is an alien individual and the goods were produced in her factory in China, is Ms. B’s income
from the sale of the goods to Ms. C taxable in the Philippines? Explain. (2%)

SUGGESTED ANSWER

(A) Yes, the income of Ms. B from the sale of ready-to-wear goods to C is taxable. A nonresident citizen
is taxable only on income derived from sources within the Philippines (Sec. 23(B), NIRC). In line with the
source rule of income taxation, since the goods are produced and sold within the Philippines, Ms. B’s
Philippine-sourced income is taxable in the Philippines.

(B) Yes, but only a proportionate part of the income. Gains, profits and income from the sale of personal
property produced by the taxpayer without and sold within the Philippines, shall be treated as derived
partly from sources within and partly from sources without the Philippines (Sec. 42E, NIRC).

Note: The problem does not indicate where the sale took place. The suggested answers in a and b above
assume that the sale took place in the Philippines. A non-resident alien is to be taxed by the Philippine
government only on her income derived from an activity conducted in the Philippines such as the sale of
goods irrespective where produced.
IV.

Mr. E and Ms. Fare both employees of AAA Corp. They got married on February 14, 2011. On December
29, 2011, the couple gave birth to triplets. On June 25, 2013, they had twins. What were the personal
exemptions or deductions which Mr. E and Ms. F could claim in the following taxable years:

(A) For 2010 (2%)

(B) For 2011 (3%)

(C) For 2013 (2%)

SUGGESTED ANSWER

(A) For 2010, Mr. E and Ms. Fare each entitled to personal exemptions of P50,000.00 (Sec. 35A, NIRC).

(B) For 2011, Mr. E and Ms. Fare each entitled to basic personal exemption of P50,000.00. In addition to
his basic personal exemption, Mr. E could claim additional personal exemptions for three (3) qualified
dependent children in the amount of P25,000.00 for each child (Sec. 35B, NIRC).

(C) For 2013, Mr. E and Ms. Fare each entitled basic personal exemptions of P50,000.00. Mr. E could
claim additional personal exemptions for four (4) qualified dependent children in the amount of
P25,000.00 for each child (Sec. 35B, NIRC).

V.

BBB, Inc., a domestic corporation, enjoyed a particularly profitable year in 2014. In June 2015, its Board
of Directors approved the distribution or cash dividends to its stockholders. BBB, Inc. has individual and
corporate stockholders. What is the tax treatment of the cash dividends received from BBB, Inc. by the
following stockholders:

(A) A resident citizen (1%)

(B) Non-resident alien engaged in trade or business (1%)

(C) Non-resident alien not engaged in trade or business (1%)

(D) Domestic corporation (1%)

(E) Non-resident foreign corporation (1%)

SUGGESTED ANSWER

(A) A final withholding tax for ten percent (10%) shall be imposed upon the cash dividends actually or
constructively received by a resident citizen from BBB, Inc. (Sec. 24 (b)(2), NIRC).
(B) A final withholding tax of twenty percent (20%) shall be imposed upon the cash dividends actually or
constructively received by a non-resident alien engaged in trade or business from BBB, Inc. (Sec.
25(a)(2), NIRC).

(C) A final withholding tax equal to twenty-five percent (25%) of the entire income received from all
sources within the Philippines, including the cash dividends received from BBB, Inc. (Sec. 25(b), NIRC).

(D) Dividends received by a domestic corporation from another domestic corporation, such as BBB, Inc.,
shall not be subject to tax (Sec. 27(d) (4), NIRC).

(E) Dividends received by a non-resident foreign corporation from a domestic corporation are generally
subject to an income tax of 30% to be withheld at source (Sec. 28(b)(1), NIRC). However, a final
withholding tax of fifteen percent (15%) is imposed on the amount of cash dividends received from a
domestic corporation like BBB, Inc. if the tax sparing rule applies (Sec. 28(B) (5)(b), NIRC). Pursuant to
this rule, the lower rate of tax would apply if the country in which the non-resident foreign corporation
is domiciled would allow as tax credit against the tax due from it, taxes deemed paid in the Philippines of
15% representing the difference between the regular income tax rate and the preferential rate.

VI.

Differentiate between double taxation in the strict sense and in a bro sense and give an example of
each. (4%)

SUGGESTED ANSWER

Double taxation in the strict sense pertains to the direct double taxation. This means that the taxpayer is
taxed twice by the same taxing authority, within the same taxing jurisdiction, for the same property and
same purpose., Example: Imposition of final withholding tax on cash dividend and requiring the taxpayer
to declare this tax-paid income in his income tax returns..

On the other hand, double taxation in the broad sense pertains to indirect double taxation. This extends
to all cases in which there is a burden of two or more impositions. It is the double taxation other than
those covered by direct double taxation (CIR v. Solidbank Corp., G.R. No. 148191, November 25, 2003,
436 SCRA 416). Example: Subjecting the interest income of banks on their deposits with other banks to
the 5% Gross Receipts Tax (GRT) despite of the same income having been subjected to 20% Final
Withholding Tax (FWT), is only a case of indirect double taxation. The GRT is a tax on the privilege of
engaging in business, while the FWT is a tax on the privilege of earning income (CIR v. Bank of
Commerce, G.R. NO. 149636, June 8, 2005, 459 SCRA 638).

VII.

On May 15, 2013, CCC, Inc., received the Final Decision on Disputed Assessment issued by the
Commissioner of Internal Revenue (CIR) dismissing the protest of CCC, Inc. and affirming the assessment
against said corporation. On June 10, 2013, CCC, Inc., filed a Petition for Review with the Court of Tax
Appeals (CTA) division. On July 31, 2015, CCC, Inc. received a copy of the Decision dated July 22, 2015 of
the CTA division dismissing its Petition. CCC, Inc. immediately filed a Petition for Review with the CTA en
banc on August 6, 2015. Is the immediate appeal by CCC, Inc. to the CTA en banc of the adverse Decision
of the CTA division the proper remedy? (3%)

SUGGESTED ANSWER

No, CCC, Inc. should first file a motion for reconsideration or motion for new trial with the CTA Division.
Before the CTA en banc could take cognizance of the petition for review concerning a case falling under
its exclusive appellate jurisdiction, the litigant must sufficiently show that it sought prior reconsideration
or moved for a new trial with the concerned CTA Division (Commissioner of Customs v. Marina Sale, G.R.
No. 183868, November 22, 2010, 635 SCRA 606; Rule 8, Sec. 1 of the Revised Rules of Court of Tax
Appeals).

VIII

In June 2013, DDD Corp., a domestic corporation engaged in the business of leasing real properties in
the Philippines, entered into a lease agreement of a residential house and lot with EEE, Inc., a non-
resident foreign corporation. The residential house and lot will be used by officials of EEE, Inc. during the
visit to the Philippines. The lease agreement was signed by representatives from DDD Corp. and EEE, Inc.
in Singapore. DDD Corp. did not subject the said lease to VAT believing that it was not a domestic service
contract. Was DDD Corp. correct? Explain. (3%)

SUGGESTED ANSWER

DDD Corp. is not correct. Lease of properties shall be subject to VAT irrespective of the place where the
contract of lease was executed if the property is leased or used in the Philippines (Sec. 108(A), NIRC)

IX

For calendar year 2011, FFF, Inc., a VAT-registered corporation, reported unutilized excess input VAT in
the amount of P1,000,000.00 attributable to its zero-rated sales. Hoping to impress his boss, Mr. G, the
accountant of FFF, Inc., filed with the Bureau of Internal Revenue (BIR) on January 31, 2013 a claim for
tax refund/credit of the P1,000,000.00 unutilized excess input VAT of FFF, Inc. for 2011. Not having
received any communication from the BIR, Mr. G. filed a Petition for Review with the CTA on March 15,
2013, praying for the tax refund/credit of the P1,000,000.00 unutilized excess input VAT of FFF, Inc. for
2011. –

(A) Did the CTA acquire jurisdiction over the Petition of FFF, Inc.? (2%)

(B) Discuss the proper procedure and applicable time periods for administrative and judicial claims for
refund/credit of unutilized excess input VAT. (4%)

SUGGESTED ANSWER

(A) The CTA has not acquired jurisdiction over the Petition of FFF, Inc. because the judicial claim has
been prematurely filed on March 15, 2013. The Supreme Court ruled that the 30-day period after the
expiration of the 120-day period fixed by law for the Commissioner of Internal Revenue to act on the
claim for refund is jurisdictional and failure to comply would bar the appeal and deprive the Court of Tax
Appeals of its jurisdiction to entertain the appeal (CIR v. Aichi Forging Company of Asia Inc.. G.R. No.
183421, October 22, 2014, 632 SCRA 422). in this case, Mr. G filed the administrative claim on January
31, 2013. The petition for relief should have been filed on June 30, 2013. Filing the indicial claim on
March 15, 2013 is premature, thus the CTA did not acquire jurisdiction.

(B) The administrative claim must be filed with the Commissioner of Internal Revenue (CIR) within two
years from the close of the taxable quarter when the zero-rated sales were made. The CIR has 120 days
from the date of submission of complete documents in support of the claim to decide. If the CIR decides
within the 120-day period or the 120-day period expires without the CIR rendering a decision, the
taxpayer has 30 days to file a petition for review with the CTA reckoned from the receipt of adverse
decision or from the lapse of the 120-day period.

As a general rule, the 30-day period to appeal is both mandatory and jurisdictional. As an exception to
the general rule, premature filing is allowed only if filed between December 10, 2003 and October 5,
2010, when BIR Ruling No. DA-489-03 was still in force prior to the reversal of the aforesaid ruling by the
CTA in the Aichi case on October 6, 2010 (Mindanao Il Geothermal Partnership v. CIR, G.R. No. 204745,
December 8, 2014, 713 SCRA 645).

X.

Indicate whether each of the following individuals is required or not required to file an income tax
return;

(A) Filipino citizen residing outside the Philippines on his income from sources outside the Philippines.
(1%)

(B) Resident alien on income derived from sources within the Philippines. (1%)

(C) Resident citizen earning purely compensation income from two employers within the Philippines,
whose income taxes have been correctly withheld. (1%)

(D) Resident citizen who falls under the classification of minimum wage earners. (1%)

(E) An individual whose sole income has been subjected to final with holding tax. (1%)

SUGGESTED ANSWER

(A) Not required. The income of a non-resident Filipino citizen are taxable only on income sourced
within the Philippines. Accordingly, his income from sources outside the Philippines is exempt from
income tax (Sec. 51A (1)(b), NIRC).

(B) Required. A resident alien is taxable only for income derived from sources within the Philippines
(Sec. 51A (1)(c), NIRC).
(C) Required. A resident citizen who is earning purely compensation income from two employers should
file income tax return. If the compensation income is received concurrently from two employers during
the taxable year, the employee is not qualified for substituted filing (Sec. 51A (2)(b), NIRC).

(D) Not required. Under the law, all minimum wage earners in the private and public sector shall be
exempt from payment of income tax (Sec. 51A (2)(d), NIRC in relation to Republic Act No. 9504).

(E) Not required. Under the law, an individual whose sole income has been subjected of final
withholding tax pursuant to Sec. 57(A), NIRC, need not file a return. What he received is a tax-paid
income (Sec. 51A (2)(c) NIRC).

XI.

What are de minimis benefits and how are these taxed? Give three (3) examples of de minimis benefits.
(4%)

SUGGESTED ANSWER

De minimis benefits are facilities and privileges furnished or offered by an employer to his employees,
which are not considered as compensation subject to income tax and consequently to withholding tax, if
such facilities or privileges are of relatively small value and are offered or furnished by the employer
merely as means of promoting the health, goodwill, contentment, or efficiency of his employees. If
received by rank-and-file employees, they are exempt from income tax on wages; if received by
supervisory or managerial employees, they are exempt from the fringe benefits tax (RR No. 2-98, as
amended by RR No. 8-2000). The following shall be considered as de minimis benefits: (Note: The
examinee may choose any three)

1. Monetized unused vacation leave credits of private employees not

exceeding 10 days during the year;

2. Monetized value of vacation and sick leave credits paid to government officials and employees;

3. Medical cash allowance to dependents of employees, not exceeding P750 per employee per
semester or P125 per month;

4. Rice subsidy of P1,500 or 1 sack of 50 kg rice per month amounting to not more than P1,500;

5. Uniform and clothing allowance not exceeding P5,000 per annum;

6. Actual medical assistance not exceeding P10,000 per annum;

7. Laundry allowance not exceeding P300 per month;

8. Employees achievement awards, e.g., for length of service or safety achievement, which must
be in the form of a tangible personal property other than cash or gift certificate, with an annual
monetary value not exceeding P10,000 received by the employee under an established written
plan which does not discriminate in favor of highly paid employees;
 9. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per
employee per annum;

10. Daily meal allowance for overtime work and night/graveyard shift not exceeding 25% of the
basic minimum wage on a per region basis;

11. Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and
productivity incentive schemes, provided that the total annual monetary value received from
both CBA and productivity incentive schemes combined do not exceed P10,000 per employee
per taxable year (Rev. Regs. 2-98, as amended).

XII.

Mr. H decided to sell the house and lot wherein he and his family have lived for the past 10 years,
hoping to buy and move to a new house and lot closer to his children’s school. Concerned about the
capital gains tax that will be due on the sale of their house, Mr. H approaches you as a friend for advice,
if it is possible for the sale of their house to be exempted from capital gains tax and the conditions they
must comply with to avail themselves of said exemption. How will you respond?(4%)

SUGGESTED ANSWER

I would advise Mr. H, that he may be exempted from the payment of the capital gains tax on the sale or
disposition of the house and lot where his family lives because the sale of principal residence by a
natural person is exempt, provided the following conditions are complied with, viz: 1. The proceeds of
the sale is fully utilized in acquiring or constructing new principal residence within 18 calendar months
from the date of sale or disposition;

2. The historical cost or adjusted basis of the real property sold or disposed will be carried over to the
new principal residence built or acquired;

3. The Commissioner has been duly notified, through a prescribed return, within 30 days from the date
of sale or disposition of the person’s intention to avail of the tax exemption; and The exemption was
availed only once every 10 years (Sec. 24(d)(2), NIRC).

XIII

GGG, Inc. offered to sell through competitive bidding its shares in HAH Corp., equivalent to 40% of the
total outstanding capital stock of the latter. JJJ, Inc. acquired the said shares in HHH Corp. as the highest
bidder. Before it could secure a certificate authorizing registration/tax clearance for the transfer of the
shares of stock to JIJ, Inc., GGG, Inc. had to request a ruling from the BIR confirming that its sale of the
said shares was at fair market value and was thus not subject to donor’s tax. In BIR Ruling No. 012-14,
the CIR held that the selling price for the shares of stock of HHH Corp, was lower than their book value,
so the difference between the selling price and the book value of said shares was a taxable donation.
GGG, Inc. requested the Secretary of Finance to review BIR Ruling No. 012-14, but the Secretary
affirmed said ruling. GGG, Inc. filed with the Court of Appeals a Petition for Review under Rule 43 of the
Revised Rules of Court. The Court of Appeals, however, dismissed the Petition for lack of jurisdiction
declaring that it is the CTA which has jurisdiction over the issues raised. Before which Court should GGG,
Inc. seek recourse from the adverse ruling of the Secretary of Finance in the exercise of the latter’s
power of review? (3%)

SUGGESTED ANSWER

GGG, Inc., should seek recourse with the Court of Tax Appeals (CTA) which has jurisdiction. There is no
provision in law that expressly provides where exactly the adverse ruling of the Secretary of Finance
under Section 4 of the NIRC is appealable. However, RA No. 1125, as amended, addresses the seeming
gap in the law as it vests upon the CTA, albeit impliedly, with jurisdiction over the case as “other
matters” arising under the NIRC or other laws administered by the BIR. Furthermore, the Supreme Court
held that the jurisdiction to review the rulings of the Secretary of Finance on the issues raised against a
ruling of the Commissioner of Internal Revenue, pertains to the Court of Tax Appeals in the exercise of
its appellate jurisdiction (Philamlife v. The Sec. of Finance and CIR, G.R. No. 210987, November 24,
2014).

XIV

KKK Corp. secured its Certificate of Incorporation from the Securities and Exchange Commission on June
3, 2013. It commenced business operations on August 12, 2013. In April 2014, Ms. J, an employee of KKK
Corp. in charge of preparing the annual income tax return of the corporation for 2013, got confused on
whether she should prepare payment for the regular corporate income tax or the minimum corporate
income tax.

(A) Ás Ms. J’s supervisor, what will be your advice? (2%),

(B) What are the distinctions between regular corporate income tax and minimum corporate income
tax? (3%)

SUGGESTED ANSWER

(A) As Ms. J’s supervisor, I will advise that KKK Corp. should prepare payment for the regular corporate
income tax and not the minimum corporate income tax. Under the Tax Code, minimum corporate
income tax is only applicable beginning on the fourth taxable year following the commencement of
business operation (Sec. 27(e)(1), NIRC).

(B) The distinctions between regular corporate income tax and the minimum corporate income tax are
the following:

1. As to taxpayer: Regular corporate income tax applies to all corporate taxpayers; while minimum
corporate income tax applies to domestic corporations and resident foreign corporations.

2. As to tax rate: Regular corporate income tax is 30%; while minimum corporate income tax is 2%.
 3. As to tax base: Regular corporate income tax is based on the net taxable income; while
minimum corporate income tax is based on gross income.

4. As to period of applicability: Regular corporate income tax is applicable once the corporation
commenced its business operation, while minimum corporate income tax is applicable
beginning on the fourth taxable year following the commencement of business operation.

5. As to imposition: The minimum corporate income tax is imposed whenever it is greater than the
regular corporate income tax of the corporation (Sec. 27(A) and (E), NIRC; RR No. 9-98).

XV.

In 2012, Dr. K decided to return to his hometown to start his own practice. At the end of 2012, Dr. K
found that he earned gross professional income in the amount P1,000,000.00, while he incurred
expenses amounting to P560,000.00 constituting mostly of his office space rent, utilities, and
miscellaneous expenses related to his medical practice. However, to Dr. K’s dismay, only P320,000.00 of
his expenses were duly covered by receipts. What are the options available for Dr. K, so he could
maximize the deductions from his gross income? (3%)

SUGGESTED ANSWER

In order to maximize his deductions, Dr. K may avail of the optional standard deduction (OSD) which is
an amount not exceeding forty percent (40%) of his gross sales or gross receipts. The OSD can be
claimed without being required to present proof or evidence of expenses paid or incurred by him (Sec.
34(L), NIRC; Rev. Regs. 16-08, as amended).

XVI

LLL is a government instrumentality created by Executive Order to be primarily responsible for

integrating and directing all reclamation projects for the National Government. It was not organized as a
stock or a non-stock corporation, nor was it intended to operate commercially and compete in the
private market. By virtue of its mandate, LLL reclaimed several portions of the foreshore and offshore
areas of the Manila Bay, some of which were within the territorial jurisdiction of Q City. Certificates of
title to the reclaimed properties in Q City were issued in the name of LLL in 2008. In 2014, Q City issued
Warrants of Levy on said reclaimed properties of LLL based on the assessment for delinquent property
taxes for the years 2010 to 2013.

(A) Are the reclaimed properties registered in the name of LLL subject to real property tax? (4%)

(B) Will your answer be the same in (A) if from 2010 to the present time, LLL is leasing portions of the
reclaimed properties for the establishment and use of popular fastfood restaurants J Burgers, G Pizza,
and K Chicken? (2%)
SUGGESTED ANSWER

(A) The reclaimed properties are not subject to real property tax because LLL is a government
instrumentality. Under the law, real property owned by the Republic of the Philippines is exempt from
real property tax unless the beneficial use thereof has been granted to a taxable person (Sec. 234, Local
Government Code). When the title of the real property is transferred to LLL, the Republic remains the
owner of the real property. Thus, such arrangement does not result in the loss of the tax exemption
(Republic of the Philippines, represented by The Philippine Reclamation Authority (PRA) v. City of
Paranaque, G.R. No. 191109, July 8, 2012, 677 SCRA 246):

ALTERNATIVE ANSWER

(A) No. LLL is an instrumentality of the national government which cannot be taxed by local government
units. LLL is not a government-owned or controlled corporation taxable for real property taxes (City of
LapuLapu v. PEZA, G.R. No. 184203, November 26, 2014).

(B) No. As a rule, properties owned by the Republic of the Philippines are exempt from real property tax
except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person. When LLL leased out portions of the reclaimed properties to taxable entities, such as the
popular fast food restaurants, the reclaimed properties are subject to real property tax (Sec. 234(a),
Local Government Code; GSIS v. City Treasurer and City Assessor of the City of Manila, G.R. No. 186242,
December 23, 2009).

XVII

Mr. L owned several parcels of land and he donated a parcel each to his two children. Mr. Lacquired
both parcels of land in 1975 for P200,000.00. At the time of donation, the fair market value of the two
parcels of land, as determined by the CIR, was P2,300,000.00; while the fair market value of the same
properties as shown in the schedule of values prepared by the City Assessors was P2,500,000.00. What
is the proper valuation of Mr. L’s gifts to his children for the purpose of computing donor’s tax? (3%)

SUGGESTED ANSWER

The valuation of Mr. L’s gift to his children is the fair market value (FMV) the property at the time of
donation. The FMV is the higher of the EMV as determined by the Commissioner, or the FMV as shown
in the schedule of values fixed by the provincial and city assessors. In this case, for the purpose of
computing donor’s tax, the proper valuation is the value prepared by the City Assessors amounting to
P2,500,000.00, because it is higher than the FMV determined by the CIR (Sec. 102 in relation to Sec.
88(B), NIRC).

XVIII

Under the Tariff and Customs Code, as amended:

(A) When does importation begin and when is it deemed terminated? (2%)
(B) In what case/s is the decision of the Collector automatically reviewed by the Commissioner of
Customs? In what instance/s is the decision of the Commissioner automatically appealed to the
Secretary of Finance? (4%)

SUGGESTED ANSWER

(A) Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with
intention to unlade therein. Importation is deemed terminated upon payment of the duties, taxes, and
other charges due upon the articles, or secured to be paid, at a port of entry and the legal permit for
withdrawal shall have been granted, or in case said articles are free of duties, taxes and other charges,
until they have legally left the jurisdiction of Customs (Sec. 1202 of the Tariff and Customs Code).

(B) Whenever the decision of the Collector of Customs in any seizureproceedings is adverse to the
government, the said decision is automatically elevated to the Commissioner of Customs for review, and
if such decision is affirmed by the Commissioner of Customs, the same shall be automatically elevated to
and be finally reviewed by the Secretary of Finance (Sec. 2315 of the Tariff and Customs Code):

XIX

In 2014, M City approved an ordinance levying customs duties and fees on goods coming into the
territorial jurisdiction of the city. Said city ordinance was duly published on February 15, 2014 with
effectivity date on March 1, 2014.

(A) Is there a ground for opposing said ordinance? (2%)

(B) What is the proper procedural remedy and applicable time periods for challenging the ordinance?
(4%)

SUGGESTED ANSWER

(A) Yes, on the ground that the ordinance is ultra vires. The taxing powers of local government units,
such as M City, cannot extend to the levy of taxes, fees and charges already imposed by the national
government, and this includes, among others, the levy of customs duties under the Tariff and Customs
Code (Sec. 133(e), Local Government Code).

(B) Any question on the constitutionality or legality of tax ordinances may be raised on appeal within 30
days from the effectivity to the Secretary of Justice. The Secretary of Justice shall render a decision
within 60 days from the date of receipt of the appeal. Thereafter. within 20 days after receipt of the
decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the
aggrieved party may file the appropriate proceedings with the Red Court (Sec. 187, Local Government
Code).

XX
After filing an Information for violation of Section 254 of the National Internal Revenue Code (Attempt
to Evade or Defeat Tax) with the CTA, the Public Prosecutor manifested that the People is reserving the
right to file the corresponding civil action for the recovery of the civil liability for taxes. As counsel for
the accused, comment on the People’s manifestation. (3%)

SUGGESTED ANSWER

The manifestation is not proper. The criminal action and the corresponding civil action for the recovery
of the civil liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly
determined in the same proceeding before the Court of Tax Appeal (CTA). The filing of the criminal
action is deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing
of such civil action separately from the criminal action shall be recognized (Sec. 7(b)(1) of Republic Act.
No. 9282: Judy Anne Santos v. People, G.R. No. 173176, August 26, 2008, 563 SCRA 341).

XXI

MMM, Inc., a domestic telecommunications company, handles incoming telecommunications services

for non-resident foreign companies by relaying international calls within the Philippines. To broaden the
coverage of its telecommunications services throughout the country, MMM, Inc. entered into various
interconnection agreements with local carriers. The non-resident foreign corporations pay MMM, Inc. in
US dollars inwardly remitted through Philippine banks, in accordance with the rules and regulations of
the Bangko Sentral ng Pilipinas. MMM, Inc. filed its Quarterly VAT Returns for 2000. Subsequently,
MMM, Inc. timely filed with the BIR an administrative claim for the refund of the amount of
P6,321,486.50, representing excess input VAT attributable to its effectively zero-rated sales in 2000. The
BIR ruled to deny the claim for refund of MMM, Inc. because the VAT official receipts submitted by
MMM, Inc. to substantiate said claim did not bear the words “zero-rated” as required under Section
4.108-1 of Revenue Regulations (RR) No. 7-95. On appeal, the CTA division and the CTA en banc affirmed
the BIR ruling. MMM, Inc. appealed to the Supreme Court arguing that the NIRC itself did not provide for
such a requirement. RR No. 7-95 should not prevail over a taxpayer’s substantive right to claim tax
refund or credit.

(A) Rule on the appeal of MMM, Inc. (3%)

(B) Will your answer in (A) be any different if MMM, Inc. was claiming refund of excess input VAT
attributable to its effectively zero-rated sales in 2012? (2%) ;

SUGGESTED ANSWER

(A) The appeal of MMM, Inc. must be denied. MMM, Inc.’s position that the requirements under RR No.
7-95 should not prevail over a taxpayer’s substantive right to claim tax refund or credit is unmeritorious.
The Secretary of Finance has the authority to promulgate the necessary rules and regulations for the
effective enforcement of the provisions of the National Internal Revenue Code (NIRC). Such rules and
regulations are given weight and respect by the courts in view of the rule-making authority given to
those who formulate them and their specific expertise in their respective fields. An applicant for a claim
for tax refund or tax credit must not only prove entitlement to the claim, but also compliance with all
the documentary and evidentiary requirements. Consequently, the Court of Tax Appeal (CTA), and the
CTA en banc correctly ruled that the failure to indicate the words “zero-rated” on the invoices and
receipts issued by a taxpayer, would result in the denial of the claim for refund or tax credit (Eastern
Telecommunications Philippines, Inc. v. CIR, G.R. No. 183531, March 25, 2015).

(B) No, my answer will not be different if the claim for refund is for effectively zero-rated sales in 2012.
The requirement to print the word “zero-rated” is no longer by mere regulations, but is now clearly
provided by law as follows — “If the sale is subject to žero percent (0%) value-added tax, the term “zero-
rated sale” shall be written or printed prominently on the invoice or receipt. Failure to comply with this
invoicing requirement is fatal to a claim for refund of input taxes attributable to the zero-rated sale (Sec.
113(B)(2)(c), NIRC). Moreover, as recently ruled by the Supreme Court, the subsequent incorporation of
Sec. 4.108-1 of RR 7-95 in Sec. 113 of the NIRC as introduced in R.A. No. 9337, actually confirmed the
validity of the imprinting requirement on VAT invoices or official receipts-a case falling under the
principle of legislative approval of administrative interpretation by reenactment (Northern Mindanao
Power Corp. v. CIR, G.R. No. 185115, February 18, 2015).

XXII

State the conditions for allowing allowing the following as deductions from the gross estate of a citizen
or resident alien for the purpose of imposing estate tax:

(A) Claims against the estate (2%) (B) Medical expenses (2%)

SUGGESTED ANSWER

(A) In order that claims against the estate may be allowed as deductions from the gross estate of a
citizen or resident alien for purposes of imposing the estate tax, the law requires that at the time the
indebtedness was incurred, the debt instrument was duly notarized. In addition, if the loan was
contracted within three (3) years before the death of the decedent, the executor or administrator shall
submit a statement showing the disposition of the proceeds of the loan (Sec. 86(a)(1)(c), NIRC).

(B) The conditions for the allowance of medical expenses as deductions from the gross estate of a citizen
or resident alien are: (1) the medical expenses must have been incurred within one (1) year before the
death of the decedent; (2) that the medical expenses are duly substantiated with receipts; and (3) the
total amount thereof, whether paid or unpaid, does not exceed P500,000.00 (Sec. 86A(6), NIRC).

https://www.pinayjurist.com/2015-bar-exam-suggested-answers-in-legal-ethics-by-the-up-law-
complex/

2015 Bar Exam Suggested Answers in Legal Ethics by the UP Law Complex

JANUARY 23, 2019

I.

Define the following terms: (4%)

(A) counsel de oficio
(B) counsel de parte
(C) amicus curiae
(D) attorney of record
SUGGESTED ANSWER

(A) counsel de officio – a lawyer appointed by the court to represent a

party who cannot afford to secure a lawyer to represent him in a case.

(B) counsel de parte – a lawyer chosen by a party to represent him in a case.

(C) amicus curiae – literally, a friend of the court; a lawyer appointed by the court, not to represent a
party to the case, but to advise the court on intricate questions of law in a case that the lawyer may
have some expertise in

(D) counsel of record – a lawyer whose name and address appears in the or a case as representing a
party; same as a counsel de parte.

II.

In open court, accused Marla manifested that she had already settled in full the civil aspect of the
criminal case filed against her in the total amount of P58,000.00. Marla further alleged that she paid
directly to private complainant Jasmine the amount of P25,000.00. The balance of P33,000.00 was
delivered to Atty. Jeremiah, Jasmine’s lawyer, evidenced by a receipt signed by Atty. Jeremiah himself.
However, Jasmine manifested that she did not receive the amount of P33,000.00 which Marla turned
over to Atty. Jeremiah. Despite Jasmine’s requests to turn over the money, Atty. Jeremiah failed to do
so. It was only after Jasmine already filed an administrative complaint against Atty. Jeremiah that the
latter finally paid the P33,000.00 to the former, but in three installment payments of P11,000.00 each.
Atty. Jeremiah claimed that he decided to hold on to the P33,000.00 at first because Jasmine had not yet
paid his attorney’s fees.

Is Atty. Jeremiah administratively liable? Explain. (3%)

SUGGESTED ANSWER

Atty. Jeremiah is administratively liable for violating Rule 16.01 of the Code of Professional
Responsibility (CPR) which provides that “a lawyer shall account for all money and property collected or
received by him for or from the client.” His claim that he held on to the P33,000.00 because his client
Jasmine had not yet paid his attorney’s fees, is lame. Rule 16.03 of the CPR provides that “a lawyer shall
have a lien over the funds (of the client) and may apply as much thereof as may be necessary to satisfy
his lawful fees and disbursements, giving notice promptly thereafter to his client”. But the Supreme
Court has held that this can be availed of by a lawyer only if there is an agreement between him and the
client as to the amount of his attorney’s fees. There is no evidence of such agreement in this case. In
fact, Atty. Jeremiah claimed his exercise of a retaining lien only after an administrative case was already
filed against him; moreover, it is belied by the fact that Atty. Jeremiah paid the P33,000.00 to his client
Jasmine, albeit in installments.
III.

Maria and Atty. Evangeline met each other and became good friends at zumba class. One day, Maria
approached Atty. Evangeline for legal advice. It turned out that Maria, a nurse, previously worked in the
Middle East. So she could more easily leave for work abroad, she declared in all her documents that she
was still single. However, Maria was already married with two children. Maria again had plans to apply
for work abroad but this time. wished to have all her papers in order. Atty. Evangeline, claiming that she
was already overloaded with other cases, referred Maria’s case to another lawyer. Maria found it
appalling that after Atty. Evangeline had learned of her secrets, the latter refused to handle her case.
Maria’s friendship with Atty. Evangeline permanently turned sour after Maria filed an administrative
case against the latter for failing to return borrowed jewelry. Atty. Evangeline, on the other hand,
threatened to charge Maria with a criminal case for falsification of public documents, based on the
disclosures Maria had earlier made to Atty. Evangeline.

(A) Was the consultation of Maria with Atty. Evangeline considered privileged? (1%)

(B) What are the factors to establish the existence of attorney-client privilege? (3%)

SUGGESTED ANSWER

(A) The consultation of Maria with Atty. Evangeline is considered privileged. In the case of Hadjula v.
Madianda (A.C. No. 6711, July 3, 2007), which involves basically the same facts, the Supreme Court held
as follows:

“As it were, complainant went to respondent, a lawyer who incidentally was also then a friend, to bare
what she considered personal secrets and sensitive documents for the purpose of obtaining legal advice
and assistance. The moment complainant approached the then recep tive respondent to seek legal
advice, a veritable lawyerclient relationship evolved between the two. Such relationship, imposes upon
the lawyer certain restrictions circumscribed by the ethics of the profession. Among the burdens of the
relationship is that which enjoins the lawyer, respondent in this instance, to keep inviolate confidential
information acquired or revealed during legal consultations. The fact that one is, at the end of the day
not inclined to handle the client’s case is hardly of consequence. Of little moment too, is the fact that no
formal professional engagement follows the consultation. Nor will it make any difference, that no
contract whatsoever was executed by the parties to memorialize the relationship.”
(B) In the same case, the Supreme Court cited Wigmore on the factors essential to establish the
attorney-client privilege as follows:

(1) Where legal advise of any kind is sought (2) from a professional legal adviser in his capacity as such,
(3) the communication relating to that purpose, (4) made in confidence (5) by the client (6) are at his
instance permanently protected (7) from disclosure by himself or by the legal advisor, (8) except the
protection be waived.”

IV.
The Lawyer’s Oath is a source of obligation and its violation is a ground for suspension, disbarment, or
other disciplinary action. State in substance the Lawyer’s Oath. (3%)

SUGGESTED ANSWER

I, ________, having been permitted to continue in the practice of law in the Philippines, do solemnly
swear that I recognize the supreme authority of the Republic of the Philippines; I will support its
Constitution and obey the law as well as the legal orders of the duly constituted authorities therein; I
will do no falsehood, nor consent to the doing of any in court; I will not wittingly or willingly promote or
sue any groundless, false or unlawful suit, nor give aid nor consent to the same; I will delay no man for
money or malice, and will conduct myself as a lawyer according to the best of my knowledge and
discretion with all good fidelity as well to the courts as to my clients; and ! impose upon myself this
voluntary obligation without any mental reservation or purpose of evasion. So help me God.”

V.

Judge Ana P. Sevillano had an issue with the billings for the per cellular phone services of her 16-year-old
daughter for the last three consecutive months. Although Judge Sevillano had been repeatedly came the
Customer Service Hotline of Universal Telecoms, the billings issuem never fully settled to Judge
Sevillano’s satisfaction. Finally, Judge Sevillante wrote the National Telecommunications Commission a
letter of compra against Universal Telecoms, using her official court stationery and signing the letter as
“Judge Ana P. Sevillano.” Did Judge Sevillano violate any professional or ethical standard for judges?
Justify your answer. (3%)

SUGGESTED ANSWER

Judge Sevillano violated Section 8, Canon 4, of the New Code of Judicial Conduct for the Philippine
Judiciary, which provides that “judges shall not use or lend the prestige of the judicial office to advance
their private interests, or those of a member of their family or of anyone else, nor shall they convey or
permit others to convey the impression that anyone is in a special position improperly to influence them
in the performance of judicial duties”, as well as Rule 6.02 of the Code of Professional Responsibility
which provides that “a lawyer in the government service shall not use his public position to promote or
advance his private interests, nor allow the latter to interfere with his public duties”.

In the case of Ladigon v. Garong (A.M. MTJ-08-1712, August 20, 2008), where a Municipal Trial Court
Judge wrote a letter to a religious organization abroad, about the complaint of one of its members,
using the stationary of his court and signing with his title of “Judge”, the Supreme Court held with
regard to the use of the stationary, that “In the present case, the respondent Judge crossed the line of
propriety when he used his letterhead to report a complaint involving an alleged violation of church
rules and, possibly, of
Philippine laws. Coming from a judge with the letter addressed to a foreign reader, such report could
indeed have conveyed the impression of official recognition or notice of the reported violation.”

With regard to the use of the judge’s title in signing the letter, the Supreme Court held that:

“The same problem that the use of letterhead poses, occurs in the use of the title of judge or Justice in
the correspondence of a member of the Judiciary. While the use of the title is an official designation as
well as an honor that an incumbent has earned, a line still has to be drawn based on the circumstances
of the use of the appellation. While the title can be used for social and other identification purposes, it
cannot be used with the intent to use the prestige of his judicial office to gainfully advance his personal,
family or other pecuniary interests. Nor can the prestige of a judicial office be used or lent to advance
the private interests of others, or to convey or permit others to convey the impression that they are in a
special position to influence the judge. To do any of these is to cross into the prohibited field of
impropriety.”

VI.

Casper Solis graduated with a Bachelor of Laws degree from Achieve University in 2000 and took and
passed the bar examinations given that same year. Casper passed the bar examinations and took the
Attorney’s Oath together with other successful bar examinees on March 19, 2001 at the Philippine
International Convention Center (PICC). He was scheduled to sign the Roll of Attorneys on May 24, 2001
but he misplaced the Notice to Sign the Roll of Attorneys sent by the Office of the Bar Confidant after he
went home to the province for a vacation. Since taking his oath in 2001, Casper had been employed by
several law firms and private corporations, mainly doing corporate and taxation work. When attending a
seminar as part of his Mandatory Continuing Legal Education in 2003, Casper was unable to provide his
roll number. Seven years later in 2010, Casper filed a Petition praying that he be allowed to sign the Roll
of Attorneys. Casper alleged good faith, initially believing that he had already signed the Roll before
entering PICC for his oath-taking on March 19, 2001.

a. Can Casper already be considered a member of the Bar and be allowed to use the title of “attorney”?
Explain. (1%)

b. Did Casper commit any professional or ethical transgression for which he could be held
administratively liable? (2%)

c. Will you grant Casper’s Petition to belatedly sign the Roll of Attorneys? Why? (2%)

SUGGESTED ANSWER

(A) Casper cannot already be considered a member of the Bar and be allowed to use the title of
attorney. In the case of In Re: Petition to Sign on the Roll of Attorneys, Michael A. Medado, Petitioner
(B.M. No. 2540, September 24, 2013), and Aguirre v. Rana (B.M. No. 1036, June 10, 2003, 451 SCRA
428), involving the same facts, the Supreme Court held that it is the act of signing the Roll of Attorneys
that makes a successful Bar examinee a full-fledged member of the Philippine Bar.

(B) He can be held liable for unauthorized practice of law. Canon 9 of the Code of Professional
Responsibility provides that a lawyer shall not directly or indirectly assist in the unauthorized practice of
law.” In the Medado case, the Supreme Court held that “while a reading of Canon 9 appears to merely
prohibit lawyers from assisting in the unauthorized practice of law, the unauthorized practice of law by
the lawyer himself is subsumed under this provision, because at the heart of Canon 9 is the lawyer’s
duty to prevent the unauthorized practice of law”.

(C) I will grant Casper’s petition to belatedly sign the Roll of Attorneys.
He demonstrated good faith and moral character in voluntarily filing his petition. He did not wait for a
third party to file a complaint against him for his transgression. However, he should be allowed to sign
the Roll only one year afterwards, which is tantamount to a suspension, as was done in the Medado
case.

VII

Cite some of the characteristics of the legal profession which distinguish it from business. (4%)

SUGGESTED ANSWER

The primary characteristics which distinguish the legal profession from a business are:
(1) a duty of public service of which emolument is a by-product, and in which one may attain the highest
eminence without making much money;
(2) a relation as officer of the court to the administration of justice involving thorough sincerity, integrity
and reliability;
(3) a relation to client in the highest degree fiduciary;
(4) a relation to colleagues characterized by candor, fairness and unwillingness to resort to current
business methods of advertising and encroachment on their practice, or dealing directly with their
clients (In Re Sycip, 92 SCRA 1).

VIII

Engr. Gilbert referred his friends, spouses Richard and Cindy Maylupa, to Atty. Jane for the institution of
an action for partition of the estate of Richard’s deceased father. In a letter, Atty. Jane promised to give
Engr. Gilbert a commission equivalent to 15% of the attorney’s fees she would receive from the spouses
Maylupa. Atty. Jane, however, failed to pay Engr. Gilbert the promised commission despite already
terminating the action for partition and receiving attorney’s fees amounting to about P600,000.00. Engr.
Gilbert repeatedly demanded payment of his commission but Atty. Jane ignored him. May Atty. Jane
professionally or ethically promise a commission to Engr. Gilbert? Explain. (3%)

SUGGESTED ANSWER
Atty. Jane may not professionally or ethically promise a commission to Engr. Gilbert. Rule 9.02 of the
Code of Professional Responsibility (CPR) provides that “a lawyer shall not divide or stipulate to divide a
fee for legal services with persons not authorized to practice law”.

IX.

(A) Explain the doctrine of quantum meruit in determining the amount of attorney’s fees. (2%)

(B) Identify the factors to be considered in determining attorney’s fees on a quantum meruit basis. (2%)

SUGGESTED ANSWER

(A) Quantum meruit means as much as the services of a lawyer are worth.
Recovery of attorney’s fees on the basis of quantum meruit is authorized when (1) there is no express
contract for the payment of attorney’s fees; (2) although there is a contract for attorney’s fees, the fees
stipulated are found unconscionable by the court; (3) the contract for attorney’s fees is void due to
formal defects of execution; (4) the lawyer was not able to finish the case for justifiable cause; (5) the
lawyer and the client disregard the contract for attorney’s fees; and (6) the client dismissed his counsel
or the latter withdrew therefrom, for valid reasons.

(B) The factors are those set in Rule 20.01 of the Code of Professional
Responsibility (CPR), as follows:

a) the time spent and the extent of the services rendered or required;

b) the novelty and difficulty of the questions involved;

c) the importance of the subject matter;

d) the skill demanded;

e) the probability of losing other employment as a result of acceptance of the proffered case;
f) the customary charges for similar services and the schedule of fees of the IBP chapter to which he
belongs;
g) the amount involved in the controversy and the benefits resulting to the client from the service;
h) the contingency or certainty of compensation;
i) the character of the employment, whether occasional or established; and
j) the professional standing of the lawyer.”

The spouses Manuel were the registered owners owners of a parcel of land measuring about 200,000
square meters. On May 4, 2000, Manuel sold the land for P3,500,000.00 to the spouses Rivera who were
issued a certificate of title of the said lands. Because the Spouses Rivera falled to pay the balance of the
purchase price for the land, the spouses Manuel, through Atty. Enriquez, instituted an action on March
18, 2010 before the Regional Trial Court (RTC) for sum of money and/or annulment of sale, docketed as
Civil Case No. 1111. The complaint in Civil Case No. 1111 specifically alleged that Atty. Enriquez would be
paid P200,000.00 as attorney’s fees on a contingency basis. The RIC subsequently promulgated its
decision upholding the sale of the land to the spouses Rivera. Atty. Enriquez timely filed an appeal on
behalf of the spouses Manuel before the Court of Appeals. The appellate court found for the spouses
Manuel, declared the sale of the land to the spouses Rivera null and void, and ordered the cancellation
of the spouses Rivera’s certificate of title for the land. The Supreme Court dismissed the spouses
Rivera’s appeal for lack of merit. With the finality of judgment in Civil Case No. 1111 on October 20,
2014, Atty. Enriquez filed a motion for the issuance of a writ of execution.

Meanwhile, the spouses Rivera filed on November 10, 2014 before the RTC a case for quieting of title
against the spouses Manuel, docketed as Civil Case No. 2222. The spouses Manuel, again through Atty.
Enriquez, filed a motion to dismiss Civil Case No. 2222 on the ground of res judicata given the final
judgment in Civil Case No. 1111. Pending the resolution of the motion to dismiss in Civil Case No. 2222,
the RTC granted on February 9, 2015 the motion for issuance of a writ of execution in Civil Case No.
1111 and placed the spouses Manuel in possession of the land. Atty. Enriquez, based on a purported
oral agreement with the spouses Manuel, laid claim to 1/2 of the land, measuring 100,000.00 Square
meters with market value of P1,750,000.00, as his attorney’s fees.
Atty. Enriquez caused the subdivision of the land in two equal portions and entered into the half the
appropriated for himself. Based on the professional and ethical standards for lawyers, may Atty.
Enriquez claim 1/2 of the land as his contingency fee? Why? (4%)

SUGGESTED ANSWER

Atty. Enriquez may not claim 1/2 of the land as his contingency fee. In the first place, a lawyer cannot
charge his client a contingent fee or a percentage of the amount recovered as his fees in the absence of
an express contract to that effect (Corpus v. Court of Appeals, G.R. No. L-40424, June 30, 1980, 98 SCRA
424). There is no such contract in this case. As a matter of fact, the claim of a purported oral agreement
for a contingency fee of 1/2 of the land is contradicted by the allegation in the Complaint in Civil Case
No. 1111 for a contingency fee of P200,000.00 only. Moreover, the amount claimed as contingent fee
appears to be excessive and unreasonable. The issue involved in the case was simple and did not require
extensive skill, effort and research on the part of Atty. Enriquez. Furthermore, Atty. Enriquez caused the
division of the land and appropriated one half thereof, pending resolution of the motion to dismiss in
Civil Case No. 2222. This constitutes a violation of Article 1491 of the New Civil Code, because the case in
which the property is involved has not yet been terminated (The Conjugal Partnership of the Spouse
Cadavedo v. Victorino T. Lacaya, G.R. No. 173188, January 15, 2014).

XI

Atty. Belinda appeared as counsel for accused Popoy in a case being heard before Judge Tadhana. After
Popoy was arraigned, Atty. Belinda movcu a resetting of the pre-trial conference. This visibly irked Juage
and and so before Atty. Belinda could finish her statement, Judge Tadhana cut her off by saying that if
she was not prepared to handle the case, then he could easily assign a counsel de oficio for Popoy.
Judge Tadhana also uttered that Atty. Belinda was wasting the precious time of the court. Atty. Belinda
tried to explain that she was capable of handling the case but before she could finish her explanation,
Judge Tadhana again cut her off and accused her of always making excuses for her incompetence. Judge
Tadhana even declared that he did not care if Atty. Belinda filed a thousand administrative cases against
him. According to Atty. Belinda, Judge Tadhana had also humiliated her like that in the past for the
flimsiest of reasons. Even Atty. Belinda’s clients were not spared from Judge Tadhana’s wrath as he
often scolded witnesses who failed to respond immediately to questions asked of them on the witness
stand. Atty. Belinda filed an administrative case against Judge Tadhana. Do the acts of Judge Tadhana as
described above constitute a violation of the Code of Judicial Conduct? Explain. (3%)

SUGGESTED ANSWER

Judge Tadhana has violated Section 6, Canon 6 of the New Code of Judicial Conduct for the Philippine
Judiciary which provides that:”Sec. 6. Judges shall maintain order and decorum in all proceedings before
the court, and be patient, dignified and courteous in relation to litigants, witnesses, lawyers and others
with whom the judge deals in an official capacity. Judges shall require similar conduct of legal
representatives, court staff and others subject to their influence, direction or control”
The Supreme Court has held as follows:
“The duty to maintain respect for the dignity of the court applies to members of the bench and bar alike.
A judge should be courteous both in his conduct and in his language especially to those appearing
before him. He can hold counsels to a proper appreciation of their duties to the court, their clients and
the public in general without being petty, arbitrary, overbearing, or tyrannical.. He should refrain from
conduct that demeans his office and remember that courtesy begets courtesy. Above all, he must
conduct himself in such a manner that he gives no reason for reproach” (Ruiz v. Bringas, A. H. No. MTJ-
00-1266, April 6, 2000, 330 SCRA 62).

XII

(A) What is the best form of advertising possible for a lawyer (27)
(B) What are the allowable or permissible forms of advertising by a lawyer? (3%)

SUGGESTED ANSWER

(A) The best form of advertising is a well-merited reputation for professional capacity and fidelity to
trust, which must be earned as an outcome of character and conduct (Ulep v. Legal Clinic, Inc., Bar
Matter No.553, June 17, 1993, 223 SCRA 378 [2012]).

(B)
1. Publication in reputable law lists of brief biographical and honest informative data; 2. Use of an
ordinary professional business card;
3. Announcements of specialization and availability of service in a legal journal for lawyers; 4. Seeking of
appointment to a public office requiring lawyers;
5. Advertising to seek full-time position as counsel for a corporation;
6. Offering free legal service to indigents through radio broadcasts or printed matter;
7. Announcement of opening of a law firm, changes ofpersonnel, firm name or office address;
8. Listings in a telephone directory.

XIII

In a land registration case before Judge Lucio, the petitioner is represented by the second cousin of
Judge Lucio’s wife.
(A) Differentiate between compulsory and voluntary disqualification and determine if Judge Lucio should
disqualify himself under either circumstance. (3%)
(B) If none of the parties move for his disqualification, may Judge Lucio proceed with the case? (2%)

SUGGESTED ANSWER

(A) In compulsory disqualification, the judge is compelled to inhibit himself from presiding over a case
when any of the ground provided by the law or the rules exist. Under Section 1, Rule 137 of the Revised
Rules of Court, no judge or judicial officer shall sit in any case (1) in which he, or his wife or child, is
pecuniarily interested as heir, legatee, creditor or otherwise, or (2) in which he is related to either party
within the sixth degree of consanguinity or affinity or to counsel within the fourth degree computed
according to the rules of the civil law, or (3) in which he has been executor, administrator, trustee or
counsel, or (4) in which he has presided in any inferior court when his ruling or decision is the subject of
review, without the written consent of all parties in interest and entered upon the record.

Section 5, Canon 3 of the New Code of Judicial Conduct for the Philippine Judiciary adds the following
grounds:
a) the judge has actual bias or prejudice concerning a party or personal knowledge of dispute the
proceedings;

b) knowledge of disputed evidentiary facts concerning the judge has previously served as a lawyer or
was witness in the matter under controversy.

In voluntary disqualification, a judge may inhibit himself in the exercise of his discretion. Paragraph 2.
Rule 137 of the Revised Rules of court provides that “a judge may, in the exercise of his sound
discretion, disqualify himself from sitting in a case, for just and valid reasons other than those
mentioned above”. The New Code of Professional Conduct for the Philippine Judiciary adds that “judges
shall disquality themselves from participating in any proceedings in which they are unable to decide the
matter impartially or in which it may appear to a reasonable observer that they are unable to decide the
matter impartially.” There is no mandatory ground for Judge Lucio to disqualify himself. The second
cousin of his wife, a sixth degree relative, is appearing not as a party but as a counsel.

(B) If none of the parties moves for his disqualification, Judge Lucio may
proceed with the case. All the more so if, without the participation of the judge, the parties and their
lawyers execute a written agreement that Judge Lucio may proceed with the same, and such agreement
is signed by them and made a part of the records of the case.

XIV

Identify and briefly explain three of the canons under the New Code of Judicial Conduct for the
Philippine judiciary. (6%)

SUGGESTED ANSWER

(Any three of the following:)

Canon No. 1 – Independence. Judicial independence is a pre-reguisite to the rule of law and a
fundamental guarantee of a fair trial. A judge shall therefore uphold and exemplify the judicial function
independently on the basis of their assessment of the facts and in accordance a conscientious
understanding of the law, free from any extraneous influence, inducement, pressure, threat or
interference, direct or indirect, from any quarter or for any reason.

Canon No. 2 – Integrity. Integrity is essential not only to the proper discharge of the judicial office but
also to the personal demeanor of judges. The behavior and conduct of judges must reaffirm the people’s
faith in the integrity of the judiciary. Justice must not be merely done but must also be seen to be done.

Canon No. 3. – Impartiality. Impartiality is essential to the proper discharge of the judicial office. It
applies not only to the decision itself but also to the process by which the decision is made. Judges shall
perform their judicial functions without favor, bias or prejudice.

Canon No. 4. – Propriety. Propriety and the appearance of propriety are essential to the performance of
all the activities of a judge. Judges shall avoid impropriety and the appearance of impropriety in all their
activities.

Canon No. 5. – Equality. Ensuring equality of treatment to all before the courts is essential to the
performance of the judicial office. Judges shall be aware of, and understand, diversity in society and
differences arising from various sources, including, but not limited to, race, color, sex, religion, national
origin, caste, disability, age, marital status, sexual orientation, social and economic status and other like
causes.

Canon No. 6. – Competence and Diligence. Competence and diligence are prerequisites for the due
performance of judicial office. Judges shall take reasonable steps to maintain and enhance their
knowledge, skills and personal qualities necessary for the proper performance of judicial duties.

XV

Jon served as Chief Executive Officer (CEO) of PBB Cars, Inc. (PRR) family-owned corporation engaged in
the buying and selling of second hand cars. Atty. Teresa renders legal services to PBB on a retainer basis
In 2010, Jon engaged Atty. Teresa’s services for a personal case. Attu Teresa represented Jon in a BP.
Big. 22 case filed against him by the spouses Yuki, Jon paid a separate legal fee for Atty. Teresa’s
services, Jon subsequently resigned as CEO of PBB in 2011. In 2012, Atty. Teresa filed on behalf of PBB a
complaint for replevin and damages against Jon to recover the car PBB had assigned to him as a service
vehicle. Atty. Teresa, however, had not yet withdrawn as Jon’s counsel of record in the BP Big. 22 case,
which was still then pending. jon filed an administrative case for disbarment against Atty. Teresa for
representing conflicting interests and violating the Code of Professional Responsibility. Atty. Teresa
countered that since the BP Big. 22 case and the replevin case are unrelated and involved different
issues, parties, and subject matters, there was no conflict of interest and she acted within the bounds of
legal ethics.
Is Atty. Teresa’s contention tenable? Explain. (3%)

SUGGESTED ANSWER

The Supreme Court has adopted the following tests for determining conflict of interest.
(1) Whether a lawyer is duty bound to fight for an issue or claim in behalf of one client, and at the same
time, to oppose that claim for another client.

(2) Whether the acceptance of a new relation would prevent the full discharge of his duty of undivided
loyalty to his client.
(3) Whether the acceptance of a new relation would invite suspicion of unfaithfulness or double-dealing
in the performance of his duty of fidelity and loyalty.
(4) Whether in the acceptance of the new relation, he would be called upon to injure his former client
on a matter that he has handled for him, or require him to reveal information that his former client has
given to him.

Although the case for replevin filed by Atty. Teresa against Jon is different from the BP Big. 22 case she
was handling for him, the pendency of the two cases at the same time is likely to invite suspicion of
unfaithfulness or double-dealing in the performance of her duty and fidelity to Jon Teresa’s contention
is, therefore, not tenable.

XVI

Atty. Luna Tek maintains an account in the social media network calls Twitter and has 1,000 followers
there, including fellow lawyers and some clients. Her Twitter account is public so even her non-followers
could see and read her posts, which are called tweets. She oftentimes takes to Twitter to vent about her
daily sources of stress like traffic or to comment about current events. She also tweets her disagreement
and disgust with the decisions of the Supreme Court by insulting and blatantly cursing the individual
Justices and the Court as an institution.

(A) Does Atty. Luna Tek act in a manner consistent with the Code of Professional Responsibility? Explain
the reasons for your answer. (3%)

(B) Describe the relationship between a lawyer and the courts. (3%)

SUGGESTED ANSWER

(A) Atty. Luna Tek did not act in a manner consistent with the Code of Professional Responsibility (CPR).
Canon 11 of the Code provides that “a lawyer shall observe and maintain the respect due to the courts
and to judicial officers and should insist on similar conduct with others”. As an officer of the court, a
lawyer should set the example in maintaining a respectful attitude towards the court. Moreover, he
should abstain from offensive language in criticizing the courts. Atty. Luna Tek violated this rule in
insulting and blatantly cursing the individual Justices and the Supreme Court in her tweets. Lawyers are
expected to carry their ethical responsibilities with them in cyberspace (Lorenzana V. Judge Ma. Cecilia
L. Austria, A.M. No. RTJ-09-2200, April 2, 2014).

(B) A lawyer is an officer of the court. As such, he is as much a part of the machinery of justice as a judge
is. The judge depends on the lawyer for the proper performance of his judicial duties. Thus, Canon 10
enjoins a lawyer to be candid with the courts; Canon 11 requires him to show respect to judicial officers;
and Canon 12 urges him to exert every effort and consider it his duty to assist in the speedy and efficient
administration of justice.”

XVII

Give three instances when a lawyer is allowed to withdraw bis/her services. (3%)

SUGGESTED ANSWER

(Any three of the following)

1. When the client pursues an illegal or immoral course of conduct in connection with the matter he is
handling;
2. When the client insists that the lawyer pursue conduct violative of these canons and rules;
3. When his inability to work with co-counsel will not promote the best interest of the client;
4. When the mental or physical condition of the lawyer renders it difficult for him to carry out the
employment effectively;
5. When the client deliberately fails to pay the fees for the services or fails to comply with the retainer
agreement;
6. When the lawyer is elected or appointed to a public office.
7. Other similar cases.

XVIII

Atty. Javier sold a piece of land in favor of Gregorio for P 2,000,000.00. Atty. Javier drafted the Deed of
Sale with Right to Repurchase which he and Gregorio signed on August 12, 2002. Under said Deed, Atty.
Javier represented that he had”the perfect right to dispose as owner in fee simple” the land and that the
land is “free from all liens and encumbrances. The Dec also stated that Atty. Javier had two years within
which to repurchase is property. Atty. Javier turned over the owner’s copy of his certificate of title, TCT
No. 12121, to Gregorio. Gregorio then immediately took possession of the land.

Atty. Javier failed to exercise his right to repurchase within two years. Gregorio sent Atty. Javier a letter
dated April 8, 2005 demanding that the latter already repurchase the property. Despite receipt of
Gregorio’s letter, Atty. Javier still failed to repurchase the property. Gregorio remained in peaceful
possession of the land until July 25, 2013, when he received notice from Trustworthy Bank informing
him that the land was mortgaged to said bank, that the bank already foreclosed on the land, and that
Gregorio should therefore vacate the land. Upon investigation, Gregorio discovered that Atty. Javier’s
TCT No. 12121 had already been cancelled when another bank foreclosed on a previous mortgage on
the land, but after a series of transactions, Atty. Javier was able to reacquire the land and secure TCT No
34343 for the same. With TCT No. 34343, Atty. Javier constituted another mortgage on the land in favor
of Trustworthy Bank on February 22, 2002. Gregorio was subsequently dispossessed of the property.
Gregorio filed an administrative complaint against Atty. Javier. In his defense, Atty. Javier argued that he
could not be held administratively liable as there was no attorney-client relationship between him and
Gregorio. Moreover, the transaction was not actually one of sale with right to repurchase, but one of
equitable mortgage, wherein he still had the legal right to mortgage the land to other persons.

(A) If you are tasked to investigate and report on Gregorio’s administrative complaint against Atty.
Javier, what will be your recommendation and finding? (3%)

(B) in the same administrative case, may Atty. Javier be ordered to return the P2,000,000.00 purchase
price to Gregorio? Explain. (3%)

SUGGESTED ANSWER

(A) In the case of Saladagay. Atty. Arturo Astorga (A.C. No. 4697, November 25, 2014), involving the
same facts, the Supreme Court found that:

“Respondent dealt with complainant with bad faith, falsehood, and deceit when he entered into the
“Deed of Sale with Right to Repurchase” dated December 2, 1981 with the latter. He made it appear
that the property was covered by TCT No. T-662 under his name, even giving complainant the owner’s
copy of the said certificate of title, when the truth is that the said TCT had already been cancelled some
nine years earlier by TCT No. T-3211 in the name of PNB. He did not even care to correct the wrong
statement in the deed when he was subsequently issued a new copy of TCT No. T-7235 on January 4,
1982, 21 days or barely a month after the execution of the said deed. All told, respondent clearly
committed an act of gross dishonesty and deceit against complainant (Canon 1 and Rule 1.01 of the
Code of Professional Responsibility)”.

Consequently, the Court held that:

“The actions of respondent in connection with the execution of the “Deed of Sale with Right to
Repurchase”
clearly fall within the concept of unlawful, dishonest, and deceitful conduct. They violate Article 19 of
the Civil Code. They show a disregard for Section 63 of the Land Registration Act. They also reflect bad
faith, dishonesty, and deceit on respondent’s part. Thus, respondent deserves to be sanctioned.”
Following the said precedent, I will recommend that Atty. Javier be likewise sanctioned.
(B) However, Atty. Javier may not be ordered to return the P2,000,000.00 to Gregorio in the
administrative case. This is a civil liability which is best determined in a civil case. The sole issue in an
administrative proceeding is whether or not the respondent deserves to remain a member of the Bar
(Concepcion and Blesilda S. Concepcion v. Atty. Elmer A. Dela Rosa, A.C. No. 10681, February 3, 2015).

XIX

(A) What are the grounds for disbarment or suspension from office of an attorney? ( 4%)

(B) If Atty. Babala is also admitted as an attorney in a foreign jurisdiction, what is the effect of his
disbarment or suspension by a competent court or other disciplinary authority in said foreign
jurisdiction to his membership in the Philippine Bar? (2%)

SUGGESTED ANSWER

(A) Under Sec. 27, Rule 138, the grounds for suspension or disbarment of a lawyer are “any deceit,
malpractice or other gross misconduct in such office, grossly immoral conduct, or by reason of
conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to
take before admission to practice, or for a willful disobedience appearing as an attorney for a party or to
a cause without authority to do so”. The practice of soliciting cases for the purposes of gain, either
personally or through paid agents or brokers constitutes malpractice.

(B) He may also be disbarred or suspended in the Philippines, if the

ground for his suspension or disbarment in a foreign jurisdiction is also a ground for suspension or
disbarment here. He is, however, still entitled to notice and hearing, and the decision of the foreign
tribunal will only be prima facie evidence of his guilt.

XX

Cecilio is one of the 12 heirs of his father Vicente, who owned an tural land located in Bohol. Cecilio filed
a complaint charging Judge Love Koto with abuse of discretion and authority for preparing and not a
document entitled “Extra-judicial Partition with Simultaneous Sale” executed by Cecilio’s mother Divina
and brother Jose. Jose signed on Deed on his own behalf and purportedly also on behalf of his brothers
and sisters, including Cecilio. Cecilio though alleged that in his Special Power of Attorney, he merely
granted Jose the authority to mortgage sald agricultural land but not to partition, much less to sell the
same. Judge Koto contended that in a municipality where a notary public is unavailable, a municipal
judge is allowed to notarize documents or deeds as ex officio notary public. He claimed that he acted in
good faith and only wanted to help. Did Judge Koto violate any rules? Discuss. (3%)

SUGGESTED ANSWER

Municipal Trial Court judges are notaries public ex oficio; however, they may notarize only such
documents as are related to their functions. The exception to this is that, in remote municipalities where
there is no notary public available, an MTC judge may notarize a private document provided that he
shall state in his certification the absence of a notary public in the municipality, and that the notarial
fees should be paid to the Municipal Treasurer. Assuming, nevertheless, that the exception applies in
this case, Judge Koto should not have notarized the “Extra-Judicial Partition with Simultaneous Deed of
Sale” submitted to him for notarization. This is because not all of the parties concerned signed and
appeared before him. In the particular case of Cecilio, his brother Jose signed for him purportedly on the
basis of a Special Power of Attorney. Judge Koto should have asked for the production of the Special
Power of Attorney and determined whether or not Cecilio indeed authorized Jose to sign the deed of
partition and sale on his behalf.

XXI

Judge Junior attended the 50th birthday party of his fraternity brother, Atty. Vera. Also present at the
party was Atty. Rico who was Atty. Vera’s classmate way back in high school and who was handling Civil
Case No. 5555 currently pending before Judge Junior’s court. Well-aware that Atty. Rico had a case
before his sala, Judge Junior still sat next to Atty. Rico at a table, and the two conversed with each other,
and ate and drank together throughout the night. Since Atty. Vera was a well-known personality, his
birthday party was featured in a magazine. The opposing party to Atty. Rico’s client in Civil Case No.
5555, while flipping through the pages of the magazine, came upon the pictures of Judge Junior and
Atty. Rico together at the party and used said pictures as bases for instituting an administrative case
against Judge Junior. Judge Junior, in his answer, reasoned that he attended Atty. Vera’s party in his
private capacity, that he had no control over who Atty. Vera invited to the party, and that he and Atty.
Rico never discussed Civil Case No. 5555 during the party. Did Judge Junior commit an administrative
infraction? Explain. (3%)

SUGGESTED ANSWER

Section 3, Canon 4 of the New Code of Conduct for the Philippine Judiciary provides that “judges shall, in
their personal relations with individual members of the legal profession who practice regularly in their
court, avoid situations which might reasonably give rise to the suspicion of favouritism or partiality.” The
act of Judge Junior in sitting next to Atty. Rico, a lawyer whom he knew had a case before his sala, and
dining and conversing with him throughout the night, violates the foregoing rule. It tends to give rise to
suspicion of partiality. It is improper conduct for which he may be reprimanded.

XXII

(A) Describe briefly the Mandatory Continuing Legal Education for a member of the Integrated Bar of the
Philippines and the purpose of the same. (2%)

(B) Name three parties exempted from the MCLE. (3%)

SUGGESTED ANSWER

(A) Mandatory Continuing Legal Education (MCLE) is a rule promulgated by the Supreme Court requiring
all lawyers, with a few exceptions, to earn 36 units of legal education every three (3) years. Its purpose is
to ensure that members of the bar keep abreast with law and juris: prudence, maintain the ethics of the
profession, and enhance the standards of the practice of law.

(B) Select three from the following:

a. President and Vice-President, Secretaries and Undersecretaries of Executive Departments;

b. Senators and Members of the House of Representatives;
c. Chief Justice and Associate Justices of the Supreme Court, incumbent and retired members of the
judiciary, incumbent members of the Judicial and Bar Council, incumbent court
lawyers covered by the Philippine Judicial Academy:
d. Chief State Counsel, Chief State Prosecutor, and Assistant Secretaries of the Department of Justice;
e. Solicitor General and Assistant Solicitor General;
f. Government Corporate Counsel, Deputy and Assistant Government Corporate Counsel;
g. Chairmen and Members of Constitutional Commissions;
h. The Ombudsman, over-all Deputy Ombudsman, Deputy Ombudsman and Special Prosecutor of the
Office of the Ombudsman;
I. Heads of government agencies exercising quasi-judicial functions;
j. Incumbent deans, bar reviewers and professors of law who have teaching experience for at least ten
years in accredited law schools;
K. The Chancellor, Vice-Chancellor and members of the Corps of Professors and Professorial Lecturers of
the Philippine Judicial Academy.

XXIII

Atty. Billy, a young associate in a medium-sized law firm, was in a rush to meet the deadline for filing his
appellant’s brief. He used the internet for legal research by typing keywords on his favorite search
engine, which led him to many websites containing text of Philippine jurisprudence. None on these sites
was owned or maintained by the Supreme Court. He found a case he believed to be directly applicable
to his client’s cause, so he copied the text of the decision from the blog of another law firm, and pasted
the text to the document he was working on. The formatting of the text he had copied was lost when he
pasted it to the document, and he could not distinguish anymore which portions were the actual
findings or rulings of the Supreme Court, and which were quoted portions from the other sources that
were used in the body of the decision. Since his deadline was fast approaching, he decided to just make
it appear as if every word he quoted was part of the ruling of the Court, thinking that it would not be
discovered. Atty. Billy’s opponent, Atty. Ally, a very conscientious former editor of her school’s law
journal, noticed many discrepancies in Atty. Billy’s supposed quotations from the Supreme Court
decision when she read the text of the case from her copy of the Philippine Reports. Atty. Billy failed to
reproduce the punctuation marks and font sizes used by the Court. Worse, he quoted the arguments of
one party as presented in the case, which arguments happened to be favorable to his position, and not
the ruling or reasoning of the Court, but this distinction was not apparent in his brief. Appalled, she filed
a complaint against him.

(A) Did Atty. Billy fail in his duty as a lawyer? What rules did he violate, if any? (2%)

(B) How should lawyers quote a Supreme Court decision? (2%)

SUGGESTED ANSWER

(A) Atty. Billy has violated Canon 10, Rules 10.01 and 10.02 of the Code of Professional Responsibility
(CPR) which provide as follows:
CANON 10. A LAWYER OWES CANDOR, FAIRNESS AND GOOD FAITH TO THE COURT. Rule 10.01. A lawyer
shall not do any falsehood, nor consent to the doing of any in court; nor shall he mislead or allow the
Court to be misled by any artifice. Rule 10.02. A lawyer shall not knowingly misquote or misrepresent
the contents of a paper, the language or the argument of opposing counsel, or the text of a decision or
authority, or knowingly cite a law a provision already rendered inoperative by repeal or amendment, or
assert as a fact that which has not been proved.

(B) They should be verbatim reproductions of the Supreme Court’s decisions, down to the last word and
punctuation mark (Insular Life Assurance Co., Ltd., Employees Association v. Insular Life Assurance Co.,
Ltd., G.R. No. L-25291, January 30, 1971, 37 SCRA 244).

XXIV

An anonymous letter addressed to the the Supreme Court was sent by one concerned citizen,
complaining against Judge Hambog, ing Judge of the RTC of Mahangin City, Branch 7. Malcolm X
reported that Judge Hambog is acting arrogantly in cours and inappropriate language; and embarrassing
and insulting parties, witnesses, and even lawyers appearing before him. Attached to the letter were
pages from transcripts of records in several cases heard before Judge Hambog, with Judge Hambog’s
arrogant, abusive, inappropriate, embarrassing and/or insulting remarks or comments highlighted.

(A) Will the Court take cognizance of the letter-complaint even coming from an anonymous source?
Explain. (2%)

(B) Describe briefly the procedure followed when giving due course to a complaint against an RTC judge.
(3%)

SUGGESTED ANSWER

(A) Yes. Section 1, Rule 140 of the Revised Rules of Court provides that proceedings for the discipline of
judges of regular and special courts, and Justices of the Court of Appeals and the Sandiganbayan, may be
instituted “upon an anonymous complaint, ‘supported by public records of indubitable integrity”.

(B) If the complaint is sufficient in form and substance, a copy thereof shall be sent to the respondent,
and he shall be required to comment within 10 days from date of service. Upon the filing of the
respondent’s comment, the Supreme Court shall refer the matter to the Office of the Court
Administrator for evaluation, report and recommendation, or assign the case to a Justice of the Court of
Appeals, for investigation, report and recommendation. The investigating Justice shall set a date for the
hearing and notify the parties thereof, and they may present evidence, oral or documentary, at such
hearing. The investigating Justice shall terminate the investigation within 90 days from its
commencement, and submit his report and recommendation to the Supreme Court within 30 days from
the termination of the investigation. The Supreme Court shall take action on the report as the facts and
the law may warrant (Rule 140).