2017 BAR EXAMS QUESTIONS IN MERCANTILE LAW

I.
A.
Absolute Timber Co. (ATC) has been engaged in the logging business in Isabela. To secure one of its shipments of
logs to be transported by Andok Shipping Co., ATC purchased a marine policy with an all-risk provision. Because of a
strong typhoon then hitting Northern Luzon, the vessel sank and the shipment of lofs was totally lost. ATC filed its
claim, but the insurer denied the claim on several grounds, namely:

1. the vessel had not been seaworthy;

2. the vessel’s crew had lacked sufficient training;
3. the improper loading of the logs on only one side of the vesse had led to the tilting of the ship to that side
during the stormy voyage; and
4. the extremely bad weather had been a fortuitous event.
ATC now seeks your legal advice to know if its claim was sustainable. What is your advice? Explain your answer. (3%)

B.
The newly restored Ford Mustang muscle car was just released from the car restoration shop to its owner, Seth, an
avid sportsman. Given his passion for sailing, he needed to go to a round-the-world voyage with his crew on his
brand-new 180-meter yacht. Hearing about his coming voyage, Sean, his bosom friend, asked Seth if he could borrow
the car for his net roadshow. Sean, who had been in display the restored car of Seth in major cities of the country.
Seth agreed and lent the Ford Mustang to Sean. Seth further expressly allowed Sean to use the car even for his own
purposes on special occasions during his absence from the country. Seth and Sean then went together to Bayad Agad
Insurance Co. (BAIC) to get separate policies for the car in their respective names.

BAIC consults you as its lawyer on whether separate policies could be issued to Seth and Sean in respect of the same
car.

1. What is insurable interest? (2%)

2. Do Seth and Sean have separate insurable interests? Explain briefly your answer. (3%)
II.
A.
Morgan, a lawyer, received a lot of diving and other water sports equipment as payment of his professional fees by
Dennis, his client in a child custody case. Dennis owned a diving and water sports dealership in Anilao, Batangas.
Morgan decided to name Dennis as entrustee because he did not have any experience in selling such specialized
sports equipment. They executed a trust receipt agreement, with Morgan as entruster and Dennis as entrustee.

Before the sports equipment could be sold, a strong typhoon hit Batangas. Anilao and other parts of Batangas
experienced power outage. Taking advantage of the total darkness, unidentified thieves destroyed the padlocks of
the establishment of Dennis, and carted off the equipment inside.
Morgan demanded that Dennis pay the value of the stolen equipment, but the latter refused on the ground that he
also had suffered from the effects of the typhoon, and insisted that the cause of the loss was fortuitous event or force
majeure.

Is the justification of Dennis warranted? Explain your answer. (4%)

B.
Safe Warehouse, Inc. (Safe) issued on various dates negotiable warehouse receipts to Peter, Paul, and Mary covering
certain goods deposited by the latter with the former. Peter, Paul, and Mary then negotiated and endorsed the
warehouse receipts to Cyrus, Magnus, and Charles upon payment by the latter of valuable consideration for the
warehouse receipts. Cyrus, Magnus, and Charles were not aware of, nor were they parties to any irregularity or
infirmity affecting the title or the face of the warehouse receipts.

On due dates of the warehouse receipes, Cyrus, Magnus, and Charles demanded that Safe surrender the goods to
them. Safe refused because its warehouseman’s claim must first be paid. Cyrus, Magnus, and Charles refused to pay,
and insisted that such claim was the liability of Peter, Paul, and Mary.

1. What is a warehouseman’s claim? (3%)

2. Is Safe’s refusal to surrender the goods to Cyrus, Magnus, and Charles legally justified? Explain your answer.
(3%)
III.
A.
Data Realty, Inc. (DRI) was engaged in realty development. The family of Matteo owned 100% of the capital stock of
DRI. Matteo was also the President and Chairman of the Board of Directors. Other members of Matteo’s family held
the major positions in DRI. Because of a nasty takeover fight with D&E Realty Co., Inc. (D&E), another realty
developer, for the control of a smaller realty company with vast landholdings, DRI and D&E engaged in an expensive
litigation that eventually led to a money judgment being rendered in favor of D&E.

Meantime, DRI, facing inability to pay its liabilities as they fall due but still holding substantial assets, filed a petition
for voluntary rehabilitation. Trying to beat the consequences of rehabilitation proceedings, D&E moved in the trial
court for the issuance of a writ of execution. The trial court also happened to be the rehabilitation court. The writ of
execution was issued.

Serving the writ of execution, Merto, the court sheriff who had just passed his Credit Transactions subject in law
school, garnished Matteo’s bank accounts, and levied his real properties, including his house and lot in Makati.

Are the garnishment and levy of Matteo’s assets lawful and proper? Explain your answer. (4%)

B.
Sid used to be the majority stockholder and President of Excellent Corporation (Excellent). When Meridian Co., Inc.
(Meridian), a local conglomerate, took over control and ownership of Excellent, it brought along its team of officers.
Sid thus became a minority stockholder and a minority member of the Board of Directors. Excellent, being the leading
beverage manufacturer in the country, became the monopoly when Meridian’s own beverage business was merged
with Excellent’s, thereby making Excellent virtually the only beverage manufacturer in the country.

Left out and ignored by the management, Sid became a fiscalizer of sorts, questioning during the Board meetings the
direction being pursued by Excellent’s officers.

Ultimately, Sid demanded the inspection of the books and other corporate records of Excellent. The management
refused to comply, saying that his right as a minority stockholder has been much reduced.

State under what conditions may Sid properly assert his right to inspect the books and other corporate records of
Excellent. Explain your answer. (3%)

IV.
Procopio, a Director and the CEO of Parisian Hotel Co., Inc. (Parisian), was charged along with other company officials
with several counts of estafa in connection with the non-remittance of SSS premiums the company had collected from
its employees. During the pendency of the cases, Parisian filed a petition for rehabilitation. The court, finding the
petition to be sufficient in form and substance, issued a commencement order together with a stay or suspension
order.
Citing the commencement order, Procopio and the other officers facing the criminal charges moved to suspend the
proceedings in the estafa cases.

1. What is a commencement order, and what is the effect of its issuance? Explain your answer. (4%)
2. Suppose you are the trial judge, will you grant the motion to suspend of Procopio, et al.? Explain your
answer. (4%)
V.
A.
Under the Nell Doctrine, so called because it was first pronounced by the Supreme Court in the 1965 ruling in Nell v.
Pacific Farms, Inc. (15 SCRA 415), the general rule is that where one corporation sells or otherwise transfers all of its
assets to another corporation, the latter is not liable for the debts and liabilities of the transferor.
State the exceptions to the Nell Doctrine. (4%)

B.
Santorini Corporation (Santorini) was in dire straits. In order to firm up its financial standing, it agreed to entertain
the merger and takeover offer of Proficient Corporation (Proficient), the leading company in their line of business.
Erica, the major stockholder of Santorini, strongly opposed the merger and takeover. The matter of the merger and
takeover by Proficient was included in the agenda of the next meeting of Santorini’s Board of Directors. However,
owing to Erica’s serious illness that required her to seek urgent medical treatment and care in Singapore, she failed
to attend the meeting and was consequently unable to cast her vote. The Board of Directors approved the merger
and takeover. At the time of the meeting, Santorini had been in the red for a number of years owing to its recurring
business losses and reverses.
Erica seeks your legal advice regarding her right as a stockholder opposed to the corporate action. Explain your
answer. (4%)

C.
Samito is the President and a Director of Lucky Bank (Lucky), a commercial bank holding its main office in Makati.
His brother, Othello, owned a big fishing business based in Malabon. Othello applied for a loan of P50 million with
Lucky. Othello followed the ordinary banking procedures in all the stages of the processing of his application. When
required, he made the necessary arrangements to guarantee the loan. Thus, in addition to the real estate mortgage,
Othello executed a joint and solidary suretyship, issued postdated checks, and submitted all other requirements
prescribed by Lucky.

When the loan application was about to be approved and the proceeds released, BG Company, a keen competitor of
Othello in the fishing industry, wrote to the Board of Directors and the management of Lucky questioning the loan on
the ground of conflict of interest due to Samito and Othello being brothers, citing the legal restriction against bank
exposure of directors, officers, stockholders or their related interests. (DOSRI).

1. What are the three restrictions imposed by law on DOSRI transactions? (4%)
2. Is BG Company’s opposition based on conflict of interest and violation of the restrictions on DOSRI
transactions legally and factually correct? Explain your answer. (4%)
VI.
A.
Hortencio owned a modest grocery business in Laguna. Because of the economic downturn, he incurred huge financial
liabilities. he remained afloat only because of the properties inherited from his parents who had both come from
landed families in laguna. His main creditor was Puresilver Company (Puresilver), the principal supplier of the
merchandise sold in his store. To secure his credit with Puresilver, he executed a real estate mortgage with a dragnet
clause involving his family’s assets worth several millions of pesos.

Nonetheless, Hortencio, while generally in the black, now faces a situation where he is unable to pay his liabilities as
they fall due in the ordinary course of business. What will you advise him to do to resolve his dire financial condition?
Explain your answer. (5%)

B.
Wyatt, an internet entrepreneur, engaged in a sideline business of creating computer programs for selected clients
on a per project basis and for servicing basic computer problems of his friends and family members. His main job was
being an IT consultant at Futurex Co., a local computer company.

Because of his ill-advised investments in the stock market and the fraud perpetrated against him by his trusted
confidante, Wyatt was already drowning in debt, that is, he had far more liabilities than his entire assets.

What legal recourse remained available to Wyatt? Explain your answer. (5%)

VII.
A.
Virtucio was a composer of Ilocano songs who has been quite popular in the Ilocos Region. Pascuala is a professor of
music in a local university with special focus on indigenous music. When she heard the musical works of Virtucio, she
purchased a CD of his works. She copied thte CD and sent the second copy to her Music class with instructions for
the class to listen to the CD and analyze the works of Virtucio.

Did Pascuala thereby infringe Virtucio’s copyright? Explain your answer. (4%)

B.
Super Biology Corporation (Super Biology) invented and patented a miracle medicine for the cure of AIDS. Being the
sole manufacturer, Super Biology sold the medicine at an exorbitant price. Because of the sudden prevalence of AIDS
cases in Metro Manila and other urban areas, the Department of Health (DOH) asked Super Biology for a license to
produce and sell the AIDS medicine to the public at a substantially lower price. Super Biology, citing the huge costs
and expenses incurred for research and development, refused.

Assuming you are asked your opinion as the legal consultant of DOH, discuss how you will resolve the matter. (4%)

VIII.
A.
Flora, a frequent traveller, found a purse concealed between the cushions of a large sofa inside the VIP lounge in
NAIA while she was waiting for her flight to be called. Inside the purse was a very valuable diamond-studded necklace.
She decided not to turn over the purse to the airport management, and instead to keep it. On her return from her
travels, she had a dependable jeweller appraise the necklace, and the latter told her that the necklace was easily
worth at least P5 million in the open market. To test the appraisal, she pawned the necklace for P2 million. She then
deposited the entire amount in her checking account with Metro Bank. Promptly, Metro Bank reported the transaction
to the Anti-Money Laundering Council (AMLC).

Given that her appropriation was theft, may Flora be successfully prosecuted for money laundering? Explain briefly
your answer. (4%)

B.
Prosperous Bank is a domestic bank with head office in Makati. It handles the banking requirements of thousands of
clients.

The AMLC initiated a discreet investigation of the financial transactions of Lorenzo, a suspected drug trafficker based
in Naga City. The intelligence group of the AMLC, in coordination with the counterpart group from the PDEA and the
NBI, gathered ample evidence establishing Lorenzo’s unlawful drug activities. The AMLC had probable cause that his
deposits and investments in various banks, including Prosperous Bank, were related to money laundering.

Accordingly, the AMLC now transmits to Prosperous Bank a formal demand to allow its agent to examine the banking
transactions of Lorenzo, but Prosperous Bank refuses the demand.

Is Prosperous Bank’s refusal justified? Explain your answer. (4%)

 IX.
A.
Alfred issued a check for P1,000 to Benjamin, his friend, as payment for an electronic gadget. The check was drawn
against Alfred’s account with Good Bank. Benjamin then indorsed the check specially in favor of Cesar. However,
Cesar misplaced the check. Dexter, a dormmate of Cesar, found the check, altered its amount to P91,000 and forged
Cesar’s indorsement by way of a blank indorsement in favor of Felix, a known jeweler. Felix then caused the deposit
of the check in his account with Solar Bank. As collecting bank, Solar Bank stamped “all previous indorsements
guaranteed” on the check. Seeing such stamp of the collecting bank, Good Bank paid the amount of P91,000 on the
check.

May Good Bank claim reimbursement from Alfred? Explain your answer. (4%)

B.
In 2006, Donald, an American temporarily residing in Cebu City, issued to Rhodora a check for $50,000 drawn against
Wells Fargo Bank with offices in San Francisco, California. Rhodora negotiated the check and delivered it to Yaasmin,
a Filipina socialite who frequently travelled locally and internationally. Because of her frequent travels, Yaasmin
misplaced the check. It was only 11 years later on, in 2017, when she found the check inside a diary kept in her vault
in her Hollywood, California house.

Discuss and explain the rights of Yaasmin on the check. (4%)

X.
Wisconsin Transportation Co., Inc. (WTC) owned and operated an inter-island deluxe bus service plying the Manila-
Batangas-Mindoro route. Three friends, namely: Aurelio, Jerome, and Florencio rode on the same WTC bus from
Manila bound for Mindoro. Aurelio purchased a ticket for himself. Jerome, being a boyhood friend of the bus driver,
was allowed a free ride by agreeing to sit during the trip on a stool placed in the aisle. Florencio, already penniless
after spending all of his money on beer the night before, just stole a ride in the bus by hiding in the on-board toilet
of the bus.

During the trip, the bus collided with another bus coming from the opposite direction. The three friends all suffered
serious physical injuries.

What are WTC’s liabilities, if any, in favor of Aurelio, Jerome, and Florencio? Explain your answer. (4%)

XI.
TRUE or FALSE – Explain briefly your answer.

1. A conviction under the Trust Receipts Law shall bar a prosecution for estafa under the Revised Penal Code.
(2%)
2. The term capital in relation to public utilities under Sec. 11, Art. XII of the 1987 Constitution refers to the
total outstanding capital stock comprising both common and non-voting preferred shares. (2%)
3. Forgery is a real defense but may only be raised against a holder not in due course. (2%)
4. News reports are not copyrightable. (2%)
5. The law on life insurance prohibits double insurance. (2%)
XII.
Onassis Shipping, Inc. (Onassis) operated passenger vessels and cargo trucks, and offered its services to the general
public. In line with its vision and mission to protect the environment, Go-Green Asia (Go-Green), an NGO affiliated
with Greenpeace, entered into a contract with Onassis whereby Go-Green would operate with its own crew the M/V
Dolphin, an ocean-going passenger vessel of Onassis.

While on its way to Palawan carrying Go-Green’s invited guests who were international and local observers desirous
of checking certain environmental concerns in the area, the M/V Dolphin encountered high waves and strong winds
caused by a typhoon in the West Philippine Sea. The rough seas led to serious physical injuries to some of the guests.

Discuss the liabilities of Onassis and Go-Green to the passengers of the M/V Dolphin. Explain briefly your answer.
(3%)

***END OF EXAMINATION***
 2017 BAR EXAMS QUESTIONS IN CIVIL LAW

I.
State whether the following marital unions are valid, void, or voidable, and give the corresponding justifications for
your answer:

(a) Ador and Becky’s marriage wherein Ador was afflicted with AIDS prior to the marriage. (2%)

(b) Carlos’ marriage to Dina which took place after Dina had poisoned her previous husband Edu in order to free
herself from any impediment in order to live with Carlos. (2%)

(c) Eli and Fely’s marriage solemnized seven years after the disappearance of Chona, Eli’s previous spouse, after the
plane she had boarded crashed in the West Philippine Sea. (2%)

(d) David who married Lina immediately the day after obtaining a judicial decree annulling his prior marriage to
Elisa. (2%)

(e) Marriage of Zoren and Carmina who did not secure a marriage license prior to their wedding, but lived together
as husband and wife for 10 years without any legal impediment to marry. (2%)

II.
In 1960, Rigor and Mike occupied two separate but adjacent tracts of land in Mindoro. Rigor’s tract was classified as
timber land while Mike’s was classified as agricultural land. Each of them fenced and cultivated his own tract
continuously for 30 years. In 1991, the Government declared the land occupied by Mike as alienable and disposable,
and the one cultivated by Rigor as no longer intended for public use or public service.

Rigor and Mike now come to you today for legal advice in asserting their right of ownership of their respective lands
based on their long possession and occupation since 1960.

(a) What are the legal consequences of the 1991 declarations of the Government respecting the lands? Explain your
answer. (2%)

(b) Given that, according to Section 48(b) of Commonwealth Act No. 141, in relation to Section 14(1) of Presidential
Decree No. 1529, the open, continuous, exclusive, and notorious possession and occupation of alienable and
disposable lands of the public domain as basis for judicial confirmation of imperfect title must be from June 12,
1945, or earlier, may Mike nevertheless validly base his assertion of the right of ownership on prescription under
the Civil Code? Explain your answer. (4%)

(c) Does Rigor have legal basis for his application for judicial confirmation of imperfect title based on prescription as
defined by the Civil Code given that, like Mike, his open, continuous, exclusive, and notorious possession and
occupation was not since June 12, 1945, or earlier, and his tract of land was timber land until the declaration in
1991? Explain your answer. (4%)
 III.
Josef owns a piece of land in Pampanga. The National Housing Authority (NHA) sought to expropriate the property
for its socialized housing project. The trial court fixed the just compensation for the property at P50 million. The
NHA immediately deposited the same at the authorized depository bank and filed a motion for the issuance of a writ
of possession with the trial court. Unfortunately, there was delay in the resolution of the motion. Meanwhile, the
amount deposited earned interest.

When Josef sought the release of the amount deposited, NHA argued that Josef should only be entitled to P50
million.

Who owns the interest earned? (3%)

IV.
(a) Distinguish antichresis from usufruct. (3%)

(b) Distinguish commodatum from mutuum. (3%)

V.
Jacob has owned a farm land in Ramos, Tarlac. In 2012, Liz surreptitiously entered and cultivated the property. In
2014, Jacob discovered Liz’s presence in and cultivation of the property. Due to his being busy attending to his
business in Cebu, he tolerated Liz’s cultivation of the property. Subsequently, in December 2016, Jacob wanted to
regain possession of the property; hence, he sent a letter to Liz demanding that she vacate the property. Liz did not
vacate despite the demand.

Jacob comes to enlist your legal assistance to bring an action against Liz to recover the possession of the property.

What remedies are available to Jacob to recover possession of his property under the circumstances? Explain your
answer. (4%)

VI.
Tyler owns a lot that is enclosed by the lots of Riley to the North and East, of Dylan to the South, and of Reece to
the West. The current route to the public highway is a kilometer’s walk through the northern lot of Riley, but the
route is a rough road that gets muddy during the rainy season, and is inconvenient because it is only 2.5 meters
wide. Tyler’s nearest access to the public highway would be through the southern lot of Dylan.

May Dylan be legally required to afford to Tyler a right of way through his property? Explain your answer. (4%)

VII.
Alice agreed to sell a parcel of land with an area of 500 square meters registered in her name and covered by TCT
No. 12345 in favor of Bernadette for the amount of P900,000. Their agreement dated October 15, 2015, reads as
follows:
I, Bernadette, agree to buy the lot owned by Alice covered by TCT No. 12345 for the ammount of P900,000 subject
to the following schedule of payment:

Upon signing of agreement – P100,000

November 15, 2015 – P200,000

December 15, 2015 – P200,000

January 15, 2016 – P200,000

February 15, 2016 – P200,000

Title to the property shall be transferred upon full payment of P900,000 on or before February 15, 2016.

After making the initial payment of P100,000 on october 15, 2015, and the second installment of P200,000 on
November 15, 2015, Bernadette defaulted despite repeated demands from Alice.

In December 2016, Bernadette offered to pay her balance but Alice refused and told her that the land was no longer
for sale. Due to the refusal, Bernadette caused the annotation of her adverse clalm upon TCT No. 12345 on
December 19, 2016. Later on, Bernadette discovered that Alice had sold the property to Chona on February 5,
2016, and that TCT No. 12345 had been cancelled and another one issued (TCT No. 67891) in favor of Chona as the
new owner.

Bernadette sued Alice and Chona for specific performance, annulment of sale and cancellation of TCT No. 67891.
Bernadette insisted that she had entered into a contract of sale with Alice; and that because Alice had engaged in
double sale, TCT No. 67891 should be cancelled and another title be issued in Bernadette’s favor.

1. Did Alice and Bernadette enter into a contract of sale of the lot covered by TCT No. 12345? Explain your
answer. (4%)
2. Did Alice engage in double sale of the property? Explain your answer. (4%)
VIII.
Pedro had worked for 15 years in Saudi Arabia when he finally decided to engage in farming in his home province
where his 10-hectare farmland valued at P2,000,000 was located. He had already P3,000,000 savings from his long
stint in Saudi Arabia.

Eagerly awaiting Pedro’s arrival at the NAIA were his aging parents Modesto and Jacinta, his common-law spouse
Veneranda, their three children, and Alex, his child by Carol, his departed legal wife. Sadly for all of them, Pedro
suffered a stroke because of his over-excitement just as the plane was about to land, and died without seeing any
of them.

The farmland and the savings were all the properties he left.

(a) State who are Pedro’s legal heirs, and the shares of each legal heir to the estate? Explain your answer. (4%)
(b) Assuming that Pedro’s will is discovered soon after his funeral. In the will, he disposed of half of his estate in
favor of Veneranda, and the other half in favor of his children and his parents in equal shares. Assuming also that
the will is admitted to probate by the proper court. Are the testamentary dispositions valid and effective under the
law on succession? Explain your answer. (4%)

IX.
Danny and Elsa were married in 2002. In 2012, Elsa left the conjugal home and her two minor children with Danny
to live with her paramour. In 2015. Danny sold without EIsa’s consent a parcel of land registered in his name that
he had purchased prior to the marriage. Danny used the proceeds of the sale to pay for his children’s tuition fees.

Is the sale valid, void or voidable? Explain your answer. (3%)

X.
Briefly explain whether the following contracts are valid, rescissible, unenforceable, or void:

(a) A contract of sale between Lana and Andy wherein 16-year old Lana agreed to sell her grand piano for
25,000.00. (2%)

(b) A contract of lease of the Philippine Sea entered by and between Mitoy and Elsa. (2%)

(c) A barter of toys executed by 12-year old Clarence and 10-year old Czar (2%)

(d)A sale entered by Barri and Garri, both minors, which their parents later ratified. (2%)

(e) Jenny’s sale of her car to Celestine in order to evade attachment by Jenny’s creditors. (2%)

XI.
Zeny and Nolan were best friends for a long time already. Zeny borrowed 310,000.00 from Nolan, evidenced by a
promissory note whereby Zeny promised to pay the loan “once his means permit.” Two months later, they had a
quarrel that broke their long-standing friendship.
Nolan seeks your advice on how to collect from Zeny despite the tenor of the promissory note. what will your advice
be? Explain your answer. (3%)

XII.
Krystal owns a parcel of land covered by TCT No. 12345 in Angeles City, Due to severe financial constraints, Krystal
was lorc based in the property to RBP Corporation, a foreign corporation based in South Korea. Subsequently, RBP
Corporation sold the property to Gloria, one of its most valued clients.

Wanting her property back, Krystal, learning of the transfer of the property from RBP Corporation to Gloria, sued
both of them in the Regional Trial Court (RTC) for annulment of sale and for reconveyance. She alleged that the sale
by RBP Corporation to Gloria was void because RBP Corporation was a foreign corporation prohibited by the
Constitution from acquiring and owning lands in the Philippines.
Will KrystaI’s suit for annulment of sale and reconveyance prosper? Explain your answer. (4%)

XIII.
TRUE or FALSE – Explain your answers.

(a) All rights are considered as property. (2%)

(b) A lessee cannot bring a case for quieting of title respecting the property that he leases. (2%)

(c) Only the city or municipal mayor can file a civil action to abate a public nuisance. (2%)

(d) Possession of a movable property is lost when the location of the said movable is unknown to the owner. (2%)

(e) Continuous non-apparent easements can be acquired either through title or by prescription. (2%)

XIV.
Plutarco owned land that borders on a river. After several years the action of the water of the river caused the
deposit of soil, and increased the area of Plutarco’s property by 200 square meters.

(a) If Plutarco wants to own the increase in area, what will be his legal basis for doing so? Explain your answer.
(2%)

(b) On the other hand, if the river dries up, may Plutarco validly claim a right of ownership of the dried-up river
bed? Explain your answer. (2%)

XV.
Kevin signed a loan agreement with ABC Bank. To secure payment, Kevin requested his girlfriend Rosella to execute
a document entitled “Continuing Guaranty Agreement” whereby she expressly agreed to be solidarily liable for the
obligation of Kevin.

Can ABC Bank proceed directly against Rosella upon Kevin’s default even without proceeding against Kevin first?
Explain your answer. (3%)

XVI.
Jovencio operated a school bus to ferry his two sons and five of their schoolmates from their houses to their school,
and back. The parents of the five schoolmates paid for the service. One morning, Porfirio, the driver, took a short
cut on the way to school because he was running late, and drove across an unmanned railway crossing. At the time,
Porfirio was wearing earphones because he loved to hear loud music while driving. As he crossed the railway tracks,
a speeding PNR train loudly blared its horn to warn Porfirio, but the latter did not hear the horn because of the loud
music. The train inevitably rammed into the school bus. The strong impact of the collision between the school bus
and the train resulted in the instant death of one of the classmates of Jovencio’s younger son.

The parents of the fatality sued Jovencio for damages based on culpa contractual alleging that Jovencio was a
common carrier; Porfirio for being negligent; and the PNR for damages based on culpa aquiliana.
Jovencio denied being a common carrier. He insisted that he had exercised the diligence of a good father of a family
in supervising Porfirio, claiming that the latter had had no history of negligence or recklessness before the fatal
accident.

(a) Did his operation of the school bus service for a limited clientele render Jovencio a common carrier? Explain your
answer. (3%)

(b) In accordance with your answer to the preceding question, state the degree of diligence to be observed by
Jovencio, and the consequences thereof. Explain your answer. (3%)

(c) Assuming that the fatality was a minor of only 15 years of age who had no earning capacity at the time of his
death because he was still a student in high school, and the trial court is minded to award indemnity, what may
possibly be the legal and factual justifications for the award of loss of earning capacity? Explain your answer. (4%)
 2017 BAR EXAMS QUESTIONS IN TAXATION LAW

I.
SMZ, Inc., is a VAT-registered enterprise engaged in the general construction business. HP International contracts
the services of SMZ, Inc. to construct HP International’s factory building located in the Laguna Techno Park, a
special economic zone. HP lnternational is registered with the the Philippine Economic Zone Authority (PEZA) as an
ecozone export enterprise, and, as such, enjoys income tax holiday pursuant to the Special Economic Zone Act of
1995.

SMZ, Inc., files an application with the Bureau of lnternal Revenue (BIR) for the VAT zero-rating of its sale of
services to HP International. However, the BIR denies SMZ, lnc.’s application on the ground that HP lnternational
already enjoys income tax holiday.

Is the BIR correct in denying SMZ, lnc.’s application? Explain your answer. (6%)

II.
Wreck Corporation is a domestic corporation engaged in the business of importing, refining and selling petroleum
products. During the period from September 1, 2014 to December 31, 2014, Wreck Corporation imported 225
million liters of Jet A-1 aviation fuel and paid the excise taxes thereon. Seventy-five percent (75%) of the total
volume of aviation fuel imported were actually sold to international carriers of Philippine and foreign registries for
their use or consumption outside of the Philippines in the period from November 1, 2014, to December 31, 2014.
Wreck Corporation did not pass on to the international carriers the excise taxes it paid on the importation of
petroleum products.

On June 25, 2015, Wreck Corporation filed an administrative claim for refund or issuance of tax credit certificate
amounting to the excise taxes it had paid on the importation of 225 million liters of Jet A-1 aviation fuel.

If you were the Commissioner of lnternal Revenue, will you grant Wreck Corporation’s administrative claim for
refund or issuance of tax credit certificate Explain your answer. (6%)

III.
Vanderful, Inc.’s income tax return for taxable year 2015 showed an overpayment due to excess creditable
witholding taxes in the amount of P750,000. The company opted to carry over the excess income tax credits as tax
credit against its quarterly income tax liabilities for the next succeeding years. For taxable year 2016, the
company’s income tax return showed an overpayment due to excess creditable withholding taxes in the amount of
P1,100,000, which included the carry-over from year 2015 in the amount of P750,000 because its operations
resulted in a net loss hence, there was no application for any tax liability. This time, the company opted and marked
the box “To be refunded” in respect of the total amount of P1,100,000.

Vanderful, lnc. now files in the BIR a claim for refund of unutilized overpayments of P1,100,000. Is the claim
meritorious? (4%)
 IV.
On the basis of a warrant of seizure and detention issued by the Collector of Customs for the purpose of enforcing
the Tariff and Customs Code, assorted brands of liquor and cigarettes said to have been illegally imported into the
Philippines were seized from a store operating in a Freeport zone. The store owner moved for the quasahal of the
warrant on the ground that the collector of Customs had no jurisdiction to enforce it within the Freeport zone.

Should the motion to quash be granted (3%)

V.
On March 30, 2016, XL Co. filed an administrative claim for refund of unutilized input VAT for taxable year 2014,
together with supporting documents. XL Co. claimed that its sale of generated power and delivery of electric
capacity was VAT zero-rated. Due to the inaction of the Commissioner of Internal Revenue (CIR), XL Co. filed with
the Court of Tax Appeals (CTA) the following judicial claims for refund.

 Period Covered – Date Filed

 1st Quarter of 2014 – March 31, 2016
 2nd Quarter of 2014 – June 30, 2016
 3rd and 4th quarter of 2014 – August 12, 2016
Is XL Co.’s claim for VAT refund timely filed? Explain your answer. (5%)

VI.
Heeding the pronouncement of the President that the worsening traffic condition in the metropolis was a sign of
economic progress, the Congress enacted Republic Act No. 10701, also known as An Act Imposing a Transport Tax
on the Purchase of Private Vehicles.

Under RA 10701, buyers of private vehicles are required to pay a transport tax equivalent to 5% of the total
purchase price per vehicle purchased. RA 10701 provides that the Land Transportation Office (LTO) shall not accept
for registration any new vehicles without proof of payment of the 5% transport tax. RA 10701 further provide that
existing owners of private vehicles shall be required to pay a tax equivalent to 5% of the current fair market value
of every vehicle registered with the LTO. However, RA 10701 exempts owners of public utility vehicles and the
Government from the coverage of the 5% transport tax.

A group of private vehicle owners sue on the ground that the law is unconstitutional for contravening the Equal
Protection Clause of the Constitution.

Rule on the constitutionality and validity of RA 10701. (5%)

VII.
Calvin Dela Pisa was a Permits and Licensing Officer (rank-and-file) of Sta. Portia Realty Corporation (SPRC). He
invited the Regional Director of the Housing and Land Use Regulatory Board (HLURB) to lunch at the Sulo Hotel in
Quezon City to discuss the approval of SPRC’s application for a development permit in connection with its
subdivision development project in Pasig City. At breakfast the following day, Calvin met a prospective client
interested to enter into a joint venture with SPRC for the construction of a residential condominium unit in Cainta,
Rizal.

Calvin incurred expenses for the lunch and breakfast meetings he had with the Regional Director of HLURB and the
prospective client, respectively. The expenses were duly supported by official receipts issued in his name. At
month’s end, he requested the reimbursement of his expenses, and SPRC granted his request.

(a) Can SPRC claim an allowable deduction for the expenses incurred by Calvin? Explain your answer. (2.5%)

(b) Is the reimbursement received by Calvin from SPRC subject to tax? Explain your answer. (2.5%)

VIII.
On April 30, 2015, Daryl resigned as the production manager of 52nd Avenue, a television studio owned by SSS
Entertainment Corporation. 52nd Avenue issued to her a Certificate of Withholding Tax on Compensation (BIR Form
No. 2316), which showed that the tax withheld from her compensation was equal to her income tax due for the
period from January 2015 to April 30 2015.

A month after her resignation, Daryl put up her own studio and started producing short films. She was able to earn
a meager income from her short films but did not keep record of her production expenses.

Is Daryl qualified for substituted filing for taxable year 2015? Explain your answer. (3%)

IX.
Upon his retirement, Alfredo transferred his savings derived from his salary as a marketing assistant to a time
deposit with AAB Bank. The bank regularly deducted 20% final withholding tax on the interest income from the time
deposit.

Alfredo contends that the 20% final tax on the interest income constituted double taxation because his salary had
been already subjected to withholding tax.

Is Alfredo’s contention correct? Explain your answer. (3%)

X.
On January 27, 2017, Ramon, the comptroller of Vantage Point, Inc., executed a document entitled “Waiver of the
Statute of Limitations” in connection with the BIR’s investigation of the tax liabilities of the company for the year
2012. However, the Board of Directors of Vantage Point, Inc., did not adopt a board resolution authorizing Ramon to
execute the waiver.

On October 14, 2017, Vantage Point, Inc., received a preliminary assessment notice from the BIR indicating its
deficiency withholding taxes for the year 2012. Vantage Point, Inc., filed its protest. On October 30, 2017, the BIR
issued a formal letter of demand and final assessment notice. Vantage Point, Inc., again filed a protest. The
Commissioner of Internal Revenue denied the protests and directed the collection of the assessed deficiency taxes.
Accordingly, Vantage Point, Inc., filed a petition for review in the CTA to seek the cancellation and withdrawal of the
assessment on the ground of prescription.

(a) What constitutes a valid waiver of the statute of limitations for the assessment and collection of taxes? Explain
your answer. (3%)

(b) Has the right of the Government to assess and collect deficiency taxes from Vantage Point, Inc. for the year
2012 prescribed? Explain your answer. (3%)

XI.
The Board of Directors of Sumo Corporation, a company primarily engaged in the business of marketing and
distributing pest control products, approved the partial cessation of its commercial operations, resulting in the
separation of 32 regular employees. Only half of the affected employees were notified of the board resolution.

Rule on the taxability of the separation pay and indemnity that will be received by the affected employees as the
result of their separation from service. Explain your answer. (3%)

XII.
On September 17, 2015, Data Realty, Inc., a real-estate corporation duly organized and existing under Philippine
law, sold to Jenny Vera a condominium unit at Freedom Residences in Malabon City with an area of 32.31 square
meters for a contract price of P4,213,000. The condominium unit had a zonal value amounting to P2,877,000 and
fair market value amounting to P550,000.

(a) Is the transaction subject to value-added tax and documentary stamp tax? Explain your answer. (3%)

(b) Would your answer be the same if the property was sod by a bank in a foreclosure sale? Explain your answer.
(3%)

XIII.
BATAS Law is a general professional partnership operating in the City of Valenzuela. It regularly pays value-added
tax on its services. All its lawyers have individually paid the required professional tax for the year 2017. However,
as a condition for the renewal of its business permit for the year 2017, the City Treasurer of Valenzuela assessed
BATAS Law for the payment of percentage business tax on its gross receipts for the year 2016 in accordance with
the Revenue Tax Code of Valenzuela.

Is BATAS Law liable to pay the assessed percentage business tax? Explain your answer. (3%)

XIV.
Globesmart Services, Inc. received a final assessment notice with formal letter of demand from the BIR for
deficiency income tax, value-added tax and withholding tax for the taxable year 2016 amounting to P48 million.
Globesmart Services, Inc., fied a protetst against the assessment, but the Commissioner of Internal Revenue denied
the protest. Hence, Globesmart Services, Inc. filed a petition for review in the CTA with an urgent motion to
suspend the collection of tax.
After hearing, the CTA Division issued a resolution granting the motion to suspend but required Globesmart
Services, Inc., to post a surety bond equivalent to the deficiency assessment within 15 days from notice of the
resolution. Globesmart Services, Inc. moved for the partial reconsideration of the resolution and for the reduction of
the bond to an amount it could obtain. The CTA division issued another resolution reducing the amount of the surety
bond to P24 million. The latter amount was still more than the net worth of Globesmart Services, Inc., as reported
in its audited financial statements.

(a) May the collection of taxes be suspended? Explain your answer. (3%)

(b) Is the CTA Division justified in requiring Globesmart Services, Inc., to post a surety bond as a condition for the
suspension of the deficiency tax collection? Explain your answer. (3%)

XV.
Casimira died on June 19, 2017, after three weeks of confinement due to an unsuccessful liver transplant. For her
confinement, she had incurred substantial medical expenses that she financed through personal loans secured by
mortgages on her real properties. Her heirs are still in the process of making an inventory of her assets that can be
used to pay the estate taxes, if any, which are due on December 19, 2017.

(a) Are the medical expenses, personal loans and mortgages incurred by Casimira deductible from her gross estate?
Explain your answer. (5%)

(b) May the heirs of Casimira file the estate tax return and pay the corresponding estate tax beyond December 19,
2017, without incurring interest and surcharge? Explain your answer. (3%)

XVI.
The BIR assessed the Babuyan Water District (BWD) with deficiency income taxes amounting to P8.5 million,
inclusive of interest and surcharge. The BWD disputed the assessment, and argued that it was a wholly-owned
government entity performing essential government functions. However, the BIR denied the protest.

The BWD filed a petition for arbitration in the Office of the Secretary of Justice pursuant to Sections 66 to 71,
Chapter 14, Book IV of the Administrative Code of 1987 to assail the denial of its protest, and to seek the proper
interpretation of Section 32(B)(7)(b) of the Tax Code that excluded from gross income the income derived by the
Government or its political subdivisions. The Secretary of Justice rendered a decision declaring the BWD exempt
from the payment of income tax.

The Commissioner of Internal Revenue appealed to the CTA on the sole ground that the Secretary of Justice had no
jurisdiction to review the assessment of the BIR.

Is the appeal meritorious? Explain your answer. (4%)

XVII.
San Juan University is a non-stock, non-profit educational institution. It owns a piece of land in Caloocan City on
which its three 2-storey school buildings stood. Two of the buildings are devoted to classrooms, laboratories, a
canteen, a bookstore, and administrative offices. The third building is reserved as dormitory for student athletes
who are granted scholarships for a given academic year.

In 2017, San Juan University earned income from tuition fees and from leasing a portion of its premises to various
concessionaires of food, books, and school supplies.

(a) Can the City Treasurer of Caloocan City collect real property taxes on the land and building of San Juan
University? Explain your answer. (5%)

(b) Is the income earned by San Juan University for the year 2017 subject to income tax? Explain your answer.
(5%)

XVIII.
(a) Distinguishoutright smugglingfrom technical smuggling. (3%)
(b) Distinguish compromisefrom abatementof taxes. (3%)
XIX.
CMI School, Inc., a non-stock, non-profit corporation, donated its three parcels of idle land situated in the
Municipality of Cuyapo, Nueva Ecija to SLC University, another non-stock, non-profit corporation, in recognition of
the latter’s contribution to and participation in the spiritual and educational development of the former.

(a) Is CMI School, Inc., liable for the payment of donor’s tax? Explain your answer. (2.5%)

(b) If SLC University later sells the three parcels of idle land to Puregold Supermarket, Inc., a stock corporation, will
SLC University be liable for capital gains tax? Explain your answer. (3%)

(c) If SLC University donates the three parcels of idle land in favor of the Municipality of Cuyapo, Nueva Ecija, will
SLC University be liable for donor’s tax? Explain your answer. (2.5%)

***END OF EXAMINATION***
 2017 Bar Exams Questions in Labor Law

a. What are the accepted tests to determine the existence of an employer-employee relationship? (5%)

b. Applying the tests to determine the existence of employer-employee relationship, is a jeepney driver operating
under the boundary system an employee of the jeepney operator or a mere lessee of the jeepney? Explain your
answer. (3%)

II

Procopio was dismissed from employment for stealing his co-employee Raul’s watch. Procopio filed a complaint for
illegal dismissal. The Labor Arbiter ruled in Procopio’s favor on the ground that Raul’s testimony was doubtful, and,
therefore, the doubt should be resolved in favor of Procopio. On appeal, the NLRC reversed the ruling because Article
4 of the Labor Code – which states that all doubts in the interpretation and implementation of the provisions of the
Labor Code, including the implementing rules and regulations, shall be resolved in favor of labor – applied only when
the doubt involved the “implementation and interpretation” of the Labor Code; hence, the doubt, which involved the
application of the rules on evidence, not the Labor Code, could not necessarily be resolved in favor of Procopio. Was
the reversal correct? Explain your answer. (3%)

III

a. Andrew Manning Agency (AMA) recruited Feliciano for employment by Invictus Shipping, its foreign principal.
Meantime, AMA and Invictus Shipping terminated their agency agreement. Upon his repatriation following his
premature termination, Feliciano claimed from AMA and Invictus Shipping the payment of his salaries and benefits
for the unserved portion of the contract. AMA denied liability on the ground that it no longer had an agency agreement
with Invictus Shipping. Is AMA correct? Explain your answer. (3%)

b. As a rule, direct hiring of migrant workers is not allowed. What are the exceptions? Explain your answer. (2.5%)

c. Phil, a resident alien, sought employment in the Philippines. The employer, noticing that Phil was a foreigner,
demanded that he first secures an employment permit from the DOLE. Is the employer correct? Explain your answer.
(2.5%)

IV.

The Regional Tripartite Wages and Productivity Board (RTWPB) for Region 3 issued a wage order on November 2,
2017, fixing the minimum wages for all industries throughout Region 3.
a. Is the wage order subject to the approval of the National Wages and Productivity Commission before it takes effect?
(2%)

b. The law mandates that no petition for wage increase shall be entertained within a period of 12 months from the
effectivity of the wage order. Under what circumstances may the Kilusang Walang Takot, a federation of labor
organizations that publicly and openly assails the wage order as blatantly unjust, initiate the review of the wage
increases under the wage order without waiting for the end of the 12-month period? Explain your answer. (3%)

V.

a. Percival was a mechanic of Pacific Airlines. He enjoyed a meal break of one hour. However, during meal breaks, he
was required to be on standby for emergency work. During emergencies, he was made to forego his meals or to hurry
up eating. He demanded payment of overtime for work done during his meal periods. Is Percival correct? Explain your
answer. (3%)

b. Distinguish a learner from an apprentice. (4%)

c. Are there differences between a househelper and a homeworker? Explain your answer. (4%)

VI.

a. One of Pacific Airline’s policies was to hire only single applicants as flight attendants, and considered as
automatically resigned the flight attendants at the moment they got married. Is the policy valid? Explain your answer.
(2.5%)

b. Tarcisio was employed as operations manager and received a monthly salary of P25,000 through his payroll account
with DB Bank. He obtained a loan from Roberto to purchase a car. Tarcisio failed to pay Roberto when the loan fell
due. Roberto sued to collect, and moved to garnish Tarcisio’s payroll account. The latter vigorously objected and
argued that salaries were exempt from garnishment. Is Tarcisio correct? Explain your answer. (3%)

VII.

Dr. Crisostomo entered into a retainer agreement with AB Hotel and Resort whereby he would provide medical services
to the guests and employees of AB Hotel and Resort, which, in turn, would provide the clinic premises and medical
supplies. He received a monthly retainer fee of P60,000, plus 70% share in the service charges from AB Hotel and
Resort’s guests availing themselves of the clinic’s services. The clinic employed nurses and allied staff, whose salaries,
SSS contributions, and other benefits he undertook to pay. AB Hotel and Resort issued directives giving instructions
to him on the replenishment of emergency kits and forbidding the clinic staff from receiving cash payments from the
guests. In time, the nurses and the clinic staff claimed entitlement to rights as regular employees of AB Hotel and
Resort, but the latter refused on the ground that Dr. Crisostomo, who was their employer, was an independent
contractor. Rule with reasons. (4%)
 VIII.

Marciano was hired as Chief Engineer on board the vessel M/V Australia. His contract of employment was for nine
months. After nine months, he was re-hired. He was hired for a third time after another nine months. He now claims
entitlement to the benefits of a regular employee based on his having performed tasks usually necessary and desirable
to the employer’s business for a continuous period of more than one year. is Marciano’s claim tenable? Explain your
answer. (3%)

IX.

Section 255 of the Labor Code recognizes three categories of employees, namely: managerial, supervisory, and rank-
and-file.

a. Give the characteristics of each category of employees, and state whether the employees in each category may
organize and form unions. Explain your answer. (5%)

b. May confidential employees who assist managerial employees and who act in a confidential capacity or have access
to confidential matters being handled by persons exercising managerial functions in the field of labor relations form,
or assist, or join labor unions? Explain your answer. (2.5%)

X.

a. The labor sector has been loudly agitating for the end of labor-only contracting, as distinguished from job
contracting. Explain these two kinds of labor contracting, and give the effect of a finding that one is a labor-only
contractor. Explain your answers. (4%)

b. What are the grounds for validly terminating the services of an employee based on a just cause? (5%)
c. Give the procedure to be observed for validly terminating the services of an employee based on a just cause. (4%)

XI.

a. The modes of determining the exclusive bargaining agent of the employees in a business are: (a) voluntary
recognition; (b) certification election; and (c) consent election. Explain how they differ from one another. (4%)

b. Marcel was the Vice President for Finance and Administration and a member of the Board of Directors of Mercedes
Corporation. He brought a complaint for illegal suspension and illegal dismissal against Mercedes Corporation, which
moved to dismiss the complaint on the ground that the complaint pertained to the jurisdiction of the RTC due to the
controversy being intracorporate based on his positions in the corporation. Marcel countered that he had only been
removed as Vice President for Finance and Administration, not as a member of the Board of Directors. he also argued
that his position was not listed as among the corporate offices in Mercedes Corporation’s by-laws. Is the argument of
Marcel correct? Explain your answer. (2.5%)
c. State the jurisdiction of the Voluntary Arbitrator, or Panel of Voluntary Arbitrators in labor disputes? (4%)

XII.

A.

Juanito initiated a case for illegal dismissal against Mandarin Company. The Labor Arbiter decided in his favor, and
ordered his immediate reinstatement with full backwages and without loss of seniority and other benefits. Mandarin
Company did not like to allow him back in its premises to prevent him from influencing his co-workers to move against
the interest of the company; hence, it directed his payroll reinstatement and paid his full backwages and other benefits
even as it appealed to the NLRC.

A few months later, the NLRC reversed the ruling of the Labor Arbiter and declared that Juanito’s dismissal was valid.
The reversal ultimately became final.
May Mandarin Company recover the backwages and other benefits paid to Juanito pursuant to the decision of the
Labor Arbiter in view of the reversal by the NLRC? Rule with reasons. (2.5%)

B.
Gene is a married regular employee of Matibay Corporation. The employees and Matibay Corporation had an existing
CBA that provided for funeral and bereavement aid of P15,000 in case of the death of a legal dependent of a regular
employee. His widowed other, who had been living with him and his family for many years, died; hence, he claimed
the funeral aid. Matibay Corporation denied the claim on the basis that she had not been his legal dependent as the
term legal dependent was defined by the Social Security Law.
a. Who may be the legal dependents of Gene under the Social Security Law? (2.5%)
b. Is Gene entitled to the funeral aid for the death of his widowed mother? Explain your answer. (2%)

C.
Rosa was granted vacation leave by her employer to spend three weeks in Africa with her family. Prior to her
departure, the General manager of the company requested her to visit the plant of a client of the company in
Zimbabwe in order to derive the best manufacturing practices useful to the company. She accepted the request
because the errand would be important to the company and Zimbabwe was anyway in her itinerary. It appears that
she contracted a serious disease during the trip. Upon her return, she filed a claim for compensation, insisting that
she had contracted the disease while serving the interest of her employer.

Under the Labor Code, the sickness or death of an employee, to be compensable, must have resulted from an illness
either definitely accepted as an occupational disease by the Employees’ Compensation Commission, or caused by
employment subject to proof that the risk of contracting the same is increased by working conditions.
Is the serious disease Rosa contracted during her trip to Africa compensable? Explain your answer. (2.5%)
 XIII.

A.

Given that the liability for an illegal strike is individual, not collective, state when the participating union officers and
members may be terminated from employment because of the illegal strike. Explain your answer. (4%)

B.

A sympathetic strike is stoppage of work to make common cause with other strikers in another establishment or
business. Is the sympathetic strike valid? Explain your answer. (1%)

C.

Due to business recession, Ballistic Company retrenched a part of its workforce. Opposing the retrenchment, some of
the affected employees staged a strike. Eventually, the retrenchment was found to be justified, and the strike was
declared illegal; hence, the leaders of the strike, including the retrenched employees, were declared to have lost their
employment status.

Are the striking retrenched employees still entitled to separation pay under Sec. 298 of the Labor Code despite the
illegality of their strike? Explain your answer. (2%)

XIV.

Pursuant to his power under Sec. 278(g) of the Labor Code, the Secretaryy of Labor assumed jurisdiction over the
three-day old strike in Armor Steel Plates, Inc., one of the country’s bigger manufacturers of steel plates, and ordered
all the striking employees to return to work. The striking employees ignored the order to return to work.

a. What conditions may justify the Secretary of Labor to assume jurisdiction? (2.5%)
b. What are the consequences of the assumption of jurisdiction by the Secretary of Labor, and of the disobedience to
the return to work? Explain your answer. (2.5%)

***END OF EXAMINATION***
 POLITICAL LAW AND INTERNATIONAL LAW
I.
A priority thrust of the Administration is the change of the form of government from unitary to federal. The change
can be effected only through constitutional amendment or revision.

A. What are the methods of amending the Constitution? Explain briefly each method. (3%)

B.Cite at least three provisions of the Constitution that need to be amended or revised to effect the change from
unitary to federal, and explain briefly why. (3%)

II.
A.

Under the doctrine of immunity from suit, the State cannot be sued without its consent. How may the consent be
given by the State? Explain your answer. (3%)

B.

The doctrine of immunity from suit in favor of the State extends to public officials in the performance of their official
duties. May such officials be sued nonetheless to prevent or undo their oppressive or illegal acts, or to compel them
to act? Explain your answer. (3%)

C.

Do government-owned or -controlled corporations also enjoy the immunity of the State from suit? Explain your
answer. (3%)

III.
State A and State B, two sovereign states, enter into a 10-year mutual defense treaty. State A finds that more
progressive State B did not go to the aid of State A when it was threatened by its strong neighbor State C. State B
reasoned that it had to be prudent and deliberate in reacting to State C because of their existing trade treaties.

1. May State A unilaterally withdraw from its mutual defense treaty with State B? Explain your answer.
(2.5%)
2. What is the difference between the principles of pacta sunt servandaand rebus sic stantibusin
international law? (2.5%)
3. Are the principles of pacta sunt servandaand rebus sic stantibusrelevant in the treaty relations between
State A and State B? What about in the treaty relations between State B and State C? Explain your answer. (2.5%)
IV.
What is the pardoning power of the President under Art. VIII, Sec. 19 of the Constitution? Is the exercise of the
power absolute? (4%)

Distinguish pardon from amnesty. (4%)

 V.
1. What is the right of legation, and how is it undertaken between states? Explain your answer. (2%)
2. Under this right, may a country like Malaysia insist that the Philippines establishes a consulate in Sabah to
look after the welfare of the Filipino migrants in the area? Explain your answer. (2%)
VI.
A.

The President appoints the Vice President as his Administration’s Housing Czar, a position that requires the
appointee to sit in the Cabinet. Although the appointment of the members of the Cabinet requires confirmation by
the Commission on Appointment (CA), the Office of the President does not submit the appointment to the CA. May
the Vice President validly sit in the Cabinet? (2.5%)

B.

The Executive Department has accumulated substantial savings from its appropriations. Needing P3,000,000 for
the conduct of a plebiscite for the creation of a new city but has no funds appropriated soon by the Congress for the
purpose, the COMELEC requests the President to transfer funds from the savings of the Executive Department in
order to avoid a delay in the holding of the plebiscite.

May the President validly exercise his power under the 1987 Constitution to transfer funds from the savings of the
Executive Department, and make a cross-border transfer of P3,000,000 to the COMELEC by way of augmentation?
Is your answer the same if the transfer is treated as aid to the COMELEC? Explain your answer. (4%)

VII.
Give the limitations on the power of the Congress to enact the General Appropriations Act. Explain your answer.
(5%)

VIII.
A bank acquired a large tract of land as the highest bidder in the foreclosure sale of the mortgaged assets of its
borrower. It appears that the land has been originally registered under the Torrens system in 1922 pursuant to the
provisions of the Philippine Bill of 1902, the organic act of the Philippine Islands as a colony of the USA. Sec. 21 of
the Philippine Bill of 1902 provided that “all valuable mineral deposits in public lands in the Philippine Islands, both
surveyed and unsurveyed, are hereby declared to be free and open too exploration, occupation, and purchase, and
the land in which they are found to occupation and purchase, by citizens of the United States, or of said Islands.”
Sec. 27 of the law declared that a holder of the mineral claim so located was entitled to all the minerals that lie
within his claim but he could not mine outside the boundary lines of his claim.

The 1935 Constitution expressly prohibited the alienation of natural resources except agricultural lands. Sec. 2, Art.
XII of the 1987 Constitution contains a similar prohibition, and proclaims that all lands of public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests, or timber, wildilfe,
flora, and fauna, and other natural resources are owned by the State. This provision enunciates the Regalian
Doctrine.
May the Government, on the basis of the Regalian Doctrine enunciated in the constitutional provisions, deny the
bank its right as the owner of the mineral resources underneath the surface of its property as recognized under the
Philippine Bill of 1902? Explain your answer. (5%)

IX.
A.

Ambassador Robert of State Alpha committed a very serious crime while he headed his foreign mission in the
Philippines. Is he subject to arrest by Philippine authorities? Explain your answer. (3%)

B.

Extradition is the process pursuant to a treaty between two State parties for the surrender by the requested State
to the custody of the requesting State of a fugitive criminal residing in the former. However, extradition depends on
the application of two principles – the principle of specialty and the dual criminality principle. Explain these
principles. (4%)

C.

The President signs an agreement with his counterpart in another country involving reciprocity in the treatment of
each other country’s nationals residing in the other’s territory. However, he does not submit the agreement to the
Senate for concurrence.

Sec. 21, Art. VII of the Constitution provides that no treaty or international agreement shall be valid and effective
without such concurrence.

Is the agreement signed by the President effective despite the lack of Senate concurrence? Explain your answer.
(4%)

X.
A.

Under the enrolled bill doctrine, the signing of a bill by both the Speaker of the House of Representatives and the
President of the Senate and the certification by the secretaries of both Houses of Congress that the bill was passed
on a certain date are conclusive on the bill’s due enactment. Assuming there is a conflict between the enrolled bill
and the legislative journal, to the effect that the enrolled bill signed by the Senate President and eventually
approved by the President turned out to be different from what the Senate actually passed as reflected in the
legislative journal.

May the Senate President disregard the enrolled bill doctrine and consider his signature as invalid and of no effect?
(2.5%)

May the President thereafter withdraw his signature? Explain your answer. (2.5%)
 B.

Sec. 26(2), Art. VI of the Constitution provide that no bill passed by either House of Congress shall become a law
unless it has passed three readings on separate days and printed copies of it in its final form have been distributed
to the Members of the House three days before its passage.

Is there an exception to the provision? Explain your answer. (3%)

XI.
Sec. 17, Art. VI of the Constitution establishes an Electoral Tribunal for each of the Houses of Congress, and makes
each Electoral Tribunal “the sole judge of all contests relating to the election, returns, and qualifications of their
respective Members.” On the other hand, Sec. 2(1).C Art. IX of the Constitution grants to the COMELEC the power
to enforce and administer all laws and regulations “relative to the conduct of an election, plebiscite, initiative,
referendum, and recall.”

Considering that there is no concurrence of jurisdiction between the Electoral Tribunals and the COMELEC, state
when the jurisdiction of the Electoral Tribunals begins, and the COMELEC’s jurisdiction ends. Explain your answer.
(4%)

XII.
The Congress establishes by law Philippine Funds, Inc., a private corporation, to receive foreign donations coming
from abroad during national and local calamities and disasters, and to enable the unhampered and speedy
disbursements of the donations through the mere action of its Board of Directors. Thereby, delays in the release of
the donated funds occasioned by the stringent rules of procurement would be avoided. Also, the releases would not
come under the jurisdiction of the Commission on Audit (COA).
A. Is the law establishing Philippine Funds, Inc., constitutional? Explain your answer. (3%)

B. Can the Congress pass the law that would exempt foreign grants from the jurisdiction of the COA. Explain your
answer. (3%)

XIII.
Command responsibility pertains to the responsibility of commanders for crimes committed by subordinate
members of the armed forces or other persons subject to their control in international wars or domestic conflicts.
The doctrine has now found application in civil actions for human rights abuses, and in proceedings seeking the
privilege of the writ of amparo.What are the elements to be established in order to hold the superior or commander
liable under the doctrine of command responsibility? (4%)
A. May the doctrine of command responsibility apply to the President for the abuses of the armed forces (AFP and
PNP) given his unique role as the commander-in-chief of all the armed forces? Explain your answer. (4%)

XIV.
To fulfill a campaign promise to the poor folk in a far-flung area in Mindanao, the President requested his friend,
Pastor Roy, to devote his ministry to them. The President would pay Pastor Roy a monthly stipend of P50,000 from
his discretionary fund, and would also erect a modest house of worship in the locality in an area of the latter’s
choice.

Does the President thereby violate any provisions of the Constitution? Explain your answer. (3%)

XV.
A. According the Sec. 3, Art. VIII of the Constitution, the Judiciary shall enjoy fiscal autonomy. What does the term
“fiscal autonomy” signify? Explain your answer. (3%)

B. May a complaint for disbarment against the Ombudsman prosper during her incumbency? Explain your answer.
(3%)

C. Sec. 3, Art. XI of the Constitution states that “[n]o impeachment proceedings shall be initiated against the same
official more than once within a period of one year.” What constitutes initiation of impeachment proceedings under
the provision? (3%)

*** END OF EXAMINATION***