The Law Pertaining to the State and Its Relationship with Its Citizens

Table of Contents

Constitutional Law
Basic Principles of Political Law 2
Bill of Rights 3
Composition and powers of the government organs 8
Judicial Review 10
Supervision of Courts 10
Powers of the Supreme Court 10
Qualifications, disqualifications, and selection of the president, senators, members
of the House of Representatives, justices and judges, the ombudsman,
and constitutional commissioners 13
Immunity of the president, privileges of senators and members of
the House of Representatives 15
Structure of government (composition, functions, powers and privileges,
separation of powers, and system of checks and balances) 16
Process of legislation 17
Natural resources (nationalization principle for natural resources and
economic activities including advertising and media) 17
Amendment and revision of the Constitution (Article XVI) 18

International Law 19
Sources of international law 19
Relationship with domestic law 19

Labor Law 20
Basic principles 20
Existence of employer-employee relationship; tests 20
Termination of employment 23
Requirements for labor-only contracting 29
Rights of employees and of labor organizations; membership in unions 29
Management prerogative 30
Illegal recruitment of overseas Filipino workers 30
Remedies (labor standards violations) 30

Taxation Law 32
Basic principles of taxation in the Constitution 32
Income tax 34
Value-added tax 38
Donor’s tax 41
Remedies (jurisdiction of courts, prescription, remedies against assessment notices) 43

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 a. Constitutional Law

i. Basic Principles of political law (e.g., separation of powers, sovereignty, judicial

review, fundamental powers of the State, i.e., police power, eminent domain, and
taxation)

2014

XXII.

The National Power and Grid Corporation (NPGC), a government entity involved in power generation
distribution, had its transmission lines traverse some fields belonging to Farmerjoe. NPGC did so without
instituting any expropriation proceedings. Farmerjoe, not knowing any better, did not immediately press his
claim for payment until after ten years later when a son of his took up Law and told him that he had a right to
claim compensation. That was then the only time that Farmerjoe earnestly demanded payment. When the
NPGC ignored him, he instituted a case for payment of just compensation. In defense, NPGC pointed out that
the claim had already prescribed since under its Charter it is clearly provided that "actions for damages must be
filed within five years after the rights of way, transmission lines, substations, plants or other facilities shall
have been established and that after said period, no suit shall be brought to question the said rights of way,
transmission lines, substations, plants or othe r facilities." If you were the lawyer of Farmerjoe, how would you
protect and vindicate the rights of your client? (4%)

2016

-IV-

Several concerned residents of the areas fronting Manila Bay, among them a group of students who are minors,
filed a suit against the Metro Manila Development · Authority (MMDA), the Department of Environment and
Natural Resources (DENR), the Department of Health (DOH), the Department of Agriculture (DA), the
Department of Education (DepEd), the Department of Interior and Local Government (DILG), and a number
of other executive agencies, asking the court to order them to perform their duties relating to the cleanup,
rehabilitation and protection of Manila Bay. The complaint alleges that the continued neglect by defendants
and their failure to prevent and abate pollution in Manila Bay constitute a violation of the petitioners'
constitutional right to life, health and a balanced ecology.

[a] If the defendants assert that the students/petitioners who are minors do not have locus standi  to file
the action, is the assertion correct? Explain your answer. (2.5%)

[b] In its decision which attained finality, the Court ordered the defendants to clean up, rehabilitate
and sanitize Manila Bay within eighteen (18) months, and to submit to the Court periodic reports of
their accomplishment, so that the Court can monitor and oversee the activities undertaken by the
agencies in compliance with the Court's directives. Subsequently, a resolution was issued extending
the time periods within which the agencies should comply with the directives covered by the final
decision. A view was raised that the Court's continued intervention after the case has been decided
violates the doctrine of separation of powers considering that the government agencies all belong to
the Executive Department and are under the control of the President. Is this contention correct? Why
or why not? (2.5%)

-IX-

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The Government, through Secretary Toogoody of the Department of · Transportation (DOTr), filed a
complaint for eminent domain to acquire a 1,000- hectare property in Bulacan, owned by Baldomero. The
court granted the expropriation, fixed the amount of just compensation, and installed the Government in full
possession of the property.

[a] If the Government does not immediately pay the amount fixed by the court as just compensation,
can Baldomero successfully demand the return of the property to him? Explain your answer. (2.5%)

[b] If the Government paid full compensation but after two years it abandoned its plan to build an
airport on the property, can Baldomero compel the Government to re-sell the property back to him?
Explain your answer. (2.5%)

-XII-

Paragraphs c, d and f of Section 36 of Republic Act No. 9165 provide:

"Sec. 36. Authorized drug testing. xx x The following shall be subjected to undergo drug testing: xx x

c. Students of secondary and tertiary schools x x x;

d. Officers and employees of public and private offices x x x;

f. All persons charged before the prosecutor's office with a criminal offense having an imposable
imprisonment of not less than 6 years and 1 day;"

Petitioners contend that the assailed portions of Sec. 36 are unconstitutional for violating the right to privacy,
the right against unreasonable searches and seizures and the equal protection clause. Decide if the assailed
provisions are unconstitutional. (5%)

ii. Bill of Rights (due process, equal protection, freedom of expression, rights during
expropriation, searches and seizures)

2013

III.

A robbery with homicide had taken place and Lito, Badong and Rolliewere invited for questioning based on
the information furnished by a neighbor that he saw them come out of the victim's house at about the time of
the robbery/killing. The police confronted the three with this and other information they had gathered, and
pointedly accused them of committing the crime.

Lito initially resisted, but eventually broke down and admitted his participation in the crime. Elated by this
break and desirous of securing a written confession soonest, the police called City Attorney Juan Buan to serve
as the trio's counsel and to advise them about their rights during the investigation.

Badong and Rollie, weakened in spirit by Lito's early admission, likewise admitted their participation. The trio
thus signed a joint extra-judicial confession which served as the main evidence against them at their trial. They
were convicted based on their confession.

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Should the judgment of conviction be affirmed or reversed on appeal? (5%)

VII.

As he was entering a bar, Arnold -who was holding an unlit cigarette in his right hand -was handed a match
box by someone standing near the doorway. Arnold unthinkingly opened the matchbox to light his cigarette
and as he did so, a sprinkle of dried leaves fell out, which the guard noticed. The guard immediately frisked
Arnold, grabbed the matchbox, and sniffed its contents. After confirming that the matchbox contained
marijuana, he immediately arrested Arnold and called in the police.

At the police station, the guard narrated to the police that he personally caught Arnold in possession of dried
marijuana leaves. Arnold did not contest the guard's statement; he steadfastly remained silent and refused to
give any written statement. Later in court, the guard testified and narrated the statements he gave the police
over Arnold's counsel's objections. While Arnold presented his own witnesses to prove that his possession and
apprehension had been set-up, he himself did not testify.

The court convicted Arnold, relying largely on his admission of the charge by silence at the police
investigation and during trial.

From the constitutional law perspective, was the court correct in its ruling? (6%)

2014

XIX.

Surveys Galore is an outfit involved in conducting nationwide surveys. In one such survey, it asked the people
about the degree of trust and confidence they had in several institutions of the government. When the results
came in, the judiciary was shown to be less trusted than most of the government offices. The results were then
published by the mass media. Assension, a trial court judge, felt particularly offended by the news. He then
issued a show-cause order against Surveys Galore directing the survey entity to explain why it should not be
cited in contempt for coming up with such a survey and publishing the results which were so unflattering and
degrading to the dignity of the judiciary. Surveys Galore immediately assailed the show-cause order of Judge
Assension, arguing that it is violative of the constitutional guaranty of freedom of expression. Is Surveys
Galore’s petition meritorious? (4%)

XXIII.

The police got a report about a shooting incident during a town fiesta. One person was killed. The police
immediately went to the scene and started asking the people about what they witnessed. In due time, they were
pointed to Edward Gunman, a security guard, as the possible malefactor. Edward was then having refreshment
in one of the eateries when the police approached him. They asked him if he had a gun to which question he
answered yes. Then they asked if he had seen anybody shot in the vicinity just a few minutes earlier and this
time he said he did not know about it. After a few more questions, one of the policemen asked Edward if he
was the shooter. He said no, but then the policeman who asked him told him that several witnesses pointed to
hi m as the shooter. Whereupon Edward broke down and started explaining that it was a matter of self-defense.
Edwardwas eventually charged with murder. During his trial, the statements he made to the police were
introduced as evidence against him. He obj ected claiming that they were inadmissible since he was not given
his Miranda rights. On the other hand, the prosecution countered that there was no need for such rights to be
given since he was not yet arrested at the time of the questioning. If you wer e the judge, how would you rule
on the issue? (4%)

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 XXIV.

Alienmae is a foreign tourist. She was asked certain questions in regard to a complaint that was filed against
her by someone who claimed to have been defrauded by her. Alienmae answered all the questions asked,
except in regard to some matters in which she invoked her right against self-incrimination. When she was
pressed to elucidate, she said that the questions being asked might tend to elicit incriminating answers insofar
as her home state is concerned. Could Alienmae invoke the right against self-incrimination if the fear of
incrimination is in regard to her foreign law? (4%)

2015

XVII

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 GBTY A 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 of the law.

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

(2) Which of the three (3) levels of test should be applied to the present case? Explain. (3%)

XVIII

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 of the Philippines maintains that the case of Hades 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%)

XX.

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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%)

2016

-VII-

Ernesto, a minor, while driving a motor vehicle, was stopped at a mobile checkpoint. Noticing that Ernesto is a
minor, SPOl Jojo asked Ernesto to exhibit his driver's license but Ernesto failed to produce it. SPOI Jojo
requested Ernesto to alight from the vehicle and the latter acceded. Upon observing a bulge in the pants of
Ernesto, the policeman frisked him and found an unlicensed .22-caliber pistol inside Ernesto's right pocket.
Ernesto was arrested, detained and charged. At the trial, Ernesto, through his lawyer, argued that, policemen at
mobile checkpoints are empowered to conduct nothing more than a ''visual search". They cannot order the
persons riding the vehicle to alight. They cannot frisk, or conduct a body search of the driver or the passengers
of the vehicle.

Ernesto's lawyer thus posited that:

[a] The search conducted in violation of the Constitution and established jurisprudence was an illegal
search; thus, the gun which was seized in the course of an illegal search is the "fruit of the poisonous
tree" and is inadmissible in evidence. (2.5%)

[b] The arrest made as a consequence of the invalid search was likewise illegal, because an unlawful
act (the search) cannot be made the basis of a lawful arrest. (2.5%)

Rule on the correctness of the foregoing arguments, with reasons.

-VIII-

A law is passed intended to protect women and children from all forms of violence. When a woman perceives
an act to be an act of violence or a threat of violence against her, she may apply for a Barangay Protection
Order (BPO) to be issued by the Barangay Chairman, which shall have the force and effect of law. Conrado,
against whom a BPO had been issued on petition of his wife, went to court to challenge the constitutionality of
the law. He raises the following grounds:

[a] The law violates the equal protection clause, because while it extends protection to women who
may be victims of violence by their husbands, it does not extend the same protection to husbands who
may be battered by their wives. (2.5%)

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 [b] The grant of authority to the Barangay Chairman to issue a Barangay Protection Order (BPO)
constitutes an undue delegation of judicial power, because obviously, the issuance of the BPO entails
the exercise of judicial power. (2.5%)

Rule on the validity of the grounds raised by Conrado, with reasons.

2018

Under Section 6 of Article V (on Criminal Jurisdiction) of the Visiting Forces Agreement (VFA), the custody
of a United States (US) personnel who becomes subject to criminal prosecution before a Philippine court shall
be with the US military authorities, if the latter so requests. The custody shall begin from the commission of
the offense until the completion of all judicial proceedings. However, when requested, the US military
authorities shall make the US personnel available to Philippine authorities for any investigative or judicial
proceeding relating to the offense with which the person has been charged. In the event that the Philippine
judicial proceedings are not completed within one year, the US shall be relieved of any obligation under
Section 6.

The constitutionality of Section 6, Article V of the VFA is challenged on two grounds: (1) it nullifies the
exclusive power of the Supreme Court to adopt rules of procedure for all courts in the Philippines; and (2) it
violates the equal protection clause to the extent that it allows the transfer of the custody of an accused to a
foreign power as providing a different rule of procedure for that accused.

Rule on the challenge. (5%)

XIII

PO1 Adrian Andal is known to have taken bribes from apprehended motorists who have violated traffic rules.
The National Bureau of Investigation conducted an entrapment operation where P01 Adrian was caught red-
handed demanding and taking PhP500.00 from a motorist who supposedly beat a red light.

After he was apprehended, PO1 Adrian was required to submit a sample of his urine. The drug test showed that
he was positive for dangerous drugs. Hence, PO1 Adrian was charged with violation of Section 15, Article II
of R.A. No. 9165 or the Comprehensive Dangerous Drugs Act of 2002.

PO1 Adrian argues against the admissibility of the urine test results and seeks its exclusion. He claims that the
mandatory drug test under R.A. No. 9165 is a violation of the accused's right to privacy and right against self-
incrimination.

Are PO1 Adrian's contentions correct? (2.5%)

XVI

Five foreign nationals arrived at the NAIA from Hong Kong. After retrieving their checked-in luggage, they
placed all their bags in one pushcart and proceeded to Express Lane 5. They were instructed to place their
luggage on the examiner's table for inspection.

The examiner found brown-colored boxes, similar in size to powdered milk boxes, underneath the clothes
inside the foreigners' bags. The examiner discovered white crystalline substances inside the boxes that he
inspected and proceeded to bundle all of the boxes by putting masking tape around them. He thereafter handed
the boxes over to Bureau of Customs agents. The agents called out the names of the foreigners one by one and

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ordered them to sign their names on the masking tape placed on the boxes recovered from their respective
bags. The contents of the boxes were thereafter subjected to tests which confirmed that the substance was
shabu.

Can the shabu found inside the boxes be admitted in evidence against the five foreigners for the charge of
illegal possession of drugs in violation of the Comprehensive Dangerous Drugs Act of 2002? (2.5%)

XVII

The police served a warrant of arrest on Ariston who was suspected of raping and killing a female high school
student. While on the way to the police station, one of the police officers who served the warrant asked Ariston
in the local dialect if he really raped and killed the student, and Ariston nodded and said, "Opo." Upon arriving
at the police station, Ariston saw the City Mayor, whom he approached and asked if they could talk privately.
The Mayor led Ariston to his office and, while there in conversation with the Mayor, Ariston broke down and
admitted that he raped and killed the student. The Mayor thereafter opened the door of the room to let the
public and media representatives witness Ariston's confession. In the presence of the Mayor, the police and the
media, and in response to questions asked by some members of the media, Ariston sorrowfully confessed his
guilt and sought forgiveness for his actions.

Which of these extrajudicial confessions, if any, would you consider as admissible in evidence against
Ariston? (5%)

XVIII

Two police teams monitored the payment of ransom in a kidnapping case.

The bag containing the ransom money was placed inside an unlocked trunk of a car which was parked at the
Angola Commercial Center in Mandaluyong City.

The first police team, stationed in an area near where the car was parked, witnessed the retrieval by the
kidnappers of the bag from the unlocked trunk. The kidnappers thereafter boarded their car and proceeded
towards the direction of Amorsolo St. in Makati City where the second police team was waiting.

Upon confirmation by radio report from the first police team that the kidnappers were heading towards their
direction, the second police team proceeded to conduct surveillance on the car of the kidnappers, eventually
saw it enter Ayala Commercial Center in Makati City, and the police team finally blocked it when it slowed
down. The members of the second police team approached the vehicle and proceeded to arrest the kidnappers.

Is the warrantless arrest of the kidnappers by the second police team lawful? (5%)

iii. Composition and powers of the government organs

2014

VI.

A few months before the end of the present Congress, Strongwill was invited by the Senate to shed light in an
inquiry relative to the alleged siphoning and diverting of the pork barrel of members of Congress to non-
existent or fictitious projects. Strongwill has been identified in the news as the principal actor responsible for
the scandal, the leader of a non-governmental organization which ostensibly funnelled the funds to certain

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local government projects which existed only on paper. At the start of the hearings before the Senate,
Strongwill refused at once to cooperate. The Senate cited him in contempt and sent him to jail until he would
have seen the light. The Congress, thereafter, adjourned sine die preparatory to the assumption to office of the
newly-elected members. In the meantime, Strongwill languished behind bars and the remaining senators
refused to have him released, claiming that the Senate is a continuing body and , therefore, he can be detained
indefinitely. Are the senators right? (4%)

VII.

Margie has been in the judiciary for a long time, starting from the lowest court. Twenty (20) years from her
first year in the judiciary, she was nominated as a Justice in the Court of Appeals. Margie also happens to be a
first-degree cousin of the President. The Judicial and Bar Council included her in the short-list submitted to the
President whose term of office was about to end – it was a month before the next presidential elections. Can
the President still make appointments to the judiciary during the so-called midnight appointment ban period?
Assuming that he can still make appointments, could he appoint Margie, his cousin? (4%)

VIII.

The President, concerned about persistent reports of widespread irregularities and shenanigans related to the
alleged ghost projects with which the pork barrel funds of members of Congress had been associated, decided
not to release the funds authorized under a Special Appropriations Act for the construction of a new bridge.
The Chief Executive explained that, to pro perly conserve and preserve the limited funds of the government, as
well as to avoid further mistrust by the people, such a project – which he considered as unnecessary since there
was an old bridge near the proposed bridge which was still functional – should be scrapped. Does the President
have such authority? (4%)

2017

VII.

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

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 the foreign grants from the jurisdiction of the
COA? Explain your answer. (3%)

2018
III.
What and whose vote is required for the following acts: (2% each)
(a) the repeal of a tax exemption law;

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 (b) a declaration of the existence of a state of war;
(c) the amendment of a constitutional provision through a constituent assembly;
(d) the resolution of a tie in a presidential election; and
(e) the extension of the period for the suspension of the privilege of the writ of habeas corpus?

iv. Judicial review

2014

XI.

In keeping with the modern age of instant and incessant information and transformation, Congress passed
Cybercrime Prevention Act to regulate access to and use of the amenities of the cyberspace. While ostensibly
the law is intended to protect the interests of society, some of its provisions were also seen as impermissibly
invading and impairing widely cherished liberties of the people particularly the freedom of expression. Before
the law could even be implemented, petitions were filed in the Supreme Court questioning said provisions by
people who felt threatened, for themselves as well as for the benefit of others who may be similarly affected
but not minded enough to challenge the law. The Solicitor General countered that there is no basis for the
exercise of the power of judicial review since there has yet been no violation of the law, and therefore, there is
no actual case or controversy to speak of, aside from the fact that the petitioners have no locus standi since
they do not claim to be in imminent danger of being prosecuted under the law. Can the Court proceed to decide
the case even if the law has not yet become effective? (4%)

2018

XX

Andreas and Aristotle are foreign nationals working with the Asian Development Bank (ADS) in its
headquarters in Manila. Both were charged with criminal acts before the local trial courts.

Andreas was caught importing illegal drugs into the country as part of his "personal effects" and was thus
charged with violation of Comprehensive Dangerous Drugs Act of 2002. Before the criminal proceedings
could commence, the President had him deported as an undesirable alien. Aristotle was charged with grave
oral defamation for uttering defamatory words against a colleague at work. In his defense, Aristotle claimed
diplomatic immunity. He presented as proof a communication from the Department of Foreign Affairs stating
that, pursuant to the Agreement between the Philippine Government and the ADS, the bank's officers and staff
are immune from legal processes with respect to acts performed by them in their official capacity.

(a) Can the President's act of deporting an undesirable alien be subject to judicial review? (2.5%)

(b) Is Aristotle's claim of diplomatic immunity proper? (2.5%)

v. Supervision of courts
vi. Powers of the Supreme Court

2014

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 XII.

The Court had adopted the practice of announcing its decision in important, controversial or interesting cases
the moment the votes had been taken among the justices, even as the final printed decision and separate
opinions are not yet available to the public. In a greatly anticipated decision in a case of wide-ranging
ramifications, the voting was close – 8 for the majority, while 7 were for the other side. After the Court had
thus voted, it issued a press release announcing the result, with the advice that the printed copy of the decision,
together with the separate opinions, were to be issued subsequently. The following day, however, one of the
members of the Court died. The Court then announced that it would deliberate anew on the case since
apparently the one who died belonged to the majority. Citizens for Transparency, a group of civic-spirited
professionals and ordinary citizens dedicated to transparency and accountability in the government, questioned
the act of the Court. The petitioners claimed the decision had already been validly adopted and promulgated.
Therefore, it could no longer be recalled by the Court. At the same time, the group also asked the Court to
disclose to the public the original decision and the separate opinions of the magistrates, together with what
they had deliberated on just before they came up with the press release about the 8-7 decision. (6%)

(A) Was the announced 8-7 decision already validly promulgated and thus not subject to recall?

(B) If the decision was not yet finalized at the time when the justice died, could it still be
promulgated?

(C) If the decision was still being finalized, should the Court release to the public the majority
decision and the separate opinions as originally announced, together with their deliberations on the
issues?

XXVII.

Congress enacted a law exempting certain government institutions providing social services from the payment
of court fees. Atty. Kristopher Timoteo challenged the constitutionality of the said law on the ground that only
the Supreme Court has the power to fix and exempt said entities from the payment of court fees.

Congress, on the other hand, argues that the law is constitutional as it has the power to enact said law for it was
through legislative fiat that the Judiciary Development Fund (JDF) and the Special Allowance for Judges and
Justices (SAJJ), the funding of which are sourced from the fees collected by the courts, were created. Thus,
Congress further argues that if it can enact a law utilizing court fees to fund the JDF and SAJJ, a fortiori it can
enact a law exempting the payment of court fees.

Discuss the constitutionality of the said law, taking into account the arguments of both parties? (4%)

XXX.

Congress passed a law, R.A. No. 15005, creating an administrative Board principally tasked with the
supervision and regulation of legal education. The Board was attached to the Department of Education. It was
empowered, among others, to prescribe minimum standards for law admission and minimum qualifications of
faculty members, the basic curricula for the course of study aligned to the requirements for admission to the
Bar, law practice and social consciousness, as well as to establish a law practice internship as a requirement for
taking the Bar which a law student shall undergo anytime during the law course, and to adopt a system of
continuing legal education. Professor Boombastick, a long-time law practitioner and lecturer in several
prestigious law schools, assails the constitutionality of the law arguing; that it encroached on the prerogatives
of the Supreme Court to promulgate rules relative to admission to the practice of law, the Integrated Bar, and
legal assistance to the underprivileged. If you were Professor Boombastick’s understudy, how may you help

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him develop clear, concise and cogent arguments in support of his position based on the present Constitution
and the decisions of the Supreme Court on judicial independence and fiscal autonomy? (4%)

2015

XI.

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

(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%)

2016

-XX-

Under Sec. 5, Article VIII of the Constitution, the Supreme Court shall have the power to "promulgate rules
concerning the protection and enforcement of constitutional rights, pleading, practice and procedure in all
courts xxx." Section 23 of R.A. No. 9165 or the Comprehensive Dangerous Drugs Act of 2002 provides that
"any person charged under any provision of this Act regardless of the imposable penalty shall not be allowed
to avail of the provision on plea-bargaining." Patricio, a user who was charged with alleged sale of shabu but
who wants to enter a plea of guilt to a charge of possession, questions the constitutionality of Sec. 23 on the
ground that Congress encroached on the rule-making power of the Supreme Court under Sec. 5, Article VIII.
He argues that plea-bargaining is procedural in nature and is within the exclusive constitutional power of the
Court. Is Patricio correct? Explain your answer. (5%)

2017

XV.

A.

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

2018

XII

Section 9 of P.O. No. 1606, as amended, provides that the Sandiganbayan may adopt internal rules governing
the allotment of cases among its divisions, the rotation of justices among them, and other matters relating to
the internal operations of the court.

Section 6 of Article IX-A of the Constitution allows each of the Constitutional Commissions "en bane [to]
promulgate its own rules concerning pleadings and practice before it or before any of its offices. Such rules
however shall not diminish, increase, or modify substantive rights."

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Section 16(3) of Article VI of the Constitution states that "Each House may determine the rules of its
proceedings." Section 21, Article VI of the Constitution further provides that "The Senate or the House of
Representatives or any of its respective committees may conduct inquiries... in accordance with its duly
published rules of procedure."

Finally, Section 3(8) of Article XI of the Constitution declares that "The Congress shall promulgate its rules on
impeachment to effectively carry out the purposes of this section."

Are the rules promulgated pursuant to these provisions subject to review and disapproval by the Supreme
Court? (5%)

vii. Qualifications, disqualifications, and selection of the president, senators, members

of the House of Representatives, justices and judges, the ombudsman, and
constitutional commissioners

2013

IV.

Congress enacted a law providing for trial by jury for those charged with crimes or offenses punishable by
reclusion perpetua or life imprisonment. The law provides for the qualifications of members of the jury, the
guidelines for the bar and bench for their selection, the manner a trial by jury shall operate, and the procedures
to be followed.

Is the law constitutional? (6%)

2015

XXII

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 of the 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%)

2016

-XVIII-

13
Sec. 8, Article X of the 1987 Constitution provides that no elective official shall serve for more than three (3)
consecutive terms. Rule and explain briefly the reason if the official is prohibited to run for another term in
each of the following situations: (a) ifthe official is a Vice-Mayor who assumed the position of Mayor for the
unexpired term under the Local Government Code; (b) if the official has served for three consecutive terms
and did not seek a 4th term but who won in a recall election; (c) if the position of Mayor of a town is abolished
due to conversion of the town to a city; (d) if the official is preventively suspended during his term but was
exonerated; and (e) if the official is proclaimed as winner and assumes office but loses in an election protest.
(5%)

2018

IV

The Province of Amaya is one of the smallest provinces in the Philippines with only one legislative district
composed of four municipalities: Uno, Dos, Tres, and Cuatro.

Andres, a resident and registered voter of Cuatro municipality, ran and was elected as member of the
Sangguniang Panlalawigan (SP) of Amaya in the 2010 and 2013 local elections.

While Andres was serving his second term as ·sp member, a law was enacted re-apportioning the four towns of
Amaya into two legislative districts: Uno and Dos comprising the First District, and Tres and Cuatro
comprising the Second District.

In the 2016 local elections, Andres ran and was elected as member of the SP of Amaya representing the
Second District.

Andres seeks your legal advice regarding his intention to run as a member of the SP of Amaya for the Second
District in the next local elections in 2019. What will you advise Andres? (2.5%)

State whether or not the following acts are constitutional: (2% each)

(a) A law prescribing as qualifications for appointment to any court lower than the Supreme Court,
Philippine citizenship, whether natural-born or naturalized, 35 years of age on the date of
appointment, and at least eight years as a member of the Philippine Bar;

(b) A law requiring all candidates for national or local elective offices to be college degree holders;

(c) The designation by the President of an acting Associate Commissioner of the Civil Service
Commission;

(d) The appointment by the President as Deputy Ombudsman of a lawyer who has been engaged in the
practice of law for five years; and

(e) The nomination by a national party-list of a person who is not one of its bona fide members.

IX

In 1990, Agripina migrated to Canada and acquired Canadian citizenship.

14
In 2008, Agripina retired and returned to the Philippines to permanently reside in her hometown of Angeles,
Pampanga. A month after returning to the Philippines, Agripina took her oath of allegiance and executed a
sworn renunciation of her Canadian citizenship in accordance with R.A. No. 9225.

In 2009, Agripina filed her certificate of candidacy for Congress for the 2010 elections. Agripina's political
rivals lost no time in causing the filing of various actions to question her candidacy. They questioned her
eligibility to run as member of Congress. Since Agripina had to take an oath under R.A. No. 9225, it meant
that she needed to perform an act to perfect her Philippine citizenship.

Hence, they claimed that Agripina could not be considered a natural-born citizen. Agripina raised the defense
that, having complied with the requirements of R.A. No. 9225, she had reacquired, and was deemed never to
have lost, her Philippine citizenship.

Is Agripina disqualified to run for Congress for failing to meet the citizenship requirement? (2.5%)

XIX

President Alfredo died during his third year in office. In accordance with the Constitution, Vice President
Anastasia succeeded him. President Anastasia then nominated the late President Alfredo's Executive Secretary,
Anna Maria, as her replacement as Vice President. The nomination was confirmed by a majority of all the
Members of the House of Representatives and the Senate, voting separately.

(a) Is Anna Maria's assumption as Vice President valid? (2.5%)

(b) Can Anastasia run as President in the next election? (2.5%)

viii. Immunity of the president, privileges of senators and members of the House of
Representatives

2018
II
Agnes was allegedly picked up by a group of military men headed by Gen. Altamirano, and was brought to
several military camps where she was interrogated, beaten, mauled, tortured, and threatened with death if she
would not confess her membership in the New People's Army (NPA) and point to the location of NPA camps.
She suffered for several days until she was released after she signed a document saying that she was a
surenderee, and was not abducted or harmed by the military. After she was released, and alleging that her
rights to life, liberty and security had been violated and continued to be threatened by violation of such rights,
she filed with the Supreme Court (the Court) a Petition for the Writs of Amparo and Habeas Data with prayers
for Temporary Protection Orders, Inspection of Place, and Production of Documents and Personal Properties.
The case was filed against President Amoyo (who was the President of the Philippines when the abduction,
beating, mauling and life threats were committed), General Altamirano, and several military men whom Agnes
was able to recognize during her ordeal. The Court, after finding the petition to be in order, issued the writ of
amparo and the writ of habeas data and directed the respondents to file a verified return on the writs, and
directed the Court of Appeals (CA) to hear the petition. The respondents duly filed their return on the writs and
produced the documents in their possession. After hearing, the CA ruled that there was no more need to issue
the temporary protection orders since the writ of amparo had already been issued, and dismissed the petition
against President Amoyo on the ground that he was immune from suit during his incumbency as President.
Agnes appealed the CA ruling to the Court. The appeal was lodged after President Amoyo's term had ended.

(b) Will the President's immunity from suit continue even after his term has ended, considering that the events
covered by the Petition took place during his term? (2.5%)

15
 ix. Structure of government (composition, functions, powers and privileges, separation
of powers, and system of checks and balances)

2013

IV.

Congress enacted a law providing for trial by jury for those charged with crimes or offenses punishable by
reclusion perpetua or life imprisonment. The law provides for the qualifications of members of the jury, the
guidelines for the bar and bench for their selection, the manner a trial by jury shall operate, and the procedures
to be followed.

Is the law constitutional? (6%)

2015

VI.

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

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

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's contention tenable? Explain. (4%)

2018

Ascertain the constitutionality of the following acts: (2.5% each)

(a) An investigation conducted by the Ombudsman against a Commissioner of the Commission on

Audit for serious misconduct.

(b) A law prohibiting any court, other than the Supreme Court, from issuing a writ of injunction
against an investigation being conducted by the Ombudsman.

16
 (c) A law prohibiting any appeal from the decision or final order of the Ombudsman in an
administrative proceeding, except through a petition for review on certiorari  filed before the Supreme
Court.

x. Process of legislation
2014

I.

With the passage of time, the members of the House of Representatives increased with the creation of new
legislative districts and the corresponding adjustments in the number of party-list representatives. At a time
when the House membership was already 290, a great number of the members decided that it was time to
propose amendments to the Constitution. The Senators, however, were cool to the idea. But the members of the
House insisted. They accordingly convened Congress into a constituent assembly in spite of the opposition of
the majority of the members of the Senate. When the votes were counted, 275 members of the House of
Representatives approved the proposed amendments. Only 10 Senators supported such proposals. The
proponents now claim that the proposals were validly made, since more than the required three-fourths vote of
Congress has been obtained. The 14 Senators who voted against the proposals claim that the proposals needed
not three-fourths vote of the entire Congress but each house. Since the required number of votes in the Senate
was not obtained, then there could be no valid proposals, so argued the Senators. Were the proposals validly
adopted by Congress? (5%)

xi. Natural resources (nationalization principle for natural resources and economic
activities)

2015

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. AT 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%)

XIX.

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

17
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%)

2016

-II-

Sec. 11, Art. XII of the Constitution, provides: "No franchise, certificate or any other form of authorization for
the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by
such citizens xx x." Does the term "capital" mentioned in the cited section refer to the total common shares
only, or to the total outstanding capital stock, or to both or "separately to each class of shares, whether
common, preferred non-voting, preferred voting or any class of shares?" Explain your answer. (5%)

xii. Amendment and revision of the Constitution (Article XVII)

2014

II.

Several citizens, unhappy with the proliferation of families dominating the political landscape, decided to take
matters into their own hands. They proposed to come up with a people’s initiative defining political dynasties.
They started a signature campaign for the purpose of coming up with a petition for that purpose. Some others
expressed misgivings about a people’s initiative for the purpose of proposing amendments to the Constitution,
however. They cited the Court’s decision in Santiago v. Commission on Elections, 270 SCRA 106 (1997), as
authority for their position that there is yet no enabling law for s uch purpose. On the other hand, there are also
those who claim that the individual votes of the justices in Lambino v. Commission on Elections, 505 SCRA
160 (2006), mean that Santiago’s pronouncement has effectively been abandoned. If you were consulted by
those behind the new attempt at a people’s initiative, how would you advise them? (4%)

2017

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 briefly explain why? (3%)

18
 b. International Law – 1 question

i. Sources of international law

2016

-X-

The Philippines entered into an international agreement with members of the international community creating
the International Economic Organization (IEO) which will serve as a forum to address economic issues
between States, create standards, encourage greater volume of trade between its members, and settle economic
disputes. After the Philippine President signed the agreement, the Philippine Senate demanded that the
international agreement be submitted to it for its ratification. The President refused, arguing that it is an
executive agreement that merely created an international organization and it dwells mainly on addressing
economic issues among States.

Is the international agreement creating the IEO a treaty or an executive agreement? Explain. (5%)

ii. Relationship with domestic law

2013

VI.

Congress passed Republic Act No. 7711 to comply with the United Nations Convention on the Law of the Sea.

In a petition filed with the Supreme Court, Anak Ti Ilocos, an association of Ilocano professionals, argued that
Republic Act No. 7711discarded the definition of the Philippine territory under the Treaty of Paris and in
related treaties; excluded the Kalayaan Islands and the Scarborough Shoals from the Philippine Archipelagic
baselines; and converted internal waters into archipelagic waters.

Is the petition meritorious? (6%)

2015

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 UN
CLOS 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%)

19
 c. Labor Law – 3 questions
i. Basic principles
2017

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%)

ii. Existence of employer-employee relationship; tests

2014

II.

Lucy was one of approximately 500 call center agents at Hambergis, Inc. She was hired as a contractual
employee four years ago. Her contracts would be for a duration of five (5) months at a time, usually after a
onemonth interval. Her re-hiring was contingent on her performance for the immediately preceding contract.
Six (6) months after the expiration of her last contract, Lucy went to Hambergis personnel department to
inquire why she was not yet being recalled to work. She was told that her performance during her last contract
was "below average." Lucy seeks your legal advice about her chances of getting her job back. What will your
advice be? (4%)

XIII.

Don Luis, a widower, lived alone in a house with a large garden. One day, he noticed that the plants in his
garden needed trimming. He remembered that Lando, a 17-year old out-of-school youth, had contacted him in
church the other day looking for work. He contacted Lando who immediately attended to Don Luis’s garden
and finished the job in three days. (4%)

(A) Is there an employer-employee relationship between Don Luis and Lando?

(B) Does Don Luis need to register Lando with the Social Security System (SSS)?

XXIII.

Luningning Foods engaged the services of Lamitan Manpower, Inc., a bona fide independent contractor, to
provide "tasters" that will check on food quality. Subsequently, these "tasters" joined the union of rank -and-
file employees of Luningning and demanded that they be made regular employees of the latter as they are
performing functions necessary and desirable to operate the company’s business. Luningning rejected the
demand for regularization. On behalf of the "tasters", the union then filed a notice of strike with the

20
Department of Labor and Employment (DOLE). In response, Luningning sought a restraining order from the
Regional Trial Court (RTC) arguing that the DOLE does not have jurisdiction over the case since it does not
have an employer-employee relationship with the employees of an independent contractor. If you were the
RTC judge, would you issue a restraining order against the union? (4%)

2015

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%)

VIII

Star Crafts is a lantern maker based in Pampanga. It supplies Christmas lanterns to stores in Luzon, Metro
Manila, and parts of Visayas, with 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 I 00 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%)

2016

-II-

Gregorio was hired as an insurance underwriter by the Guaranteed Insurance Corporation (Guaranteed). He
does not receive any salary but solely relies on commissions earned for every insurance policy approved by the
company. He hires and pays his own secretary but is provided free office space in the office of the company.
He is, however, required to meet a monthly quota of twenty (20) insurance policies, otherwise, he may be
terminated. He was made to agree to a Code of Conduct for underwriters and is supervised by a Unit Manager.

[a] Is Gregorio an employee of Guaranteed? Explain. (2.5%)

[b] Suppose Gregorio is appointed as Unit Manager and assigned to supervise several underwriters.
He holds office in the company premises, receives an overriding commission on the commissions of
his underwriters, as well as a monthly allowance from the company, and is supervised by a branch
manager. He is governed by the Code of Conduct for Unit Managers. Is he an employee of
Guaranteed? Explain. (2.5%)

21
 -XVIII-

Empire Brands (Empire) contracted the services of Style Corporation (Style) for the marketing and promotion
of its clothing line. Under the contract, Style provided Empire with Trade Merchandising Representatives
(TMRs) whose services began on September 15, 2004 and ended on June 6, 2007, when Empire terminated the
promotions contract with Style.

Empire then entered into an agreement for manpower supply with Wave Human Resources (Wave). Wave
owns its condo office, owns equipment for the use by the TMRs, and has assets amounting to Pl,000,000.00.
Wave provided the supervisors who supervised the TMRs, who, in tum, received orders from the Marketing
Director of Empire. In their agreement, the parties stipulated that Wave shall be liable for the wages and
salaries of its employees or workers, including benefits, and protection due them, as well as remittance to the
proper government entities of all withholding taxes, Social Security Service, and Philhealth premiums, in
accordance with relevant laws.

As the TMRs wanted to continue working at Empire, they submitted job applications as TMRs with Wave.
Consequently, Wave hired them for a term of five (5) months, or from June 7, 2007 to November 6, 2007,
specifically to promote Empire's products.

When the TMRs' 5-month contracts with Wave were about to expire, they sought renewal thereof, but were
refused. Their contracts with Wave were no longer renewed as Empire hired another agency. This prompted
them to file complaints for illegal dismissal, regularization, non-payment of service incentive leave and 13th
month pay against Empire and Wave.

[a] Are the TMRs employees of Empire? (2.5%)

[b] Were the TMRs illegally dismissed by Wave? (2.5%)

2017

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

VIII.

Marciano was hired as Chief Engineer on board the vessel MN Australia. His contract of employment was for
nine months. After nine months, he was re-hired. He was hired 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

22
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%)

2018

Nonato had been continuously employed and deployed as a seaman who performed services that were
necessary and desirable to the business of N-Train Shipping, through its local agent, Narita Maritime Services
(Agency), in accordance with the 2010 Philippine Overseas Employment Administration Standard
Employment Contract (2010 POEA-SEC). Nonato's last contract (for five months) expired on November 15,
2016. Nonato was then repatriated due to a "finished contract." He immediately reported to the Agency and
complained that he had been experiencing dizziness, weakness, and difficulty in breathing. The Agency
referred him to Dr. Neri, who examined, treated, and prescribed him with medications. After a few months of
treatment and consultations, Nonato was declared fit to resume work as a seaman. Nonato went back to the
Agency to ask for re-deployment but the Agency rejected his application. Nonato filed an illegal dismissal case
against the Agency and its principal, with a claim for total disability benefits based on the ailments that he
developed on board N-Train Shipping vessels. The claim was based on the certification of his own physician,
Dr. Nunez, that he was unfit for sea duties because of his hypertension and diabetes.

a) Was Nonato a regular employee of N-Train Shipping? (2.5%)

iii. Termination of employment

2013

I.

Jose and Erica, former sweethearts, both worked as sales representatives for Magna, a multinational firm
engaged in the manufacture and sale of pharmaceutical products. Although the couple had already broken off
their relationship, Jose continued to have special feelings for Erica.

One afternoon, Jose chanced upon Erica riding in the car of Paolo, a co-employee and Erica's ardent suitor; the
two were on their way back to the office from a sales call on Silver Drug, a major drug retailer. In a fit of
extreme jealousy, Jose rammed Paolo's car, causing severe injuries to Paolo and Erica. Jose's flare up also
caused heavy damage to the two company-owned cars they were driving.

(A) As lawyer for Magna, advise the company on whether just and valid grounds exist to dismiss Jose.
(4%)

(B) Assuming this time that Magna dismissed Jose from employment for cause and you are the lawyer
of Jose, how would you argue the position that Jose's dismissal was illegal? (4%)

2014

I.

Linda was employed by Sectarian University (SU) to cook for the members of a religious order who teach and
live inside the campus. While performing her assigned task, Linda accidentally burned herself. Because of the

23
extent of her injuries, she went on medical leave. Meanwhile, SU engaged a replacement cook. Linda filed a
complaint for illegal dismissal, but her employer SU contended that Linda was not a regular employee but a
domestic househelp. Decide. (4%)

VI.

Lina has been working as a steward with a Miami, U.S.A.-based Loyal Cruise Lines for the past 15 years. She
was recruited by a local manning agency, Macapagal Shipping, and was made to sign a 10-month employment
contract everytime she left for Miami. Macapagal Shipping paid for Lina’s round-trip travel expenses from
Manila to Miami. Because of a food poisoning incident which happened during her last cruise assignment,
Lina was not re-hired. Lina claims she has been illegally terminated and seeks separation pay. If you were the
Labor Arbiter handlingthe case, how would you decide? (4%)

X.

Luisa was hired as a secretary by the Asian Development Bank (ADB) in Manila. Luisa’s first boss was a
Japanese national whom she got along with. But after two years, the latter was replaced by an arrogant Indian
national who did not believe her work output was in accordance with international standards. One day, Luisa
submitted a draft report filled with typographical errors to her boss. The latter scolded her, but Luisa verbally
fought back. The Indian boss decided to terminate her services right then and there. Luisa filed a case for
illegal dismissal with the Labor Arbiter claiming arbitrariness and denial of due process. If you were the Labor
Arbiter, how would you decide the case? (4%)

XI.

Lionel, an American citizen whose parents migrated to the U.S. from the Philippines, was hired by JP Morgan
in New York as a call center specialist. Hearing about the phenomenal growth of the call center industry in his
parents’ native land, Lionel sought and was granted a transfer as a call center manager for JP Morgan’s
operations in Taguig City. Lionel’s employment contract did not specify a period for his stay in the
Philippines. After three years of working in the Philippines, Lionel was advised that he was being recalled to
New York and being promoted to the position of director of international call center operations. However,
because of certain "family reasons," Lionel advised the company of his preference to stay in the Philippines.
He was dismissed by the company. Lionel now seeks your legal advice on: (6%)

(A) whether he has a cause of action

(B) whether he can file a case in the Philippines

(C) what are his chances of winning

XXI.

An accidental fire gutted the JKL factory in Caloocan. JKL decided to suspend operations and requested its
employees to stop reporting for work. After six (6) months, JKL resumed operations but hired a new set of
employees. The old set of employees filed a case for illegal dismissal. If you were the Labor Arbiter, how
would you decide the case? (4%)

24
 XXIV.

Lanz was a strict and unpopular Vice-President for Sales of Lobinsons Land. One day, Lanz shouted invectives
against Lee, a poor performing sales associate, calling him, among others, a "brown monkey." Hurt, Lee
decided to file a criminal complaint for grave defamation against Lanz. The prosecutor found probable cause
and filed an information in court. Lobinsons decided to terminate Lanz for committing a potential crime and
other illegal acts prejudicial to business. Can Lanz be legally terminated by the company on these grounds?
(4%)

2015

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%)

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%)

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%)

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 seniority. 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%)

2016

25
 -IX-

Zienna Corporation (Zienna) informed the Department of Labor and Employment Regional Director of the end
of its operations. To carry out the cessation, Zienna sent a Letter Request for Intervention to the NLRC for
permission and guidance in effecting payment of separation benefits for its fifty (50) terminated employees.

Each of the terminated employees executed a Quitclaim and Release before Labor Arbiter Nocomora, to whom
the case was assigned. After the erstwhile employees received their separation pay, the Labor Arbiter declared
the labor dispute dismissed with prejudice on the ground of settlement. Thereafter, Zienna sold all of its assets
to Zandra Company (Zandra), which in tum hired its own employees.

Nelle, one of the fifty (50) terminated employees, filed a case for illegal dismissal against Zienna. She argued
that Zienna did not cease from operating since the corporation subsists as Zandra. Nelle pointed out that aside
from the two companies having essentially the same equipment, the managers and owners of Zandra and
Zienna are likewise one and the same.

For its part, Zienna countered that Nelle is barred from filing a complaint for illegal dismissal against the
corporation in view of her prior acceptance of separation pay.

Is Nelle correct in claiming that she was illegally dismissed? (5%)

-XI-

Dion is an Accounting Supervisor in a trading company. He has rendered exemplary service to the company
for 20 years. His co-employee and kumpadre, Mac, called him over the phone and requested him to punch his
(Mac's) daily time card as he (Mac) was caught in a monstrous traffic jam. Dion acceded to Mac's request but
was later caught by the Personnel Manager while punching. Mac's time card. The company terminated the
employment of Dion on the ground of misconduct. Is the dismissal valid and just? Explain. (5%)

-XII-

Amaya was employed as a staff nurse by St. Francis Hospital (SFH) on July 8, 2014 on a probationary status
for six (6) months. Her probationary contract required, among others, strict compliance with SFH's Code of
Discipline.

On October 16, 2014, Dr. Ligaya, filed a Complaint with the SFH Board of Trustees against Amaya for
uttering slanderous remarks against the former. Attached to the complaint was a letter of Minda, mother of a
patient, who confirmed the following remarks against Dr. Ligaya:

"Bakit si Dr. Ligaya pa ang napili mong 'pedia' eh ang tandatanda na n'un? E makakalimutin na yun
xx x Alam mo ba, kahit wala namang diperensya yung baby, ipinapa-iso/ate nya?"

The SFH President asks you, being the hospital's counsel, which of these two (2) options is the legal and
proper way of terminating Amaya: a) terminate her for a just cause under Article 288 of the Labor Code
(Termination by Employer); or b) terminate her for violating her probationary contract. Explain. (5%)

-XIV-

Tess, a seamstress at Marikit Clothing Factory, became pregnant. Because of morning sickness, she frequently
absented herself from work and often came to the factory only four (4) days a week. After two (2) months, the
personnel manager told her that her habitual absences rendered her practically useless to the company and,

26
thus, asked her to resign. She begged to be retained, citing her pregnancy as reason for her absences. Tess
asked for leave of absence but her request was denied. She went on leave nevertheless. As a result, she was
thus dismissed for going on leave without permission of management.

Tess filed a complaint for illegal dismissal. The company's defense: she was legally dismissed because of her
numerous absences without leave and not because of her pregnancy. On the other hand, Tess argues that her
dismissal was an act of discrimination, based as it was on her pregnancy which the company treated as a
disease. Whose position is meritorious-the company's or Tess'? Explain. (5%)

-XV-

Jim is the holder of a certificate of public convenience for a jeepney. He entered into a contract of lease with
Nick, whereby they agreed that the lease period is for one (1) year unless sooner terminated by Jim for any of
the causes laid down in the contract. The rental is thirty thousand pesos (P30,000.00) monthly. All the
expenses for the repair of the jeepney, together with expenses for diesel, oil and service, shall be for the
account of Nick. Nick is required to make a deposit of three (3) months to answer for the restoration of the
vehicle to its good operating condition when the contract ends. It is stipulated that Nick is not an employee of
Jim and he holds the latter free and harmless from all suits or claims which may arise from the implementation
of the contract. Nick has the right to use the jeepney at any hour of the day provided it is operated on the
approved line of operation.

After five (5) months of the lease and payment of the rentals, Nick became delinquent in the payment of the
rentals for two (2) months. Jim, as authorized by the contract, sent a letter of demand rescinding the contract
and asked for the arrearages. Nick responded by filing a complaint with the NLRC for illegal dismissal,
claiming that the contract is illegal and he was just forced by Jim to sign it so he can drive. He claims he is
really a driver of Jim on a boundary system and the reason he was removed is because he failed to pay the
complete daily boundary , of one thousand (P1,000.00) for 2 months due to the increase in the number of
tricycles.

[a] Jim files a motion to dismiss the NLRC case on the ground that the regular court has jurisdiction
since the agreement is a lease contract. Rule on the motion and explain. (2.5%)

[b] Assuming that Nick is an employee of Jim, was Nick validly dismissed?

2017

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.

27
Give the procedure to be observed for validly terminating the services of an employee based on a just cause?
(4%)

2018

VIII

Nathaniel has been a salesman assigned by Newmark Enterprises (Newmark) for nearly two years at the
Manila office of Nutrition City, Inc. (Nutrition City). He was deployed pursuant to a service agreement
between Newmark and Nutrition City, the salient provisions of which were as follows:

a) the Contractor (Newmark) agrees to perform and provide the Client (Nutrition City), on a non-
exclusive basis, such tasks or activities that are considered contractible under existing laws, as may be
needed by the Client from time to time;

b) the Contractor shall employ the necessary personnel like helpers, salesmen, and drivers who are
determined by the Contractor to be efficiently trained;

c) the Client may request replacement of the Contractor's personnel if quality of the desired result is
not achieved;

d) the Contractor's personnel will comply with the Client's policies, rules, and regulations; and

e) the Contractor's two service vehicles and necessary equipment will be utilized in carrying out the
provisions of this Agreement.

When Newmark fired Nathaniel, he filed an illegal dismissal case against the wealthier company, Nutrition
City, Inc., alleging that he was a regular employee of the same. Is Nathaniel correct? (2.5%)

XII

Nena worked as an Executive Assistant for Nesting, CEO of Nordic Corporation. One day, Nesting called
Nena into his office and showed her lewd pictures of women in seductive poses which Nena found offensive.
Nena complained before the General Manager who, in turn, investigated the matter and recommended the
dismissal of Nesting to the Board of Directors. Before the Board of Directors, Nesting argued, that since the
Anti-Sexual Harassment Law requires the existence of "sexual favors," he should not be dismissed from the
service since he did not ask for any sexual favor from Nena. Is Nesting correct? (2.5%)

XIII

Nicodemus was employed as a computer programmer by Network Corporation, a telecommunications firm. He

has been coming to work in shorts and sneakers, in violation of the "prescribed uniform policy" based on
company rules and regulations. The company human resources manager wrote him a letter, giving him 10 days
to comply with the company uniform policy. Nicodemus asserted that wearing shorts and sneakers made him
more productive, and cited his above-average output. When he came to work still in violation of the uniform
policy, the company sent him a letter of termination of employment. Nicodemus filed an illegal dismissal case.
The Labor Arbiter ruled in favor of Nicodemus and ordered his reinstatement with backwages. Network
Corporation, however, refused to reinstate him. The NLRC 1st Division sustained the Labor Arbiter's
judgment. Network Corporation still refused to reinstate Nicodemus. Eventually, the Court of Appeals
reversed the decision of the NLRC and ruled that the dismissal was valid. Despite the reversal, Nicodemus still
filed. a motion for execution with respect to his accrued backwages.

28
 (a) Were there valid legal grounds to dismiss Nicodemus from his employment? (2.5%)

XIX

Northeast Airlines sent notices of transfer, without diminution in salary or rank, to 50 ground crew personnel
who were front-liners at Northeast Airlines counters at the Ninoy Aquino International Airport (NAIA). The
50 employees were informed that they would be distributed to various airports in Mindanao to anticipate
robust passenger volume growth in the area. North Union, representing rank-and-file employees, filed unfair
labor practice and illegal dismissal cases before the NLRC, citing, among others, the inconvenience of the 50
concerned employees and union discrimination, as 8 of the 50 concerned ground crew personnel were union
officers. Also, the Union argued that Northeast Airlines could easily hire additional employees from Mindanao
to boost its ground operations in the Mindanao airports.

a) Will the transfer of the 50 ground crew personnel amount to illegal dismissal? (2.5%)

b) Will the unfair labor practice case prosper? (2.5%)

iv. Requirements for valid labor-only contracting

2014

IX.

Luisa Court is a popular chain of motels. It employs over 30 chambermaids who, among others, help clean and
maintain the rooms. These chambermaids are part of the union rank-and-file employees which has an existing
collective bargaining agreement (CBA) with the company. While the CBA was in force, Luisa Court decided
to abolish the position of chambermaids and outsource the cleaning of the rooms to Malinis Janitorial Services,
a bona fide independent contractor which has invested in substantial equipment and sufficient manpower. The
chambermaids filed a case of illegal dismissal against Luisa Court. In response, the company argued that the
decision to outsource resulted from the new management’s directive to streamline operations and save on
costs. If you were the Labor Arbiter assigned to the case, how would you decide? (4%)

2017

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 Hoteland Resort, which, in turn, would provide the clinic
premises and medical supplies. He received a monthly retainer fee of ₱60,000.00, plus a 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 Hoteland
Resort, but the latter refused on the ground that Dr. Crisostomo, who was their employer, was an independent
contractor. Rule, with reasons. (4%)

v. Rights of employees and of labor organizations; membership in unions

29
2013

IX.

Pablo works as a driver at the National Tire Company (NTC). He is a member of the Malayang Samahan ng
Manggagawa sa NTC, the exclusive rank-and-file collective bargaining representative in the company. The
union has a CBA with NTC which contains a union security and a check-off clause. The union security clause
contains a maintenance of membership provision that requires all members of the bargaining unit to maintain
their membership in good standing with the union during the term of the CBA under pain of dismissal. The
check-off clause on the other hand authorizes the company to deduct from union members' salaries defined
amounts of union dues and other fees. Pablo refused to issue an authorization to the company for the check-off
of his dues, maintaining that he will personally remit his dues to the union.

(A) Would the NTC management commit unfair labor practice if it desists from checking off Pablo's
union dues for lack of individual authorization from Pablo? (4%)

(B) Can the union charge Pablo with disloyalty for refusing to allow the check off of his union dues
and, on this basis, ask the company to dismiss him from employment? (4%)

vi. Management prerogative

vii. Illegal recruitment of overseas Filipino workers

viii. Remedies (labor standards violations)

2013

IV.

Bobby, who was assigned as company branch accountant in Tarlac where his family also lives, was dismissed
by Theta Company after anomalies in the company's accounts were discovered in the branch Bobby filed a
complaint and was ordered reinstated with full backwages after the Labor Arbiter found that he had been
denied due process because no investigation actually took place.

Theta Company appealed to the National Labor Relations Commission (NLRC) and at the same time wrote
Bobby, advising him to report to the main company office in Makati where he would be reinstated pending
appeal Bobby refused to comply with his new assignment because Makati is very far from Tarlac and he
cannot bring his family to live with him due to the higher cost of living in Makati.

(A) Is Bobby's reinstatement pending appeal legally correct? (4%)

(B) Advise Bobby on the best course of action to take under the circumstances. (4%)

V.

Cris filed a complaint for illegal dismissal against Baker Company. The Labor Arbiter dismissed the complaint
but awarded Cris financial assistance. Only the company appealed from the Labor Arbiter's ruling. It confined
its appeal solely to the question of whether financial assistance could be awarded. The NLRC, instead of ruling
solely on the appealed issue, fully reversed the Labor Arbiter's decision; it found Baker Company liable for
illegal dismissal and ordered the payment of separation pay and full backwages.

30
Through a petition for certiorari under Rule 65 of the Rules of Court, Baker Company challenged the validity
of the NLRC ruling. It argued that the NLRC acted with grave abuse of discretion when it ruled on the illegal
dismissal issue, when the only issue brought on appeal was the legal propriety of the financial assistance
award.

Cris countered that under Article 218(c) of the Labor Code, the NLRC has the authority to "correct, amend, or
waive any error, defect or irregularity whether in substance or in form" in the exercise of its appellate
jurisdiction.

Decide the case. (8%)

VII.

Philippine Electric Company is engaged in electric power generation and distribution. It is a unionized
company with Kilusang Makatao as the union representing its rank-and-file employees. During the
negotiations for their expired collective bargaining agreement (CBA), the parties duly served their proposals
and counter-proposals on one another. The parties, however, failed to discuss the merits of their proposals and
counter-proposals in any formal negotiation meeting because their talks already bogged down on the
negotiation ground rules, i.e., on the question of how they would conduct their negotiations, particularly on
whether to consider retirement as a negotiable issue.

Because of the continued impasse, the union went on strike. The Secretary of Labor and Employment
immediately assumed jurisdiction over the dispute to avert widespread electric power interruption in the
country. After extensive discussions and the filing of position papers (before the National Conciliation and
Mediation Board and before the Secretary himself) on the validity of the union's strike and on the wage and
other economic issues (including the retirement issue), the DOLE Secretary ruled on the validity of the strike
and on the disputed CBA issues, and ordered the parties to execute a CBA based on his rulings.

Did the Secretary of Labor exceed his jurisdiction when he proceeded to rule on the parties' CBA positions
even though the parties did not fully negotiate on their own? (8%)

2015

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%)

2018

III

31
Due to his employer's dire financial situation, Nicanor was prevailed upon by his employer to voluntarily
resign. In exchange, he demanded payment of salary differentials, 13th month pay, and financial assistance, as
promised by his employer. Management promised to pay him as soon as it is able to pay off all was attack.
retrenched able His to rank-and-file widow, pay Nicanor Norie, employees. the filed amount a money Five
promised claim years against to later, him, and the Nicanor company before died management before the
National Labor Relations Commission (NLRC), including interest on the amount of the unpaid claim. She also
claimed additional damages arguing that the supposed resignation letter was obtained from her spouse through
undue pressure and influence. The employer filed a motion to dismiss on the ground that (A) the NLRC did not
have jurisdiction over money claims, and (8) the action has prescribed.

(a) Does the NLRC have jurisdiction to award money claims including interest on the amount unpaid?
(2.5%)

(b) Assuming that the NLRC has jurisdiction, has the action prescribed? (2.5%)

(c) May Nicanor's spouse successfully claim additional damages as a result of the alleged undue
pressure and influence? (2.5%)

d. Taxation Law – 3 questions

i. Basic principles of taxation in the Constitution
2014

XXVIII.

Choose the correct answer. Tax laws - (1%)

(A) may be enacted for the promotion of private enterprise or business for as long as it gives
incidental advantage to the public or the State

(B) are inherently legislative; therefore, may not be delegated

(C) are territorial in nature; hence, they do not recognize the generally-accepted tenets of international
law

(D) adhere to uniformity and equality when all taxable articles or kinds of property of the same class
are taxable at the same rate

2015

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

2016

Briefly explain the following doctrines: lifeblood doctrine; necessity theory; benefits received principle; and,
doctrine of symbiotic relationship. (5%)

32
Sure Arrival Airways (SAA) is a foreign corporation, organized under the laws of the Republic of Nigeria. Its
commercial airplanes do not operate within Philippine territory, or service passengers embarking from
Philippine airports. The firm is represented in the Philippines by its general agent, Narotel.

SAA sells airplane tickets through Narotel, and these tickets are serviced by SAA airplanes outside the
Philippines. The total sales of airplane tickets transacted by Narotel for SAA in 2012 amounted to
Pl0,000,000.00. The Commissioner of Internal Revenue (CIR) assessed SAA deficiency income taxes at the
rate of 30% on its taxable income, finding that SAA's airline ticket sales constituted income derived from
sources within the Philippines.

SAA filed a protest on the ground that the alleged deficiency income taxes should be considered as income
derived exclusively from sources outside the Philippines since SAA only serviced passengers outside
Philippine territory. It, thus, asserted that the imposition of such income taxes violated the principle of
territoriality in taxation.

Is the theory of SAA tenable? Explain. (5%)

XI

Soaring Eagle paid its excise tax liabilities with Tax Credit Certificates (TCCs) which it purchased through the
One Stop Shop Inter-Agency Tax Credit Center (Center) of the Department of Finance. The Center is a
composite body of the DOF, BIR, BOC and the BOI. The TCCs ~ere accepted by the BIR as payments. A year
after, the BIR demanded the payment of alleged deficiency excise taxes on the ground that Soaring Eagle is not
a qualified transferee of the TCCs it purchased from other BOI-registered companies. The BIR argued that the
TCCs are subject to post-audit as a suspensive condition. On the other hand, Soaring Eagle countered that it is
a buyer in good faith and for value who merely relied on the Center's representation of the genuineness and
validity of the TCCs. If it is ordered to pay the deficiency, Soaring Eagle claims the same is confiscatory and a
violation of due process. Is the assessment against Soaring Eagle valid? Explain. (5%)

2017

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 (RA 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°/o 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
provides 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%)

33
 ii. Income tax
2013

II.

A group of philanthropists organized a non-stock, non-profit hospital for charitable purposes to provide
medical services to the poor. The hospital also accepted paying patients although none of its income accrued to
any private individual; all income were plowed back for the hospital's use and not more than 30% of its funds
were used for administrative purposes.

Is the hospital subject to tax on its income? If it is, at what rate? (6%)

XI.

In 2000, Mr. Belen bought a residential house and lot for P1,000,000. He used the property as his and his
family's principal residence. It is now year 2013 and he is thinking of selling the property to buy a new one. He
seeks your advice on how much income tax he would pay if he sells the property. The total zonal value of the
property is P5,000,000 and the fair market value per the tax declaration is P2,500,000. He intends to sell it
for P6,000,000.

What material considerations will you take into account in computing the income tax? Please explain the legal
relevance of each of these considerations. (7%)

2014

III.

Dr. Taimtim is an alumnus of the College of Medicine of Universal University (UU), a privately-owned center
for learning which grants yearly dividends to its stockholders.

UU has a famous chapel located within the campus where the old folks used to say that anyone who wanted to
pass the medical board examinations should offer a dozen roses on all the Sundays of October. This was what
Dr. Taimtim did when he was still reviewing for the board examinations. In his case, the folk saying proved to
be true because he is now a successful cardiologist. Wanting to give back to the chapel and help defray the
costs of its maintenance, Dr. Taimtim donated P50,000.00 to the caretakers of the chapel which was evidenced
by an acknowledgment receipt.

In computing his net taxable income, can Dr.Taimtim use his donation to the chapel as an allowable deduction
from his gross income under the National Internal Revenue Code (NIRC)? (4%)

XI.

Triple Star, a domestic corporation, entered into a Management Service Contract with Single Star, a non-
resident foreign corporation with no property in the Philippines. Under the contract, Single Star shall provide
managerial services for Triple Star’s Hongkong branch. All said services shall be performed in Hongkong.

34
Is the compensation for the services of Single Star taxable as income from sources within the Philippines?
Explain. (4%)

IX.

Mr. Gipit borrowed from Mr. Maunawain P100,000.00, payable in five (5) equal monthly installments. Before
the first installment became due, Mr. Gipit rendered general cleaning services in the entire office building of
Mr. Maunawain, and as compensation therefor, Mr. Maunawain cancelled the indebtedness of Mr. Gipit up to
the amount of P75,000.00. Mr. Gipit claims that the cancellation of his indebtedness cannot be considered as
gain on his part which must be subject to income tax, because according to him, he did not actually receive
payment from Mr. Maunawain for the general cleaning services. Is Mr. Gipit correct? Explain. (4%)

XXI.

On August 31, 2014, Haelton Corporation (HC), thru its authorized representative Ms. Pares, sold a 16-storey
commercial building known as Haeltown Building to Mr. Belly for P100 million. Mr. Belly, in turn, sold the
same property on the same day to Bell Gates, Inc. (BGI) for P200 million. These two (2) transactions were
evidenced by two (2) separate Deeds of Absolute Sale notarized on the same day by the same notary public.

Investigations by the Bureau of Internal Revenue (BIR) showed that:

(1) the Deed of Absolute Sale between Mr. Belly and BGI was notarized ahead of the sale between HC and
Mr. Belly; (2) as early as May 17, 2014, HC received P40 million from BGI, and not from Mr. Belly; (3) the
said payment of P40 million was recorded by BGI in its books as of June 30, 2014 as investment in Haeltown
Building; and (4) the substantial portion of P40 million was withdrawn by Ms. Pares through the declaration of
cash dividends to all its stockholders.

Based on the foregoing, the BIR sent Haeltown Corporation a Notice of Assessment for deficiency income tax
arising from an alleged simulated sale of the aforesaid commercial building to escape the higher corporate
income tax rate of thirty percent (30%). What is the liability of Haeltown Corporation, if any? (4%)

XXIV.

A, B, and C, all lawyers, formed a partnership called ABC Law Firm so that they can practice their profession
as lawyers. For the year 2012, ABC Law Firm received earnings and paid expenses, among which are as
follows: (6%)

Earnings:

(1) Professional/legal fees from various clients

(2) Cash prize received from a religious society in recognition of the exemplary service of ABC Law
Firm

(3) Gains derived from sale of excess computers and laptops

Payments:

(1) Salaries of office staff

(2) Rentals for office space

35
 (3) Representation expenses incurred in meetings with clients

(A) What are the items in the above mentioned earnings which should be included in the computation
of ABC Law Firm’s gross income? Explain.

(B) What are the items in the above-mentioned payments which may be considered as deductions
from the gross income of ABC Law Firm? Explain.

(C) If ABC Law Firm earns net income in 2012, what, if any, is the tax consequence on the part of
ABC Law Firm insofar as the payment of income tax is concerned? What, if any, is the tax
consequence on the part of A, B, and C as individual partners, insofar as the payment of income tax is
concerned?

XXVI.

Freezy Corporation, a domestic corporation engaged in the manufacture and sale of ice cream, made payments
to an officer of Frosty Corporation, a competitor in the ice cream business, in exchange for said officer’s
revelation of Frosty Corporation’s trade secrets.

May Freezy Corporation claim the payment to the officer as deduction from its gross income? Explain. (4%)

XXVII.

In January 2013, your friend got his first job as an office clerk. He is single and lives with his family who
depends upon him for financial support. His parents have long retired from their work, and his two (2) siblings
are still minors and studying in grade school. In February 2014, he consulted you as he wanted to comply with
all the rules pertaining to the preparation and filing of his income tax return. He now asks you the following:

(A) Is he entitled to personal exemptions? If so, how much? (1%)

(B) Is he entitled to additional exemptions? If so, how much? (1%)

(C) What is the effect of the taxes withheld from his salaries on his taxable income? (2%)

2015

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%)

III

36
Ms. C, a resident citizen, bought ready-to-wear goods from Ms. B, a nonresident 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%)

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 withholding tax. (1%)

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 of 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%)

2016

XX

Patrick is a successful businessman in the United States and he is a sole proprietor of a supermarket which has
a gross sales of $10 million and an annual income of $3 million. He went to the Philippines on a visit and, in a
party, he saw Atty. Agaton who boasts of being a tax expert. Patrick asks Atty. Agaton: if he (Patrick) decides
to reacquire his Philippine citizenship under RA 9225, establish residence in this country, and open a
supermarket in Makati City, will the BIR tax him on the income he earns from his U.S. business? If you were
Atty. Agaton, what advice will you give Patrick? (5%)

2017

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,

37
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%)

iii. Value-added tax

2013

VI.

On October 15, 2005, ABC Corp. imported 1,000 kilos of steel ingots and paid customs duties and VAT to the
Bureau of Customs on the importation. On February 17, 2009, the Bureau of Customs, citing provisions of the
Tariff and Customs Code on post-audit, investigated and assessed ABC Corp. for deficiency customs duties
and VAT.

Is the Bureau of Customs correct? (7%)

VII.

XYZ Law Offices, a law partnership in the Philippines and a VAT-registered taxpayer, received a query by e-
mail from Gainsburg Corporation, a corporation organized under the laws of Delaware, but the e-mail came
from California where Gainsburg has an office. Gainsburg has no office in the Philippines and does no
business in the Philippines.

XYZ Law Offices rendered its opinion on the query and billed Gainsburg US$1,000 for the opinion. Gainsburg
remitted its payment through Citibank which converted the remitted US$1 ,000 to pesos and deposited the
converted amount in the XYZ Law Offices account.

What are the tax implications of the payment to XYZ Law Offices in terms of VAT and income taxes? (7%)

2014

VIII.

Masarap Kumain, Inc. (MKI) is a Value-Added Tax (VAT)-registered company which has been engaged in the
catering business for the past 10 years. It has invested a substantial portion of its capital on flat wares, table
linens, plates, chairs, catering equipment, and delivery vans. MKI sold its first delivery van, already 10 years
old and idle, to Magpapala Gravel and Sand Corp. (MGSC), a corporation engaged in the business of buying
and selling gravel and sand. The selling price of the delivery van was way below its acquisition cost. Is the sale
of the delivery van by MKI to MGSC subject to VAT? (4%)

38
 XIX.

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 65-2012 imposing
Value-Added Tax (VAT) on association dues and membership fees collected by condominium corporations
from its member condominium-unit owners. The RMC’s validity is challenged before the Supreme Court (SC)
by the condominium corporations.

The Solicitor General, counsel for BIR, claims that association dues, membership fees, and other
assessment/charges collected by a condominium corporation are subject to VAT since they constitute income
payments or compensation for the beneficial services it provides to its members and tenants.

On the other hand, the lawyer of the condominium corporations argues that such dues and fees are merely held
in trust by the condominium corporations exclusively for their members and used solely for administrative
expenses in implementing the condominium corporations’ purposes. Accordingly, the condominium
corporations do not actually render services for a fee subject to VAT.

Whose argument is correct? Decide. (5%)

XXV.

Which of the following transactions is subject to Value-Added Tax (VAT)? (1%)

(A) Sale of shares of stock-listed and traded through the local stock exchange

(B) Importation of personal and household effects belonging to residents of the Philippines returning
from abroad subject to custom duties under the Tariff and Customs Code

(C) Services rendered by individuals pursuant to an employer employee relationship

(D) Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with
the Cooperative Development Authority

2015

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 their 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%)

2017

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 lnternational's factory building located in the Laguna
Techno Park, a special economic zone. HP International is registered with the Philippine Economic Zone

39
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 Internal 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
International already enjoys income tax holiday.

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

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 ₱4,213,000.00. The condominium unit had a zonal value
amounting to ₱2,877,000.00 and fair market value amounting to ₱550,000.00.

(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 sold by a bank in a foreclosure sale? Explain
your answer. (3%)

2018

IX

Karlito, a Filipino businessman, is engaged in the business of metal fabrication and repair of LPG cylinder
tanks. He conducts business under the name and style of "Karlito's Enterprises," a single proprietorship.
Started only five (5) years ago, the business has grown so enormously that Karlito decided to incorporate it by
transferring all the assets of the business, particularly the inventory of goods on hand, machineries and
equipment, supplies, parts, raw materials, office furniture and furnishings, delivery trucks and other vehicles,
buildings, and tools to the new corporation, Karlito's Enterprises, Inc., in exchange for 100% of the capital
stock of the new corporation, the stock subscription to which shall be deemed fully paid in the form of the
assets transferred to the corporation by Karlito.

As a result, Karlito's Enterprises, the sole proprietorship, ceased to do business and applied for cancellation of
its BIR Certificate of Registration. The BIR, however, assessed Karlito VAT on account of the cessation of
business based on the current market price of the assets transferred to Karlito's Enterprises, Inc.

(a) Is the transfer subject to VAT? (2.5%)

(b) Is the transfer subject to income tax? (2.5%)

Klaus, Inc., a domestic, VAT-registered corporation engaged in the land transportation business, owns a house
and lot along Katipunan St., Quezon City. This property is being used by Klaus, lnc.'s president and single
largest shareholder, Atty. Krimson, as his residence. No business activity transpires there except for the
company's Christmas party which is held there every December. Atty. Krimson recently grew tired of the long

40
commute from Katipunan to his office in Makati City and caused the company to sell the house and lot. The
sale was recorded in the books of Klaus, Inc. as investment in real property.

(a) Is the sale of the said property subject to VAT? (2.5%)

(b) Is the sale subject to 6% capital gains tax or regular corporate income tax of 30%? (2.5%)

XI

Koko's primary source of income is his employment with the government. He earns extra from the land he
inherited from his parents, and which land he has been leasing to a private, non-stock, non-profit school since
2005.

Last January, the school offered to buy the land from Koko for an amount equivalent to its zonal value plus
15% of such zonal value. Koko agreed but required the school to pay, in addition to the purchase price, the
12% VAT. The school refused Koko's proposal to pass on the VAT contending that it was an entity exempt
from such tax. Moreover, it said that Koko was not regularly engaged in the real estate business and, therefore,
was not subject to VAT. Consequently, Koko should not charge any VAT to the school.

(a) Is the contention of the school correct? (2.5%)

(b) Will your answer be the same if Koko signed up as a VAT-registered person only in 2017? (2.5%)

iv. Donor’s tax

2013

IX.

In the settlement of the estate of Mr. Barbera who died intestate, his wife renounced her inheritance and her
share of the conjugal property in favor of their children. The BIR determined that there was a taxable gift and
thus assessed Mrs. Barbera as a donor.

Was the BIR correct? (7%)

2014

II.

Mr. De Sarapen is a candidate in the upcoming Senatorial elections. Mr. De Almacen, believing in the sincerity
and ability of Mr. De Sarapen to introduce much needed reforms in the country, contributed P500,000.00 in
cash to the campaign chest of Mr. De Sarapen. In addition, Mr. De Almacen purchased tarpaulins, t-shirts,
umbrellas, caps and other campaign materials that he also donated to Mr. De Sarapen for use in his campaign.
Is the contribution of cash and campaign materials subject to donor’s tax? (4%)

2015
XVII
Mr. L owned several parcels of land and he donated a parcel each to his two children. Mr. L acquired both
parcels of land in 1975 for ll200,000.00. At the time of donation, the fair market value of the two parcels of
land, as determined by the CIR, was 112,300,000.00; while the fair market value of the same properties as

41
shown in the schedule of values prepared by the City Assessors was 112,500,000.00. What is the proper
valuation of Mr. L's gifts to his children for purposes of computing donor's tax? (3%)

2017

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%)

2018

IV

Years ago, Krisanto bought a parcel of land in Muntinlupa for only PhP65,000. He donated the land to his son,
Kornelio, in 1980 when the property had a fair market value of PhP75,000, and paid the corresponding donor's
tax.

Kornelio, in turn, sold the property in 2000 to Katrina for PhP 6.5 million and paid the capital gains tax,
documentary stamp tax, local transfer tax, and other fees and charges. Katrina, in turn, donated the land to
Klaret School last August 30, 2017 to be used as the site for additional classrooms. No donor's tax was paid,
because Katrina claimed that the donation was exempt from taxation. At the time of the donation to Klaret
School, the land had a fair market value of PhP 65 million.

(a) Is Katrina liable for donor's tax? (2.5%)

(b) How much in deduction from gross income may Katrina claim on account of the said donation?
(2.5%)

VIII

Upon the death of their beloved parents in 2009, Karla, Karla, and Karlie inherited a huge tract of farm land in
Kanlaon City. The siblings had no plans to use the property. Thus, they decided to donate the land, but were
not sure to whom the donation should be made. They consult you, a well-known tax law expert, on the tax
implications of the possible donations they plan to make, by giving you a list of the possible donees:

1. The Kanlaon City High School Alumni Association (KCHS AA), since the siblings are all alumni
of the same school and are active members of the organization. KCHS AA is an organization intended
to promote and strengthen ties between the school and its alumni;

2. The Kanlaon City Water District which intends to use the land for its offices; or

42
 3. Their second cousin on the maternal side, Kikay, who serves as the caretaker of the property.

Advise the siblings which donation would expose them to the least tax liability. (5%)

v. Remedies (jurisdiction of courts, prescription, remedies against assessment notices)

2013

X.

In 2010, pursuant to a Letter of Authority (LA) issued by the Regional Director, Mr. Abcede was assessed
deficiency income taxes by the BIR for the year 2009. He paid the deficiency. In 2011, Mr. Abcede received
another LA for the same year 2009, this time from the National Investigation Division, on the ground that Mr.
Abcede's 2009 return was fraudulent.

Mr. Abcede contested the LA on the ground that he can only be investigated once in a taxable year. Decide.
(7%)

2014

I.

On March 27, 2012, the Bureau of Internal Revenue (BIR) issued a notice of assessment against Blue Water
Industries Inc. (BWI), a domestic corporation, informing the latter of its alleged deficiency corporate income
tax for the year 2009. On April 20, 2012, BWI filed a letter protest before the BIR contesting said assessment
and demanding that the same be cancelled or set aside.

However, on May 19, 2013, that is, after more than a year from the filing of the letter protest, the BIR
informed BWI that the latter’s letter protest was denied on the ground that the assessment had already become
final, executory and demandable. The BIR reasoned that its failure to decide the case within 180 days from
filing of the letter protest should have prompted BWI to seek recourse before the Court of Tax Appeals (CTA)
by filing a petition for review within thirty (30) days after the expiration of the 180-day period as mandated by
the provisions of the last paragraph of Section 228 of the National Internal Revenue Code (NIRC).
Accordingly, BWI’s failure to file a petition for review before the CTA rendered the assessment final,
executory and demandable. Is the contention of the BIR correct? Explain. (5%)

IV.

Gangwam Corporation (GC) filed its quarterly tax returns for the calendar year 2012 as follows:

First quarter - April 25, 2012

Second quarter - July 23, 2012

Third quarter - October 25, 2012

Fourth quarter - January 27, 2013

43
On December 22, 2013, GC filed with the Bureau of Internal Revenue (BIR) an administrative claim for
refund of its unutilized input Value-Added Tax (VAT) for the calendar year 2012. After several months of
inaction by the BIR on its claim for refund, GC decided to elevate its claim directly to the Court of Tax
Appeals (CTA) on April 22, 2014.

In due time, the CTA denied the tax refund relative to the input VAT of GC for the first quarter of 2012,
reasoning that the claim was filed beyond the two-year period prescribed under Section 112(A) of the National
Internal Revenue Code (NIRC).

(A) Is the CTA correct? (3%)

(B) Assuming that GC filed its claim before the CTA on February 22, 2014, would your answer be the
same? (3%)

V.

The City of Liwliwa assessed local business taxes against Talin Company. Claiming that there is double
taxation, Talin Company filed a Complaint for Refund or Recovery of Illegally and/or Erroneously-collected
Local Business Tax; Prohibition with Prayer to Issue Temporary Restraining Order and Writ of Preliminary
Injunction with the Regional Trial Court (RTC). The RTC denied the application for a Writ of Preliminary
Injunction. Since its motion for reconsideration was denied, Talin Company filed a special civil action for
certiorari with the Court of Appeals (CA). The government lawyer representing the City of Liwliwa prayed for
the dismissal of the petition on the ground that the same should have been filed with the Court of Tax Appeals
(CTA). Talin Company, through its lawyer, Atty. Frank, countered that the CTA cannot entertain a petition for
certiorari since it is not one of its powers and authorities under existing laws and rules.

Decide. (5%)

VII.

In accordance with the Local Government Code (LGC), the Sangguniang Panglungsod (SP) of Baguio City
enacted Tax Ordinance No. 19, Series of 2014, imposing a P50.00 tax on all the tourists and travellers going to
Baguio City. In imposing the local tax, the SP reasoned that the tax collected will be used to maintain the
cleanliness of Baguio City and for the beautification of its tourist attractions. (D) is punishable by
administrative penalty only.

Claiming the tax to be unjust, Baguio Travellers Association (BTA), an association of travel agencies in
Baguio City, filed a petition for declaratory relief before the Regional Trial Court (RTC) because BTA was
apprehensive that tourists might cancel their bookings with BTA’s member agencies. BTA also prayed for the
issuance of a Temporary Restraining Order (TRO) to enjoin Baguio City from enforcing the local tax on their
customers and on all tourists going to Baguio City.

The RTC issued a TRO enjoining Baguio City from imposing the local tax. Aggrieved, Baguio City filed a
petition for certiorari before the Supreme Court (SC) seeking to set aside the TRO issued by the RTC on the
ground that collection of taxes cannot be enjoined. Will the petition prosper? (5%)

XV.

When is a pre-assessment notice required under the following cases? (1%)

44
 (A) When the finding for any deficiency tax is the result of mathematical error in the computation of
the tax as appearing on the face of the return.

(B) When a discrepancy has been determined between the tax withheld and the amount actually
remitted by the withholding agent.

(C) When the excise tax due on excisable articles has been paid.

(D) When an article locally purchased or imported by an exempt person, such as, but not limited to
vehicles, capital equipment, machineries and spare parts, has been sold, traded or transferred to non-
exempt persons.

XVI.

Mr. Tiaga has been a law-abiding citizen diligently paying his income taxes. On May 5, 2014, he was surprised
to receive an assessment notice from the Bureau of Internal Revenue (BIR) informing him of a deficiency tax
assessment as a result of a mathematical error in the computation of his income tax, as appearing on the face of
his income tax return for the year 2011, which he filed on April 15, 2012. Mr. Tiaga believes that there was no
such error in the computation of his income tax for the year 2011. Based on the assessment received by Mr.
Tiaga, may he already file a protest thereon? (4%)

XVIII.

Madam X owns real property in Caloocan City. On July 1, 2014, she received a notice of assessment from the
City Assessor, informing her of a deficiency tax on her property. She wants to contest the assessment. (4%)

(A) What are the administrative remedies available to Madam X in order to contest the assessment and
their respective prescriptive periods?

(B) May Madam X refuse to pay the deficiency tax assessment during the pendency of her appeal?

XXIX.

Doña Evelina, a rich widow engaged in the business of currency exchange, was assessed a considerable
amount of local business taxes by the City Government of Bagnet by virtue of Tax Ordinance No. 24. Despite
her objections thereto, Doña Evelina paid the taxes. Nevertheless, unsatisfied with said Tax Ordinance, Doña
Evelina, through her counsel Atty. ELP, filed a written claim for recovery of said local business taxes and
contested the assessment. Her claim was denied, and so Atty. ELP elevated her case to the Regional Trial
Court (RTC).

The RTC declared Tax Ordinance No. 24 null and void and without legal effect for having been enacted in
violation of the public ation requirement of tax ordinances and revenue measures under the Local Government
Code (LGC) and on the ground of double taxation. On appeal, the Court of Tax Appeals (CTA) affirmed the
decision of the RTC. No motion for reconsideration was filed and the decision became final and executory.
(4%)

(A) If you are Atty. ELP, what advice will you give Doña Evelina so that she can recover the subject
local business taxes?

(B) If Doña Evelina eventually recovers the local business taxes, must the same be considered as
income taxable by the national government?

45
2015

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) in division. On July 31, 2015, CCC, Inc. received a copy of the Decision dated July 22, 2015
of the CT A division dismissing its Petition. CCC, Inc. immediately filed a Petition for Review with the CT
A 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%)

IX

For calendar year 2011, FFF, Inc., a VAT-registered corporation, reported unutilized excess input VAT in the
amount of Pl ,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 Pl,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 Pl,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%)

XIII

GGG, Inc. offered to sell through competitive bidding its shares in HHH 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 JJJ, 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%)

2016

XVI

Amor Powers, Inc. (API) is a domestic corporation registered with the BIR as a value-added taxpayer. API
incurred excess input VAT in the amount of P500,000,000.00 on August 3, 2008. Hence, it filed with the BIR
an administrative claim for the refund or credit of these input taxes on August 15, 2010. Without waiting for
the CIR to act on its claim, API filed a Petition for Review with the CT A on September 15, 2010 before the
lapse of two years after the close of the taxable quarter concerned.

46
In its Comment on the Petition, the CIR argues that API's Petition should be dismissed as it was filed before
the lapse of the 120-day period given to the CIR by Sec. 112(D) of the NIRC, which became effective on
January 1, 1998. For the CIR, the 120- day period is mandatory and jurisdictional so that any suit filed before
its expiration is premature and, therefore, dismissible.

API, on the other hand, invokes BIR Ruling No. DA-489-03 issued by the CIR on December 10, 2003 in
answer to a query posed by the Department of Finance regarding the propriety of the actions taken by Lazi Bay
Resources Development, Inc., which filed an administrative claim for refund with the CIR and, before the
lapse of the 120-day period from its filing, filed a judicial claim with the CTA. BIR Ruling No. DA-489-03
stated that the taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial
relief with the CTA.

Will API's Petition for Review prosper? Decide with reasons. (5%)

2017

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 Internal Revenue, will you grant Wreck Corporation's administrative claim
for refund or issuance of tax credit certificate? Explain your answer. (6%)

III.

Vanderful, lnc.'s income tax return for taxable year 2015 showed an overpayment due to excess creditable
withholding taxes in the amount of ₱750,000.00. 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 ₱1,100,000.00, which included the carry-over from year 2015 in the amount of ₱750,000.00
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 ₱1,100,000.00.

Vanderful, Inc. now files in the BIR a claim for refund of unutilized overpayments of ₱1,100,00.00. Is the
claim meritorious? (4%)

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

47
electric capacity and energy 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%)

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%)

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. filed a protest 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 Jl24 million. The latter amount was still more than the net worth of Globesmart
Services, Inc. as reported in its audited financial statements.

48
 (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%)

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(8)(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%)

2018

XII

The BIR Commissioner, in his relentless enforcement of the Run After Tax Evaders (RATE) program, filed
with the Department of Justice (DOJ) charges against a movie and television celebrity. The Commissioner
alleged that the celebrity earned around PhP 50 million in fees from product endorsements in 2016 which she
failed to report in her income tax and VAT returns for said year. The celebrity questioned the proceeding
before the DOJ on the ground that she was denied due process since the BIR never issued any Preliminary
Assessment Notice (PAN) or a Final Assessment Notice (FAN), both of which are required under Section 228
of the NIRC whenever the Commissioner finds that proper taxes should be assessed.

Is the celebrity's contention tenable? (2.5%)

XIV

The City of Kabankalan issued a notice of assessment against KKK, Inc. for deficiency real property taxes for
the taxable years 2013 to 2017 in the amount of PhP 20 million. KKK paid the taxes under protest and
instituted a complaint entitled "Recovery of Illegally and/or Erroneously-Collected Local Business Tax,
Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction" with the RTC of Negros Occidental.

The RTC denied the application for TRO. Its motion for reconsideration having been denied as well, KKK
filed a petition for certiorari with the Court of Appeals (CA) assailing the denial of the TRO.

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Will the petition prosper? (5%)

XIX

The BIR assessed Kosco, Inc., an importer of food products, deficiency income and value-added taxes, plus
50% surcharge after determining that Kosco, Inc. had under-declared its sales by an amount exceeding 30% of
that declared in its income tax and VAT returns. Kosco, Inc. denied the alleged under-declaration, protested
the deficiency assessment for income and value-added taxes and challenged the imposition of the 50%
surcharge on the ground that the surcharge may only be imposed if Kosco, Inc. fails to pay the deficiency taxes
within the time prescribed for their payment in the notice of assessment.

(a) Is the imposition of the 50% surcharge proper? (2.5%)

(b) If your answer to {a) is yes, may Kosco, Inc. enter into a compromise with the BIR for reduction
of the amount of surcharge to be paid? (2.5%)

XX

Krisp Kleen, Inc. (KKI) is a corporation engaged in the manufacturing and processing of steel and its by-
products. It is both registered with the Board of Investments with a pioneer status, and with the BIR as a VAT
entity. On October 10, 2010, it filed a claim for refund/credit of input VAT for the period January 1 to March
31, 2009 before the Commissioner of Internal Revenue (CIR). On February 1, 2011, as the CIR had not yet
made any ruling on its claim for refund/credit, KKI, fearful that its period to appeal to the courts might
prescribe, filed an appeal with the Court of Tax Appeals (CTA).

(a) Can the CTA act on KKl's appeal? (2.5%)

(b) Will your answer be the same if KKI filed its appeal on March 20, 2011 and CIR had not yet acted
on its claim? (2.5%)

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