TED ANSVERS TO THE 2017 BAR EXANATION bal ae QUESTIONS IN TAXATION (b) —_IFSLC University later sells the three parcels of idle land to Puregold Supermarket, nc, a stock corporation, will SLC University be for capital gains tax? Explain your answer, (3%) SUGGESTED ANSWER (b) Yes. The gain presumed to have been realized um the sate, exchange or disposition of lands and/or buildings which are used in the business ofa corporation and are treated asc be subject to capital gains tax (Section 27(D)(S), 1997 NIRC, as amended). , Section 30 of the NIRC subjects to income tax (capital galas income from properties, real conducted for profit irrespective of ‘ax exempt corporations, (©) ISLC University donates the three parcels of idle land in favor of the Municipality of Cuyapo, Nueva Ecija, will SLC University be lic able for donor's tax? Explain your answer. (2.5%) SUGGESTED ANSWER (© _No. Gifts made by a resident to any political subdivision of the National Government shall be exempt from donor’s tax (Section 101(A)(2), 1997 NIRC, as amended). —o0000- COMMERCIAL LAW I A Absolute Timber Co. (ATC) has been engaged in the logging business Isabela, To secure one ofits shipments of logs to be transported by Andok Shipping Co., ATC purchased a marine policy with an all-risk provision. Because ofa strong typhoon then hitting Northern Luzon, the vessel sank and the shipment of logs was totally lost, ATC filed is claim, nsurer denied e claim on several grounds, namely: (1) the vessel had not been seawo (2) the vessels crew liad lacked sufficies ;; G) the improper loading Of the fogs on only one side of ing of the ship 10 that side during 1 tremely bad weather had be ATC noiv seeks your legal advice to know if able, What is your advice? Explain your answer. (3%) SUGGESTED ANSWER ATC’s claim i sustainable. The all risk policy that ATC procured from the insurer insures against all causes of conceivable loss or damage except when the loss or damage was due to fraud oF intentional miscor uct committed by ATC (J New World International Development », NYK FilJapan Shipping Corporation, G.R. No. 171468, August 24, 2011). The grounds of denial that the insurer invoked are aot due to the fraud or intentional misconduct ofthe insurer, ALTERNATIVE ANSWER ‘The claim of Absolute Timber Company that the extreme bad weather is 2 fortuitous event is not v seaworthy. (Manila ‘Steamship Company x. Abduthaman, G.R. No. L-9534, September 29, 1956, 100 Phil 32), ATC’s negligence also bars it from invoking the defense of force majeure.TED ANSNERS 10TH 207 BAR SXAMNATON e we QUESTIONS IN COMMERCIAL LAW 8. ‘oration shop ta its own 1g, he needed to go to a round-the-world voyage with his crew coming voyage, Sean, car for his next roadshow. jing motor shows and prornotions, jor cites ofthe country. Seth his bosom friend, asked Seth ‘Sean, who had been in the business o proposed to display the restored car of Seth in Mustang to Sean ‘own purposes on special occasions during his ‘and Sean then went together to Bayad Agad ‘absence from the country Insurance Co. (BAIC) tno coun orndranae tom he preserva cunfary toss. or damage from ts dest The happentog ofthe evet insured aginst (44 CJS 870 ‘SUGGESTED ANSWERS 7O THE 2017 BAR EXANINATION 99 (QUESTIONS I COMMERCIAL LAW (b) __DoSeth and Sean have separat rable interests? Explain brie‘ly your answer. (3%) SUGGESTED ANSWER Seth and Sean have separate insurable interests. Seth's insurable interest is his legal and/or equi an owner while Sean’ may become the bs (Malayan Insurance Co. 184300, July 11, 2012, Morgan, a lawyer, received a lot of diving, equipinent as payment of his professional fees by Denn custody case, Dennis owned a diving and water sports Batangas. Morgan decided to name Dennis as entrustee becau ized sports equipment, da trust receipt agreement, with Morgan as entruster and Dennis as en- Before the sports equipment could be Batangas. Anilao and other parts of Batan SUGGESTED ANSWER ‘The justification of Dennis is not warranted, Under the trust receipt law, the loss of goods which are the subject of a trust receipt,100 ‘SUGGESTED ANSWERS TO THE 2017 BAR EXAMINATION. ‘QUESTIONS IN COMMERCIAL LAW pending their disposition, irrespective of whether or not it was duc to the fault or negligence of the entrustee, shall not extinguish the obligation of the entrustee for the value thereof (Pres. Dec. 115, Sec.10, January 29, 1973). ALTERNATIVE ANSWER ‘The transaction is not really a trust receipt within the ambit of PD 115 since there is no loan component in the transaction, In a trust receipt, the entruster granted the loan to finance the acquisition of the ‘goods, which goods are held in trust for the benefit of the entruster pentt~ ing their disposition. Not being a trust receipt (where foree majeure would not have heen a defense), the supposed entrustee is not liable for the loss of the sports equipment following general principle that force majeure exempts the obligor from liability. B. Safe Warehouse, Inc. (Safe) issued on various dates negotiable ware- house receipts to Peter, Paul, and Mary covering certain goods deposited by the later with the former. Peter, Paul, and Mary then negotiated and endorsed the warehouse receipts to Cyrus, Magnus, and Charles upon payment by the latter of valuable consideration for the warehouse receipts. Cyrus, Magnus, and Charles were not aware of, nor were they partes to any irregularity or infirmity affecting the ttle or the face ofthe werchouse receipts, (On due dates of the warehouse receipts, Cyrus, Magnus, and Charles demanded that Safe surrender the goods to them. Safe refused because its ‘wareheuseman’s claim must first be paid. Cyrus, Magnus, and Charles refused to pay, and insisted that such claim was the liability of Peter, Paul, ard Mary (@) What is a warehouseran’s elaim? (3%) SUGGESTED ANSWER (@) A warchouseman’s lien consist of the storage elarges as well 9 other fees and charges as may be stipulated in the warehouse receipt. ‘SUGGESTED ANSWERS TO THE 2017 BAR EXAMINATION 401 ‘QUESTIONS IN COMMERCIAL LAW (©) Is Safe’s refusal to surrender the goods to Cyrus, Magnus, and Charles legally justified? Explain your answe: (3%) SUGGESTED ANSWER. (b) Yes, Safe's refusal to surrender the goods is justified Under the Warehouse Receipts Lav, the warehouseman may withhold “etivery of the goods unless the demand to deliver is accompanied by an ‘offer to pay the warchouseman’s lien. The lien is possessory in nature. It attaches to the goods regardless of who isthe owner thereof. Ul A. Data Realy, Ine. (ORD) was engaged in realty development. The family of Matteo owned 100% ofthe eapital stocs of DRI. Mateo was also the President and Chairman ofthe Board of Directors. Other members of Mat- {co's family held the major positions in DRI. Because of a nasty takeover fight with D&E Realty Co, Inc. (D&E), anther really developer, forthe contol of a smaller tealty company with vast landholdings, DRI and D&E engaged in an expensive litigation that eventually led to a money judgment-being rendered in fvor of DRE, Meantime, DR, facing inability to pay its abilities as they fall due but til holding substantial assets, fled a petition for voluntary rehabilitation Trying to beat the consequences of rehabilitation proceedings, DAE moved in te tral court for the issuance of a wrt of execution. The teal cour also hap pened tbe the rehabilitation cour. The wit of execution was issued Serving the writ of execution, Metro, the court sheriff who hal just passed his Credit Transactions subject inlaw school, garnished Matteo's bank accounts and levied his real properties, ineluding his house and Tot in Makati