JUSTICE MARIANO C.

DEL CASTILLO
Chairperson
2018 Bar Examinations

I.

Congress enacted a law to provide Filipinos, especially the poor and the marginalized, access and
information to a full range of modern family planning methods, including contraceptives, intrauterine
devices, injectibles, non- abortifacient hormonal contraceptives, and family planning products and
supplies, but expressly prohibited abortion. To ensure its objectives, the law made it mandatory for
health providers to provide information on the full range of modern family planning methods, supplies
and services, for schools to provide reproductive health education, for non-governmental medical
practitioners to render mandatory 48 hours pro bono reproductive health services as a condition to
Philhealth accreditation, and for couples desiring to marry to attend a family planning seminar prior
to the issuance of a marriage license. It also punishes certain acts of refusals to carry out its
mandates. The spouses Aguiluz, both Roman Catholics, filed a petition to declare the law as
unconstitutional based on, among others, the following grounds:

(a) It violates the right to life, since it practically sanctions abortion. Despite express terms
prohibiting abortion, petitioners claim that the family planning products and supplies oppose
the initiation of life, which is a fundamental human right, and the sanction of contraceptive
use contravenes natural law and is an affront to the dignity of man.

(b) It violates the constitutional prohibition against involuntary servitude because it requires
medical practitioners to render 48 hours of pro bono reproductive health services which may
be against their will.

(c) It violates the Freedom of Religion, since petitioners' religious beliefs prevent them from
using contraceptives, and that any State- sponsored procurement of contraceptives, funded
by taxes, violates the guarantee of religious freedom.

Rule on each of the above objections. (2.5% each)

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.
 (a) Was the CA correct in saying that the writ of amparo rendered unnecessary the issuance
of the temporary protection order? (2.5%)

(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%)

III

What and whose vote is required for the following acts: (2% each)

(a) the repeal of a tax exemption law;

(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

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.

VI

Ang Araw, a multi-sectoral party-list organization duly registered as such with the Commission on
Elections (Comelec), was proclaimed as one of the winning party-list groups in the last national
elections. Its first nominee, Alejandro, assumed office as the party-list representative.

About one year after Alejandro assumed office, the Interim Central Committee of Ang Araw expelled
Alejandro from the party for disloyalty and replaced him with Andoy, its second nominee. Alejandro
questioned before the Comelec his expulsion and replacement by Andoy.

The Comelec considered Alejandro's petition as an intra-party dispute which it could resolve as an
incident of its power to register political parties; it proceeded to uphold the expulsion.

Is the Comelec's ruling correct? (5%)

VII

The 2016 mayoralty race in the City of Ardania included Arnaldo and Anacleto as contenders.

Arnaldo filed a petition with the Comelec to cancel Anacleto's Certificate of Candidacy (CoC) for
misrepresenting himself as a Filipino citizen. Arnaldo presented as evidence a copy of Anacleto's
Spanish passport and a certification from the Bureau of Immigration (Bl) showing that Anacleto used
the same passport several times to travel to and from Manila and Madrid or Barcelona.

In his Comment, Anacleto claimed that, a year prior to filing his CoC, he had complied with all the
requirements of R.A. No. 9225 (Citizenship Retention and Re-acquisition Act of 2003) to reacquire
his Philippine citizenship by taking an oath of allegiance and executing a sworn renunciation of his
Spanish citizenship. He defended the use of his Spanish passport subsequent to taking his oath of
allegiance to the Philippines as a practical necessity since he had yet to obtain his Philippine
passport despite reacquiring his Philippine citizenship. Even after he secured his Philippine
passport, he said he had to wait for the issuance of a Schengen visa to allow him to travel to Spain
to visit his wife and minor children.

(a) Based on the allegations of the parties, is there sufficient ground to cancel Anacleto's
CoC? (2.5%)

(b) In case Anacleto's CoC is properly cancelled, who should serve as mayor of Ardania City:
Arnaldo, who obtained the second highest number votes, or Andrea, the duly-elected Vice
Mayor of the City? (2.5%)

VIII

Two petitions for the cancellation of Certificate of Candidacy (CoC)/Denial of Due Course were filed
with the Comelec against two candidates running as municipal mayors of different towns.

The first petition was against Anselmo. Years ago, Anselmo was charged and convicted of the crime
of rape by final judgment, and was sentenced to suffer the principal penalty of reclusion perpetua
which carried the accessory penalty of perpetual absolute disqualification. While Anselmo was in
prison, the President commuted his sentence and he was discharged from prison.

The second petition was against Ambrosio. Ambrosio's residency was questioned because he was
allegedly a "green card holder," i.e., a permanent resident of the US, as evidenced by a certification
to this effect from the US Embassy.
Acting on the recommendations of its Law Department, the Comelec en banc motu proprio issued
two resolutions granting the petitions against Anselmo and Ambrosio.

Both Anselmo and Ambrosio filed separate petitions with the Supreme Court assailing the
resolutions cancelling their respective CoCs. Both claimed that the Comelec en bane acted with
grave abuse of discretion amounting to lack or excess of jurisdiction because the petitions should
have first been heard and resolved by one of the Comelec's Divisions.

Are Anselmo and Ambrosio correct? (5%)

IX

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

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%)

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.

(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.

XI

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%)

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."

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%)

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%)

XIV

Amoroso was· charged with treason before a military court martial. He was acquitted.

He was later charged with the same offense before a Regional Trial Court. He asks that the
information be quashed on the ground of double jeopardy.

The prosecution objects, contending that for purposes of double jeopardy, the military court martial
cannot be considered as a "competent court."

Should the Regional Trial Court grant Amoroso's motion to quash on the ground of double jeopardy?
(2.5%)
 XV

Annika sued the Republic of the Philippines, represented by the Director of the Bureau of Plant
Industry, and asked for the revocation of a deed of donation executed by her in favor of said Bureau.
She alleged that, contrary to the terms of the donation, the donee failed to install lighting facilities
and a water system on the property donated, and to build an office building and parking lot thereon,
which should have been constructed and made ready for occupancy on or before the date fixed in
the deed of donation.

The Republic invoked state immunity and moved for the dismissal of the case on the ground that it
had not consented to be sued. Should the Republic's motion be granted? (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 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%)

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%)

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%)

-NOTHING FOLLOWS-
 JUSTICE MARIANO C. DEL CASTILLO
Chairperson
2018 Bar Examinations

I.

Narciso filed a complaint against Norte University for the payment of retirement benefits after having
been a part-time professional lecturer in the same school since 1974. Narciso taught for two
semesters and a summer term for the school year 1974-1975, took a leave of absence from 1975 to
1977, and resumed teaching until 2003. Since then, his contract has been renewed at the start of
every semester and summer, until November 2005 when he was told that he could no longer teach
because he was already 75 years old. Norte University also denied Narciso's claim for retirement
benefits stating that only full-time permanent faculty, who have served for at least five years
immediately preceding the termination of their employment, can avail themselves of post-
employment benefits. As part-time faculty member, Narciso did not acquire permanent employment
status under the Manual of Regulations for Private Schools, in relation to the Labor Code, regardless
of his length of service.

(a) Is Narciso entitled to retirement benefits? (2.5%)

(b) If he is entitled to retirement benefits, how should retirement pay be computed in the
absence of any contract between him and Norte University providing for such benefits?
(2.5%)

II

Nayon Federation issued a charter certificate creating a rank-and-file Neuman Employees Union. On
the same day, New Neuman Employees Union filed a petition for certification election with the
Department of Labor and Employment (DOLE) Regional Office, attaching the appropriate charter
certificate.

a) The employer, Neuman Corporation, filed a motion to dismiss the petition for lack of legal
personality on the part of the petitioner union. Should the motion be granted? (2.5%)

b) The employer likewise filed a petition for cancellation of union registration against New
Neuman Employees Union, alleging that Nayon Federation already had a chartered local
rank-and-file union, Neuman Employees Union, pertaining to the same bargaining unit within
the establishment. Should the petition for cancellation prosper? (2.5%)

III

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%)

IV

Natasha Shoe Company adopted an organizational streamlining program that resulted in the
retrenchment of 550 employees in its main plant. After having been paid their separation benefits,
the retrenched workers demanded payment of retirement benefits under a CBA between their union
and management. Natasha Shoe Company denied the workers' demand.

(a) What is the most procedurally peaceful means to resolve this dispute? (2.5%)

(b) Can the workers claim both separation pay and retirement benefits? (2.5%)

Nelda worked as a chambermaid in Hotel Neverland with a basic wage of PhP560.00 for an eight-
hour workday. On Good Friday, she worked for one (1) hour from 10:00 PM to 11:00 PM. Her
employer paid her only PhP480.00 for each 8-hour workday, and PhP70.00 for the work done on
Good Friday. She sued for underpayment of wages and non-payment of holiday pay and night shift
differential pay for working on a Good Friday. Hotel Neverland denied the alleged underpayment,
arguing that based on long-standing unwritten tradition, food and lodging costs were partially
shouldered by the employer and partially paid for by the employee through salary deduction.
According to the employer, such valid deduction caused the payment of Nelda's wage to be below
the prescribed minimum. The hotel also claimed that she was not entitled to holiday pay and night
shift differential pay because hotel workers have to work on holidays and may be assigned to work
at night.

(a) Does the hotel have valid legal grounds to deduct food and lodging costs from Nelda's
basic salary? (2.5%)

(b) Applying labor standards law, how much should Nelda be paid for work done on Good
Friday? Show the computation in your test booklet and encircle your final answer. (2.5%)

VI

A certification election was conducted in Nation Manufacturing Corporation, whereby 55% of eligible
voters in the bargaining unit cast their votes. The results were as follows:

Union Nana : 45 votes

Union Nada: 40 votes

Union Nara : 30 votes

No Union : 80 votes

Union Nana moved to be declared as the winner of the certification election.

a) Can Union Nana be declared as the winner? (2.5%)

b) Assume that the eligibility of 30 voters was challenged during the pre-election conference.
The ballots of the 30 challenged voters were placed inside an envelope sealed by the DOLE
Election Officer. Considering the said envelope remains sealed, what should be the next
course of action with respect to the said challenged votes? (2.5%)
 VII

Nico is a medical representative engaged in the promotion of pharmaceutical products and medical
devices for Northern Pharmaceuticals, Inc. He regularly visits physicians' clinics to inform them of
the chemical composition and benefits of his employer's products. At the end of every day, he
receives a basic wage of PhP700.00 plus a PhP150.00 "productivity allowance." For purposes of
computing Nico's 13th month pay, should the daily "productivity allowance" be included? (2.5%)

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%)

IX

Sgt. Nemesis was a detachment non-commissioned officer of the Armed Forces of the Philippines in
Nueva Ecija. He and some other members of his detachment sought permission from their Company
Commander for an overnight pass to Nueva Vizcaya to settle some important matters. The
Company Commander orally approved their request and allowed them to carry their firearms as the
place they were going to was classified as a "critical place." They arrived at the place past midnight;
and as they were alighting from a tricycle, one of his companions accidentally dropped his rifle,
which fired a single shot, and in the process hit Sgt. Nemesis fatally. The shooting was purely
accidental. At the time of his death, he was still legally married to Nelda, but had been separated de
facto from her for 17 years. For the last 15 years of his life, he was living in with Narda, with whom
he has two minor children. Since Narda works as a kasambahay, the two children lived with their
grandparents, who provided their daily support. Sgt. Nemesis and Narda only sent money to them
every year to pay for their school tuition.

Nelda and Narda, both for themselves and the latter, also on behalf of her minor children, separately
filed claims for compensation as a result of the death of Sgt. Nemesis. The Line of Duty Board of the
AFP declared Sgt. Nemesis' death to have been "in line of duty", and recommended that all benefits
due to Sgt. Nemesis be given to his dependents. However, the claims were denied by GSIS
because Sgt. Nemesis was not in his workplace nor performing his duty as a soldier of the Philippine
Army when he died.
 (a) Are the dependents of Sgt. Nemesis entitled to compensation as a result of his death?
(2.5%)

(b) As between Nelda and Narda, who should be entitled to the benefits? (2.5%)

(c) Are the minor children entitled to the benefits considering that they were not fully
dependent on Sgt. Nemesis for support? (2.5%)

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%)

b) Can Nonato successfully claim disability benefits against N-Train Shipping and its agent
Narita Maritime Services? (2.5%)

XI

Your favorite relative, Tita Nilda, approaches you and seeks your advice on her treatment of her
kasambahay, Noray. Tita Nilda shows you a document called a "Contract of Engagement" for your
review. Under the Contract of Engagement, Noray shall be entitled to a rest day every week,
provided that she may be requested to work on a rest day if Tita Nilda should need her services that
day. Tita Nilda also claims that this Contract of Engagement should embody all terms and conditions
of Noray's work as the engagement of a kasambahay is a private matter and should not be regulated
by the State.

a) Is Tita Nilda correct in saying that this is a private matter and should not be regulated by
the State? (2.5%)

b) Is the stipulation that she may be requested to work on a rest day legal? (2.5%)

c) Are stay-in family drivers included under the Kasambahay Law? (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.

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

(b) Should Nicodemus' motion for execution be granted? (2.5%)

XIV

Nelson complained before the DOLE Regional Office about Needy Corporation's failure to pay his
wage increase amounting to PhPS,000.00 as mandated in a Wage Order issued by the Regional
Tripartite Wages and Productivity Board. Consequently, Nelson asked the DOLE to immediately
issue an Order sustaining his money claim. To his surprise, he received a notice from the DOLE to
appear before the Regional Director for purposes of conciliating the dispute between him and Needy
Corporation. When conciliation before the Regional Director failed, the latter proceeded to direct
both parties to submit their respective position papers in relation to the dispute. Needy Corporation
argued, that since Nelson was willing to settle for 75% of his money claim during conciliation
proceedings, only a maximum of 75% of the said money claim may be awarded to him.

(a) Was DOLE's action to conduct mandatory conciliation in light of Nelson's complaint valid?
(2.5%)

(b) Should the Regional Director sustain Needy Corporation's argument? (2.5%)

XV

Nexturn Corporation employed Nini and Nono, whose tasks involved directing and supervising rank-
and-file employees engaged in company operations. Nini and Nono are required to ensure that such
employees obey company rules and regulations, and recommend to the company's Human
Resources Department any required disciplinary action against erring employees. In Nextum
Corporation, there are two independent unions, representing rank-and-file and supervisory
employees, respectively.

a) May Nini and Nono join a union? (2.5%)

b) May the two unions be affiliated with the same Union Federation? (2.5%)

XVI

Nagrab Union and Nagrab Corporation have an existing CSA which contains the following provision:
"New employees within the coverage of the bargaining unit who may be regularly employed shall
become members of Nagrab Union. Membership in good standing with the Nagrab Union is a
requirement for continued employment with Nagrab Corporation." Nagrab Corporation subsequently
acquired all the assets and rights of Nuber Corporation and absorbed all of the latter's employees.
Nagrab Union immediately demanded enforcement of the above-stated CSA provision with respect
to the absorbed employees. Nagrab Corporation refused on the ground that this should not apply to
the absorbed employees who were former employees of another corporation whose assets and
rights it had acquired.

(a) Was Nagrab Corporation correct in refusing to enforce the CSA provision with respect to
the absorbed employees? (2.5%)

(b) May a newly-regularized employee of Nagrab Corporation (who is not part of the
absorbed employees) refuse to join Nagrab Union? How would you advise the human
resources manager of Nagrab Corporation to proceed? (2.5%)

XVII

Upon compliance with the legal requirements on the conduct of a strike, Navarra Union staged a
strike against Newfound Corporation on account of a collective bargaining deadlock. During the
strike, some members of Navarra Union broke the windows and punctured the tires of the company-
owned buses. The Secretary of Labor and Employment assumed jurisdiction over the dispute.

(a) Should all striking employees be admitted back to work upon the assumption of
jurisdiction by the Secretary of Labor and Employment? Will these include striking
employees who damaged company properties? (2.5%)

(b) May the company readmit strikers only by restoring them to the payroll? (2.5%)

XVIII

Nestor and Nadine have been living in for the last 10 years without the benefit of marriage. Their
union has produced four children. Nadine was three months pregnant with her 5th child when Nestor
left her for another woman. When Nadine was eight months pregnant with her 5th child, she applied
for maternity leave benefits. Her employer refused on the ground that this was already her 5th
pregnancy and that she was only living in with the father of her child, who is now in a relationship
with another woman. When Nadine gave birth, Nestor applied for paternity leave benefits. His
employer also denied the application on the same grounds that Nadine's employer denied her
application.

(a) Can Nadine's employer legally deny her claim for maternity benefits? (2.5%)

(b) Can Nestor's employer legally deny his claim for paternity benefits? (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%)

XX
In Northern Lights Corporation, union members Nad, Ned, and Nod sought permission from the
company to distribute flyers with respect to a weekend union activity. The company HR manager
granted the request through a text message sent to another union member, Norlyn.

While Nad, Ned, and Nod were distributing the flyers at the company assembly plant, a company
supervisor barged in and demanded that they cease from distributing the flyers, stating that the
assembly line employees were trying to beat a production deadline and were thoroughly distracted.
Norlyn tried to show the HR manager's text message authorizing flyer distribution during work hours,
but the supervisor brushed it aside.

As a result, Nad, Ned, and Nod were suspended for violating company rules on trespass and highly-
limited union activities during work hours. The Union filed an unfair labor practice (ULP) case before
the NLRC for union discrimination.

a) Will the ULP case filed by the Union prosper? (2.5%)

b) Assume the NLRC ruled in favor of the Union. The Labor Arbiter's judgment included,
among others, an award for moral and exemplary damages at PhP50,000.00 each for Nad,
Ned, and Nod. should Northern be Lights given to Corporation the Union, and argued not
that individually any award to its of members. Is Northern Lights Corporation correct? (2.5%)

-NOTHING FOLLOWS-
 JUSTICE MARIANO C. DEL CASTILLO
Chairperson
2018 Bar Examinations

Sidley and Sol were married with one (1) daughter, Solenn. Sedfrey and Sonia were another couple
with one son, Sonny. Sol and Sedfrey both perished in the same plane accident. Sidley and Sonia
met when the families of those who died sued the airlines and went through grief-counseling
sessions. Years later, Sidley and Sonia got married. At that time, Solenn was four (4) years old and
Sonny was five (5) years old. These two (2) were then brought up in the same household. Fifteen
(15) years later, Solenn and Sonny developed romantic feelings towards each other, and eventually
eloped. On their own and against their parents' wishes, they procured a marriage license and got
married in church.

(a) Is the marriage of Solenn and Sonny valid, voidable, or void? (2.5%)

(b) If the marriage is defective, can the marriage be ratified by free cohabitation of the
parties? (2.5%)

II

After finding out that his girlfriend Sandy was four (4) months pregnant, Sancho married Sandy. Both
were single and had never been in any serious relationship in the past. Prior to the marriage, they
agreed in a marriage settlement that the regime of conjugal partnership of gains shall govern their
property relations during marriage. Shortly after the marriage, their daughter, Shalimar, was born.

Before they met and got married, Sancho purchased a parcel of land on installment, under a
Contract of Sale, with the full purchase price payable in equal annual amortizations over a period of
ten (10) years, with no down payment, and secured by a mortgage on the land. The full purchase
price was PhP1 million, with interest at the rate of 6% per annum. After paying the fourth (4th)
annual installment, Sancho and Sandy got married, and Sancho completed the payments in the
subsequent years from his salary as an accountant. The previous payments were also paid out of
his salary. During their marriage, Sandy also won PhP1 million in the lottery and used it to purchase
jewelry. When things didn't work out for the couple, they filed an action for declaration of nullity of
their marriage based on the psychological incapacity of both of them. When the petition was granted,
the parcel of land and the jewelry bought by Sandy were found to be the only properties of the
couple.

(a) What is the filiation status of Shalimar? (2.5%)

(b) What system of property relationship will be liquidated following the declaration of nullity
of their marriage? (2.5%)

(c) In the liquidation, who should get the parcel of land? The jewelry? (2.5%)

(d) Is Shalimar entitled to payment of presumptive legitime? If yes, how much should be her
share and from where should this be taken? (2.5%)

Ill

Silverio was a woman trapped in a man's body. He was born male and his birth certificate indicated
his gender as male, and his name as Silverio Stalon. When he reached the age of 21, he had a sex
reassignment surgery in Bangkok, and, from then on, he lived as a female. On the basis of his sex
reassignment, he filed an action to have his first name changed to Shelley, and his gender, to
female. While he was following up his case with the Regional Trial Court of Manila, he met Sharon
Stan, who also filed a similar action to change her first name to Shariff, and her gender, from female
to male.

Sharon was registered as a female upon birth. While growing up, she developed male
characteristics and was diagnosed to have congenital adrenal hyperplasia ("CAH") which is a
condition where a person possesses both male and female characteristics. At puberty, tests
revealed that her ovarian structures had greatly minimized, and she had no breast or menstrual
development. Alleging that for all intents and appearances, as well as mind and emotion, she had
become a male, she prayed that her birth certificate be corrected such that her gender should be
changed from female to male, and that her first name should be changed from Sharon to Shariff.

Silverio and Sharon fell in love and decided to marry. Realizing that their marriage will be frowned
upon in the Philippines, they travelled to Las Vegas, USA where they got married based on the law
of the place of celebration of the marriage. They, however, kept their Philippine citizenship.

(a) Is there any legal bases for the court to approve Silverio's petition for correction of entries
in his birth certificate? (2.5%)

(b) Will your answer be the same in the case of Sharon's petition? (2.5%)

(c) Can the marriage of Silverio (Shelley) and Sharon (Shariff) be legally recognized as valid
in the Philippines? (2.5%)

IV

Severino died intestate, survived by his wife Saturnina, and legitimate children Soler, Sulpicio,
Segundo and the twins Sandro and Sandra. At the time of his death, the twins were only 11 years of
age, while all the older children were of age. He left only one property: a 5,000 sq. m. parcel of land.
After his death, the older siblings Soler, Sulpicio, and Segundo sold the land to Dr. Santos for
PhP500,000 with a right to repurchase, at the same price, within five (5) years from the date of the
sale. The deed of sale was signed only by the three (3) older siblings, and covered the entire
property. Before the five (5) years expired, Sole and Sulpicio tendered their respective shares of
PhP166,666 each to redeem the property. Since Segundo did not have the means because he was
still unemployed, Saturnina paid the remaining PhP166,666 to redeem the property. After the
property was redeemed from Dr. Santos, the three (3) older children and Saturnina, for herself and
on behalf of the twins who were still minors, sold the property to Dr. Sazon, in an absolute sale, for
PhP1 million. In representing the twins, Saturnina relied on the fact that she was the natural
guardian of her minor children.

(a) Was the first sale to Dr. Santos, and the subsequent repurchase, valid? (2.5%)

(b) Was the second sale to Dr. Sazon valid? May the twins redeem their share after they
reach the age of majority? (2.5%)

Sol Soldivino, widow, passed away, leaving two (2) legitimate children: a 25- year old son, Santino
(whom she had not spoken to for five [5] years prior to her death since he attempted to kill her at that
time), and a 20-year-old daughter, Sara. She left an estate worth PhP8 million and a will containing
only one provision: that PhP1 million should be given to "the priest who officiated at my wedding to
my children's late father." Sara, together with two (2) of her friends, acted as an attesting witness to
the will.

On the assumption that the will is admitted for probate and that there are no debts, divide the estate
and indicate the heirs/legatees entitled to inherit, the amount that each of them will inherit, and
where (i.e., legitime/free portion/intestate share) their shares should be charged. (5%)
 VI

Sammy and Santi are cousins who separately inherited two (2) adjoining lots from their grandfather.
Sammy is based overseas but wants to earn income from his inherited land, so he asked a local
contractor to build a row of apartments on his property which he could rent out. The contractor sent
him the plans and Sammy noticed that the construction encroached on a part of Santi's land but he
said nothing and gave approval to construct based on the plans submitted by the local contractor.
Santi, based locally, and who loved his cousin dearly, did not object even if he knew of the
encroachment since he was privy to the plans and visited the property regularly. Later, the cousins
had a falling out and Santi demanded that the portion of the apartments that encroached on his land
be demolished.

Can Santi successfully file legal action to require the demolition? (5%)

VII

Sydney, during her lifetime, was a successful lawyer. By her own choice, she remained unmarried
and devoted all her time to taking care of her nephew and two (2) nieces: Socrates, Saffinia, and
Sophia. She wrote a will giving all her properties remaining upon her death to the three (3) of them.
The will was admitted to probate during her lifetime. Later, she decided to make a new will giving all
her remaining properties only to the two (2) girls, Saffinia and Sophia. She then tore up the
previously probated will. The second will was presented for probate only after her death. However,
the probate court found the second will to be void for failure to comply with formal requirements.

(a) Will the doctrine of dependent relative revocation apply? (2.5%)

(b) Will your answer be the same if the second will was found to be valid but both Saffinia
and Sophia renounce their inheritance? (2.5%)

VIII

Sofronio was a married father of two when he had a brief fling with Sabrina, resulting in her
pregnancy and the birth of their son Sinforoso. Though his wife knew nothing of the affair, Sofronio
regretted it, but secretly provided child support for Sinforoso. Unfortunately, when Sinforoso was 10
years old, Sofronio died. Only Sofronio's father, Salumbides, knew of Sabrina and Sinforoso. For the
purpose of providing support to Sinforoso, Salumbides gave Sabrina usufructruary · rights over one
of his properties - a house and lot - to last until Sinforoso reaches the age of majority. Sabrina was
given possession of the property on the basis of caucion juratoria. Two (2) years after the creation of
the usufruct, the house accidentally burned down, and three (3) years thereafter, Sinforoso died
before he could reach the age of 18.

Will the usufruct continue after the house has burned down? If yes, will it continue after Sinforoso's
death? (2.5%)

IX

Newlyweds Sam and Sienna had contracted with Sangria Hotel for their wedding reception. The
couple was so unhappy with the service, claiming, among other things, that there was an
unreasonable delay in the service of dinner and that certain items promised were unavailable. The
hotel claims that, while there was a delay in the service of the meals, the same was occasioned by
the sudden increase of guests to 450 from the guaranteed expected number of 350, as stated in the
Banquet and Meeting Services Contract. In the action for damages for breach of contract instituted
by the couple, they claimed that the Banquet and Meeting Services Contract was a contract of
adhesion since they only provided the number of guests and chose the menu. On the other hand,
the hotel's defense was that the proximate cause of the complainant's injury was the unexpected
increase in their guests, and this was what set the chain of events that resulted in the alleged
inconveniences.
 (a) Does the doctrine of proximate cause apply in this case? (2.5%)

(b) Was the Banquet and Meeting Services Contract a contract of adhesion? If yes, is the
contract void? (2.5%)

Sinclair and Steffi had an illicit relationship while Sinclair was married to another. The relationship
produced a daughter Sabina, who grew up with her mother. For most parts of Sabina's youth, Steffi
spent for her support and education. When Sabina was 21 years old, Sinclair's wife of many years
died. Sinclair and Steffi lost no time in legitimizing their relationship. After the 40-day prayers for
Sinclair's late wife, Sinclair and Steffi got married without a marriage license, claiming that they have
been cohabiting for the last 20 years.

After graduating from college, Sabina decided to enroll in law school. Sinclair said that he was not
willing to pay for her school fees since she was no longer a minor. Sinclair claimed that, if Sabina
wanted to be a lawyer, she had to work and spend for her law education.

(a) What is Sabina's filiation status? (2.5%)

(b) Is Sinclair legally required to finance Sabina's law education? (2.5%)

XI

Samantha sold all her business interest in a sole proprietorship to Sergio for the amount of PhP1
million. Under the sale agreement, Samantha was supposed to pay for all prior unpaid utility bills
incurred by the sole proprietorship. A month after the Contract to Sell was executed, Samantha still
had not paid the PhP50,000 electricity bills incurred prior to the sale. Since Sergio could not operate
the business without electricity and the utility company refused to restore electricity services unless
the unpaid bills were settled in full, Sergio had to pay the unpaid electricity bills. When the date for
payment arrived, Sergio only tendered PhP950,000 representing the full purchase price, less the
amount he paid for the unpaid utility bills. Samantha refused to accept the tender on the ground that
she was the one supposed to pay the bills and Sergio did not have authorization to pay on her
behalf.

(a) What is the effect of payment made by Sergio without the knowledge and consent of
Samantha? (2.5%)

(b) Is Samantha guilty of mora accipiendi? (2.5%)

XII

Saachi opened a savings bank account with Shanghainese Bank. He made an initial deposit of
PhP100,000. Part of the bank opening forms that he was required to sign when he opened the
account was a Holdout Agreement which provided that, should he incur any liability or obligation to
the bank, the bank shall have the right to immediately and automatically take over his savings
account deposit. After he opened his deposit account, the Shanghainese Bank discovered a scam
wherein the funds in the account of another depositor in the bank was withdrawn by an impostor.
Shanghainese Bank suspected Saachi to be. the impostor, and filed a criminal case of estafa
against him. While the case was still pending with the Prosecutor's office, the bank took over
Saachi's savings deposit on the basis of the Holdout Agreement.

(a) What kind of contract is created when a depositor opens a deposit account with a bank?
(2.5%)

(b) In this case, did the bank have the right to take over Saachi's bank deposit? (2.5%)
 XIV

Socorro is the registered owner of Lot A while Segunda is the registered owner of the adjoining Lot
B. Lot A is located at an elevated plateau of about 15 feet above the level of Lot B. Since Socorro
was allegedly removing portions of the land and cement that supported the adjoining property,
Segunda caused the annotation of an adverse claim against 50 sq. m. on Lot A's Transfer Certificate
of Title, asserting the existence of a legal easement.

(a) Does a legal easement in fact exist? If so, what kind? (2.5%)

(b) If a legal easement does in fact exist, is an annotation of an adverse claim on the title of
the servient estate proper? (2.5%)

XV

Simon owned a townhouse that he rented out to Shannon, a flight attendant with Soleil Philippine
Airlines (SPA). They had no written contract but merely agreed on a three (3)-year lease. Shannon
had been using the townhouse as her base in Manila and had been paying rentals for more than a
year when she accepted a better job offer from Sing Airlines. This meant that Singapore was going
to be her new base and so she decided, without informing Simon, to sublease the townhouse to
Sylvia, an office clerk in SPA.

(a) Can Simon compel Shannon to reduce the lease agreement into writing? (2.5%)

(b) Does the sublease without Simon's knowledge and consent constitute a ground for
terminating the lease? (2.5%)

XVI

Selena was a single 18-year old when she got pregnant and gave birth to Suri. She then left to work
as a caregiver in Canada, leaving Suri with her parents in the Philippines. Selena, now 34 years old
and a permanent resident in Canada, met and married Sam who is a 24-year old Canadian citizen
who works as a movie star in Canada. Sam's parents are of Filipino ancestry but had become
Canadian citizens before Sam was born. Wanting Suri to have all the advantages of a legitimate
child, Selena and Sam decided to adopt her. Sam's parents, already opposed to the marriage of
their son to someone significantly older, vehemently objected to the adoption. They argued that Sam
was not old enough and that the requisite age gap required by the Inter-Country Adoption Act
between Sam as adopter and Suri as adoptee was not met.

Are Sam's parents correct? (2.5%)

XVII

Sofia and Semuel, both unmarried, lived together for many years in the Philippines and begot three
children. While Sofia stayed in the Philippines with the children, Semuel went abroad to work and
became a naturalized German citizen. He met someone in Germany whom he wanted to marry.
Semuel thereafter came home and filed a petition with the Regional Trial Court (RTC) for partition
ofthe common properties acquired during his union with Sofia in the Philippines. The properties
acquired during the union consisted of a house and lot in Cavite worth PhP2 million, and some
personal properties, including cash in bank amounting to PhP1 million. All these properties were
acquired using Samuel's salaries and wages since Sofia was a stay-at-home mother. In retaliation,
Sofia filed an action, on behalf of their minor children, for support.

(a) How should the properties be partitioned? (2.5%)

(b) Should Semuel be required to support the minor children? (2.5%)

 XVIII

Shasha purchased an airline ticket from Sea Airlines (SAL) covering Manila-Bangkok- Hanoi-Manila.
The ticket was exclusively endorsable to Siam Airlines (SMA). The contract of air transportation was
between Shasha and SAL, with the latter endorsing to SMA the Hanoi-Manila segment of the
journey. All her flights were confirmed by SAL before she left Manila. Shasha took the flight from
Manila to Bangkok on board SAL using the ticket. When she arrived in Bangkok, she went to the
SAL ticket counter and confirmed her return trip from Hanoi to Manila on board SMA Flight No. SA
888. On the date of her return trip, she checked in for SMA Flight No. SA 888, boarded the plane,
and before she could even settle in on her assigned seat, she was off-loaded and treated rudely by
the crew. She lost her luggage and missed an important business meeting. She thereafter filed a
complaint solely against SAL and argued that it was solidarily liable with SMA for the damages she
suffered since the latter was only an agent of the former.

(a) Should either, or both, SAL and SMA be held liable for damages that Shasha suffered?
(2.5%)

(b) Assuming that one is an agent of the other, is the agency coupled with interest? (2.5%)

XIX

Sebastian, who has a pending assessment from the Bureau of Internal Revenue (BIR), was required
to post a bond. He entered into an agreement with Solid Surety Company (SSC) for SSC to issue a
bond in favor of the BIR to secure payment of his taxes, if found to be due. In consideration of the
issuance of the bond, he executed an Indemnity Agreement with SSC whereby he agreed to
indemnify the latter in the event that he was found liable to pay the tax. The BIR eventually decided
against Sebastian, and judicially commenced action against both Sebastian and SSC to recover
Sebastian's unpaid taxes. Simultaneously, BIR also initiated action to foreclose on the bond. Even
before paying the BIR, SSC sought indemnity from Sebastian on the basis of the Indemnity
Agreement. Sebastian refused to pay since SSC had not paid the BIR anything yet, and alleged that
the provision in the Indemnity Agreement which allowed SSC to recover from him, by mere demand,
even if it (SSC) had not yet paid the creditor, was void for being contrary to law and public policy.

Can Sebastian legally refuse to pay SSC? (2.5%)

XX

Simeon was returning to Manila after spending a weekend with his parents in Sariaya, Quezon. He
boarded a bus operated by the Sabbit Bus Line (SBL) on August 30, 2013. In the middle of the
journey, the bus collided with a truck coming from the opposite direction, which was overtaking the
vehicle in front of the truck. Though the driver of the SBL bus tried to avoid the truck, a mishap
occurred as the truck hit the left side of the bus. As a result of the accident, Simeon suffered a
fractured leg and was unable to report for work for one week. He sued SBL for actual and moral
damages. SBL raised the defense that it was the driver of the truck who was at fault, and that it
exercised the diligence of a good father of a family in the selection and supervision of its driver.

(a) Is SBL liable for actual damages? Moral damages? (2.5%)

(b) Will SBL be liable to pay interest if it is required to pay damages, and delays in the
payment of the judgment award? What is the rate of interest, and from when should the
interest start running? (2.5%)

-NOTHING FOLLOWS-
 JUSTICE MARIANO C. DEL CASTILLO
Chairperson
2018 Bar Examinations

KM Corporation, doing business in the City of Kalookan, has been a distributor and retailer of
clothing and household materials. It has been paying the City of Kalookan local taxes based on
Sections 15 (Tax on Wholesalers, Distributors or Dealers) and 17 (Tax on Retailers) of the Revenue
Code of Kalookan City (Code). Subsequently, the Sangguniang Panlungsod enacted an ordinance
amending the Code by inserting Section 21 which imposes a tax on "Businesses Subject to Excise,
Value-Added and Percentage Taxes under the National Internal Revenue Code (NIRC)," at the rate
of 50% of 1 % per annum on the gross sales and receipts on persons "who sell goods and services
in the course of trade or business." KM Corporation paid the taxes due under Section 21 under
protest, claiming that (a) local government units could not impose a tax on businesses already taxed
under the NIRC and (b) this would amount to double taxation, since its business was already taxed
under Sections 15 and 17 of the Code.

(a) May local government units impose a tax on businesses already subjected to tax under
the NIRC? (2.5%)

(b) Does this amount to double taxation? (2.5%)

II

Kronge Konsult, Inc. (KKI) is a Philippine corporation engaged in architectural design, engineering,
and construction work. Its principal office is located in Makati City, but it has various infrastructure
projects in the country and abroad. Thus, KKI employs both local and foreign workers. The company
has adopted a policy that the employees' salaries are paid in the currency of the country where they
are assigned or detailed.

Below are some of the employees of KKI. Determine whether the compensation they received from
KKI in 2017 is taxable under Philippine laws and whether they are required to file tax returns with the
Bureau of Internal Revenue (BIR). (2% each)

(a) Kris Konejero, a Filipino accountant in KKl's Tax Department in the Makati office, and
married to a Filipino engineer also working in KKI;

(b) Klaus Kloner, a German national who heads KKl's Design Department in its Makati office;

(c) Krisanto Konde, a Filipino engineer in KKl's Design Department who was hired to work at
the principal office last January 2017. In April 2017, he was assigned and detailed in the
company's project in Jakarta, Indonesia, which project is expected to be completed in April
2019;

(d) Kamilo Konde, Krisanto's brother, also an engineer assigned to KKl's project in Taipei,
Taiwan. Since KKI provides for housing and other basic needs, Kamila requested that all his
salaries, paid in Taiwanese dollars, be paid to his wife in Manila in its Philippine Peso
equivalent; and

(e) Karen Karenina, a Filipino architect in KKl's Design Department who reported back to
KKl's Makati office in June 2017 after KKl's project in Kuala Lumpur, Malaysia was
completed.

III
Kim, a Filipino national, worked with K-Square, Inc. (KSI), and was seconded to various KSl-affiliated
corporations:

1. from 1999 to 2004 as Vice President of K-Gold Inc.,

2. from 2004 to 2007 as Vice President of KPB Bank;

3. from 2007 to 2011 as CEO of K-Com Inc.;

4. from 2011 to 2017 as CEO of K-Water Corporation, where Kim served as CEO for seven
years until his retirement last December 12, 2017 upon reaching the compulsory retirement
age of 60 years.

All the corporations mentioned are majority-owned in common by the Koh family and covered by a
BIR-qualified multiemployer-employee retirement plan (MEE RP), under which the employees may
be moved around within the controlled group (i.e., from one KSI subsidiary or affiliate to another)
without loss of seniority rights or break in the tenure. Kim was well-loved by his employer and
colleagues, so upon retirement, and on his last day in office, KSI gave him a Mercedes Benz car
worth PhP 5 million as a surprise, with a streamer that reads: "You'll be missed. Good luck, Sir Kim."

(a) Are the retirement benefits paid to Kim pursuant to the MEERP taxable? (2.5%)

(b) Which internal revenue tax, if any, will apply to the grant of the car to Kim by the
company? (2.5%)

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%)

Spouses Konstantino and Karina are Filipino citizens and are principal shareholders of a restaurant
chain, Karina's, Inc. The restaurant's principal office is in Makati City, Philippines.

Korina's became so popular as a Filipino restaurant that the owners decided to expand its operations
overseas. During the period 2010-2015 alone, it opened ten (10) stores throughout North America
and five (5) stores in various parts of Europe where there were large Filipino communities. Each
store abroad was in the name of a corporation organized under the laws of the state or country in
which the store was located. All stores had identical capital structures: 60% of the outstanding
capital stock was owned by Karina's, Inc., while the remaining 40% was owned directly by the
spouses Konstantino and Korina.
Beginning 2017, in light of the immigration policy enunciated by US President Donald Trump, many
Filipinos have since returned to the Philippines and the number of Filipino immigrants in the US
dropped significantly. On account of these developments, Konstantino and Karina decided to sell
their shares of stock in the five (5) US corporations that were doing poorly in gross sales. The
spouses' lawyer-friend advised them that they will be taxed 5% on the first PhP100,000 net capital
gain, and 10% on the net capital gain in excess of PhP100,000.

Is the lawyer correct? If not, how should the spouses Konstantino and Karina be taxed on the sale of
their shares? (5%)

VI

Kria, Inc., a Korean corporation engaged in the business of manufacturing electric vehicles,
established a branch office in the Philippines in 2010. The Philippine branch constructed a
manufacturing plant in Kabuyao, Laguna, and the construction lasted three (3) years. Commercial
operations in the Laguna plant began in 2014.

In just two (2) years of operation, the Philippine branch had remittable profits in an amount
exceeding 175% of its capital. However, the head office in Korea instructed the branch not to remit
the profits to the Korean head office until instructed otherwise. The branch chief finance officer is
concerned that the BIR might hold the Philippine branch liable for the 10% improperly accumulated
earnings tax (IAET) for permitting its profits to accumulate beyond reasonable business needs.

(a) Is the Philippine branch of Kria subject to the 10% IAET under the circumstances stated
above? (2.5%)

(b) Is it subject to 15% branch profit remittance tax (BPRT)? (2.5%)

VII

Karissa is the registered owner of a beachfront property in Kawayan, Quezon which she acquired in
2015. Unknown to many, Karissa was only holding the property in trust for a rich politician who
happened to be her lover. It was the politician who paid for the full purchase price of the Kawayan
property. No deed of trust or any other document showing that Karissa was only holding the property
in trust for the politician was executed between him and Karissa.

Karissa died single on May 1, 2017 due to a freak surfing accident. She left behind a number of
personal properties as well as real properties, including the Kawayan property. Karissa's sister,
Karen, took charge of registering Karissa's estate as a taxpayer and reporting, for income tax and
VAT purposes, the rental income received by the estate from real properties. However, it was only
on October 1, 2017 when Karen managed to file an estate tax return for her sister's estate. The
following were claimed as deductions in the estate tax return:

1. Funeral expenses amounting to PhP250,000;

2. Medical expenses amounting to PhP100,000, incurred when Karissa was

hospitalized for pneumonia a month before her death; and

3. Loss valued at PhP6 million arising from the destruction of Karissa's condominium
unit due to fire which occurred on September 15, 2017.

(a) Should the beachfront property be included in Karissa's gross estate? (2.5%)

(b) Are the claimed deductions proper? (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

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%)

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 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%)

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%)

XIII

The Collector at the Port of Koronadal seized 100 second-hand right-hand drive buses imported
from Japan. He issued warrants of distraint and scheduled the vehicles for auction sale. Kamila, the
importer of the second-hand buses, filed a replevin suit with the Regional Trial Court (RTC). The
RTC granted the replevin upon filing of a bond.

Did the RTC err in granting the replevin? (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.

Will the petition prosper? (5%)

XV

In 2015, Kerwin bought a three-story house and lot in Kidapawan, North Cotabato. The property has
a floor area of 600 sq.m. and is located inside a gated subdivision. Kerwin initially declared the
property as residential for real property tax purposes.
In 2016, Kerwin started using the property in his business of manufacturing garments for export. The
entire ground floor is now occupied by state-of-the-art sewing machines and other equipment, while
the second floor is used as offices. The third floor is retained by Kerwin as his family's residence.
Kerwin's neighbors became suspicious of the activities going on inside the house, and they decided
to report it to the Kidapawan City Hall. Upon inspection, the local government discovered that the
property was being utilized for commercial use. Immediately, the Kidapawan Assessor reclassified
the property as commercial with an assessment level of 50% effective January 2017, and assessed
Kerwin back taxes and interest. Kerwin claims that only 2/3 of the building was used for commercial
purposes since the third floor remained as family residence. He argues that the property should have
been classified as partly commercial and partly residential.

(a) Is the Kidapawan assessor correct in assessing back taxes and interest? (2.5%)

(b) Is Kerwin correct that only 2/3 of the property should be considered commercial? (2.5%)

(c) If Kerwin wants to file an administrative protest against the assessment, is he required to
pay the assessment taxes first? With whom shall the protest be filed and within what period?
(2.5%)

XVI

In an action for ejectment filed by Kurt, the lessor-owner, against Kaka, the lessee, the trial court
ruled in favor of Kurt. However, the trial court first required Kurt to pay the realty taxes due on the
property for 2016 before he may recover possession thereof.

Kurt objected, arguing that the delinquent realty taxes were never raised as an issue in the
ejectment case. At any rate, Kurt claimed that it should be Kaka who should be made liable for the
realty taxes since it was Kaka who possessed the property throughout 2016.

Is Kurt correct in resisting the trial court's requirement to pay the taxes first? (2.5%)

XVII

Kilusang Krus, Inc. (KKI) is a non-stock, non-profit religious organization which owns a vast tract of
land in Kalinga.

KKI has devoted 1 /2 of the land for various uses: a church with a cemetery exclusive for deceased
priests and nuns, a school providing K to 12 education, and a hospital which admits both paying and
charity patients. The remaining 1/2 portion has remained idle.

The KKI Board of Trustees decided to lease the remaining 1 /2 portion to a real estate developer
which constructed a community mall over the property.

Since the rental income from the lease of the property was substantial, the KKI decided to use the
amount to finance (1) the medical expenses of the charity patients in the KKI Hospital and (2) the
purchase of books and other educational materials for the students of KKI School.

(a) Is KKI liable for real property taxes on the land? (2.5%)

(b) Is KKl's income from the rental fees subject to income tax? (2.5%)

XVIII

Kathang Isip, Inc. (Kii) is a domestic corporation engaged in the business of manufacturing,
importing, exporting, and distributing toys both locally and abroad. Its principal office is located in
Kalookan City, Philippines. It has 50 branches in different cities and municipalities in the country.
When Kii applied for renewal of its mayor's permit and licenses in its principal office in January this
year, Kalookan City demanded payment of the local business tax on the basis of the gross sales
reported by the corporation in its audited financial statements for the preceding year. Kil protested,
contending that Kalookan City may tax only the sales consummated by its principal office but not the
sales consummated by its branch offices located outside Kalookan City.

When Kalookan City denied the protest, Kil engaged the services of Atty. Kristeta Kabuyao to file the
necessary judicial proceedings to appeal the decision of Kalookan City. Atty. Kabuyao is a legal
expert, but resides in Kalibo, Aklan where her husband operates a resort. She, however, practices in
Metro Manila, including Kalookan City. The counsel representing the city, in the case filed in
Kalookan City by KII, questioned the use of Atty. Kabuyao's Professional Tax Receipt (PTR) issued
in Aklan for a case filed in Kalookan City.

(a) Is Kll's contention that Kalookan City can only collect local business taxes based on sales
consummated in the principal office meritorious? (2.5%)'

(b) Is the Kalookan City counsel correct in saying that Atty. Kabuyao's PTR issued in Aklan
cannot be used in Kalookan? (2.5%)

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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