Bar Exam 2010 Questions and Suggested Answers

in CIVIL LAW by the UP Law Center

OCTOBER 17, 2018

CIVIL LAW

NOTE:

Although the questions, as framed, do not require reasons for the “True or False” Answers,
proper explanations are herein provided to aid in the evaluation of the answers of the examinees.

True or False.

1. Under Article 26 of the Family Code, when a foreign spouse divorces his/her Filipino spouse, the
latter may re-marry by proving only that the foreign spouse has obtained a divorce against her or
him abroad. (1%)

SUGGESTED ANSWER:

FALSE.

In Garcia v. Recio, 366 SCRA 437(2001), the SC held that for a Filipino spouse to have
capacity to contract a subsequent marriage, it must also be proven that the foreign divorce
obtained by the foreigner spouse gives such foreigner spouse capacity to remarry.

ALTERNATIVE ANSWER

TRUE.

Art 26 (2) (FC), clearly provides that the decree of divorce obtained abroad by the foreigner
spouse is sufficient to capacitate the Filipino spouse to remarry.

1. X, a widower, died leaving a will stating that the house and lot where he lived cannot be
partitioned for as long as the youngest of his four children desires to stay there. As coheirs and co-
owners, the other three may demand partition anytime. (1%)

 
 

SUGGESTED ANSWER:

FALSE.

The other three co-heirs may not at any time demand the partition of the house and lot
since it was expressly provided by the decedent in his will that the same cannot be
partitioned while his youngest child desires to stay there. Article 1083 of the New Civil
Code allows a decedert to prohibit, by will, the partition of a property in his estate for a
period not longer than 20 years no matter what his reason may be. Hence, the three co-
heirs cannot demand its partition at anytime but only after 20 years from the death of their
father. Even if the deceased parent did not leave a will, if the house and lot constituted their
family home, Article 159 of the Family Code prohibits its partition for a period of ten (10)
years, or for as long as there is a minor beneficiary living in the family home.

II

Multiple choice.

A A had a 4-storey building which was constructed by Engineer B. After five years, the building
developed cracks and its stairway eventually gave way and collapsed, resulting to injuries to
some lessees. Who should the lessees sue for damages? (1%)

1. A, the owner
2. B, the engineer
3. both A & B

SUGGESTED ANSWER:

3. Both A & B.

The lessee may proceed against A for breach of contract, and against B for tort or statutory
liability.

Under Article 1654 (2, of the) New Civil Code, the Lessor is obliged to make all the
necessary repairs in order to keep the leased property suitable for the use to which it has
been devoted. Consequently, under Article 1659 NCC, the proprietor of a building or
structure is responsible for the damages resulting from its total or partial collapse, if it is
due to the lack of necessary repairs.
Under Article 1723 NCC, the engineer or architect who drew up the plans and
specifications for a building is liable for damages if within 15 years from the completion of
the structure, the same should collapse by reason of a defect in those plans and
specifications, or due to the defects in the ground. This liability may be enforced against the
architect or engineer even by a third party who has no privity of contract with the architect
or engineer under Article 2192 NCC.

ALTERNATIVE ANSWER

No. 1. A, the owner.

The lessee can sue only the lessor for breach of contract under Article 1659 in relation to
Article 1654 NCC. The lessee cannot sue the architect or the engineer because there was no
privity of contract between them. When sued, however, the lessor may file a third party
claim against the architect or the engineer.

ALTERNATIVE ANSWER

No. 2. B, the Engineer.

Under Article 1723 (NCC), the engineer or architect who drew up the plans and
specifications for a building is liable for damages if within 15 years from the completion
ofthe structure, the same should collapse by reason of a defect in those plans and
specifications, or due to the defects in the ground. Under Article 2192 (NCC), however, if
the damages should be the result of any of the defect in the construction mentioned in
Article 1723 (NCC), the third person suffering damages may proceed only against the
engineer or architect or contractor within the period fixed therein. The damages suffered
by the lessee in the problem are clearly those resulting from defects in the construction
plans or specifications.

1. O, owner of Lot A, learning that Japanese soldiers may have buried gold and other treasures at
the adjoining vacant Lot B belonging to spouses X & Y, excavated in Lot B where she succeeded in
unearthing gold and precious stones. How will the treasures found by O be divided? (1%)
2. 100% to O as finder
3. 50% to O and 50% to the spouses X and Y
4. 50% to 0 and 50% to the state
5. None of the above

SUGGESTED ANSWER:

No. 4. None of the above.

The general rule is that the treasure shall belong to the spouses X and Y, the owners of Lot
B. Under Article 438 (NCC), the exception is that when the discovery of a hidden treasure
is made on the property of another and by chance, one-half thereof shall belong to the
owner of the land and the other one-half is allowed to the finder. In the problem, the
finding of the treasure was not by chance because O knew that the treasure was in Lot B.
While a trespasser is also not entitled to any share, and there is no indication in the
problem whether or not o was a trespasser,O is not entitled to a share because the finding
was not “by chance”.

1. A executed a Deed of Donation in favor of B, a bachelor, covering a parcel of land valued at P1

million. B was, however, out of the country at the time. For the donation to be valid, (1%)
2. B may e-mail A accepting the donation.
3. The donation may be accepted by B’s father
4. B can accept the donation anytime convenient to him.
5. B’s mother who has a general power of attorney may accept the donation for him.
6. None of the above is sufficient to make B’s acceptance valid

SUGGESTED ANSWER:

No. 5. None of the above is sufficient to make B’s acceptance valid.

Since the donation covered an immovable property, the donation and the acceptance must be
in a public document. An e-mail is not a public document. Hence, No. I is false.

No. 2 and No. 4 are both false. The acceptance by the donee’s father alone or mother alone,
even though in a public document, ‘s not sufficient because the father and the mother did
not have a special power of attorney for the purpose. Under Article 745 (NCC), the donee
must accept the donation personally, or through an authorized person with a special power
of attorney for the purpose; otherwise, the donation shall be poid.

No. 3 is also false. B cannot accept the donation anytime at his convenience. Under Article
749 NCC, the donee may accept the donation only during the lifetime of the donor.

1. A executed a 5-page notarial will before a notary public and three witnesses. All of them signed
each and every page of the will.

One of the witnesses was B, the father of one of the legatees to the will. What is the effect of B
being a witness to the will? (1%)

1. The will is invalidated

2. “The will is valid and effective
3. The legacy given to B’s child is not valid

 
SUGGESTED ANSWER:

No. 3. The legacy given to B’s child is not valid.

The validity of the will is not affected by the legacy in favor of the son of an attesting
witness to the will. However, the said legacy is void under Article 823 NCC.

ALTERNATIVE ANSWER

No. 2. The will is valid and effective.

Under Article 823 (NCC), the legacy given in favor of the son ofan instrumental witness to
a wizz has no effect on the validity of the will Hence, the will is valid and effective.

III

Define, Enumerate or Explain. (2% each)

1. What is the difference between “guaranty” and *suretyship”?

SUGESTED ANSWER:

Guaranty and Suretyship distinguished:

1) The obligation in guaranty is secondary: whereas, in suretyship, it is primary.

2) In guaranty, the undertaking is to pay if the principal debtor cannot pay. whereas, in
suretyship, the undertaking is to pay if the principal debtor does not pay.

3) In guaranty, the guarantor is entitled to the benefit of excussion; whereas, in suretyship

the surety is not so entitled.

4) Liability in guaranty depends upon an independent agreement to pay the obligations of

the principal If he fails to do so whereas, in suretyship, the surety assumes liability as a
regular party.

5) The Guarantor insures the solvency of the principal debtor; whereas, the surety Insures
the debt.
6)In a guaranty, the guarantor is subsidiarily liable; whereas, in 1 Suretyship, the surety
binds himself solidarily with the principal debtor. (Art. 2047, Civil Code)

1. Define quasi tort. Who are the persons liable under quasi torts and what are the defenses
available to them?

NOTE: It is recommended that the examinerexercise leniency and liberality in grading the
answers given to this question. The term quasi-tort is not a part of legal developments in
civil law. In Philippine Legal tradition, quasi-delict has beert treated as the closest civil law
equlvalent of the common lawtort. In fact, in a number of Supreme Court decisions, the
two terms have been considered synonymous. In reality, however, the common law tort is
much broader in scope than the civil law quasi-delict.

In recent developments in common law, the concept of “quasi-torts” can be considered as

the closest common law equivalent of the civil law concept of quasi-delict. This is because it
is argued that the growing recognition of quasi-torts as a source of obligation Is hinged on
the acceptance at common law of the civil law principles of quasi-delict. 1

FIRST SUGGESTED ANSWER

Quasi-tort is a legal concept upholding the doctrine that some legal duty exists that can not
be classified strictly as a personal duty (that is, resulting in a tort), nor as a contractual
duty (thus resulting in a breach of contract) but rather some other kind of duty
recognizable by the law. “Tort” or “Quasi-Tort” is an Anglo American or Common Law
concept, while “Deliet” or “Quasi-Delict” is a Civil Law concept. (Wikipedia Encyclopedia)

SECOND SUGGESTED ANSWER

Quasi-tort is considered as the equivalent of quasidelict. Hence the rules of the latter
pertaining to persons who can be held liable and their defenses would also apply.

Those liable for quasi-delict include:

1. The tort feasor or the person causing damage to another through fault or negligence
(Article 2176 NCC: and
2. Parsons vicariously Hable under Article 2180 (NCC).

The defenses available include:

1. That the defendant was not negligent or that he exercised due diligence (Article 2176 NCC).
2. That although the defendant is negligent, his negligence is not the proximate cause of the
injury. (Article 2179 NCC).
 3. That the plaintiff’s own negligence was the immediate and proximate cause of his injury
(Article 2179 NCC).
4. That the person vicariously liable has observed all the diligence of a good father of a family to
prevent damage (2180 NCC).
5. That the cause of action has prescribed after the lapse of 4 years (Article 1146 NOC). The fact
that the plaintiff had committed contributory negligence is a partial defense (Article 2179 NCC).
6. Give at least two reasons why a court may assume jurisdiction over a conflict of laws case.

SUGGESTED ANSWER

1) Statute theory. There is a domestic law authorizing the local court to assume
jurisdiction.

2) Comity theory. The local court assumos jurisdiction based on the principle of comity or
courtesy.

ALTERNATIVE ANSWER

1. Public Order. To maintain peace and order, disputes that disturb the peace of the forum
should be settled by the courts of the forum even though the application of a foreign law is
necessary for the purpose.
2. Humanitarian Principle. An aggrieved party should not be left without remedy in a forum even
though the application of a foreign law by the courts of the forum is unavoidable in order to
extend relief.

IV

Spouses B and G begot two offsprings. Albeit they had serious personality differences, the
spouses continued to live under one roof. B begot a son by another woman. G also begot a
daughter by another man.

A If G gives the surname of B to her daughter by another man, what can B do to protect their
legitimate children’s interests? Explain. (5%)

SUGGESTED ANSWER

B can impugn the status of G’s daughter by another man as his legitimate daughter on the
ground that for biological reason he could not have been the father of the child, a fact that
may be proven by the DNA test. Having been born during the marriage between B and G,
G’s daughter by another man is presumed as the child of B under Article 164 of the Family
Code. In the same action to impugn, B can pray for the correction of the status of the said
daughter in her record of birth.
 

1. If B acquiesces to the use of his surname by G’s daughter by another man, what is/are the
consequence/s? Explain. (5%)

SUGGESTED ANSWER

If B acquiesces and does not file the action to impugn the legitimacy of the child within the
prescriptive period for doing so in Article 170 of the Family Code, G’s daughter by another
man shall be conclusively presumed as the legitimate daughter of B by G.

G filed on July 8, 2000 a petition for declaration of nullity of her marriage to B. During the
pendency of the case, the couple entered into a compromise agreement to dissolve their absolute
community of property. B ceded his right to their house and lot and all his shares in two business
firms to G and their two children, aged 18 and 19

B also opened a bank account in the amount of P3 million in the name of the two children to
answer for their educational expenses until they finish their college degrees.

For her part, G undertook to shoulder the day-to-day living expenses and upkeep of the children.
The Court approved the spouses’ agreement on September 8, 2000.

1. Suppose the business firm as suffered reverses, rendering G unable to support herself and the
children. Can Gatill ask for support pendente lite from B? Explain. (3%)

SUGGESTED ANSWER

Yes, G can still ask for support from B because during the pendency of the action, the
marriage between them is considered still subsisting (Article 68, Family Code). Being
considered still married to each other, Band G still have the obligation to support each
other. The compromise agreement cannot operate to waive future support when needed
(Article 2035, Civil Code).

After the compromise agreement was approved by the court and the properties of the
marriage were distributed, there remained no more common properties of B and G. While
Article 198 of the Family Code appears to limit the source of support to the common
properties of the said marriage in case of the pendency of an action to declare the nullity of
marriage, Article 94 and Article 121 Indicate otherwise. Under the said Articles, the
spouses remain personally and solidarily liable with their separate properties for support
even though, for whatever reason, there are no more community or partnership properties
left.
The judgment based on the compromise dissolving the property relations of B and G does
not bar G from asking support pendente lite. The dissolution of the property relations of
the spouses did not terminate the obligation between them to support each other. The
declaration of the nullity of their marriage is what terminates the right of G to be
supported by B as his spouse.

1. Suppose in late 2004 the two children had squandered the P3 million fund for their education
before they could obtain their college degrees, can they ask for more support from B? Explain.
(3%)

SUGGESTED ANSWER

Yes, the two children can still ask for support for schooling or training for some profession,
trade or vocation, even beyond the age of majority until they shall have finished or
completed their education Article 194, Paragraph 2, Family Code Javier v. Lucero, 94 Phil.
634 [1954]). Their having squandered the money given to them for their education will not
deprive them of their right to complete an education, or to extinguish the obligation of the
parents to ensure the future of their children.

VI

Gigolo entered into an agreement with Majorette for her to carry in her womb his baby via in
vitro fertilization. Gigolo undertook to underwrite Majorette’s pre-natal expenses as well as
those attendant to her delivery. Gigolo would thereafter pay Majorette P2 million and, in return;
she would give custody of the baby to himn.

After Majorette gives birth and delivers the baby to Gigolo following her receipt of P2 million,
she engages your services as-her lawyer to regain custody of the baby.

2. What legal action can you file on behalf of Majorette? Explain. (2.5%)

FIRST SUGGESTED ANSWER

As her lawyer, I can file a petition for habeas corpus on behalf of Majorette to recover
custody of her child. Since she is the mother of the child that was born out of wedlock, she
has exclusive parental authority and custody over the child. Gigolo, therefore, has no right
to have custody of the child and his refusal to give up custody will constitute illegal
detention for which habeas corpus is the proper remedy.

SUGGESTED ANSWER

The action to regain custody will not prosper. In the first place Majorette can not regain
custody of the baby. As surrogate mother she merely carries the child in her womb for its
development. The child is the child of the natural parents – Gigolo and his partner. The
agreement between Gigolo and Majorette is a valid agreement.

 Can Gigolo demand from Majorette the return of the P2 million if he returns the baby? Explain.
(2.5%)

FIRST SUGGESTED ANSWER

No, he cannot. Both he and Majorette are guilty of violating the provision of the Anti-Child
Abuse Law (RA7610) on child trafficking. Being in part delicto, the parties shall be left
where they are and Gigolo cannot demand the return of what he paid.

SECOND SUGGESTED ANSWER

Yes. The agreement between Gigolo and Majorette is a valid agreement.

2. Who of the two can exercise parental authority over the child? Explain. (2.5%)

FIRST SUGGESTED ANSWER

Majorette, the mother, can exercise parental authority. Since the child was born out of
wedlock, the child is illegitimate and the mother has the exclusive parental authority and
custody over the child.

SECOND SUGGESTED ANSWER

Gigolo can exercise parental authority over the child. Majorette has no blood relation to
the child. She is just a “carrier” of the child.

2. Is the child entitled to support and inheritance from Gigolo? Explain. (2.5%)

FIRST SUGGESTED ANSWER

If Gigolo voluntarily recognized the child as his illegitimate child in accordance with
Article 175 in relation to Article 172 of the Family Code, the child is entitled to support and
inheritance from Gigolo.

SECOND SUGGESTED ANSWER

Yes, because Gigolo is the natural and biological parent of the baby.

VII

G and B were married on July 3, 1989. On March 4. 2001, the friarriage, which bore no
offspring, was declared void ab initio under Article 36 of the Family Code. At the time of the
dissolution of the marriage, the couple possessed the following properties:

 a house and lot acquired by Bon August 3, 1988, one third (1/3) of the purchase price
(representing down payment) of which he paid; one third (1/3) was paid by G on February 14,
1990 out of a cash gift given to her by her parents on her graduation on April 6, 1989; and the
balance was paid out of the spouses’ joint income; and
 an apartment unit donated to B by an uncle on June 19, 1987

1. Who owns the foregoing properties? Explain. (5%)

SUGGESTED ANSWER

Since the marriage was declared void ab initio in 2001, no Absolute Community or
Conjugal Partnership was ever established between B and G. Their property relation is
governed by a “special co-ownership under Article 147 of the Family Code because they
were capacitated to marry each other. Under that Article 147, wages and salaries of the
former spouses” earned during their cohabitation shall be owned by them in equal shares
while properties acquired thru their work or industry shall be owned by them in
proportion to their respective contributions. Care and maintenance of the family is
recognized as a valuable contribution. In the absence of proof as to the value of their
respective contributions, they shall share equally.

If ownership over the house and lot was acquired by Bon August 3, 1988 at the time he
bought it on Installment before he got married, he shall remain owner of the house and lot
but he must reimburse G for all the amounts she advanced to pay the purchase price and
for her one-half share in the last payment from their joint Income. In such case, the house
and lot were not acquired during their cohabitation, hence, are not co-owned by Band G.

But if the ownership of the house and lot was acquired during the cohabitation, the house
and lot will be owned is follows:

1) 1/3 of the house and lot is owned by B. He is an undivided co-owner to that extent for his
contribution in its acquisition in the form of the down payment he made before the
celebration of the marriage. The money he used to pay the down payment was not earned
during the cohabitation, hence, It is his exclusive property.
2)1/3 of the house and lot is owned by G. She is an undivided co-owner to the extent for her
contribution in its acquisition when she paid 1/ 3 of the purchase price using the gift from
her parents. Although the gift was acquired by G

during her cohabitation with B, it is her exclusive property. It did not consist of wage or
salary or fruit of her work or Industry.

3) 1/3 of the house is co-owned by Band G because the payment came from their co-owned
funds, i.e., their joint income during their cohabitation which is shared by them equally in
the absence of any proof to the contrary.

After summing up their respective shares, B and G are undivided co-owners of the house
and lot in equal shares.

As to the apartment, it is owned exclusively by B because he acquired it before their

cohabitation. Even if he acquired it during their cohabitation it will still be his exclusive
property because it did not come from his wage or salary, or from his work or industry. It
was acquired gratuitously from his uncle.

1. If G and B had married on July 3, 1987 and their marriage was dissolved in 2007, who owns the
properties? Explain. (5%)

SUGGESTED ANSWER

The answer is the same as in letter A. Since the parties to the marriage which was later
declared void ab initio were capacitated to marry each other, the applicable law under the
New Civil Code was Article 144. This Article is substantially the same as Article 147 of the
Family Code. Hence, the determination of ownership will remain the same as in question A.
And even assuming that the two provisions are not the same, Article 147 of the Family
Code is still the law that will govern the property relations of Band G because under
Article 256, the Family Code has retroactive effect insofar as it does not prejudice or
impair vested or acquired rights under the New Civil Code or other laws. Applying Article
147 retroactively to the case of G and B will not impair any vested right. Until the
declaration of nullity of the marriage under the Family Code, B and G have not as yet
acquired any vested right over the properties acquired during their cohabitation.

VIII

Spouses Rex and Lea bore two children now aged 14 and 8. During the subsistence of their
marriage, Rex begot a child by another woman. He is now 10 years of age.

On Lea’s discovery of Rex’s fathering a child by another woman, she filed a petition for legal
separation which was granted
Rex now wants to adopt his illegitimate child.

2. Whose consent is needed for Rex’s adoption of his illegitimate child? (2.5%)

SUGGESTED ANSWER

The consent of the 14-year-old legitimate child, of the 10-year-old illegitimate child, and of
the biological mother of the illegitimate child are needed for the adoption. (Section 7 and 9,
RA 8552). The consent of Lei is no longer required because there was already a final decree
of legal separation.

2. If there was no legal separation, can Rex still adopt his illegitimate child? Explain. (2.5%)

SUGGESTED ANSWER

Yes, he can still adopt his illegitimate child but with the consent of his spouse, of his 14-
year-old legitimate child, of the illegitimate child, and of the biological mother of the
illegitimate child (Section 7 and 9, RA 8552).

IX

Eighteen-year old Filipina Patrice had a daughter out of wedlock whom she named Laurie. At
2G, Patrice married American citizen John who brought her to live with him in the United States
of America. John at once signified his willingness to adopt Laurie.

Can John file the petition for adoption? If yes, what are the requirements? If no, why? (5%)

SUGGESTED ANSWER

No, John cannot file the petition to adopt alone. Philippine law requires husband and wife
to adopt jointly except in certain situations enumerated in the law. The case of John does
not fall in any of the exceptions. (R.A. 8552).

In 1997, B and G started living together without the benefit of marriage. The relationship
produced one offspring, Venus. The couple acquired a residential lot in Parañaque. After four (4)
years or in 2001, G having completed her 4year college degree as a fulltime student, she and B
contracted marriage without a license.

The marriage of Band G was, two years later, declared null and void due to the absence of a
marriage license.
 1. If you were the judge who declared the nullity of the marriage, to whom would you award the
lot? Explair brielly. [3%)

SUGGESTED ANSWER

Since the marriage was null and void, no Absolute Community or Conjugal Partnership
was established between B and G. Their properties are governed by the “special co-
ownership provision of Article 147 of the Family Code because both Band G were
capacitated to marry each other. The said Article provides that when a man and a woman
who are capacitated to marry each other, live exclusively with each other as husband and
wife without the benefit of marriage, or under a void marriage: (1) their wages and salaries
shall be owned by them through their work or industry shall be governed by the rules on
co-ownership. In co-ownership, the parties are co-owners if they contributed something of
value in the acquisition of the property. Their share is in proportion to their respective
contributions. In an ordinary coownership the care and maintenance of the family is not
recognized as a valuable contribution for the acquisition of a property. In the Article 147
“special co-ownership”, however, care and maintenance is recognized as a valuable
contribution which will entitle the contributor to half of the property acquired.

Having been acquired during their cohabitation, the residential lot is presumed acquired
through their joint work and industry under Article 147, hence, B and G are co-owners of
the said property in equal shares.

Article 147 also provides that when a party to the void marriage was in bad faith, he
forfeits his share in the co-ownership in favor of the common children or descendants. In
default of children or descendants, the forfeited share shall belong to the innocent party. In
the foregoing problem, there is no showing that one party was in bad faith. Hence, both
shall be presumed in good faith and no forfeiture shall take place.

1. Is Venus legitimate, illegitimate, or legitimated? Explain briefly. (3%)

SUGGESTED ANSWER

Venus is illegitimate. She was conceived and born outside a valid marriage. Thus, she is
considered illegitimate (Article 165, Family Code). While Venus was legitimated by the
subsequent marriage of her parents, such legitimation was rendered ineffective when the
said marriage was later on declared null and void due to absence of a marriage license.

Under Article 178 of the Family Code, “legitimation shall take place by a subsequent valid
marriage between parents. The annulment of a voidable marriage shall not affect the
legitimation. The inclusion of the

 
that the Article’s application is limited to voidable marriages. It follows that when the
subsequent marriage is null and void, the legitimation must also be null and void. In the
present problem, the marriage between Band G was not voidable but void. Hence, Venus
has remained an illegitimate child.

XI

The spouses Peter and Paula had three (3) children. Paula later obtained a judgment of nullity of
marriage. Their absolute community of property having been dissolved, they delivered P1
million to each of their 3 children as their presumptive legitimes.

Peter later re-married and had two (2) children by his second wife Marie. Peter and Mare, having
successfully engaged in business, acquired real properties. Peter later died intestate.

1. Who are Peter’s legal heirs and how will his estate be divided among them? (5%)

SUGGESTED ANSWER

The legal heirs of Peter are his children by the first and second marriages and his surviving
second wife.

Their shares in the estate of Peter will depend, however, on the cause of the nullity of the
first marriage. If the nullity of the first marriage was psychological incapacity of one or
both spouses, the three children of that void marriage are legitimate and all of the legal
heirs shall share the estate of Peter in equal shares. If the judgment of nullity was for other
causes, the three children are illegitimate and the estate shall be distributed such that an
illegitimate child of the first marriage shall receive half the share of a legitimate child of the
second marriage, and the second wife will inherit a share equal to that of a legitimate child.
In no case may the two legitimate children of the second marriage receive a share less than
one-half of the estate which is their legitime. When the estate is not sufficient to pay all the
legitimes of the compulsory heirs, the legitime of the spouse is preferred and the
illegitimate children will suffer the reduction.

Computation:

A If the ground of nullity is psychological incapacity:

3 children by first marriage –                 1/6th of the estate for each

2 children by second marriage –    1/6th of the estate for each

surviving second spouse –                        1/6th of the estate

1. If the ground of nullity is not psychological incapacity

2 legitimate children –                    -1/4 of the estate for each of second marriage

surviving second spouse                 -1/4 of the  estate

3 illegitimate children                    -1/12 of estate for each of first marriage

 Note: The legitime of an illegitimate child is supposed to be ya the legitime of a legitimate

child or 1/ 8th of the estate. But the estate will not be sufficient to pay the said legitimes of
the 3 illegitimate children, because only 1/4. of the estate is left after paying the legitime of
the surviving spouse which is preferred. Hence, the remaining 1/4 of the estate shall be
divided among the 3 illegitimate children.

1. What is the effect of the receipt by Peter’s 3 children by his first marriage of their presumptive
legitimes on their right to inherit following Peter’s death? (5%)

SUGGESTED ANSWER:

In the distribution of Peter’s estate, one-half of the presumptive legitime received by the
three children of the first marriage shall be collated to Peter’s estate and shall be imputed
as an advance on their respective inheritance from Peter. Only half of the presumptive
legitime is collated to the estate of Peter because the other half shall be collated to the estate
of his first wife.

XII

On May 5, 1989, 16-year old Rozanno, who was issued a student permit, drove to school a car, a
gift from his parents. On even date, as his class was scheduled to go on a field trip, his teacher
requested him to accommodate in his car, as he did, four (4) of his classmates because the van
rented by the school was too crowded. On the way to a museum which the students were
scheduled to visit, Rozanno made a wrong maneuver, causing a collision with a jeepney. One of
his classmates died. He and the three (3) others were badly injured.

A Who is liable for the death of Rozanno’s classmate and the injuries suffered by Rozarino and
his 3 other classmates? Explain. (2%)
SUGGESTED ANSWER:

At the time the incident occurred in May 1989. Rozanno was still a minor. Being a minor,
Article 218 of the Family Code applies. Pursuant to Article 218, the school, its
administrators and teachers shall be liable for the acts of the minor Rozanno because of the
special parental authority and responsibility that they exercise over him. This authority
applies to all authorized activities, whether inside or outside the premises of the school,
entity or institution. The field trip, on which occasion Rozando drove the car, was an
authorized activity, and, thus, Covered by the provision. Furthermore, the parents of
Roxanno are subsidiarily liable pursuant to Article 219 (FC), and principally liable under
Article 221 (FC), if they were negligent.

1. How about the damage to the jeepney? Explain.(2%)

SUGGESTED ANSWER:

With respect to the damages caused to the jeepney, only Rozanno should be held liable
because his negligence or tortious act was the sole, proximate, and immediate cause thereof.

1. Under the same facts, except the date of occurrence of the incident, this time in mid-1994, what
would be your answer? Explain. (2%)

SUGGESTED ANSWER:

Since Rotanno was 16 years old in 1989, if the incident happened sometime in the middle of
1994, Rozanno would have been 21 years old at that time. Hence, he was already of legal
age. The law reducing the age of majority to 18 years took effect in December 1989.

Being of legal age, Articles 218, 219, and 221 of the Family Code are no longer applicable.
In such case, only Rozanno will be personally responsible for all the consequences of his act
unless the school or his parents were themselves also negligent and such negligence
contributed to the happening of the incident. In that event, the school or his parents are not
liable under Article 218, 219 or 221 of the Family Code, but will be liable under the general
provisions of the Civil Code on

XIII

Franz was the owner of Lot E which was surrounded by four (4] lots one of which-Lot C-he also
owned. He promised Ava that if she bought Lot E, he would give her a right of way in Lot C.

Convinced, Ava bought Lot E and, as promised, Franz gave her a right of way in Lot C.

Ava cultivated Lot E and used the right of way granted by Franz
Ava later found gainful employment abroad. On her return after more than 10 years, the right of
way was no longer available to her because Franz had in the meantime sold Lot C to Julia who
had it fenced,

A Does Ava have a right to demand from Julia the activation of her right of way? Explain.
(2.5%)

SUGGESTED ANSWER:

Yes. Ava has the right to demand from Julia the activation of the right of way, for the
following reasons: 1) An easement of right of way is a real right which attaches to, and is
inseparable from, the estate to which it belongs. The sale of the property includes the
easement or servitude, even if the deed of sale is silent on the matter. The vendee of the
property in which a servitude or easement exists cannot close or put up obstructions
thereon to prevent the dominant estate from using it. Ava’s working abroad for more than
ten (10) years should not be construed as non-t18er, because it cannot be implied from the
facts that she or those whom she left behind to cultivate the lot no longer use the right of
way. Note: Since a right of way is a discontinuous easement, the period of 10 years of non-
user shall be computed from the day it ceased to be used under Art. 6341(2) CC.

5) Renunciation or waiver of an easement must be specific, clear, express and made in a

public instrument in accordance with Article 1358 of the New Civil Code.

ANOTHER SUGGESTED ANSWER:

Yes. Ava has the right to demand from Julia the activation of her right of way. A voluntary
easement of right of way, like any other contract, could be extinguished only by mutual
agreement or by renunciation of the owner of the dominant estate. Also, like in any other
contract, an casement is generally effective between parties, their heirs and assigns, except
in case where the rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law (Unisource Commercial v. Chung, 593
SCRA 530 [2009]).

B Assuming Ava opts to demand a right of way from any of the owners of Lots A, B, and D, can
she do that? Explain. (2.5%

SUGGESTED ANSWER:

Yes. Ava has the option to demand a right of way on any of the remaining lots of Franz
more so after Franz sold Lot Cto Julia. The essential elements of a legal right of way under
Article 649 and 650 ofthe New Civil Code are complied with.
ANOTHER SUGGESTED ANSWER:

Yes. Ava has the option to demand a right of way from the other lots. The law provides
that whenever a piece of land acquired by sale, exchange or partition is surrounded by
other estates of the vendor, exchanger, or co-owner, he shall be obliged to grant a night of
way without indemnity (Art. 652, NCC).

ALTERNATIVE ANSWER:

No. There was merely a promise to Ava that a right of way shall be granted to her in Lot C
If Ava purchased Lot E. The promise was not reduced into writing (Obra v. Baldra, 529
SCRA 621 [2007]). Hence, It was not or could not have been registered as to warn buyers of
Lot C about the existence of the basement on the property. Not having been annotated on
the TCT to Lot C, the buyer Acquired Lot Cfree from such right of way granted to Ava.

XIV

Primo owns a pet iguana which he keeps in A manmade pond enclosed by a fence situated in his
residential lot. A typhoon knocked down the fence of the pond and the iguana crawled out of the
gate of Primo’s residence. N, A neighbor who was passing by, started throwing stones at the
iguana, drawing the iguana to move toward him. N panicked and ran but tripped on something
and suffered a broken leg

Is anyone liable for N’s injuries? Explain. (4%)

SUGGESTED ANSWER:

No one is liable. The possessor of an animal or whoever may make use of the same is
responsible for the damage which it may cause, although it may escape or be lost. This
responsibility shall cease only in case the damage should come from force majeure or from
the fault of the person who has suffered damage (Art. 3183, New Civil Code)

XV

A, B, and C entered into a partnership to operate a restaurant business. When the restaurant had
gone past break-even stage and started to garner considerable profits, C died. A and continued
the business without dissolving

the partnership. They in fact opened a branch of the restaurant, incurring obligations in the
process. Creditors started demanding for the payment of their obligations.
A Who are liable for the settlement of the partnership’s obligations? Explain? (3%)

SUGGESTED ANSWER:

The two remaining partners, A and B, are Ilable. When any partner dies and the business
is continued without any settlementofaccounts as between him or his estate, the surviving
partners are held llable for continuing the business despite the death of C (Articles 1841,
1785, par. 2, and 1833 of the New Civil Codel

1. What are the creditors’ recourse/S? Explain. (3%)

SUGGESTED ANSWER:

Creditors can file the appropriate actions, for instance, an action for the collection of sum
of money against the partnership at will” and if there are no sufficient funds, the creditors
may go alter the private properties of A and B Article 816,New Coll Codel. Creditors may
also sue the estate of C. The estate is not excused from the liabilities of the partnership even
if c is dead already but only up to the time that he remained a partner (Article 1829, 1835.
par. 2; NCC, Testate Estate of Mota v. Serra, 47 Phil. 464 (1925]). However, the liability of
C’s individual property shall be subject first to the payment of his separate debts (Article
1835, New Civil Codei.

XVI

X was the owner of an unregistered parcel of land in Cabanatuan City. As she was abroad, she
advised her sister Y via overseas call to sell the land and sign a contract of sale on her behalf.

Y thus sold the land to Bl on March 31, 2001 and executed a deed of absolute sale on behalf ofx.
Bi fully paid the purchase price.

B2, unaware of the sale of the land to B1, signified to Y his interest to buy it but asked y for her
authority from X Without informing X that she had sold the land to BI, Y sought X for a written
authority to sell

X e-mailed Y an authority to sell the land Y thereafter sold the land on May 1, 2001 to B2 on
monthly installment basis for two years, the first installment to be paid at the end of May 2001.
Who between Bl and B2 has a better right over the land? Explain. (5%)

SUGGESTED ANSWER:
B-2 has a better title. This is not a case of double sale since the first sale was void. The law
provides that when a sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing: otherwise, the sale shall be void (Article 1874,
New Civil Code). The property was sold by Y to B1 without any written authority from the
owner X. Hence, the sale to B1 was void.

ALTERNATIVE SUGGESTED ANSWER:

Under the facts, B-1 has a better right to the land. Given the fact that the Deed of Sale in
favor of B-1 and B2 are not inscribed in the Registry of Deeds, the case is governed by
Article 1544 of the New Civil Code which provides that in case of double sales of an
immovable property, the ownership shall pertain to the person who good faith was first in
possession and in the absence thereof to the person who presents the oldest title, provided
there is good faith.

In a case, the Supreme Court has held that in a sale of real estate the execution of a notarial
document of sale is tantamount to delivery of the possession of the property sold.
Ownership of the land therefore pertains to the 1” buyer. It may also be mentioned that
under Act 3344 no

instruments or deed establishing. transmitting, acknowledging, modifying, or extinguishing

right to real property not registered under Act 496 shall be valid except as between the
parties. Thus, the Deed of Sale of B-2 has no binding effect on B-1.
 LABOR AND SOCIAL LEGISLATION
PART I

TRUE OR FALSE. Explain your answer briefly.

2. Deeds of release, waivers and quitclaims are always valid and binding. (2%)

SUGGESTED ANSWER:

FALSE. Deeds of release, waivers and quitclaims are not always valid and binding. An
agreement is valid and binding only if : (a) the parties understand the terms and conditions
of their settlement; b) it was entered into freely and voluntarily by them; and (c) it is
contrary to law, morals, and public policy.

ALTERNATIVE ANSWER:

FALSE. Not all deeds of release, waivers and quitclaims are valid and binding. The
Supreme Court, In Periquet v. NLRC (186 SCRA 724 [1990]) and affirmed In Solgus
Corporation v. Court of Appeals (514 SCRA 522 [2007]), provided the following guide
posts in determining the validity of such release, waivers and quitclaims:

“Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of mind. But where it is shown
that the person making the waiver did so voluntarily, with full understanding of what he
was doing, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking.”

 
 2. The relations between employer and employee are purely contractual in nature. (2%)

SUGGESTED ANSWER:

FALSE. Some aspects of the relations between employer and employee are determined by
certain labor standards.

ALTERNATIVE ANSWER:

FALSE. The Constitution, Labor Code, Civil Code and other social legislations are replete
with provisions that define employment relationship oven without contract, with the
intention of insuring that all the rights of labor are protected.

Article 1700 of the Civil Code provides that “[The relations between capital and labor are
not merely contractual. They are so impressed with public interest that labor contracts
must yield to the common good.”

In Article 106 of the Labor Code, the principal is deemed as a direct employer in labor-
only contracting, despite absence of contractual relationship between the worker and the
principal reduced in writing.

Equity likewise affords the aggrieved party relief in a case where an agent was given
apparent authority by the employer to represent it to third persons, such as in a
relationship between hospitals and doctors practicing medicine in its establishment
(Nograles v. Capitol Medical Center, 511 SCRA 204 [2006]).

4. As a general rule, direct hiring of Overseas Filipino Workers (OFWs) is not allowed. (2%)

SUGGESTED ANSWER:

TRUE. Art. 18 of the Labor Code provides that no employer may hire a Filipino worker
for overseas employment except through the Boards and entities authorized by the
Department of Labor and Employment (DOLE) except direct-hiring by members of the
diplomatic corps, International organizations and such other employers as may be allowed
by the DOLE.

Another exemption is “Name Hire, which refers to a worker who is able to secure an
overseas employment opportunity with an employer without the assistance or participation
of any agency.

II
 4. Distinguish the terms “conciliation,” “mediation” and “arbitration”. (3%)

SUGGESTED ANSWER:

There is a DOLE official called a “Conciliator Mediator”. He is an officer of the NCMB

whose principal function is to assist in the settlement and disposition of labor –
management disputes through conciliation and preventive mediation. However, he does not
promulgate decisions that settle controversies about rights, which are demandable and
enforceable. The latter is called arbitration and is the function of a labor arbiter or a
voluntary arbitrator.

ALTERNATIVE ANSWER:

(1) CONCILIATION is the process of dispute management whereby parties in dispute are
brought together for the purpose of: (1) amicably settling the case upon a fair compromise:
(2) determining the real parties In interest; (3) defining and simplifying the issues in the
case;(4) entering into admissions or stipulations of facts; and (5) threshing out all other
preliminary matters (Section 3, Rule V, 2005 NLRC Rules of Procedure). In resolving labor
disputes, this comes before arbitration, as a mandatory process, pursuant to the State
policy of promoting and emphasizing conciliation as modes of settling labor disputes (Art.
211 (A)(a), Labor Code).

(2) MEDIATION Is a voluntary process of settling dispute whereby the parties elect a
mediator to facilitate the communication and negotiation between the parties in dispute for
the purpose of assisting them in reaching a compromise (Sec. 319), Rep. Act No. 9285 or the
Alternative Dispute Resolution Law).

(3) ARBITRATION is a system of dispute settlement that may be compulsory or voluntary,

whereby the parties are compelled by the government, or agree to submit their dispute
before an arbiter, with the Intention to accept the resolution of said arbiter over the dispute
as final and binding on them (Luzon Development Bank v. Association of Luzon
Development Employees, 249 SCRA 162 [1995]).

In this jurisdiction, compulsory arbitration in labor disputes are submitted to a labor

arbiter, whose powers and functions are clearly defined under Article 217(a) of the Labor
Code; whereas in voluntary arbitration, the powers and functions of the voluntary
arbitrator or panel of voluntary arbitrators elected to resolve the parties’ dispute involve
the interpretation and implementation of the parties’ collective bargaining agreement,
pursuant to Articles 260-262 of the Labor Code.

6. Differentiate “surface bargaining from “blue-sky bargaining”. (2%)

SUGGESTED ANSWER:
(1) SURFACE BARGAINING is defined as “going through the motions of negotiating”
without any legal intent to reach an agreement. The determination of whether a party has
engaged in unlawful surface bargaining is a question of the intent of the party in question,
which can only be inferred from the totality of the challenged party’s conduct both.at and
away from the bargaining table. It involves the question of whether an employer’s conduct
demonstrates in unwillingness to bargain in good faith or is merely hard
bargaining (Standard Chartered Bank Employees Union (NUBE) v. Confesor, 432 SCRA 308
[2004]).

(2) BLUE-SKY BARGAINING is defined as “unrealistic and unreasonable demands in

negotiations by either or both labor and management, where neither concedes anything
and demands the impossible* (Standard Chartered Bank Employees Union (NUBE) v.
Confesor, supra.).

III

A, single, has been an active member of the Social Security System for the past 20 months. She
became pregnant out of wedlock and on her 7th month of pregnancy, she was informed that she
would have to deliver the baby through caesarean Section because of some complications. Can A
claim maternity benefits? If yes, how many days can she go on maternity leave? If not, why is
she not entitled? (3%)

SUGGESTED ANSWER:

YES. The SSS Law does not discriminate based on the civil status of a female member-
employee. As long as said female employee has paid at least three (3) monthly contributions
in the twelve-month period immediately preceding the semester of her childbirth, she can
avail of the maternity benefits under the law.

Since A gave birth through C-section, she is entitled to one hundred percent (100%) of her
average salary credit for seventy-eight (78) days, provided she notifies her employer of her
pregnancy and the probable date of her childbirth, among others (See Section 14-A, Rep.
Act No. 8282).

The same maternity benefits are ensured by Sec. 22 (b)(2) of the Magna Carta of Women
(Rep. Act No. 9710).

IV
A, a worker of ABC Company, was on leave with pay on March 31, 2010. He reported for work
on April 1 and 2. Maundy Thursday and Good Friday, respectively, both regular holidays. Is A
entitled to holiday pay for the two successive holidays? Explain, (3%)

SUGGESTED ANSWER:

YES. A is entitled to holiday pay equivalent to two hundred percent (200%) of his regular
daily wage for the two successive holidays that he worked (Section 6/a), Rule IV, Book III
of the Omnibus Rules implementing the Labor Code).

Company XYZ has two recognized labor unions, one for its rank-and-file employees (RFLU),
and one for supervisory employees (SELU). Of late, the company instituted a restructuring
program by virtue of which A, a rank-and-file employee and officer of RFLU, was promoted to a
supervisory position along with four (4) other colleagues, also active union members and/or
officers. Labor Union KMJ, a rival labor union seeking recognition as the rank-and-file
bargaining agent, filed a petition for cancellation of the registration of RFLU on the ground that
Aand her colleagues have remained to be members of RFLU, Is the petition meritorious?
Explain. (3%)

SUGGESTED ANSWER:

7. Having been promoted to supervisory positions, A and her colleagues are no longer part of the
rank-and file bargaining unit. They are deemed removed from membership of RFLU (Art. 245-A,
Labor Code as amended by Rep. Act No. 9481).

VI

A is a member of the labor union duly recognized as the sole bargaining representative of his
company. Due to a bargaining deadlock, 245 members of the 500-strong union voted on March
13, 2010 to stage a strike. A notice of strike was submitted to the National Conciliation and
Mediation Board on March 16, 2010. Seven days later or on March 23, 2010, the workers staged
a strike in the course of which A had to leave and go to the hospital where his wife had just
delivered a baby. The union members later intimidated and barred other employees from entering
the work promises thus paralyzing the business operations of the company.

A was dismissed from employment as a consequence of the strike.

2. Was the strike legal? Explain. (3%)

SUGGESTED ANSWER:
 4. The strike was not legal due to the union’s failure to satisfy the required majority vote of
union membership (251 votes), approving the conduct of a strike (See Art. 26301, Labor Code;
Section 11, Rule XXII, Dept. Order No. 40-03

Also, the strike was illegal due to the non-observance of the 30-day cooling off period by the
union (Art. 263/c), Labor Code).

2. Was A’s dismissal valid? Why or why not? (3%)

SUGGESTED ANSWER:

2. Article 264 of the Labor Code distinguishes the effects of illegal strikes between ordinary
workers and union officers who participate therein. A, as an ordinary striking worker, may not
be declared to have lost his employment status by mere participation in an illegal strike, unless
there is proof that he knowingly participated in the commission of illegal acts during the
strike(Arellano University Employees and Workers Union v. CA. 502 SCRA 219 [2006]). This is an
aspect of the State’s constitutional and statutory mandate to protect the rights of employees to
self-organization (Club Filipino, Inc. v. Bautista, 592 SCRA 471 [2009]).

VII

A was an able seaman contracted by ABC Recruitment Agency for its foreign principal,
Seaworthy Shipping Company (SSC). His employment contract provided that he would serve on
board the Almeda IT for eight (8) months with a monthly salary of US $450. In connection with
his employment, he signed an undertaking to observe the drug and alcohol policy which bans
possession or use of all alcoholic beverages, prohibited substances and unprescribed drugs on
board the ship. The undertaking provided that: (1) disciplinary action including dismissal would
be taken against anyone in possession of the prohibited substances or who is impaired by the use
of any of these substances, and (2) to enforce the policy, random test sampling would be done on
all those on board the ship.

On his third month of service while the Almieda I was docked at a foreign port, a random drug
test was conducted oli all members of the crew and A tested positive for marijuana. He was
given a copy of the drug test result. In compliance with the company’s directive, he submitted his
written explanation which the company did not find satisfactory. A month later, he was
repatriated to the Philippines.

Upon arrival in the Philippines, A filed with the National Labor Relations Commission (NLRC)
a complaint against the agency and the principal for illegal dismissal with a claim for salaries for
the unexpired portion of his contract.
 3. Was A’s dismissal valid? Explain. (3%)

SUGGESTED ANSWER:

NO, A’s dismissal was not valid. A was not found to be *in possession of the prohibited
substance” nor was he Him paired by the use” thereof. Being tested positive for
marijuana” is not a ground for “disciplinary action” under the “undertaking” he signed.

ALTERNATIVE ANSWER:

YES, A’s dismissal was valid. He was tested positive for marijuana. This is in violation of
the drug and alcohol policy, which bans possession, or use of all alcoholic beverages,
prohibited substances and un-prescribed drugs on board the ship.

7. Is his claim for salaries for the unexpired portion of his contract tenable? Explain. (3%)

SUGGESTED ANSWER:

YES, Section 10 of Rep. Act No. 8042 (as amended by Rep. Act No. 10022) provides that in
case of termination of overseas employment without just, valid or authorized cause as
defined by law or contract, or any unauthorized deductions from the inigrant worker’s
salary, the worker shall be entitled to the full reimbursement of his placement fee with
interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of
his employment contract or for three (3) years for every year of the unexpired term,
whichever is less (cf. Serrano v. Gallant Maritime, 582 SCRA 254 [2009]).

ALTERNATIVE ANSWER:

3. Under Rep. Act No. 8042, money claim can be made only if there is dismissal without just or
authorized cause.

VIII

ABC company and U labor union have been negotiating for a new Collective Bargaining
Agreement (CBA) but failed to agree on certain economic provisions of the existing agreement.
In the meantime, the existing CBA expired. The company thereafter refused to pay the
employees their midyear bonus, saying that the CBA which provided for the grant of midyear
bonus to all company employees had already expired. Are the employees entitled to be paid their
midyear bonus? Explain your answer. (3%)

SUGGESTED ANSWER:
YES, under Article 253 of the Labor Code, the parties Are duty-bound to maintain the
status quo and to continue in full force and effect the terms and conditions of the existing
CBA until a new agreement is reached by the parties.

Likewise, Art. 253-A provides for an automatic renewal clause of a CBA. Although a CBA
has expired, it continues to have legal effects as between the parties until a new CBA has
been entered into.

The same is also supported by the principle of holdover, which states that despite the lapse
of the formal effectivity of the CBA, the law stills considers the same as continuing in force
and effect until a new CBA shall have been validly executed (MERALCO v. Hon. Sec. of
Labor, 337 SCRA 90 [2000] citing National Congress of Unions in the Sugar Industry of
the Philippines v. Ferrer-Calleja, 205 SCRA 478 [1992]).

The terms and conditions of the existing CBA remain under the principle of CBA
continuity.

IX

A was working as a medical representative of RX pharmaceutical company when he met and fell
in love with B, a marketing strategist for Delta Drug Company, a competitor of RX. On several
occasions, the management of RX called A’s attention to the stipulation in his employment
contract that requires him to disclose any relationship by consanguinity or affinity with co-
employees or employees of competing companies in light of a possible conflict of interest A
seeks your advice on the validity of the company policy. What would be your advice? (3%)

SUGGESTED ANSWER:

The company policy is valid. However, it does not apply to A. As A and Bare not yet
married, no relationship by consanguinity or affinity exists between them. The case of
Duncan v. Glaxo Welcome(438 SCRA 343 [2004]] does not apply in the present case.

A, an employee of XYZ Cooperative, owns 500 shares in the cooperative. He has been asked to
join the XYZ Cooperative Employees Association. He seeks your advice on whether he can join
the association. What advice will you give him? (3%)

SUGGESTED ANSWER:
A cannot join XYZ Cooperative Employees Association, because owning shares in XYZ
Cooperative makes him a co-owner thereof.

An employee-member of a cooperative cannot join a union and bargain collectively with his
cooperative for an Howner cannot bargain with himself and his co-owners (Cooperative
Rural Bank of Davao City, Inc. v. Calleja, 165 SCRA 725, 732 [1988]; San Jose City –
Electric Service Cooperative, Inc. v. Ministry of Labor, 173 SCRA 697,701703 [1989]).

XI

Because of continuing financial constraints, XYZ, Inc. gave its employees the option to
voluntarily resign from the company. A was one of those who availed of the option. On October
5, 2007, he was paid separation benefits equivalent to seven (7) months pay for his six (6) years
and seven (7) months of service with the company and he executed a waiver and quitclaim.

A week later, A filed against XYZ, Inc. a complaint for illegal dismissal. While he admitted that
he was not forced to sign the quitclaim, he contended that he agreed to tender his voluntary
resignation on the belief that XYZ, Inc. was closing down its business. XYZ, Inc., however
continued its business under a different company name, he claimed.

Rule on whether the quitclaim executed by A (Gabrielj is valid or not. Explain. (3%)

SUGGESTED ANSWER:

The quitclaim executed by A is valid and binding.

Generally, deeds of release, waiver or quitclaims cannot bar employees from demanding
benefits to which they are legally entitled or from contesting the legality of their dismissal,
since quitclaims are looked upon with disfavor and are frowned upon as contrary to public
policy. However, where the person making the waiver has done so voluntarily, with a full
understanding thereof, and the consideration for the quitclaim is credible and reasonable,
the transaction must be recognized as being a valid and binding undertaking (Francisco
Soriano, Jr. NLRC, et al., 530 SCRA 526 [2007]).

A elected to voluntarily resign, and accepted a credible and reasonable separation benefits
package. In exchange, A executed a waiver and quitclaim.

A’s resignation could not have possibly been vitiated by any fraud or misrepresentation on
the part of XYZ, Inc. The company offered its voluntary resignation package because of
continuing financial constraints, and not preliminary to closure of business. A’s belief is not
the kind of proof required that will show he was defrauded, his consent vitiated, and
therefore the termination of his employment illegal.
ALTERNATIVE ANSWER:

The quitclaim is invalid. The signing of the quitclaim was based on a wrong premise, and
the employer was deceitful by not divulging full information. The subsequent re-opening of
the business under another name is an indication of bad faith and fraud..

XII

On December 12, 2008, A signed a contract to be part of the crew of ABC Cruises, Inc. through
its Philippine marining agency XYZ. Under the standard employment contract of the Philippine
Overseas Employment Administration (POEA), his employment was to commence upon his
actual departure from the port in the point of hire, Manila, from where he would take a flight to
the USA to join the cruise ship “MS Carnegie.” However, more than three months after A
secured his exit clearance from the POEA for his supposed departure on January 15, 2009, XYZ
still had not deployed him for no valid reason.

Is A entitled to relief? Explain. (3%)

ALTERNATIVE ANSWER:

YES. Even if no departure took place, the contract of employment has already been
perfected which creates certain rights and obligations, the breach of which may give rise to
a cause of action against the erring party:

(1) A can file a complaint for Recruitment Violation for XYZ’s failure to deploy him within
the prescribed period without any valid reason, a ground for the imposition of
administrative sanctions against XYZ under Section 2, Rule I, Part V of the 2003 POEA
Rules on Employment of Seafarers.

(2) At the same time. A can file a case for illegal recruitment under Section 6(L) of Rep. Act
No. 8042 (cf. Section 11 Rule I, Part V of the 2003 POEA Rules on Employment of
Seafarers).

(3) A may likewise file a complaint for breach of contract, and claim damages there for
before the NLRC, despite absence of employer employee relationship. Section 10 of Rep.
Act No. 8042 conferred jurisdiction on the Labor Arbiter not only on claims arising out of
EER, but also by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages.
(Santiago vs. CF Sharp Crew Management, 527 SCRA 165 [2007]).

XIII
A is employed by XYZ Company where XYZ Employees Union (XYZ-EU) is the recognized
exclusive bargaining agent. Although A is a member of rival union XYR-MU, he receives the
benefits under the CBA that XYZ-EU had negotiated with the company.

XYZ-EU assessed A a fee equivalent to the dues and other fees paid by its members but A insists
that he has no obligation to pay said dues and fees because he is not a member of XYZ-EU and
he has not issued an authorization to allow the collection. Explain whether his claim is
meritorious. (3%)

SUGGESTED ANSWER:

2. The fee exacted from A takes the form of an AGENCY FEE. This is sanctioned by Article 248 (e)
of the Labor Code.

The collection of agency fees in an amount equivalent to union dues and fees from
employees who are not union members is recognized under Article 248(e) of the Labor
Code. The union may collect such fees even without any written authorization from the
non-union member employees, if said employees accept the benefits resulting from the
CBA. The legal basis of agency fees is quasicontractual (Del Pilar Academy v. Del Pilar
Academy Empluyeres Urzton, 553 SCRA 590 [2008]).

PART II

XIV

After working from 10 a.m. to 5 p.m. on a Thursday as one of 5,000 employees in a beer factory,
A hurried home to catch the early evening news and have dinner with his family. At around
10p.m. of the same day, the plant manager called and ordered A to fill in for C who missed the
second shift.

2. May A validly refuse the plant manager’s directive? Explain. (2%)

SUGGESTED ANSWER:

YES. A may validly refuse to fill in for C. A may not be compelled to perform overtime
work considering that the plant manager’s directive is not for an emergency overtime
work, as contemplated under Article 89 of the Labor Code.

2. Assuming that A was made to work from 11 p.m. on Thursday until 2 a.m. on Friday, may the
company argue that, since he was two hours late in coming to work of Thursday morning, he
should only be paid for work rendered from 1 a.m. to 2 a.m.? Explain. (3%)

SUGGESTED ANSWER:
 3. Undertime is not off-set by overtime (Art. 88, Labor Code)

XV

Samahang Manggagawa ng Terracota, a union of supervisory employees at Terracota Inc.,

recently admitted A member of the company’s managerial xiafr, A, Into the union ranks.

3. Should A be a member of the supervisory union? Explain.

SUGGESTED ANSWER:

YES, as long as A is not a confidential employee who has access to confidential matters on
labor relations (San Miguel Corporation Supervisors and Exempt Employees Union v.
Laguesma, 277 SCRA 370,374-375 [1997]]

If A performs supervisory functions, such as overseeing employees’ performance and with

power of recommendation, then A is a rightful member of the supervisory union.
Otherwise, he may not, because Samahang Manggagawa ng Terracota cannot represent A,
A being not part of SMT’s bargaining unit.

B Assuming that A is ineligible to join the union, should the registration of Samahang
Manggagawang Terracota be cancelled? Explain. (3%)

SUGGESTED ANSWER:

3. Rep. Act No. 9481 introduced a new provision, Art. 245-A, which provides that mixed
membership is not a ground for cancellation of a union’s registration, but said employees
wrongfully joined are deemed removed from said union.

XVI

On the first day of collective bargaining negotiations between rank-and-file Union A and B Bus
Company, the former proposed a P45/day increase. The company insisted that ground rules for
negotiations should first be established, to which the union agreed. After agreeing on ground
rules on the second day, the union representatives reiterated their proposal for a wage increase.
When company representatives suggested a discussion of political provisions in the Collective
Bargaining Agreement as stipulated in the ground rules, union members went on mass leave the
next day to participate in a whole-day prayer rally in front of the company building.
  The company filed a petition for assumption of jurisdiction with the Secretary of Labor and
Employment. The Union opposed the petition, arguing that it did not intend to stage a strike.
Should the petition be granted? Explain. (2%)

SUGGESTED ANSWER:

YES.

There was a strike. What the union engaged in was actually a “work stoppage in the guise
of a protest rally.

Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the
concerted action of employees as a result of an industrial or labor dispute. The fact that the
conventional term “strike was not used by the striking employees to describe their common
course of action is in consequential. What is controlling is the substance of the situation,
and not its appearance. The term strike” encompasses not only concerted work stoppages,
but also slowdowns, mass leaves, ait-downs, attempts to damage, destroy or sabotage plant
equipment and facilities, and similar activities (Santa Rosa CocaCola Plant Employees
Union, Donricou. Sebastian, et al. v. Coca-Cola Bottlers Phils., Inc., 512 SCRA 437 [2007]).

2. The Union contended that assuming that the mass leave will be considered as a strike, the same
was valid because of the refusal of the company to discuss the economic provisions of the CBA.
Rule on the contention, (2%)

SUGGESTED ANSWER:

The Union’s contention is wrong. A strike may be declared only in cease of deadlock in
collective bargaining negotiations and unfair Labor practice (Article 263(c, Labor Code);
Section 1, Rule V, NCMB Manual of Procedures).

The proposal of the company to discuss political provisions pursuant to the ground rules
agreed upon does not automatically mean that the company refuses to discuss the economic
provisions of the CBA, or that the company was engaged in “surface bargaining” in
violation of its duty to bargain, absent any showing that such tend to show that the
company did not want to reach an agreement with the Union. In fact, there is no deadlock
to speak of in this case.

The duty to bargain does not compel either party to agree to a proposal or require the
making of a concession, The parties’ failure to agree which to discuss first on the
bargaining table did not amount to ULP for violation of the duty to bargain.
Besides, the mass leave conducted by the union members failed to comply with the
procedural requirements for a valid strike under the Rules, without which, the strike
conducted taints of illegality.

2. Union member AA, a pastor who headed the prayer rally, was served a notice of termination by
management after it filed the petition for assumption of jurisdiction. May the company validly
terminate AA? Explain. (2%)

SUGGESTED ANSWER

3. The company cannot terminate AA because the Labor Code provides mere participation of a
worker in a strike shall not constitute sufficient ground for termination of his employment.

XVI

A was hired in a sugar plantation performing such tasks as weeding, cutting and loading canes.
planting cane points, fertilizing and cleaning the drainage. Because his daily presence in the field
was not required, A also worked as a houseboy at the house of the plantation owner. For the next
planting season, the owner decided riot to hire A as a plantation worker but as a houseboy
instead. Furious, A filed a case for illegal dismissal against the plantation owner. Decide with
reason. (3%)

SUGGESTED ANSWER

A is a regular seasonal employee. Therefore, he cannot be dismissed without just or valid

cause.

The primary standard for determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or
business of the employer (Pier 8 Arrastre & Steredoring Services, Inc., et al. v. Jeff B.
Boclot, 534 SCRA 431 [2007]). Considering that A, as plantation worker, performs work
that is necessary and desirable to the usual business of the plantation owner, he is therefore
a regular seasonal employee and is entitled to reinstatement upon onset of the next season
unless he was hired for the duration of only one season (Hacienda Bino v. Cuenca, 456
SCRA 300 [2005]].

Converting Ato a mere houseboy at the house of the plantation owner amounts to an act of
severing his employment relations as its plantation worker (Angeles D. Fernandez, 513
SCRA 378 [2007]).

ALTERNATIVE ANSWER
It is management prerogative to determine what kind of worker is needed by the
plantation. Of course, if the prerogative is exercised and results in redundancy, there must
be payment of separation pay under Article 283 of the Labor Code.

XVIII

Flight attendant A, five feet and six inches tall, weighing 170 pounds ended up weighing 220
pounds in two years Pursuant to the long standing Cabin and Crew Administration Manual of the
employer airline that set a 147-pound limit for A’s height, management sent A a notice to “shape
up or ship out” within 60 days. At the end of the 60-day period, A reduced her weight to 205
pounds. The company finally served her a Notice of Administration Charge for violation of
company standards on weight requirements. Should A be dismissed? Explain. (3%)

SUGGESTED ANSWER

3. While the weight standards for cabin crew may be a valid company policy in light of its nature
as a common cartier, the airline company is now estopped from enforcing the Manualas cround
for dismissal against A. It hired A despite her weight of 170 pounds, in contravention of the
same Manual it now Invoked.

The Labor Code gives to in airline the power to determine appropriate minimum age and
other standards for requirement or termination in special occupations such as those of light
attendants and the like. Weight standards for cabin crew is a reasonable imposition by
reason of flight safety (Yrasuegut v. PAL, 569 SCRA 467 [2008]). However, A had already
been employed for two (2) years before the airline company imposed on her this weight
regulation, and nary an incident did the airline company raise which rendered her amiss of
her duties.

XIX

Several employees and members of Union A were terminated by Western Phone Co. on the
ground of redundancy. After complying with the necessary requirements, the Union staged a
strike and picketed the premises of the company. The management then filed a petition for the
Secretary of Labor and Employment to assume jurisdiction over the dispute. Without the benefit
of a hearing, the Secretary issued an Order to assume jurisdiction and for the parties to revert to
the status quo ante litem

2. Was the order to assume jurisdiction legal? Explain, (2%)

 
SUGGESTED ANSWER

YES. The Secretary of Labor and Employment has plenary power to assume jurisdiction
under Article 263() of the Labor Code. When in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in un industry indispensable to the national
Interest, the Secretary of Labor may assume jurisdiction over the dispute and decide it or
certify it to the NLRC for compulsory Arbitration (Art. 263/g), Labor Code). This
extraordinary authority glven to the Secretary of Labor is aimed at arriving at a peaceful
and speedy solution to labor disputes, without jeopardizing national interests (Steel
Corporation . SCP Employees Unton, 551 SCRA 594 [2008]). Such assumption shall have
the effect of automatically enjoining an impending strike or lockout, or in order directing
immediate return to work and resume operations, if a strike already took place, and for the
employer to re-admit all employees under the same terms and conditions prevailing before
the strike or lockout (Art. 263/9), Labor Code; Sec. 15, Rule XXII, Dept. Order No. 40-G-
03).

2. Under the same set of facts the Secretary instead issued an Order directing all striking workers
to return to work within 24 hours, except those who were terminated due to redundancy. Was
the Order legal? Explain. (3%)

SUGGESTED ANSWER

2. The Secretary of Labor’s order will be inconsistent with the established policy of the State of
enjolning the parties from performlng acts that undermine the onderlying principles embodied
in Article 26318) of the Labor Code.

In this case, excepting the employees terminated due to redundancy from those who are
required to return

to-work, which was the very labor dispute that sparked the union to strike, the Secretary of
Labor comes short of his duty under Article 26318) to maintain status quo or the terms and
conditions prevailing before the strike. In fact, the Secretary could be accused of disposing
of the parties’ labor dispute without the benefit of a hearing, in clear derogation of due
process of law.

XX

A, a driver for a bus company, sued his employer for non-payment of commutable service
incentive leave credits upon his resignation after five years of employment. The bus company
argued that A was not entitled to service incentive leave since he was considered a field
personnel and was paid on commission basis and that, in any event, his claim had prescribed. If
you were the Labor Arbiter, how would you rule? Explain. (6%)

SUGGESTED ANSWER:

I will grant the prayer of A.

Payment on commission basis alone does not prove that A is a field personnel. There must
be proof that A is left to perform his work unsupervised by his employer. Otherwise, he is
not a field personnel, thus entitled to commutable service incentive leave (SIL) credits
(Auto Bus u. Bautista, 458 SCRA 578 [2005]).

His action has not yet prescribed. In Auto Bus u. Bautista (supra), the Supreme Court
recognized that SIL is such a unique labor standard benefit, because it is commutable. An
employee may claim his accrued SIL throughout the years of his service with the company
upon his resignation, retirement, or termination. Therefore, when A resigned after five
years, his right of action to claim ALL of his SIL benefits accrued at the time when the
employer refused to pay him his rightful SIL benefits. (Art. 291, Labor Code).

ALTERNATIVE ANSWER

The money claim as cause of action has prescribed because the claim was filed after five (5)
years from date of negotiation. Art. 291 of the Labor Code provides that all money claims
arising from employeremployee relations occurring during the effectivity of the Code shall
be filled within three (3) years from that time the cause of action has accrued, otherwise,
they shall be forever barred.

XXI

A was approached for possible overseas deployment to Dubai by X, an interviewer of job

applicants for Alpha Personnel Services, Inc., an overseas recruitment agency. X required A to
submit certain documents (passport, NBI clearance, medical certificate) and to pay P25,000 as
processing fee. Upon payment of the said amount to the agency cashier, A was advised to wait
for his visa. After five months, A visited the office of Alpha Personnel Services, Inc. during
which X told him that he could no longer be deployed for employment abroad. A was informed
by the Philippine Overseas Employment Administration (POEA) that while Alpha Personnel
Services, Inc. was a licensed agency, X was not regiatered as its employce, contrary to POEA
Rules and Regulations. Under POEA Rules and Regulations, the obligation to register personnel
with the POEA belongs to the officers of a recruitment agency.

2. May X be held criminally lable for illegal recruitment? Explain. (2%)

SUGGESTED ANSWER:
 2. X performed his work with the knowledge that he works for a licensed recruitment agency. He
is in no position to know that the officers of said recruitment agency failed to register him as its
personnel (People v. Chowdury, 325 SCRA 572 [2000]. The fault not being

attributable to him, he may be considered to have apparent authority to represent Alpha in

recruitment for overseas employment.

2. May the officers having control, management or direction of Alpha Personnel Services, Inc. be
held criminally liable for illegal recruitment? Explain. (3%)

SUGGESTED ANSWER:

Yes. Alpha, being a licensed recruitment agency, still has obligations to A for processing his
papers for overseas employment. Under Section 6[m] of Rep. Act No. 8042, failure to
reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually
take place without the worker’s fault, amounts to illegal recruitment.

XXII

A was recruited to work abroad by Speedy Recruitment Agency as a technician for a Saudi
Arabian construction firm, with a monthly salary of $650.00. When she got to the construction
site, the employer compelled her to sign another contract that referred her to another employer
for a salary of $350.00. She worked for the second employer and was paid $350.00 until her two-
year contract expired. Upon her return to the Philippines, she filed a case against the agency and
the two employers. May the agency validly raise the defense that it was not privy to the transfer
of A to the second employer? Explain. (3%)

SUGGESTED ANSWER:

2. Speedy’s obligation to A is joint and several with the principal employer (Sec. 10, Rep. Act No.
8042).

The liability of the principal/employer and the recruitment/placement agency for any and
all claims for

Memorandum, management explained that too much texting and phone-calling by employees
disrupted company operations. Two employees-members of Union X were terminated from
employment due to violation of the Triemorandum-policy. The union countered with a
prohibitory injunction case (with prayer for the issuance of a temporary restraining order) filed
with the Regional Trial Court, challenging the validity and constitutionality of the cell phone
bani. The company filed a motion to dismiss, arguing that the case should be referred to the
grievance machinery pursuant to an existing Collective Bargaining Agreement with Union X,
and eventually to Voluntary Arbitration. Is the company correct? Explain. (3%)

SUGGESTED ANSWER:

YES.

Termination cases arising in or resulting from the interpretation and implementation of

collective bargaining agreements, and interpretation and enforcement of company
personnel policies which were initially processed at the various steps of the plant-level
Grievance Procedures under the parties collective bargaining areements, fall within the
original and exclusive jurisdiction of the voluntary arbitrator purgiant to Article 217 (c)
and Article 261 of the Labor Code.

ALTERNATIVE ANSWER

NO, The Regional Trial Court has jurisdiction to hear and

decide the prohibitory injunction case filed by Union X against
Company C to enjoin the latter from Implementing the
memorandum-policy against use of cell phones in the factory.
What is at isaue is Union X’S challenge against the validity and
constitutionality of the cell phone ban being implemented by
Company C. The Issue, therefore, does not involve the
interpretation of the memorandum-policy, but its intrinsie
validity (Haliguefla v. PAL, 602 SCRA 297 [2009])

POLITICAL LAW by the UP Law Center

OCTOBER 15, 2018

PART I

The dictatorial regime of President A of the Republic of Gordon was toppled by a combined
force led by Gen. Abe, former royal guards and the secessionist Gordon People’s Army. The new
government constituted a Truth and Reconciliation Commission to look into the serious crimes
committed under President A’s regime. After the hearings, the Commission recommended that
an amnesty law be passed to cover even those involved in mass killings of members of
indigenous groups who opposed President A. International human rights groups argued that the
proposed amnesty law is contrary to international law. Decide with reasons. (4%)

SUGGESTED ANSWER:

The proposed amnesty law is contrary to international law. The mass killings of members
of indigenous groups constitute genocide under Article II(a), Convention for the Prevention
and Punishment of the Crime of Genocide. The proposed amnesty law is against
international law because it is incompatible with, or in violation of the international
obligation under Article IV of this Convention that “Persons committing genocide… shall
be punished, whether they are constitutionally responsible rulers, public officials or private
individuals.”

“The Contracting Parties confirm that genocide, whether committed in time of peace or in
time of war, is a crime under international law which they undertake to prevent and to
punish.”  

II

Compare and contrast the jurisdiction of the International Criminal Court and International Court
of Justice. (3%)

SUGGESTED ANSWER:

The jurisdiction of the International Court of Justice pertains to international

responsibility in the concept of civil liability, while that of the International Criminal Court
pertains to criminal liability.

While States are the subject of law in international responsibility under the jurisdiction of
the International Court of Justice, the criminal liability within the jurisdiction of the
International Criminal Court pertains to individual natural person. (Article 34(i) of the
Statute of the International Court of Justice; Articles 25 and 27 of the Statute of the
International Criminal Court.)

III

A,      A British photojournalist, was covering the violent protests of the Thai Red-Shirts
Movement in Bangkok, Despite warnings given by the Thai Prime Minister to foreigners,
specially journalists, A moved around the Thai capital. In the course of his coverage, he was
killed with a stray bullet which was later identified as having come from the ranks of the Red-
Shirts. The wife of A sought relief from Thai authorities but was refused assistance.

3. Is there state responsibility on the part of Thailand? (2%)

SUGGESTED ANSWER

There is no state responsibility on the part of Thailand. The wrongful act in question is an
act of private individuals and not of an organ of the government or a state official. Hence, it
is not attributable to Thailand as its wrongful act for the purpose of state responsibility.

3. What is the appropriate remedy available to the victim’s family under international law? (3%)

SUGGESTED ANSWER

The appropriate remedy available to the family of A is to seek diplomatic protection from
Great Britain to press a claim for reparation. (Brownlie, Principles of Public International
Law, 7th ed., pp. 460 and 477-478.) However, in order that the claim will be allowable
under customary international law, the family of A must first exhaust the legal remedies
available in Thailand. (Brownlie, Principles of Public International Law, 7th ed. p.492.)

IV

Choose the statement which appropriately completes the opening phrase!”

5. State which resorts to retorsion in international law

6. must ensure that all states consent to its act.
7. cannot curtail migration from the offending state.
8. can expel the nationals of the offending state.
9. should apply proportionate response within appreciable limit.
10. None of the above.

Explain your answer. (2%)

SUGGESTED ANSWER:

The correct answer is letter “D”.

A State which resorts to retorsion in international law should apply proportionate response
within appreciable limit. Retorsion is merely retallation for discourteous, unkind, unfair or
unfriendly acts by acts of the same or similar kind. Oppenheim’s International Law, Vol.
II, 7 ed., p. 134.)

Congresswoman A is a co-owner of an industrial estate in Sta. Rosa, Laguna which she had
declared in her Statement of Assets and Liabilities. A member of her political party authored a
bill which would provide a 5-year development plan for all industrial estates in the Southern
Tagalog Region to attract investors. The plan included an appropriation of 2 billion pesos for
construction of roads around the estates. When the bill finally became law, a civil society
watchdog questioned the constitutionality of the law as it obviously benefitted Congresswoman
A’s industrial estate. Decide with reasons. (3%)

SUGGESTED ANSWER:

The law is constitutional. Section 12, Article VI of the Constitution does not prohibit the
enactment of a law which will benefit the business interests of a member of the Senate or
the House of Representatives. It only requires that if the member of Congress whose
business interests will be benefited by the law is the one who will file the bill, he should
notify the House concerned of the potential conflict of interest.

VI

The “Poverty Alleviation and Assistance Act was passed to enhance the capacity of the most
marginalized families nationwide. A financial assistance scheme called “conditional cash
transfers” was initially funded 500 million pesos by Congress. One of the provisions of the law
gave the Joint-Congressional Oversight Committee authority to screen the list of beneficiary
families initially determined by the Secretary of Department of Social Welfare and Development
pursuant to the Department implementing rules. Mang Pandoy, a resident of Smokey Mountain
in Tondo, questioned the authority of the Committee.

5. Does Mang Pandoy have legal standing to question the law? (2%)

SUGGESTED ANSWER:

On the assumption that Mang Pandoy is a beneficiary of the financial legal assistance, he
has legal standing to question the law. He may be prejudiced by the improper screening of
the beneficiary families. (Province of Batangas v. Romulo, 492 SCRA 736 (2004). Besides,
since the implementation of the law will require the expenditure of public funds, as a
taxpayer Mang Pandoy has legal standing to question the law. (Cruzv. Secretary of
Environment and Natural Resources, 347 SCRA 128 [2000].)

7. Is the grant of authority to the Oversight Committee to screen beneficiaries constitutional? (3%)
Decide with reasons.

SUGGESTED ANSWER:

The grant of authority to the Oversight Committee to screen beneficiaries is

unconstitutional. It violates the principle of separation of powers. By being involved in the
implementation of the law, the Oversight Committee will be exercising executive power.
(Abakada Guro Party List . Puristma, 562 SCRA 251 [2008].)

VII

True or False.

8. A proclamation of a state of emergency is sufficient to allow the President to take over any
public utility. (0.5%)

SUGGESTED ANSWER

The statement that a proclamation of emergency is sufficient to allow the President to take
over any public utility is false. Since it is an aspect of emergency powers, in accordance
with Section 23(2), Article VI of the Constitution, there must be a law delegating such
power to the President. (David J. Macapagal-Arroyo, 489 SCRA 160 [2006].)

3. A treaty which provides tax exemption needs no concurrence by a majority of all the Members
of the Congress. (0.5%)

SUGGESTED ANSWER

The statement that a treaty which provides tax exemption needs no concurrence by a
majority of all the Members of Congress is true. It is only a law, not a treaty, granting a tax
exemption which requires the concurrence of a majority of all the Members of Congress.
(Section 28(4), Article VI of the Constitution.) Without respect to its lawful substantive
content, a treaty, to be valid and effective, requires concurrence by at least two-thirds of all
the Members of the Senate. (Sec. 24, Art. VII of the Constitution).

VIII

Distinguish “presidential communications privilege from “deliberative process privilege.” (3%)

 
 

SUGGESTED ANSWER:

Presidential communications privilege applies to decision-making of the President. The

deliberative process privilege applies to decision-making of executive officials. Unlike the
deliberative process privilege,” “the presidential communications privilege” applies to
documents in their entirety and covers final and post decisional matters, as well as pre-
deliberative ones. The deliberative process privilege includes advisory opinions,
recommendations and deliberations comprising part of a process by which governmental
decisions and policies are formulated. (Nerd v. Senate Committee on Accountability of
Public Officers and Investigations, 549 SCRA 77 [2008].)

IX

The League of Filipino Political Scientists (LFPS) organized an international conference on the
human rights situation in Myanmar at the Central Luzon State University (CLSU). An exiled
Myanmar professor Sung Kui, critical of the military government in Myanmar, was invited as
keynote speaker. The Secretary of Foreign Affairs informed the President of the regional and
national security implications of having Prof. Kui address the conference. The President
thereupon instructed the immigration authorities to prevent the entry of Prof. Kui into Philippine
territory. The chancellor of CLSU argued that the instruction violates the Constitution. Decide
with reasons. (4%)

SUGGESTED ANSWER:

The argument of the chancellor of Central Luzon State University is not valid. Since an
alien has no right to enter the Philppines, preventing Prof. Sing Kui from entering the
Philippines is not a violation of his rights. (Lee and Quigley, Consular Law and Practice, 34
ed., p. 220.) Since the President has the power of control over foreign relations, he has the
power to ban aliens from entering the Philippines. (United States v. Curtiss-Wright Export
Corporation, 299 U.S. 304 [1936].)

A, the wife of an alleged victim of enforced disappearance, applied for the issuance of a Writ of
Amparo before a Regional Trial Court in Tarlac. Upon motion of A, the court issued inspection
and production orders addressed to the AFP Chief of Staff to allow entry at Carp Aquino and
permit the copying of relevant documents, including the list of detainees, if any. Accompanied
by court-designated Commission on Human Rights (CHR) lawyers, A took photographs of a
suspected isolation cell where her husband was allegedly seen being held for three days and
tortured before he finally disappeared. The CHR lawyers requested one Lt. Valdez for a
photocopy of the master plan of Camp Aquino and to confirm in writing that he had custody of
the master plan. Lt. Valdez objected on the ground that it may violate his right against self-
incrimination. Decide with reasons. (4%)

SUGGESTED ANSWER:

The objection of Lt. Valdez is not valid. The right against self-incrimination refers to
testimonial evidence and does not apply to the production of a photocopy ofthe master plan
of Camp Aquino, because it is a public record. He cannot object to the request for him to
confirm his custody of the master plan, because he is the public officer who had custody of
it. (Almonte v. Vasquez, 244 SCRA 286 [19951.)

XI

Which statement best completes the following phrase: (1%)

“Freedom from torture is a night

5. subject to derogation when national security is threatened.”

6. confined only during custodial investigation.”
7. which is non-derogable both during peacetime and in a situation of armed conflict.”
8. both (a) and (b)
9. none of the above.

SUGGESTED ANSWER:

The correct answer is letter “C”.

Freedom from torture is non-derogable both during peacetime and in a situation of armed
conflict. Under Article 4 of the International Covenant on Civil and Political Rights, the
State Parties may take measures in derogation of their obligations under this Covenant in
time of public emergency. But this derogation clause does not apply to prohibition against
torture, pursuant to Article 4/2) of the Covenant. Hence, no derogation may be made in
regard to torture.

XII

A witnessed two hooded men with baseball bats enter the house of their next door neighbor B.
After a few seconds, he heard B shouting, *Huwag Pilo babayaran kita agad.” Then A saw the
two hooded men hitting B until the latter fell lifeless. The assailants escaped using a yellow
motorcycle with a fireball sticker on it toward the direction of an exclusive village nearby. A
reported the incident to P01 Nuval. The following day, PO1 Nuval saw the motorcycle parked in
the garage of a house at Sta. Ines Street inside the exclusive village. He inquired with the
caretaker as to who owned the motorcycle. The caretaker named the brothers Pilo and Ramon
Maradona who were then outside the country. PO1 Nuval insisted on getting inside the garage.
Out of fear, the caretaker allowed him. POI Nuval took 2 ski masks and 2 bats beside the
motorcycle. Was the search valid? What about the seizure? Decide with reasons. (4%)

SUGGESTED ANSWER:

The warrantless search and the seizure was not valid. It was not made as an incident to a
lawful warrantless arrest. (People v. Baula, 344 SCRA 663 [2000].) The caretaker had no
authority to waive the right of the brothers Pilo and Ramon Maradona to waive their right
against an unreasonable search and seizure. (People v. Damaso, 212 SCRA 547 [1992].) The
warrantless seizure of the ski masks and bats cannot be justified under the plain view
doctrine, because they were seized after an invalid intrusion into the house. (People v.
Bolasa, 321 SCRA 459 [1999].)

XIII

True or False.

3. A valid and definite offer to buy a property is a prerequisite to expropriation initiated by a local
government unit. (0.5%)

SUGGESTED ANSWER:

3. The statement that a valid and definite offer to buy a property is a pre-requirement to
expropriation initiated by a local government is true. (Section 19, Local Government Code.)
4. Re-classification of land by a local government unit may be done through a resolution. (0.5%)

SUGGESTED ANSWER:

The statement that a local government unit may reclassify land through a resolution is
false. Under Section 2 of the Local Government Code, the enactment of an ordinance is
required. (Department of Agrarian Reform v. Polo Coconut Plantation Company, Inc., 564
SCRA 78 [2008].)                      

4. Boundary disputes between and among municipalities in the same province may be filed
immediately with the Regional Trial Court. (0.5%)

SUGGESTED ANSWER:
The statement that boundary disputes between and among municipalities in the same
province may be filed immediately with the Regional Trial Court is false. Under Section
118 of the Local Government Code, they should be referred for settlement to the
sangguniang panlalawigan. (Municipality of Sta. Fev. Municipality of Artao, 533 SCRA
586 [2007].)

8. The Metropolitan Manila Development Authority is authorized to confiscate a driver’s license in

the enforcement of traffic regulations. (0.5%)

SUGGESTED ANSWER:

The statement that the Metropolitan Manila Development Authority is authorized to

confiscate a driver’s license in the enforcement of traffic regulations is false. Since Republic
Act No. 7924 does not grant the Metropolitan Manila Development Authority the authority
to enact ordinances, the grant to it by Section 5(f) of Republic Act No. 7924 of the power to
confiscate drivers’ licenses without the need of any other law is an unauthorized exercise of
police power. (Metropolitan Manila Development Authority v. Garin, 456 SCRA 176
[2005].)

XIV

ABC operates an industrial waste processing plant within Laoag City. Occasionally, whenever
fluid substances are released through a nearby creek, obnoxious odor is emitted causing dizziness
among residents in Barangay La Paz. On complaint of the Punong Barangay, the City Mayor
wrote ABC demanding that it abate the nuisance. This was ignored. An invitation to attend a
hearing called by the Sangguniang Panlungsod was also declined by the president of ABC. The
city government thereupon issued a ceax and desist order to stop the operations of the plant,
prompting ABC to file a petition for injunction before the Regional Trial Court, arguing that the
city government did not have any power to abate the alleged nuisance. Decide with reasons.
(3%)

SUGGESTED ANSWER:

The city government has no power to stop the operations of the plant. Since its operations
is not a nuisance per se, the city government cannot abate it extrajudicially. A suit must be
filed in court. (AC Enterprises, Inc. v. Frabelle Properties Corporation, 506 SCRA 625
[2006].)

XV

True or False

4. A person who occupies an office that is defectively created is a de facto officer. (0.5%)
FIRST ALTERNATIVE ANSWER:

The statement that a person who occupies an office that is defectively created is a de facto
officer is false. For him to be a de facto officer, the office must be validly created. (Tuanda
v. Sandiganbayan, 249 SCRA 342 [1995].)

SECOND ALTERNATIVE ANSWER:

The statement that a person who oceupies in office that is defectively created is a de facto
officer is true. The person appointed or elected pursuant to an unconstitutional law is a de
facto officer, before the law is declared to be such. (State v. Caroll, 38 Conn. [1871].)

3. The rule on nepotism does not apply to designations made in favor of a relative of the authority
making a designation. (0.5%)

SUGGESTED ANSWER:

The statement that the rule on nepotism does not apply to designations made in favor of a
relative of the authority making the designation is false. Designation accomplishes the same
purpose as appointment. (Laurel v. Civil Service Commission, 203 SCRA 195 [1991].)

3. A discretionary duty of a public officer is never delegable. (0.5%)

SUGGESTED ANSWER:

The statement that a discretionary duty of a public officer can never be delegated is false. It
can be delegated if the delegation is authorized (Mechem, A Treatise on the Law of Public
Offices and officers, p. 368.)

3. Acquisition of civil service eligibility during tenure of a temporary appointee does not
automatically translate to a permanent appointment. (0.5%)

SUGGESTED ANSWER:

The statement that the acquisition of civil service eligibility during the tenure of a
temporary appointee does not automatically translate to a permanent appointment is true.
A new appointment which is permanent is necessary. (Province of Camarines Sur v. Court
of Appeals, 246 SCRA 281[1995].)  

 
 

XVI

Rudy Domingo, 38 years old, natural-born Filipino and a resident of the Philippines since birth,
is a Manila-based entrepreneur who runs KABAKA, a coalition of peoples’ organizations from
fisherfolk communities. KABAKA’S operations consist of empowering fisherfolk leaders
through livelihood projects and trainings on good governance. The Dutch Foundation for Global
Initiatives, a private organization registered in The Netherlands, receives a huge subsidy from the
Dutch Foreign Ministry, which, in turn is allocated worldwide to the Foundation’s partners like
KABAKA. Rudy seeks to register KABAKA as a party-list with himself as a nominee of the
coalition. Will KABAKA and Rudy be qualified as a party-list and a nominee, respectively?
Decide with reasons. (4%)

SUGGESTED ANSWER:

KABAKA and Rudy are not qualified as a party list and as nominee, respectively, since
KABAKA is receiving a subsidy from the Dutch Foreign Ministry. Under Section 2(5),
Article LX-C of the Constitution, a political party which is supported by any foreign
government cannot be registered with the Commission on Elections.

XVII

During his campaign sortie in Barangay Salamanca, Mayor Galicia was arrested at a PNP
checkpoint for carrying high-powered firearms in his car. He was charged and convicted for
violation of the COMELEC gun ban. He did not appeal his conviction and instead applied for
executive clemency. Acting on the favorable recommendation of the Board of Pardons and
Parole, the President granted him pardon. Is he eligible to run again for an elective position?
Explain briefly. (5%)

SUGGESTED ANSWER:

Mayor Galicia can run again for an elective office but not immediately. Under Section 40 of
the Local Government Code, he cannot run for an elective local office within two (2) years
after serving sentence. Under Section 12 of the Omnibus Election Code, he can run for an
elective national office after the expiration of five (5) years from his service of sentence. The
pardon granted to him is not valid. The offense involved a violation of the Omnibus
Election Code and the pardon was granted without the favorable recommendation of the
Commission on Elections. (Section 5, Article IX-C of the Constitution.)
XVIII

The House Committee on Appropriations conducted an inquiry in aid of legislation into alleged
irregular and anomalous disbursements of the Countrywide Development Fund (CDF) and
Congressional Initiative Allocation (CIA) of Congressmen as exposed by X, a Division Chief of
the Department of Budget and Management (DBM). Implicated in the questionable
disbursements are high officials of the Palace. The House Committee summoned X and the
DBM Secretary to appear and testify. X refused to appear, while the Secretary appeared but
refused to testify invoking executive privilege.

4. May X be compelled to appear and testify? If yes, what sanction may be imposed on him? (2%)

SUGGESTED ANSWER:

X may be compelled to appear and testify. Only the President or the Executive Secretary
by order of the President can invoke executive privilege. (Senate of the Philippines v.
Ermita, 488 SCRA 13 [2006].) He can be cited for contempt and ordered to be arrested. (De
la Paz v. Senate Committee on Foreign Relations, 579 SCRA 521 [2009].)

4. Is the Budget Secretary shielded by executive privilege from responding to the inquiries of the
House Committee? Explain briefly. If the answer is no, is there any sanction that may be imposed
upon him? (3%)

SUGGESTED ANSWER:

The Secretary of Budget and Management is not shielded by executive privilege from
responding to the inquires of the House Committee on Appropriations, because the inquiry
is in aid of legislation and neither the President nor the Executive Secretary by order of the
President invoked executive privilege. (Senate of the Philippines v. Ermita, 488 SCRA 1
[2006].) For refusing to testify, he may be cited for contempt and ordered to be arrested.
(De la Paz v. Senate Committee on Foreign Relations, 519 SCRA 521 [2009].)

XIX

To instill religious awareness in the students of Dona Trinidad High School, a public school in
Bulacan, the ParentTeacher’s Association of the school contributed funds for the construction of
a grotto and a chapel where ecumenical religious services and seminars are being held after
school hours. The use of the school grounds for these purposes was questioned by a parent who
does not belong to any religious group. As his complaint was not addressed by the school
officials, he filed an administrative complaint against the principal before the DECS. Is the
principal liable? Explain briefly. (5%)

SUGGESTED ANSWER:
The principal is liable. Although the grotto and the chapel can be used by different
religious sects without discrimination, the land occupied by the grotto and the chapel will
be permanently devoted to religious use without being required to pay rent. This violates
the prohibition against the establishment of religion enshrined in Section 5 of the Bill of
Rights. (Opinion No. 12 of the Secretary of Justice dated February 2, 1979.) Although
religion is allowed to be taught in public elementary and high schools, it should be without
additional cost to the government. (Section 3(3), Article XIV of the Constitution.)

XX

Define/explain the following:

4. Doctrine of operative facts (1%)

SUGGESTED ANSWER:

The doctrine of operative facts means that before a law was declared unconstitutional, its
actual existence must be taken into account and whatever was done while the law was in
operation should be recognized as valid. (Rieta v. People, 436 SCRA 273 [2004].)

 De facto municipal corporation (1%)

SUGGESTED ANSWER:

A de facto municipal corporation is one so defectively created as not to be a de jure

corporation but is nevertheless the result of a bona fide attempt to incorporate under
existing statutory authority, coupled with the exercise of corporate powers, and recognized
by the courts as such on the ground of public policy in all proceedings except a direct
attack by the state questioning its corporate existence. (Angeles, Restatement of the Law on
Local Governments, p. 23.)

3. Municipal corporation by estoppel (1%)

SUGGESTED ANSWER:

A municipal corporation by estoppel is a corporation which is so defectively formed as not

to be a de facto corporation but is considered a corporation in relation to someone who
dealt with it and acquiesced in its exercise of its corporate functions or entered into a
contract with it. (Martin, Public Corporations, 1985 ed.. p. 20.)

3. Doctrine of necessary implication (1%)

SUGGESTED ANSWER:

The doctrine of necessary implication means that every statute is understood by

implication to contain all such provisions as may be necessary to effectuate its object and
purpose, or to make effective rights, powers, privileges or jurisdiction which it grants,
including all such collateral and subsidiary consequences as may be fairly and logically
inferred from its terms. (Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor, 312
SCRA 104 [1999].)

4. Principle of holdover (1%)

SUGGESTED ANSWER:

The principle of holdover means that in the absence of an express or implied constitutional
or statutory provision to the contrary, an officer is entitled to hold his office until his
successor is appointed or chosen and has been qualified. (Topacio Nueno v. Angeles, 76
Phil. 12 [1946].)

XXI

The Sangguniang Panlungsod of Pasay City passed an ordinance requiring all disco pub owners
to have all their hospitality girls tested for the AIDS virus. Both disco pub owners and the
hospitality girls assailed the validity of the ordinance for being violative of their constitutional
rights to privacy and to freely choose a calling or business. Is the ordinance valid? Explain. (5%)
SUGGESTED ANSWER:

The ordinance is a valid exercise of police power. The right to privacy yields to certain
paramount rights of the public and defers to the exercise of police power. The ordinance is
not prohibiting the disco pub owners and the hospitality girls from pursuing their calling
or business but is merely regulating it. (Social Justice Society u. Dangerous Drugs Board,
570 SCRA 410 [2008].) The ordinance is a valid exercise of police power, because its
purpose is to safeguard public health. (Beltran vs. Secretary of Health, 476 SCRA 168
[2005].)

XXII

Governor Diy was serving his third term when he lost his governorship in a recall election.

4. Who shall succeed Governor Diy in his office as Governor? (1%)

SUGGESTED ANSWER:

The candidate who received the highest number of votes in the recall will succeed Governor
Diy. (Section 72 of the Local Government Code.)

3. Can Governor Diy run again as governor in the next election? (2%)

SUGGESTED ANSWER:

Governor Diy can run again as governor. He did not fully serve his third term, because he
lost in the recall election. His third term should not be included in computing the three-
term limit. [Lorzardav. Cornission on Elections, 311 SCRA 602 [1999).)

3. Can Governor Diy refuse to run in the recall election and instead resign from his position as
governor? (2%)

SUGGESTED ANSWER:
Governor Diy cannot refuse to run in the recall election. He is automatically considered as
a duly registered candidate. (Section 71, Local Government Code.) He is not allowed to
resign. (Section 73, Local Government Code.)

XXIII

A was a career Ambassador when he accepted an ad interim appointment as Cabinet Member.

The Commission on Appointments bypassed his ad interim appointment, however, and he was
not re-appointed. Can he re-assume his position as career Ambassador? (5%)

SUGGESTED ANSWER:

The career Ambassador cannot re-assume his position as career Ambassador. His ad
interim appointment as Cabinet Member was a permanent appointment. (Summers us.
Ozaeta, 81 Phil 754 (1948).) He abandoned his position as Ambassador when he accepted
his appointment as Cabinet Member because as Cabinet Member, he could not hold any
other office during his tenure. (Section 13, Article VII, Constitution.)

XXIV

Compare and contrast “overbreadth doctrine” from “void-for-vagueness” doctrine. (5%)

SUGGESTED ANSWER:

While the overbreadth doctrine decrees that a governmental purpose may not be achieved
by means in a statute which sweep unnecessary broadly and thereby invades the area of
protected freedom a statute is void for vagueness when it forbids or requires the doing of
an act in terms so vague that men of common intelligence cannot necessarily guess at its
meaning and differ is to its application. (Estrada v. Sandiganbayan, 369 SCRA 394 [2001].)

XXV

3. What is the rotational scheme of appointments in the COMELEC? (2%)

SUGGESTED ANSWER:
The rotational scheme of appointments in the Commission on Elections refers to the
scheme in which there is a regular recurrence of a two-year interval between the expiration
of terms of the Chairman and the Commissioners. (Gaminde vs. Commission on Audit, 347
SCRA 655 (2000).)

3. What are the two conditions for its workability? (2%)

SUGGESTED ANSWER:

The two (2) conditions for the workability of the rotational scheme of appointments are the
following: (1) the terms of the first Chairman and Commissioners should start on a
common date, irrespective of variation of dates of their appointments and qualifications,
and (2) any vacancy due to the death, resignation or disability before expiration of the term
should be filled only for the unexpired balance of the term. (Gaminde v. Commission on
Audit, 347 SCRA 655 (2000).)

3. To what other constitutional offices does the rotational scheme of appointments apply? (2%)

SUGGESTED ANSWER:

The rotational scheme of appointments applies also to the Judicial and Bar Council, the
Civil Service Commission, and the Commission on Audit. (Section 9(2), Article VIII,
Section 1(2), Article IX-B and Section 1(2), Article IX-D of the Constitution.)

XXVI

Distinguish between “pocket veto” and “item veto.” (2%)

SUGGESTED ANSWER:

A pocket veto is when the President is considered to have rejected a bill submitted to him
for his approval when Congress adjourns during the period given to the President to
approve or reject a bill.

On the other hand, an item veto, or partial veto, is the power of a President to nullify or
cancel specific provisions of a bill, usually a budget appropriations bill, without vetoing the
entire legislative package.
 

XXVII

What is the concept of association under international law? (2%)

SUGGESTED ANSWER:

An association is formed when two states of unequal power voluntarily establish durable
links. The associate delegates certain responsibilities to the other, the principal, while
maintaining its status as a state. It is an association between sovereigns. The associated
state arrangement has usually been used as a transitional device of former colonies on their
way to full independence. (Province of North Cotabato v. Government of the Republic
ofthe Philippines Peace Panel on Ancestral Domain, 568 SCRA 402 [2008]-)

Association, under international law. is a formal arrangement between a non-self-

governing territory and an independent State whereby such territory becomes an
associated State with internal self-government, but the independent state is responsible for
foreign relations and defense.

For an association to be lawful, it must comply with the general conditions prescribed in
UN General Assembly Resolution 1541(XV) of 14 December 160: (1) the population must
consent to the association; and (2) the association must promote the development and
wellbeing of the dependent state (the non-self-governing territory). Association is subject to
UN approval.

MERCANTILE LAW by the UP Law Center

OCTOBER 18, 2018

MERCANTILE LAW

Briefly describe the following types of banks: (2% each)

4. universal bank

SUGGESTED ANSWER:
A universal bank is a commercial bank with two additional powers, namely: (1) the power of an
investment house and (2) the power to invest in non-allied enterprises (Section 23, Rep. Act No. 8791,
“The General Banking Law of 2000”).

4. commercial bank

SUGGESTED ANSWER
A commercial bank is a bank that can: (1) accept drafts; (2) issue letters of credit:13] discount and
negotiate promissory notes, drafts, bills of exchange, and other evidence of debt:(4) accept or create
demand deposits; (5) receive other types of deposits, as well as deposit substitutes; (6) buy and sell
foreign exchange, as well as gold or silver bullion; (7) acquire marketable bonds and other debts
securities; and (8) extend credit, subject to such rules promulgated by the Monetary Board (Section 29,
Rep. Act No. 8791, “The General Banking Law of 2000”}

11. thrift bank

SUGGESTED ANSWER:
A thrift bank is que established as a savings and mortgage bank, a stock savings and loan association,
or  a private development bank, for the purpose of: (1) accumulating the savings of depositors and
investing them in outlets determined by the Monetary Board as necessary in the furtherance of national
economic objectives; (2) providing short-term working capital, medium and long-term financing, to
businesses engaged in agriculture, services, industry and housing; and (3) providing diversified financial
and allied services for its chosen market and constituencies specially for small and medium enterprises
and individuals (Section 3[a], Rep. Act No. 7906 Thrift Banks Act of 1995″).

6. rural bank

SUGGESTED ANSWER
A rural bank is one established to provide credit facilities to farmers and merchants or their cooperatives
and, in general, to the people of the rural communities (Section 3, Rep. Act No. 7353, “The Rural Banks
Act of 1992”).

8. cooperative bank

SUGGESTED ANSWER:
A cooperative bank is organized under the Cooperative Code to provide financial and credit services to
cooperatives. It may perform any or all the services offered by a rural bank, including the operation of a
Foreign Currency Deposit Unit subject to certain conditions (Section 100, Rep. Act No. 6938, “The
Cooperative Code of the Philippines”).

II
 9. How do you characterize the legal relationship between a commercial bank and its safety
deposit box client? (2%)

 SUGGESTED ANSWER:
The relationship between a commercial bank and its safety deposit box client is that of a bailee and a
bailor, the bailment being for hire and mutual benefit (Sia v. Court of Appeals, 222 SCR4 24/1993; CA
Agro-Industrial Development Corp. v. Court of Appeals, 219 SCRA 426 (1993).

ALTERNATIVE ANSWER:
The legal relationship of the bank and its safety deposit box client is that of lessor and lessee.

4. Is a stipulation in the contract for the use of a safety deposit box relieving the bank of liability in
connection with the use thereof valid? (2%)

SUGGESTED ANSWER
The stipulation relieving the bank of liability in connection with the use of the safety deposit box is void
as it is against law and public policy (CA Agro-Industrial Development Corp. v. Court of Appeals, supra).

10. Differentiate “bank deposits from “deposit substitutes.” (2%]

 
SUGGESTED ANSWER:
Bank deposits are funds obtained by a bank from the public which are relent by such bank to its own
borrowers. Deposit substitutes are alternative forms of obtaining funds from the public, other than
deposits, through the issuance, endorsement, or acceptance of debt instruments for the own account of
the borrower, for the purpose of relending or purchasing of receivables and other obligations. These
instruments may include, but need  not be limited to, bankers acceptances, promissory notes,
participations, certificates of assignment and similar instruments with recourse, and repurchase
agreements (Section 95, Rep. Act No. 7653, “The New Central Bank Act”).

4. Why are banks required to maintain reserves against their deposits and deposit substitutes?
State one of three purposes for these reserves. (2%)

SUGGESTED ANSWER:
Any one of the following four (4) purposes for requiring banks to maintain reserves against their deposits
and deposit substitutes will suffice:

1) One of the purposes of the requirement to maintain bank reserves is to control the volume of money
created by the credit operations of the banking system (Section 94 of the New Central Bank Act):

2) It is to enable the banks to answer any withdrawal;

3) To help Government to finance its operation;

4) To help the Government control money supply.

III

Ozamis Paper Corporation secured loans from ABC Universal Bank in the aggregate principal amount of
P100 million, evidenced by several promissory notes, and secured by a continuing guaranty of its
principal stockholder Menandro Marquez; a pledge of Marquez’s shares in the corporation valued at
P45 million; and a real estate mortgage over certain parcels of land owned by Marquez.

The corporation defaulted and the bank extra judicially foreclosed on the real estate mortgage. The
bank, which was the sole bidder for P75 million, won the award.

A Can the bank sue Marquez for the deficiency or P25 million? Explain. (2%)

SUGGESTED ANSWER:
Yes, the bank can gue Marquez for the deficiency of P25million. In extrajudicial foreclosure of a real
estate mortgage, If the proceeds of the sale are insufficient to pay the debt, the mortgagee has the right
to sue for the deficiency (Suico Rattan and Burl Interiors, Inc. v. Court of Appeals, 490 SCRA 560 [2006]).

5. If the bank opts to file an action for collection against the corporation, can it afterwards institute
a real action to foreclose the mortgage? Explain. (2%)

SUGGESTED ANSWER
No, the bank can no longer file an action to foreclose the real estate mortgage. When it filed a collection
case, it was deemed to have abandoned the real estate mortgage (Bank of America, NT and SA 1.
American Realty Corporation, 321 SCRA 659/1999]).

5. Can the bank foreclose on the pledged shares of Marquez and recover the deficiency from the
corporation? Explain. (294)

SUGGESTED ANSWER:
If the bank forecloses the pledge, it cannot recover the deficiency because the foreclosure extinguishes
the principal obligation, whether or not the proceeds from the foreclosure are equal to the amount of
the principal obligation (Art. 2115, Civil Code).

IV

Andante Realty, a marketing company that promotes and facilitates sales of real property through
leverage marketing, solicits Investors who are required to be a Business Center Owner (BCO) by paying
an enrollment fee of $250. The BCO is then entitled to recruit two other investors who pay $250 each.
The BCO receives $90 from the $250 paid by each of his recruits and is credited a certain amount for
payments made by investors through the initial efforts of his Business Center. Once the accumulated
amount reaches $5,000, the same is used as down payment for the real property chosen by the BCO.
 9. Does this. multi-level marketing scheme constitute an “investment contract” under the
Securities Regulation Code? Define an investment contract.” (2%).

SUGGESTED ANSWER:
Yes. The multi-level marketing constitutes an “investment contract” under the Securities Regulation
Code. An “Investment contract” is a contract, transaction or scheme (1) involving an investment of
money, (2) in a common enterprise, (3) with expectation of profits, (4) primarily from the efforts of
others (Power Homes Unlimited Corporation v. Securities and Exchange Commission, 546 SCRA
567/2008]).

5. What procedure must be followed under the Securities Regulation Code to authorize the sale or
offer for sale or distribution of an investment contract? (2%)

SUGGESTED ANSWER
Before the investment contract is sold or offered for sale or distribution to the public in the Philippines, it
should be registered with the Securities and Exchange Commission in accordance with Section 8 of the
Securities Regulation Code (Power Homes Unlimited Corporation v. Securities and Exchange Commission,
546 SCRA 567 [2008].)

4. What are the legal consequences of failure to follow this procedure? (2%)

SUGGESTED ANSWER:
The failure to follow the procedure has criminal consequences (i.e., upon conviction, a fine 50,000 to 5
million pesos and / or imprisonment of 7 to 21 years). It carries also clvil liabilities in that the purchaser
can recover from the seller (i) the consideration paid with interest thereon, less the amount of any
income received on the purchased securities, upon the tender of such securities, or (II) damages if the
purchaser no longer owns such securities (Sections 57 and 73, Securities Regulation Code). Furthermore,
the Securities and Exchange Commission (SEC) may issue a cease and desist order (Subsection 64.1,
Securities Regulation Code).

Venezia is a famous international fashion chain with outlets in Makati, Ortigas, and Manila. It has
complied with the minimum capitalization required under the Retail Trade Nationalization Act and
carries on retail business worth more than $3 million for each of its outlets. As its Manila outlet is not
doing very well, it decides to sell all of its business there consisting of remaining inventory, furniture and
fixtures and other assets to its competitor.

A Venezia’s Manila outlet constitutes one-third (1/ 3) of its total business. Should it comply with the
requirements of the Bulk Sales Law? Why or why not? (29)

SUGGESTED ANSWER:
Venezia need not comply with the requirements of the Bulk Sales Law as its Manila outlet constitutes
only one-third of its total business and, therefore, it would not be a sale of all or substantially all of the
business  conducted by Venezia. Moreover, the requirements of the Bulk Sales Law reflected in Sections 3,
4, 5, and 9, by the express language of said provisions, apply only to the first type of bulk sales, i.e., to
any sale, transfer, mortgage or assignment of a stock of goods, wares, merchandise, provisions or
materials otherwise than in the ordinary course of trade and the regular prosecution of business of the
vendor, mortgagor, transferor, or assignor, and not to the second type (as in the sale described in the
problem) or the third type (i.c., sale, etc. of all or substantially all of the fixtures and equipment used in
and about the business). As the Bulk Sales Law is penal in nature, it should be interpreted strictly against
the State (People v. Wong Szu Tung, CA G.R. No. 9776-R, March 26, 1954: 50 O.G. 4867: Section 2 of the
Bulk Sales Law).

4. If instead of selling its Manila outlet, Venezia merely mortgages its assets there, would it need to
comply with the requirements of the Bulk Sales Law? (2%)

SUGGESTED ANSWER:
For the same reasons stated in the answer to A above, Venezia need not comply with the requirements
of the Bulk Sales Law. The second type of bulk sales also includes the mortgage of all or substantially all
of the business of the mortgagor (Section 2, Bulk Sales Law).

4. What are the legal consequences of a failure to comply with the requirements of the Bulk Sales
Law? (2%)

SUGGESTED ANSWER:
Failure to comply with the requirements of the Bulk Sales Law renders the sale, transfer, mortgage, er
assignment fraudulent and void (Section 4, Bulk Sales Law), and makes any person found guilty of
violating any provision of the Bulk Sales Law punishable by imprisonment for not less than 6 months not
more than

5 years, or a fine in an amount not exceeding P5,000, or both such imprisonment and fine in the
discretion of the court (Section 1], Bulk Sales Law).

VI

What contractual stipulations are required in all technology transfer agreements? (29%)

SUGGESTED ANSWER:
The following stipulations are required in all technology transfer agreements:

5. The laws of the Philippines shall govern its interpretation and in the event of litigation, the venue
shall be the proper court in the place where the licensee has its principal office;
6. Continued access to improvements in techniques and processes related to the technology shall
be made available during the period of the technology transfer arrangement;
7. In case it shall provide for arbitration, the Procedure of Arbitration of the Arbitration Law of the
Philippines or the Arbitration Rules of the United Nations Commission on International Trade Law
or the Rules of Arbitration of the International Chamber of Commerce (ICC) shall apply and the
venue of arbitration shall be the Philippines or any neutral country:
 8. The Philippine taxes on all payments relating to the technology transfer agreement shall be
borne by the licensor (Sec. 88, Intellectual Property Code).
9. Enumerate three (3) stipulations that are prohibited in technology transfer agreements. (3%)

SUGGESTED ANSWER
The following stipulations are prohibited in technology transfer agreements:

5. Those that contain restrictions regarding the volume and structure of production;

6. Those that prohibit the use of competitive technologies in a non-exclusive agreement; and
7. Those that establish a full or partial purchase option in favor of the licensor (Subsections 87.3,
87.4 and 87.5 of the Intellectual Property Code).
8. Can an article of commerce serve as a trademark and at the same time enjoy patent and
copyright protection? Explain and give an example. [2%.

SUGGESTED ANSWER
A stamped or marked container of goods can be registered as a trademark (Subsection 121.1 of the
Intellectual Property Code). An original ornamental design or model for articles of manufacturer can be
copyrighted (Subsection 172.1 of the Intellectual Property Code). An ornamental design cannot be
patented, because aesthetic creations cannot be patented (Section 22 of the Intellectual Property Code).
However, it can be registered as an industrial design (Subsections 113.1 and 172.1 of the Intellectual
Property Code). Thus, a container of goods which has an original ornamental design can be registered as
a trademark, can be copyrighted, and can be registered as an industrial design.

ALTERNATIVE ANSWER
It is entirely possible for an article of commerce to bear a registered trademark, be protected by a
patent, and have most, or some part, of it copyrighted. A book is

a good example. The name of the publisher or the colophon used in the book may be registered
trademarks, the Ink used in producing the book may be covered by a patent, and the text and design of
the book may be covered by copyright.

VII

Union Mines, Inc. has total assets of P60 million with 210 stockholders holding at least 100 shares each.

The company has two principal stockholders, ABC which owns 60% of the shares of stock, and XYZ which
owns 17%.

ABC in turn is owned to the extent of 21.31% by Acme, Inc.; 29.69% by Golden Boy, Inc.: 9% by XYZ; and
the rest by individual stockholders.

None of the parties is a publicly-listed company.

XYZ now proposes to buy Acme’s and Golden Boy’s shares in ABC, which would give it direct control of
ABC and indirect control of Union Mines.
– Is the proposed acquisition by XYZ subject to the mandatory tender offer rule? Why or why not? What
is a tender offer and when is it mandatory? (5%)

SUGGESTED ANSWER:
Yes, the proposed acquisition is subject to mandatory tender offer rule. A tender offer is a publicly
announced intention by a person (acting alone or in concert with other persons) to acquire shares of a
public company. A tender offer is meant to protect minority stockholders against any scheme that dilutes
the share value of their investments. It gives them the chance to exit the company under the same terms
offered to the majority stockholders.

Under the Securities Regulations Code and its implementing rules, a mandatory tender offer is required
(i) when at least 35% of the outstanding shares of a public company is to be acquired in one transaction
or a series of transaction during a 12-month period, or (11) even if any acquisition is less than 35%
threshold but the result

thereof is the ownership of more than 51% of the total outstanding shares of a public company. The
mandatory offer rule also applies to share acquisition meeting the threshold, which is done at the level of
the holding or parent corporation controlling a public company (Cemco Holdings, Inc. v. National Life
Insurance Company of the Philippines, Inc. 529 SCRA 355 (2007).

In this case, Union Mines is clearly a public company, since it has total assets of 60 million pesos with 210
stockholders holding at least 100 shares each. A public company is defined as a corporation listed on the
stock exchange, or a corporation with assets exceeding 50 million pesos and with 200 or more
stockholders at least 200 of them holding not less than 100 shares of such corporation.

XYZ’s acquisition of shares of Acme, Inc. and Golden Boy, Inc., taken separately, does not reach 35%
threshold. Iftaken collectively, the two acquisitions total only 50%. However, when the acquisitions are
added to XYZ’s existing shares in Union Mines, they meet the more-than -51% threshold for mandatory
tender offer.

VIII

Marlon deposited with LYRIC Bank a money market placement of P1 million for a term of 31 days. On
maturity date, one claiming to be Marlon called up the LYRIC Bank account officer and instructed him to
give the manager’s check representing the proceeds of the money market placement to Marlon’s
girlfriend Ingrid.

The check, which bore the forged signature of Marlon, was deposited in Ingrid’s account with YAMAHA
Bank. YAMAHA Bank stamped a guaranty on the check reading: “All prior endorsements and/or lack of
endorsement guaranteed.”

Upon presentment of the check, LYRIC Bank funds the check. Days later, Marlon goes to LYRIC Bank to
collect his money market placement and discovers the foregoing transactions.

Marlon thereupon sues LYRIC Bank which in turn files a third-party complaint against YAMAHA Bank
Discuss the respective rights and liabilities of the two banks. (5%)

SUGGESTED ANSWER:
Since the money market placement of Marlon is in the nature of a loan to Lyric Bank, and since he did
not authorize the release of the money market placement to Ingrid, the obligation of Lyric Bank to him
has not been paid. Lyric Bank still has the obligation to pay him.

Since Yamaha Bank indorsed the check bearing the forged indorsement of Marlon and guaranteed all
Indorsements, including the forged indorsement, when it presented the check to Lyric Bank, it should be
held liable to it.

However, since the issuance of the check was attended with the negligence of Lyric Bank, it should share
the loss with Yamaha Bank on a fifty percent (50%) basis (Allied Banking Corporatton u. Lim Sio Wan,
549 SCRA 504 [2008]).

IX

Your client Dianne approaches you for legal advice on putting up a medium-sized restaurant business
that will specialize in a novel type of cuisine. As Dianne feels that the business is a little risky, she
wonders whether she should use a corporation as the business vehicle, or just run it as a single
proprietorship. She already has an existing corporation that is producing meat products profitably and is
also considering the alternative of simply setting up the restaurant as a branch office of the existing
corporation.

A Briefly explain to your client what you see as the legal advantages and disadvantages of using a
separate corporation, a single proprietorship, or a branch of an existing corporation for the proposed
restaurant business. (3%)

SUGGESTED ANSWER:
If Dianne will set up a separate corporation, her liability for its obligations and losses will be limited to
the amount of her subscription in the absence of showing that there is a ground to disregard its separate
juridical personality. If she were to operate a single proprietorship. her liability for its debts and losses
will be unlimited.

The formation and the operation of a corporation require a great deal of paper work and record-
keeping. This is not the situation in the case of a single proprietorship.

If Dianne will form a separate corporation, it can raise more funds for the business than if she were to set
up a single proprietorship.

If she were to set up the restaurant as a branch office an existing corporation, the corporation will have
more funds as capital than if she were to form 1 separate corporation. However, all the assets of the
existing corporation will be liable for the debts and losses of the restaurant business.

5. If you advise your client to use a corporation, what officer positions must the corporation at
least have? [2%)

SUGGESTED ANSWER:
The corporation must have at least five (5) directors (Section 14 of the Corporation Code). It must also
have a president, a treasurer, and a secretary (Section 25 of the Corporation Code).
  What particular qualifications, if any, are these officers legally required to possess under the
Corporation Code? (2%)

SUGGESTED ANSWER:
Every director must own at least one share of the  capital stock of the corporation, which must be
recorded in his name on the books of the corporation, and a majority of the directors must be residents
of the Philippines (Section 25 of the Corporation Code).

The president must also be a director. The secretary must be a resident and citizen of the Philippines
(Section 25 of the Corporation Code).

To secure a loan of P10 million, Mario mortgaged his building to Armando. In accordance with the loan
arrangements, Mano had the building insured with First Insurance Company for P10 million, designating
Armando as the beneficiary.

Armando also took an insurance on the building upon his own interest with Second Insurance Company
for P5 million.

The building was totally destroyed by fire, a peril insured against under both insurance policies. It was
subsequently determined that the fire had been intentionally started by Mario and that in violation of
the loan agreement, he had been storing inflammable materials in the building

4. How much, if any, can Armando recover from either or both insurance companies? (2%)

SUGGESTED ANSWER:
Armando can receive P5 million from Second Insurance Company. As mortgagee, he had an insurable
interest in the building Panlileo v. Cosio, 97 Phil 919 11955. Armando cannot collect anything from First
Insurance Company. First Insurance Company is not liable for the loss of the building. First, it was due to
a willful act of Mario, who committed arson (Section 87 of the Insurance Code; East Furnitures, Inc. v.
Globe do Rutgers Fire Insurance Company, 57 Phil. 576 /1932). Second, fire insurance policies contain a
warranty that the insured will not store hazardous materials within the
averages include all damages and expenses which are deliberately caused to save the vessel, Its cargo,
or both at the same time, from a real and known risk (Article 811 of the Code of Commerce).

XVII

The Supreme Court has held that fraud is ári exception to the “independence principle” governing
letters of credit. Explain this principle and give an example of how fraud can be an exception. (3%)

SUGGESTED ANSWER:
The “independence principle” posits that the obligations of the parties to a letter of credit are
independent of the obligations of the parties to the underlying transaction. Thus, the beneficiary of the
letter of credit, which is able to comply with the documentary requirements under the letter of credit,
must be paid by the issuing or confirming bank, notwithstanding the existence of a dispute between the
parties to the underlying transaction, say a contract of sale of goods where the buyer is not satisfied with
the quality of the goods delivered by the seller. The Supreme Court in Transfield Philippines, Inc. v. Luzon
Hydro Corporation, 443 SCRA 307 (2004) for the first time declared that fraud is an exception to the
independence principle. For instance, if the beneficiary fraudulently presents to the issuing or confirming
bank documents that contain material facts that, to his knowledge, are untrue, then payment under the
letter of credit may be prevented through a court injunction.

XVIII

For years, Y has been engaged in the parallel importation of famous brands, including shoes carrying the
foreign brand MAGIC. Exclusive distributor X demands that Y cease importation because of his
appointment as exclusive distributor of MAGIC shoes in the Philippines,

Y counters that the trademark MAGIC is not registered with the Intellectual Property Office as a
trademark and therefore no one has the right to prevent its parallel importation,

4. Who is correct? Why? (2%)

SUGGESTED ANSWER:
X is correct. His rights under his exclusive distributorship agreement are property rights entitled to
protection. The importation and sale by Y of MAGIC shoes constitute unfair competition (Yu v. Court of
Appeals, 217 SCRA 328 (1993). Registration of the trademark is not necessary in case of an action for
unfair competition (Del Monte Corporation v. Court of Appeals, 181 SCRA 410 [1990].

ALTERNATIVE MISWA
Y is correct. The rights in a trademark are acquired through registration made validly in accordance with
the Intellectual Property Code (Section 122 of the Intellectual Property Code).

5. Suppose the shoes are covered by a Philippine patent issued to the brand owner, what would
your answer be? Explain. (2%)

SUGGESTED ANSWER:
A patent for a product confers upon its owner the exclusive right of Importing the product (Subsection
71.1 of the Intellectual Property Code). The importation of a patented product without the authorization
of the owner of the patent constitutes infringement of the patent (Subsection 76.1 of the Intellectual
Property Code). X can prevent the parallel importation of such shoes by Y without its authorization.

XIX

Dr. Nobel discovered a new method of treating Alzheimer’s involving a special method of diagnosing the
disease, treating it with a new medicine that has been discovered after long experimentation and field
testing, and novel mental isometric exercises. He comes to you for advice on how he can have his
discoveries protected. Can he legally protect his new method of diagnosis, the new medicine, and the
new method of treatment? If no, why? If yes, how? [4%)

SUGGESTED ANSWER:
Dr. Nobel can be protected by a patent for the new medicine as It falls within the scope of Sec. 21 of the
Intellectual Property Code (Rep. Act No. 8293, as amended). But no protection can be legally extended to
him for the method of diagnosis and method of treatment which are expressly non-patentable (Sec. 22,
Intellectual Property Code).