Rem, Corpo, & Tax Objective Type Bqa

From Nth Time BAR CHALLENGER TO ATTORNEY
REMEDIAL, CORPORATION & TAXATION LAW

OBJECTIVE BAR QUESTIONS AND ANSWERS UP TO 2019

SUPPORT TOOL NO. 2 2. MainTool No. 2 How to Spot the Issue and Answer Bar
Deciding Questions?
(YOU CAN SHARE THIS TOOL) 3. Main Tool No. 3 Practical Exercises on how to answer in a
direct and concise format focusing on the deciding
bar questions.
Page | 1
WHAT IS
THE 2 SUPPORT TOOLS ARE:
BAR LAW FOR 4. Support Tool No. 1 – Bar Law for Dummies (BLD) Civil Law
DUMMIES TRAINING
subjects for those students who have poor
foundation in law or who have graduated years ago.
These is divided into to five (5) civil law subjects,
PROGRAM namely: Obligation and Contracts, Special

Contracts, Property, Succession and Persons and
Family Relations.
5. Support Tool No. 2 – Objective Type Bar Questions and

BAR LAW FOR DUMMIES (BLD) Answers for Remedial, Taxation and Corporation
Law. Dahil may major amendment in this three (2)
PROGRAM subjects, I suspect that most questions would ask
FOR NTH TIME BAR CHALLENGERS for objective answer just like what happened when
a new law/amendment is introduced.
WHAT IS BAR LAW FOR DUMMIES (BLD) PROGRAM?
THE 3 FINISHING TOOLS ARE:
BLD program is a Bar focused practical training
program for bar examinees who have been challenged more 6. Finishing Tool No. 1 – Applicable law for current events and
than twice to pass the bar examinations. In short, para sa mga issues.
hindi sinwerte. Hahaha ayoko maging formal, para talaga sa
mga minalas ito. Hahahaha I designed this program to be like 7. Finishing Tools No. 2 – Landmark cases
a friend – nakakatuwa, nakakapikon pero pakikinggan dahil
genuinely concern. 8. Finishing Tool No. 3 – Possible objective questions from
amended Remedial, Corporation and Taxation Law.
WHO MAY JOIN THE PROGRAM?
Syempre, yung mga minalas (bar challengers), ARE THE TOOLS EASY TO USE?
fresh bar examinees, those who graduated a long time ago as
part of refresher course and “palakol” law students dahil puro Yes. They are simple and enjoyable. Like when you
line of 7(?) ang grade. build a house, all that you need are simple tools like hammer
and saw. It is enjoyable because you will see your goals are
WHAT IS THE METHOD OF THE TRAINING? achieved in each page of the exercises.
Spoon-feeding. I will give all the tools and technique WHAT ABOUT THE AMENDMENT ON REMEDIAL, TAX
on how to spot the issue, and to learn by heart how to answer AND CORPORATION LAW?
bar questions in ALAC format and to further reduce the answer
into a direct and concise format. Along with current events and issues and landmark
cases, it is suggested that students take on those emended
WHAT ARE THESE TOOLS? subjects at the latter part of the program when they are fully
equipped on how to spot the issue and answer bar questions.
We have three (3) types of tools - the main tools,
support tools, and the finishing tools. WOULD THERE BE VLOGS?
THE 3 MAIN TOOLS ARE: Yes. Instructions for each practical exercises shall
be viewed in vlogs. Studetns will learn how the step by step
1. Main Tool No. 1 Topical Bar Questions and Answers (BQAs) procedure on how to accomplish each exercises which shall
for each eight (8) bar subjects cover “deciding bar questions”.
TheTRAINER is your humble partner to succeed in your quest for a law degree and to clinch the evasive “Attorney”
title to your name. Join BAR LAW FOR DUMMIES PROGRAM at www.barlawfordummies.com and learn the simple
tools to pass the bar examinations. Visit FB Page: Law Books Revieweers and bookstands for more bar materials
or text or call 09325293595


every step of the training program. Do not skip. Because we
WHAT ARE THOSE DECIDING BAR QUESTIONS? are building skills, not just stockage of knowledge.
This is important and I want you to have an open I DON’T THINK I NEED TO AVAIL OF THE BQAS, BUT I
mind. If there were 8,000 bar examinees with 25 bar questions WANT TO JOIN THE PROGRAM. WOULD THAT BE
for each 8 bar subjects. An examiner (now SC assigned 2) POSSIBLE?
would have to read and check 200,000 answers, in pain of
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decrypting poor handwriting of most examinees, in just 4 No. The program would be useless. It is like buidling
months (December to March). To check all those answers is a house without a hammer. You need to have the complete
impractical and a “death” sentence. So for convenience and tools to maximize the benefit of the program.
practicality, a good examiner would devise deciding questions
covering the easiest and difficult questions of law for scoring WHERE CAN I AVAIL OF BQAS?
and ranking purposes.
You may inquire at FB Page: Law Books, Reviewers
I will discuss more of this and how to identify them and Bookstand or text 09325293595.
sa ating program proper. VISIT AND LIKE THE PAGE: LAW
BOOKS, REVIEWERS AND BOOKSTAND FOR WHEN WILL THE PROGRAM START AND END?
DISCUSSION. NAKA-POST THERE.
Retakers’ enrolment for the program will start on
HOW CAN WE KNOW THAT THE QUESTION IS ONE OF January 15, 2021. The traning program proper will commence
THE DECIDING QUESTIONS? as soon as one batch is filled in. In case the maximum 100
slots are already filled in, the enrollment shall be closed.
Yan ang gagawin natin using Main Tool No. 1 and
No. 3. Trade secret natin yan. As a teacher, I have the skills to The program will guide you until the last Sunday of
identify those deciding questions. Kailangang-kailangang Novemeber 2021.
matulungan ko kayong magkaroon din ng skills upang ma-
identify ang mga deciding questions and concentrate with all HOW CAN I JOIN?
your training na masagutan ito ng tama.
I will send invitation via sms messages or
WOULD THERE BE MONITORING OF PRACTICAL messengers to all students who have availed of Main Tool No.
EXERCISES? 1 from Law Books, Reviewers and Bookstand for Sale FB Page
on or before January 15, 2021.
Yes.
DOES THE PROGRAM HAVE A WEBSITE?
WHO CAN JOIN FOR THE PROGAM?
Yes. You may visit www.barlawfordumies.com.
The program can only accommodate maximum of However, the website is currently under construction as of this
100 students in 5 batches of 20 to train them thoroughly to moment.
become co-traners for 2022 Bar Examinations.
HOW MUCH DOES IT COST TO JOIN THE BLD PROGRAM?
I will give priority to retakers who have availed of
hard copy of Main Tool No. 1 – the Topical BQAs because TO BE ANNOUNCED
reading BQAs is the initial training of the program.
BLD Program is the first bar-focused program and
For freshies, hindi pa naman ninyo alam kung kelan we are using a K-12 teaching strategies to help you pass the
graduation or gaga-graduate ba? Hahahaha But for those who bar examination by studyng smart. It means that you still can
have already availed of the Topical BQAs, I will reserve slots swim, go out with family and friends and watch your favorite
for you. Just let me know before on or before January 15, 2021. movies while building confidence to take the bar examination.
WHY IS THAT STRICT? I AM A LAW STUDENT. WHAT CAN I GET FROM THE
PROGRAM?
The goal of the program is a 100% passing
percentage. I want all of you to become lawyers and co-trainers It is not necessary that you get the on-line program.
next bar exams, and of course, “ayaw ko na kayong maging You can avail of Topical BQAs for they are good sources of
client next bar examinations dahil ayaw ko na rin kayong professors for recitations, assignments and examinations. You
gumastos pa.” So it is imperative that yuou follow each and can order them at the above mentioned FB page.


----------xxx--------- C. MATERIALS FOR BLD TRAINING
AVAILABLE TRAINING PROGRAM
MATERIALS 1. Main Tool No. 1. Topical Bar Questions and Answers
For those who failed more than twice 2. MainTool No. 2 How to Spot the Issue and Answer Bar
Deciding Questions? Page | 3
in the bar, I suggest you read Support Tool No.
1 [BAR LAW FOR DUMMIES (BLD2020)] 3. Main Tool No. 3 Practical Exercises on how to answer in a
direct and concise format focusing on the deciding
Training Materials. I used Civil Law subjects to bar questions.
come up with the materials to “re-wire” the brain
4. Support Tool No. 1 – BLD 2020 Civil law subjects
of the examinees. BLD 2020 is also
recommended for freshman students. Each 5. Support -Tool No. 2 – Objective Type Bar Questions and
Answers for Remedial, Taxation and Corporation
BLD training materials is complete with Law. Dahil may major amendment in this three (2)
jurisprudence, 20 years of bar questions and subjects, I suspect that most questions would ask
answers and annotation. for objective answer just like what happened when
a new law/amendment is introduced.
A. SUPPORT TOOL NO. 1 [BAR LAW FOR 6. Finishing Tool No. 1 – Applicable law for current events and
DUMMIES (BLD 2020)] issues to release at the latter of the program.
1. PERSONS AND FAMILY 7. Finishing Tools No. 2 – Landmark cases to release at the
latter part of the program
RELATIONS
8. Finishing Tool No. 3 – Objective questions from
2. PROPERTY amended Remedial, Corporation and Taxation Law
to release at the latter part of the program.
3. SUCCESSION
4. OBLIGATION AND CONTRACTS ---------xxx-------
5. SPECAIL CONTRACTS HOW TO ANSWER BAR QUESTIONS
B. MAIN TOOLS NO.1 (TOPICAL BAR Oftentimes, examinees, who have studied enough
QUESTIONS AND ANSWERS) for the bar, answer lengthly, mga dalawang pages, tapos puro
bura, one to two pages are all erased. It happened to me on
1. POLITICAL LAW the first day, fortunately, i passed that first two subjects.
Mababa nga lang yung grade. So, how to answer bar questions
in a precise and concise way.
2. LABOR LAW
Use the ALAC pattern. Eventually, pag sanay na
3. CIVIL LAW sanay na sanay na kayong mag answer in this format, you will
develop a more coherent way. So, start muna tayo sa basic.
4. TAXATION LAW
A – your direct Answer
5. CRIMINAL LAW L – state the Legal basis or bases
A – Apply the law to the pertinent facts of the case
C – Conclude
6. COMMERCIAL LAW
A – your direct Answer
7. REMEDIAL LAW
Its either Yes, No or very seldom yung “Assuming”,
8. LEGAL ETHICS Walang “It depends”. Sa mga BQA books maraming answer


sila na nag-start sa “it depends”. Well, sila yun. They intend to Akala niya lang tama, pero mali. So yung mga
lecture and give you a wide range of information kaya they challengers natin, if you happen to get your booklet, baka
lecture which is good. But answering for bar questions is very ganyan nga. Tama yung direct answer pero mali yung legal
different. Dapat first sentence pa lang tama na agad ang basis.
answer. With all 8,000 booklets to check, the examiner would
just glance at the first sentence, if tama ang answer, he would Because A and L are the most important part of your
just look for the legal basis, then ok na. You would get Five (5) answer, let us have an actual bar questions and answer. This
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points. So dapat maigsi lang, at the first two sentences pa lang time, maging emphatic muna tayo and we state the whole law
nadun na yung correct answer at legal basis dahil most likely para mabasa ninyo as part of your review.
yan na lang yung babasahin ng exminer.
2018 BAR No. 1, Remedial Law
Pwede rin naman na hindi “yes or no” ang first word
na gamitin mo. You can write a positive or negative statement Danielle, a Filipino citizen and permanent resident
like “ The RTC’s decision to annul the marriage is not proper”. of Milan, Italy, filed with the Regional Trial Court (RTC) of
That is a negative statement. “The RTC is correct”. That is a Davao City, where she owns a rest house, a complaint for
positive statement. ejectment against Dan, a resident of Barangay Daliao, Davao
City. Danielle's property, which is located in Digos City, Davao
If you want to be more emphatic, you can answer del Sur, has an assessed value of PhP25,000. Appended to
like this “Yes, the RTC is correct to annul the marriage” or “No, the complaint was Danielle's certification on non-forum
the RTC is not correct”. shopping executed in Davao City duly notarized by Atty. Dane
Danoza, a notary public.
L – state the Legal basis or bases
(a) Was there a need to refer the case to the Lupong
Here, you may start with the phrase “In Article 101 Tagapamayapa for prior barangay conciliation before the court
of the Revised Penal Code”, “In one of the decisions of the can take cognizance of the case? (2.5%)
Supreme Court”, “In the annals of decision”, According to the
Family Code”, “According to Section 10, Rule 100 of the Rules Paano mo ito babasahin? Read first the question.
of Court”. Etc. Ayan, ganyan. You are now justifying your Why? Para alam mo na what to look for from the facts of he
answer. Do you have state the whole law, provision or case case. Para may automatic elimination ng mga unnecessary
number? Wag na. You know why? Alam na ng examiner ang words at magfofocus ka na agad sa issue. Yan, that is how to
batas, you don’t have to state every detail. Just state the “magic spot the issue. So basahin ang question.
words”. Yung mga importante lang to justify your direct Answer.
That is my general suggestion. Pero, if you are 100% sure of Anong papasok sa kukote mo as you read the
the case number, section or law, sige ilagay mo. The problem question? Local government code, rules on conciliation before
with that is paano if the examiner had different jurisrudence or Lupon Tagapayapa, cases and the exception to the rule, di ba?
law in mind. Di ba maraming jurisprudence na iisa lang naman So, ayan...eh di naka-focus ka na agad sa issue.
ang basis? So, I suggest wag na lang. Bawas points din yan.
LCG, Section 408, paragraph F.
Yung mga nag-fail sa bar, ang lagi nilang tanong ay
“Paano ako bumagsak. Eh sure naman ako sa answer ko”. The lupon of each barangay shall have authority to bring
Yes, you are sure sa direct Answer but what about your legal together the parties actually residing in the same city or
basis. Ayan, ito na yung crux of contention. municipality for amicable settlement of all disputes, except:
[f] disputes involving parties who actually reside in barangays
I talked to one passer of the 2005bar. That time of different cities or municipalities, except where such barangay
sina-sauli pa ng SC ang mga answer booklet pero ngayon hindi units adjoin each other and the parties thereto agree to submit
na. So, the exminers ay talagang mapipilitang basahin lahat ng their differences to amicable settlement by an appropriate
full answers. Kasi pwedeng mag compare ang mga examinees lupon.
ng results, and contest if may lapses ang examiner in checking
the answers. Ngayon hindi na, and your guess is as good as Then, basahin mo na yung question and eliminate
mine why? the non-pertinent facts.
The guy came from “#notsunga” law school. He was Danielle, a Filipino citizen and permanent resident
so confident with his answers and even thought to top the bar of Milan, Italy, filed with the Regional Trial Court (RTC) of
hahahahah dyarannnn! 75%! Mali ang checking nito. So he Davao City, where she owns a rest house, a complaint for
aksed for the booklet and checked. Binasa niya ulit yung mga ejectment against Dan, a resident of Barangay Daliao, Davao
answers niya hahahah sabi niya ... Hahahah mali nga ako. City. Danielle's property, which is located in Digos City, Davao
del Sur, has an assessed value of PhP25,000. Appended to


the complaint was Danielle's certification on non-forum _________________________________________________
shopping executed in Davao City duly notarized by Atty. Dane _________________________________________________
Danoza, a notary public. _________________________________________________
_________________________________________________
After mental elimination, the question would only be _________________________________________________
like this. _________________________________________________
_________________________________________________
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Danielle, a resident of Milan, Italy, owns a resthouse _________________________________________________
in Digos City, filed an ejectment case against Dan, a resident _________________________________________________
of baranggay Daliao, Davao City. _________________________________________________
_________________________________________________
So, Danielle and Dan are not residents of one _________________________________________________
barangay unit nor their barangays are adjoined. _________________________________________________
_________________________________________________
The direct answer therefor is NO. Let us be _________________________________________________
emphatic muna for reading purposes. The answer could be any _________________________________________________
of the following. _________________________________________________
_________________________________________________
[1] No, there was no need to refer the case to the _________________________________________________
Lupong Tagapamyapa for prior barangay conciliation before _________________________________________________
the court can take cognizance of the case. According to Section _________________________________________________
408, paragraph F, of the 1991 Local Government Code, the _________________________________________________
lupon of each barangay shall have authority to bring together _________________________________________________
the parties actually residing in the same city or municipality for _________________________________________________
amicable settlement of all disputes, except: [f] disputes _________________________________________________
involving parties who actually reside in barangays of different
cities or municipalities, except where such barangay units
adjoin each other and the parties thereto agree to submit their [2]
differences to amicable settlement by an appropriate lupon. _________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
[2] No, there is no need to refer the case to the
_________________________________________________
Lupon Tagapamayapa for prior barangay conciliation.
_________________________________________________
According to the 1991 Local Gocernment Code, disputes
_________________________________________________
involving parties who actually resides in barangays of different
_________________________________________________
cities or municipalities except where such barangay units
_________________________________________________
adjoin each other and the parties thereto agree to submit their
_________________________________________________
differences to amicable settlement by an appropriate lupon, are
_________________________________________________
exempted from the pre-condition requirement of conciliation
_________________________________________________
before filing of complaint in court.
_________________________________________________
_________________________________________________
_________________________________________________
[3] No. Disputes involving parties who reside in _________________________________________________
different barangay units located in different cities or _________________________________________________
municipalites except when the barangay units are adjoined and
the parties agreed thereto to submit their differences for
conciliation to an appropriate lupon are exempted from the pre- [3]
conciliatory condition before filing of complaint to court. _________________________________________________
_________________________________________________
O, IKAW NAMAN. Get a pice of paper. Write your empatic _________________________________________________
answer using number 1. Then, sanayin mo ng sanayin ang _________________________________________________
iyong sarili na mapaigsi ang answer without leaving the _________________________________________________
pertinent or magic words. Ypu can use the blank portion _________________________________________________
provided for your aswers. _________________________________________________
[1] _________________________________________________
_________________________________________________ _________________________________________________


_________________________________________________ No. Disputes involving parties who reside in
_________________________________________________ different barangay units located in different cities or
_________________________________________________ municipalites except when the barangay units are adjoined and
_________________________________________________ the parties agreed thereto to submit their differences for
_________________________________________________ conciliation to an appropriate lupon are exempted from the pre-
conciliatory condition before filing of complaint to court.
Mas mahusay if you answer as a class or group then Page | 6
compare kayo ng answers kasi may mag students talaga na HERE, Danielle is a permanent resident of Milan,
mahusay sa language. Remember hanggang A and L muna Italy while Dan resides in Daliao, Davao City. They actually
tayo ng ALAC. Dont anwer the A and C portion. reside in different baranggay units of different cities or
municipalities and neither the units are adjoined.
So, get as many bar questions you can get, open
your codals at magsanay ng magsanay ng sumagot sa A and C – conclusion
L. Practice makes perfect.
Sa C portion, for emphasis na lang ito.
Practice, practice, practice. Stop muna, at mag
practice. HENCE, the dispute can be filed directly in court.
-------------xxx---------
Totoo, dapat ganyan lang kaigsi. Kasi dadaanan
Now that you have perfected how to the A and L, lets go to A lang yan ng mata ng examiner. Ang importante ay yung A
(the second A of ALAC). (direct answer) at L (legal basis). Yung second A and C,
dadaanan lang yan ng mata ng examiner kung tama na yung
A – apply the law to the pertinent facts. A and L.
Pertinent facts means facts in the question relevant So, ang ating final answer ay....
to the legal basis. So sa question above, ang mga pertinente
lang yung actual residence ni Danille and Dan. No. Disputes involving parties who reside in
different barangay units located in different cities or
Danielle lives is Milan while Dan lives in Daliao, municipalites except when the barangay units are adjoined
Davao City. Obviously, the dispute between the parties are one and the parties agreed thereto to submit their differences
of the exceptions. for conciliation to an appropriate lupon are exempted from
the pre-conciliatory condition before filing of complaint to
So the answer for the A portion would be like this. court.
HERE, Danielle is a permanent resident of Milan, HERE, Danielle is a permanent resident of Milan,
Italy while Dan resides in Daliao, Davao City. They actually Italy, while Dan resides in Daliao, Davao City. They actually
reside in different baranggay units of different cities or reside in different baranggay units of different cities or
municipalities and neither the units are adjoined. municipalities and neither the units are adjoined. HENCE,
the dispute can be filed directly in court.
IN THE CASE AT BAR, Danielle is a permanent
resident of Milan, Italy while Dan resides in Daliao, Davao City. Compare our answer sa suggested answer of
They actually reside in different baranggay units of different UPLC.
cities or municipalities and neither the units are adjoined.
SUGGESTED ANSWER:
You may use phrases and words such as HERE,
IN THE CASE AT BAR, o kahit wala na kung snay na sanay ka (a) No. Since Danielle is not an actual resident of
na. Barangay Daliao, or a barangay adjacent thereto,
this case is not subject to the Katarungang
Danielle is a permanent resident of Milan, Italy while Pambarangay Law; hence, prior referral to the
Dan resides in Daliao, Davao City. They actually reside in Lupong Tagapamayapa is not a pre-condition to the
different baranggay units of different cities or municipalities and filing of this case in court (Pascual v. Pascual, G.R.
neither the units are adjoined. No. 157830, 17 November 2005).
Ok let us combine ALA. Di ba mas matututo ka sana if the legal basis is stated in
the aswer. Pero hindi na dapat ilagay ng UPLC yun. It is for us
to look for the legal basis . Hahanapin na lang natin yung batas


sa codals. Also, sa BQA Books the questions are not arranged should learn how to use the environment as instructional
per topic, tatatalon-talon kayo ng topic. Mawawalan kayo ng materials.
coherence. In civil law, the first question is about annulment,
then the next is about subrogation hahahah eh di sabaw na ulit. Kaya wait for my vlog. Sa kitchen ako mag lelecture. We
Kasi Family code pa lang pinag-aaralan mo. will teach legitime using cakes, spoon and fork for annulment,
refrigerator for intestate7 and testate succession, washing the
The good thing about UPLC, PALS, and other QA Books, dishes for obligation and actual contracts for contracts.
Page | 7
mahahaba yung answer nila kasi they intend to teach or Hahahaha...
lecture. So maraming information you can get from their
sugested answers. Let us support each other. My clients can text me or
message me anytime. Mas marami yung mga hindi ko clients
To help examinees to have a coherent preparation for the na nanghihingi ng advice kaya ang sagot ko lagi ay read BLD
bar, I prepared BQA arranged per topic and sequenced by kasi nadoon n lahat ang issasagot ko sa inyo. May free naman
year. Some suggested answers are retained kasi naka lecture na mga 50 pages ng training so, you can download them. If you
type. Napaka-laking tulong for you. Some are rephrased to suit want the whole, just message me at FB Page Law Reviewers,
the ALAC format. Books and Bookstand and you can enjoy my free advice until
you take the bar2021.
For those who have stopped for a long time and wanted
to take the bar or for those who have a poor foundation, I
prepared bar law for dummies Civil Law subjects (BLDs from ------------xxx-----------
2
book 1 to 5). Mas appropriate ito sa inyo. Basahin ninyo yung
BLDs because it intends to re-wire your brain on how to study
law, spot the issue and answer bar questions.
SUPPORT TOOL NO.
The training that you will get from BLD book 1 to 5, can
also help you how to read other bar law subjects. Pinababaw OBJECTIVE TYPE
ko ang discussion to the level of k-12 para mas mahusay
ninyong maintindihan. Start with Book1 Family Code hanggang
BAR QUESTIONS AND ANSWERS
book 5. So 5 training materials yan, P600 each. Not expensive 1997 - 2019 BAR EXAMINATIONS
if you compare the cost sa mga training centers. Actually this
lecture on how to answer bar questions would cost you P2,000
per hour in some review centers, pero sa atin free lang yan. REMEDIAL LAW,
Bukod pa ang bayad sa individual coach.
There is no problem with undergoing review centers, but

CORPORATION LAW &
seld-study is more encouraged. Mahirap ang buhay ngayon.
This pandemic would not get away and even if it does, the
TAXATION LAW
economy would not be the same the way it was not after three
to five years. So, study smart and spend less. The best
assurance to pass the bar is self-study and attend free To Bar Law for Dummies (BLD) trainees:
webinars and video lectures. Marami yan sa net. You dont have
spend much. You will notice that most objective questions
were asked in the preceding years after a major
One more, mag-aral kayo how to manipulate computers amendment in the law was introduced. And the
and internet. No matter how good you are, if you cannot likelihood that it would happen again in 2021,
transfer your knowledge or skills via internet...sabaw ka. One 2022 and 2023 bar is high in Remedial,
corporation prof (mga 60 years old na siya) said “ I dont know Corporation and Taxation Law. As part of the
how to that (video lecture via zoom)”. See, pag hindi siya training, I lifted the objective questions and
natuto, he could be replaced by another techie prof. answers from Topical BQAs for those amended
THREE (3) bar subjects and we shall call it Extra-
Nanood ako one time ng webinar on law and video Tool No. ___.
lecture, puro mukha lang nakikta ko hahaha nakakasawa. Law
profs should also get education earning units para matuto ng THE DUMMY
art of teaching. Iba kasi ang art of teaching. Teachers prepare ---------XXX------
and use instructional materials at hindi pwede puro boses lang.
Nakakapagod tumitig ng tumitig sa face ng lecturer. They REMEDIAL LAW


GENERAL PRINCIPLES the prosecutory service, our courts of justice and quasi-judicial
agencies.
(2012) A. Distinguish error of jurisdiction from error
of judgment. (5%) (2006) What is an interlocutory order? (2%)
An error of judgment is one which the court may An interlocutory order refers to an order issued Page | 8
commit in the exercise of its jurisdiction. Such an error does not between the commencement and the end of the suit which is
deprive the court of jurisdiction and is correctible only by not a final decision of the whole controversy and leaves
appeal; whereas an error of jurisdiction is one which the court something more to be done on its merits (Gallardo et al. v.
acts without or in excess of its jurisdiction. Such an error People, G.R. No. 142030, April 21, 2005; Investments Inc. v.
renders an order or judgment void or voidable and is correctible Court of Appeals, G.R. No. 60036, January 27, 1987 cited in
by the special civil action of certiorari. (Dela Cruz vs. Moir, 36 Denso Phils, v. /AC, G.R. No. 75000, Feb. 27, 1987).
Phil. 213; Cochingyan vs. Claribel, 76 SCRA 361; Fortich vs.
Corona, April 24, 1998, 289 SCRA 624; Artistica Ceramica, Inc. (2006) What is the difference between a judgment
vs. Ciudad Del Carmen Homeowner‟s Association, Inc., and an opinion of the court? (2.5%)
G.R. Nos. 167583-84, June 16, 2010).
The judgment or fallo is the final disposition of the
(2006) Distinguish between substantive law and Court which is reflected in the dispositive portion of the
remedial law. (2%) decision. A decision is directly prepared by a judge and signed
by him, containing clearly and distinctly a statement of the facts
SUBSTANTIVE LAW is that part of the law which proved and the law upon which the judgment is based (Etoya
creates, defines and regulates rights concerning life, liberty, or v. Abraham Singson, Adm. Matter No. RTJ-91-758, September
property, or the powers of agencies or instrumentalities for the 26, 1994).
administration of public affairs. This is distinguished from
REMEDIAL LAW which prescribes the method of enforcing An opinion of the court is the informal expression of
rights or obtaining redress for their invasion (Bustos v. Lucero, the views of the court and cannot prevail against its final order.
G.R. No. L-2068, October 20, 1948). The opinion of the court is contained in the body of the decision
that serves as a guide or enlightenment to determine the ratio
(2006) What is the concept of remedial law? (2%) decidendi of the decision. The opinion forms no part of the
judgment even if combined in one instrument, but may be
referred to for the purpose of construing the judgment
The concept of Remedial Law lies at the very core
(Contreras v. Felix, G.R. No. L-477, June 30, 1947).
of procedural due process, which means a law which hears
before it condemns, which proceeds upon inquiry and renders
judgment only after trial, and contemplates an opportunity to be
heard before judgment is rendered (Albert v. University (2004) Distinguish Questions of law from Questions
Publishing, G.R. No. L-19118, January 30, 1965). Remedial of fact.
Law is that branch of law which prescribes the method of
enforcing the rights or obtaining redress for their invasion A QUESTION OF LAW is when the doubt or
(Bustos v. Lucero, G.R. No. L-2068, October 20, 1948; First difference arises as to what the law is on a certain set of facts,
Lepanto Ceramics, Inc. v. CA, G.R. No. 110571, March 10, while a QUESTION OF FACT is when the doubt or difference
1994). arises as to the truth or falsehood of alleged facts. (Ramos v.
Pepsi-Cola Bottling Co., 19 SCRA 289, [19670]).
(2006) How are remedial laws implemented in our
system of government? (2%) (2003) In rendering a decision, should a court take
into consideration the possible effect of its verdict upon the
Remedial laws are implemented in our system of political stability and economic welfare of the nation? 4%
government through the pillars of the judicial system, including
No, because a court is required to take into
consideration only the legal issues and the evidence admitted


in the case. The political stability and economic welfare of the
nation are extraneous to the case. They can have persuasive The Rules of Court should be liberally construed in
influence but they are not the main factors that should be order to promote their objective of securing a just, speedy and
considered in deciding a case. A decision should be based on inexpensive disposition of every action and proceeding. (Sec.
the law, rules of procedure, justice and equity. However, in 6, Rule 1 1997 Rules of Civil Procedure.) However, strict
exceptional cases the court may consider the political stability observance of the rules is an imperative necessity when they
and economic welfare of the nation when these are capable of Page | 9
are considered indispensable to the prevention of needless
being taken into judicial notice of and are relevant to the case. delays and to the orderly and speedy dispatch of Judicial
business. (Alvero vs. Judge de la Rosa, 76 Phil. 428)
(2001) How should the records of child and family
cases in the Family Courts or RTC designated by the Supreme (1998) Distinguish civil actions from special
Court to handle Family Court cases be treated and dealt with? proceedings. [3%]
Under what conditions may the identity of parties in child and
family cases be divulged (2%) CIVIL ACTION is one by which a party sues another
for the enforcement or protection of a right, or the prevention or
The records of child and family cases in the Family redress of a wrong. (See. 3[a], Rule 1, 1997 Rules of Civil
Code to handle Family Court cases shall be dealt with utmost Procedure), while a SPECIAL PROCEEDING is a remedy by
confidentiality. (Sec. 12, Family Courts Act of 1997) The identity which a party seeks to establish a status, a right or a particular
of parties in child and family cases shall not be divulged unless fact. (Sec. 3[C]. Rule 1,1997 Rules of Civil Procedure.)
necessary and with authority of the judge. (Id.)
(1997) Distinguish Bar by prior judgment from
(1999) What is the object of the Katarungang conclusiveness of judgment
Pambarangay Law? (2%)
Bar by prior-judgment is the doctrine of res judicata,
The object of the Katarungang Pambarangay Law which bars a second action when there is identity of parties,
is to effect an amicable settlement of disputes among family subject matter and cause of action. (Sec. 49[b] of former Rule
and barangay members at the barangay level without judicial 39; Sec, 47 [b] of new Rule 39). Conclusiveness of judgment
recourse and consequently help relieve the courts of docket precludes the re-litigation of a particular issue in another action
congestion. (Preamble of P.D. No. 1508, the former and the between the same parties on a different cause of action. (Sec.
first Katarungang Pambarangay Law.) 49 [c] of former Rule 39; sec. 47 [c] of new Rule 39).
(1999) What is the difference, if any, between the (1997) Distinguish Cause of action from action
conciliation proceedings under the Katarungang Pambarangay
Law and the negotiations for an amicable settlement during the A CAUSE OF ACTION is an act or omission of one
pre-trial conference under the Rules of Court? (2%) party in violation of the legal right or rights of the other (Maao
Sugar Central vs. Barrios, 79 Phil. 606; Sec. 2 of new Rule 2),
The difference between the conciliation causing damage to another. An ACTION is an ordinary suit in
proceedings under the Katarungang Pambarangay Law and a court of Justice by which one party prosecutes another for
the negotiations for an amicable settlement during the pre-trial the enforcement or protection of a right, or the prevention or
conference under the Rules of Court is that in the former, redress of a wrong.(Section 1 of former Rule 2).
lawyers are prohibited from appearing for the parties. Parties
must appear in person only except minors or incompetents who
may be assisted by their next of kin who are not lawyers. JURISDICTION
(Formerly Sec. 9, P.D. No. 1508; Sec. 415, Local Government
Code of 1991, R.A. 7160.) No such prohibition exists in the pre- (2006) Distinguish jurisdiction from venue?
trial negotiations under the Rules of Court.
JURISDICTION treats of the power of the Court to
(1998) How shall the Rules of Court be construed? decide a case on the merits, while VENUE refers to the place
[2%] where the suit may be filed. In criminal actions, however, venue


is jurisdictional. Jurisdiction is a matter of substantive law; (2006) Mark filed with the Bureau of Internal
venue, of procedural law. Jurisdiction may not be conferred by Revenue a complaint for refund of taxes paid, but it was not
consent through waiver upon a court, but venue may be acted upon. So, he filed a similar complaint with the Court of
waived, except in criminal cases (Nocum et al. v. Tan, G.R. Tax Appeals raffled to one of its Divisions. Mark's complaint
No. 145022, September 23, 2005; Santos III v. Northwest was dismissed. Thus, he filed with the Court of Appeals a
Airlines, G.R. No. 101538, June 23, 1992). petition for certiorari under Rule 65. Does the Court of Appeals
have jurisdiction over Mark's petition? (2.5%) Page | 10
SUPREME COURT No. The procedure is governed by Sec. 11 of R. A.

9282. Decisions of a division of the Court of Tax Appeals must
(1997) (b) What is the Precautionary Principle? be appealed to the Court of Tax Appeals en banc. Further, the
(2.5%) CTA now has the same rank as the Court of Appeals and is no
longer considered a quasi-judicial agency. It is likewise
provided in the said law that the decisions of the CTA en bane
(b) The Precautionary Principle states that when
are cognizable by the Supreme Court under Rule 45 of the
human activities may lead to threats of serious and irreversible
1997 Rules of Civil Procedure.
damage to the environment that is scientifically plausible but
uncertain, actions shall be taken to avoid or diminish that threat
(Rule 1, Section 4(f) of the Rules of Procedure for REGIONAL TRIAL COURT
Environmental Cases.
(2006) Does the Court of Appeals have jurisdiction [2016] State at least five (5) civil cases that fall
to review the Decisions in criminal and administrative cases of under the exclusive original jurisdiction of the Regional Trial
the Ombudsman? (2.5%) Courts (RTCs).
The Supreme Court has exclusive appellate The Regional Trial Courts inter alia shall exercise exclusive
jurisdiction over decisions of the Ombudsman in criminal cases original jurisdiction in the following civil cases:
(Sec. 14, R.A. 6770). In administrative and disciplinary cases,
appeals from the Ombudsman must be taken to the Court of (1) In all civil actions in which the subject of the litigation is
Appeals under Rule 43 (Lanting v. Ombudsman, G.R. No. incapable of pecuniary estimation;
141426, May 6, 2005; Fabian v. Desierto, G.R. No. 129742,
September 16, 1998; Sec. 14, RA. 6770). (2) In all civil actions which involve the title to, or possession of,
real property, or any interest therein, where the assessed value
of the property involved exceeds Twenty thousand pesos
COURT OF APPEALS (P20,000,00) or, for civil actions in Metro Manila, where such
value exceeds Fifty thousand pesos (P50,000.00) except
(2006) Does the Court of Appeals have jurisdiction
actions for forcible entry into and unlawful detainer of lands or
to review the Decisions in criminal and administrative cases of
buildings, original jurisdiction over which is conferred upon the
the Ombudsman? (2.5%)
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts;
The Supreme Court has exclusive appellate
jurisdiction over decisions of the Ombudsman in criminal cases (3) In all actions in admiralty and maritime jurisdiction where
(Sec. 14, R.A. 6770). In administrative and disciplinary cases, the demand or claim exceeds Three hundred thousand pesos
appeals from the Ombudsman must be taken to the Court of (P300,000.00) or, in Metro Manila, where such demand or
Appeals under Rule 43 (Lanting v. Ombudsman, G.R. No. claim exceeds Four hundred thousand pesos (P400,000.00);
141426, May 6, 2005; Fabian v. Desierto, G.R. No. 129742,
September 16, 1998; Sec. 14, RA. 6770). (4) In all matters of probate, both testate and intestate, where
the gross value of the estate exceeds Three hundred thousand
COURT OF TAX APPEALS pesos (P300,000.00) or, in probate matters in Metro Manila,


where such gross value exceeds Four Hundred thousand Eddy Ng Kok Wei, G.R. No. 139791, December 12, 2003;
pesos (P400,000.00); Kakilala v. Faraon, G.R. No. 143233, October 18, 2004; Sec. 1,
P.D. 1344).
(5) In all actions involving the contract of marriage and marital
relations; PART 1
(6) In all cases not within the exclusive jurisdiction of any court, CIVIL PROCEDURE Page | 11
tribunal, person or body exercising jurisdiction of any court,
tribunal, person or body exercising judicial or quasi-judicial A. CIVIL ACTIONS (Rule 2 – 5)
functions; RULE 2: CAUSE OF ACTION
(7) in all civil actions and special proceedings falling within the
exclusive original jurisdiction of a Juvenile and Domestic (2006) What do you mean by a) real actions; and
Relations Court and of the Court of Agrarian Relations as now b) personal action? (2%)
provided by law; and
REAL ACTIONS are actions affecting title to or
(8) In all other cases in which the demand, exclusive of interest,
possession of real property or an interest therein (Fortune
damages of whatever kind, attorney’s fees litigation expenses,
Motors, Inc. v. CA, G. R. No. 76431, October 16, 1989; Rule 4,
and costs or the value of the property in controversy exceeds
Sec. 1). All other actions are PERSONAL ACTIONS (Rule 4,
Three hundred thousand pesos (P300,000.00) or, in such other
Section I) which include those arising from privity of contract.
cases in Metro Manila, where the demand exclusive of the
above-mentioned items exceeds Four Hundred thousand
pesos (P400,000,00)” (Section 1, Section 19 of Batas
(1999) What is the rule against splitting a cause of
Pambansa Blg. 129, otherwise known as the “Judiciary
action and its effect on the respective rights of the parties for
Reorganization Act of 1980)
failure to comply with the same? (2%)
A purchased a lot from B for Pl,500,000.00. He gave

GOVERNMENT AGENCIES a down payment of P500,000, signed a promissory note
payable thirty days after date, and as a security for the
settlement of the obligation, mortgaged the same lot to B.
(2006) What court has jurisdiction over an action for When the note fell due and A failed to pay, B commenced suit
specific performance filed by a subdivision homeowner against to recover from A the balance of P1,000,000.00. After securing
a subdivision developer? Choose the correct answer. Explain. a favorable judgment on his claim, B brought another action
against A before the same court to foreclose the mortgage. A
a. The Housing and Land Use Regulatory Board now files a motion to dismiss the second action on the ground
b. The Securities and Exchange Commission of bar by prior judgment. Rule on the motion. (2%)
c. The Regional Trial Court
d. The Commercial Court or the Regional Trial Court The rule against splitting a cause of action and its
designated by the Supreme Court to hear and decide effect are that if two or more suits are instituted on the basis of
"commercial cases.” the same cause of action, the filing of one or a judgment upon
the merits in any one is available as a ground for the dismissal
An action for specific performance by a subdivision of the others. (Sec. 4, Rule 2) The motion to dismiss should be
homeowner against a subdivision developer is within the granted. When B commenced suit to collect on the promissory
jurisdiction of the Housing and Land Use Regulatory Board. note, he waived his right to foreclose the mortgage. B split his
Sec. 1 of P.D. 1344 provides that the HLURB has jurisdiction cause of action.
over cases involving specific performance of contractual and
statutory obligations filed by buyers of subdivision lots and (1999) What is the rule on joinder of causes of
condominium units against the owner, developer, dealer, action? (2%)
broker or salesman (Manila Bankers Life Insurance Corp. v.


The rule on JOINDER OF CAUSES OF ACTION is proceed with the action but the judgment rendered shall be
that a party may in one pleading assert, in the alternative or without prejudice to the rights of each necessary party. (Sec. 9
otherwise join as many causes of action as he may have of Rule 3)
against an opposing party, provided that the rule on joinder of
parties is complied with; RULE 3: PARTIES TO THE CIVIL ACTIONS
Page | 12
1.] the joinder shall not include special civil actions [2017] VI. Hanna, a resident of Manila, filed a
or actions governed by special rules, but may include causes complaint for the partition of a large tract of land located in
of action pertaining to different venues or jurisdictions provided Oriental Mindoro. She impleaded her two brothers John and
one cause of action falls within the jurisdiction of a RTC and Adrian as defendants but did not implead Leica and Agatha,
venue lies therein; and her two sisters who were permanent residents of Australia.
Arguing that there could be no final determination of the case
2.] the aggregate amount claimed shall be the test without impleading all indispensable parties, John and Adrian
of jurisdiction where the claims in all the causes of action are moved to dismiss the complaint.
principally for the recovery of money. (Sec. 5, Rule 2 of the
1997 Rules) Does the trial court have a reason to deny the
motion? Explain your answer (4%)
A secured two loans from B? one for P500,000.00
and the other for P1,000,000.00, payable on different dates. Yes, the trial court has reason to deny the motion.
Both have fallen due. Is B obliged to file only one complaint Section 11, Rule 3 Rules of Court states that neither misjoinder
against A for the recovery of both loans? Explain. (2%) nor non-joinder of parties is a ground for the dismissal of an
action. The petitioner can still amend his initiatory pleading in
No. Joinder is only permissive since the loans are order to implead Leica and Agatha, for under the same rule,
separate loans which may be governed by the different terms such amendment to implead an indispensable party may be
and conditions. The two loans give rise to two separate causes made on motion of any party or on the trial court’s own initiative
of action and may be the basis of two separate complaints. at any stage of the action and on such terms as are just (Ablaza
v. Republic; G.R. No. 158298, August 11, 2010).
(1999) Distinguish action from cause of action. (2%)
[2016] VII Spouses Marlon and Edith have three (3)
An ACTION is one by which a party sues another children ages 15, 12 and 7, who are studying at public schools.
for the enforcement or protection of a right, or the prevention or They have a combined gross monthly income of P30,000.00
redress of a wrong. (Sec. 3(A), Rule 2 )A CAUSE OF ACTION and they stay in an apartment in Manila with a monthly rent of
is the act or omission by which a party violates a right of P5,000.00. The monthly minimum wage per employee in Metro
another. (Sec. 2, Rule 2 of the 1997 Rules) An action must be Manila does not exceed P13,000.00. They do not own any real
based on a cause of action. (Sec. 1, Rule 2 of the 1997 Rules) property. The spouses want to collect a loan of P25,000.00
from Jojo but do not have the money to pay the filing fees.
(1998) Give the effects of the following: Splitting a
single cause of action: and Non-joinder of a necessary party. (B) The spouses can avail the following remedies
under the rules in order to be exempted from the payment of
the filing fees:
The effect of splitting a single cause of action is
found in the rule as follows: If two or more suits are instituted
on the basis of the same cause of action, the filing of one or a 1. If the applicant for exemption meets the salary
and property requirements under Section 19 of Rule 141, then
judgment on the merits in any one is available as a ground for
the grant of the application is mandatory. On the other hand,
the dismissal of the others. (Sec. 4 of Rule 2) The effect of the
when the application does not satisfy one or both requirements,
non-joinder of a necessary party may be stated as follows: The
then the application should not be denied outright; instead, the
court may order the inclusion of an omitted necessary party if
court should apply the “indigency test” under Section 21 of Rule
jurisdiction over his person may be obtained. The failure to
3 and use its sound discretion in determining the merits of the
comply with the order for his inclusion without justifiable cause
prayer for exemption (Algura v. Local Government Unit of the
to a waiver of the claim against such party. The court may


City of Naga, G.R. No. 150135, October 30, 2006). Hence, the personal and is not thereby extinguished, the party should be
spouses may be authorized to litigate as indigents if the court, substituted by his heirs or his executor or administrator. (Sec.
upon an ex parte application and hearing, is satisfied that they 16, Rule 3) If the action is for recovery of money arising from
do not have money or property sufficient and available for food, contract, express or implied, and the defendant dies before
shelter, and basic necessities for themselves and their family entry of final judgment in the court in which the action was
(Rule 3, Sec. 21, Rules of Court; Re: Query of Mr. Roger pending at the time of such death, it shall not be dismissed but
Prioreschi, A.M. No. 09-6-9-SC, August 19, 2009). shall instead be allowed to continue until entry of final Page | 13
judgment. A favorable judgment obtained by the plaintiff shall
2. The Spouses can also file a motion to sue as be enforced in the manner provided in the rules for prosecuting
indigent under the Rules of Procedure on Small Claims. The claims against the estate of a deceased person. (Sec. 20, Rule
Motion shall be referred to the Executive Judge for immediate 3)
action in case of multi-sala courts. If the motion is granted by
the Executive Judge, the case shall be raffled off or assigned RULE 4: VENUE OF ACTIONS
to the court designated to hear small claims cases. If the motion
is denied, the plaintiff shall be given five (5) days within which (1997) X, a resident of Angeles City, borrowed
to pay the docket fees, otherwise, the case shall be dismissed P300,000.00 from A, a resident of Pasay City. In the loan
without prejudice. In no case shall a party, even if declared an agreement, the parties stipulated that "the parties agree to sue
indigent, be exempt from the payment of the P1,000.00 fee for and be sued in the City of Manila." In case of non-payment of
service of summons and processes (Section 10, A.M. No. 08- the loan, can A file his complaint to collect the loan from X in
8-7-SC, 2016 Rules of Procedure for Small Claims Cases). Angeles City?
3. The spouses may also claim exemption from Yes, because the stipulation in the loan agreement
payment of legal fees by seeking the help of the Integrated Bar that "the parties agree to sue and be sued in the City of Manila"
of the Philippines pursuant to A.M. No. 08-11-7-SC (IRR), Rule does not make Manila the "exclusive venue thereof." (Sec, 4 of
on the Exemption from the Payment of Legal Fees of the Rule 4, as amended by Circular No. 13- 95: Sec. 4 of new Rule
Clients of the National Committee on Legal Aid and of the Legal 4) Hence, A can file his complaint in Angeles City where he
Aid Offices in the Local Chapters of the Integrated Bar of the resides, (Sec, 2 of Rule 4).
Philippines.
Suppose the parties did not stipulate in the loan
(2005) Distinguish a derivative suit from a class suit. agreement as to the venue, where can A file his complaint
against X?
A DERIVATIVE SUIT is a suit in equity that is filed
by a minority shareholder in behalf of a corporation to redress If the parties did not stipulate on the venue, A can
wrongs committed against it, for which the directors refuse to file his complaint either in Angeles City where he resides or in
sue, the real party in interest being the corporation itself (Lint v. Pasay City where X resides, (Id).
Lim-Yu, G.IL No. 138343, February 19, 2001), while a CLASS
SUIT is filed regarding a controversy of common or general Suppose the parties stipulated in their loan
interest in behalf of many persons so numerous that it is agreement that "venue for all suits arising from this contract
impracticable to join all as parties, a number which the court shall be the courts in Quezon City," can A file his complaint
finds sufficiently representative who may sue or defend for the against X in Pasay City?
benefit of all. (Sec. 12, Rule 3) It is worth noting that a derivative
suit is a representative suit, just like a class suit. Yes, because the wording of the stipulation does not
make Quezon City the exclusive venue. (Philbanking v.
(1999) What is the effect of the death of a party Tensuan. 230 SCRA 413; Unimasters Conglomeration, Inc. v.
upon a pending action? (2%) CA. CR-119657, Feb. 7, 1997)
When the claim in a pending action is purely ALTERNATIVE ANSWER:

personal, the death of either of the parties extinguishes the
No. If the parties stipulated that the venue "shall be
claim and the action is dismissed. When the claim is not purely
in the courts in Quezon City", A cannot file his complaint in


Pasay City because the use of the word "shall" makes Quezon RULE 8: MANNER OF MAKING ALLEGATIONS IN
City the exclusive venue thereof. (Hoechst Philippines vs. PLEADINGS
Torres, 83 SCRA 297).
RULE 9: EFFECT OF FAILURE TO PLEAD

B. PROCEDURE IN REGIONAL TRIAL Page | 14
(2006) Jojie filed with the Regional Trial Court of
COURTS (Rule 6 – 39) Laguna a complaint for damages against Joe. During the pre-
trial, Joe and his counsel failed to appear despite notice to both
RULE 6: KIND OF PLEADINGS of them. Upon oral motion of Jojie, Joe was declared as in
default and Jojie was allowed to present her evidence ex parte.
(2007) No. II. (c) A motion is a pleading. (2%) Thereafter, the court rendered its Decision in favor of Jojie. Joe
hired Jose as his counsel. What are the remedies available to
False. A motion is not a pleading but a mere him? Explain. (5%)
application for relief other than by a pleading (Rule 15, Sec. 1,
Rules of Court). Before the rendition of judgment; [1%]
(2007) No. II. (d) A counderclain is a pleading. (2%) BEFORE THE RENDITION OF JUDGMENT
He may file a motion under oath to set aside the
True. A counterclaim is a pleading by which a order of default on the grounds of fraud, accident, mistake or
defending party makes a claim against an opposing party excusable negligence and that he has a meritorious defense
(Sec. 6, Rule 6, Rules of Court). (Sec. 3[b], Rule 9); and if it is denied, he may move to
reconsider, and if reconsideration is denied, he may file the
(1999) What is a counterclaim? (2%) special civil action of certiorari for grave abuse of discretion
tantamount to lack or excess of the lower court's jurisdiction.
A COUNTERCLAIM is any claim which a defending (Sec. 1, Rule 65) or he may file a petition for certiorari if he has
party may have against an opposing party. (Sec. 6, Rule 6) been illegally declared in default, e.g. during the pendency of
his motion to dismiss or before the expiration of the time to
answer. (Matute vs. Court of Appeals, 26 SCRA 768; Acosta-
Distinguish a counterclaim from a cross-claim. (2%)
Ofalia vs. Sundiam, 85 SCRA 412.)
A counterclaim is distinguished from a CROSS-

After judgment but before its finality; and [2%1
CLAIM in that a cross-claim is any claim by one party against
a co-party arising out of the transaction or occurrence that is AFTER JUDGMENT BUT BEFORE ITS FINALITY,
the subject matter either of the original action or of a he may file a motion for new trial on the grounds of fraud,
counterclaim therein. A counterclaim is against an opposing accident, mistake, excusable negligence, or a motion for
party while a cross-claim is against a co-party. (Sec. 8, Rule 6) reconsideration on the ground of excessive damages,
insufficient evidence or the decision or final order being
contrary to law (Sec. 2, Rule 37): and thereafter. If the motion
RULE 7: PARTS OF PLEADINGS
is denied, appeal to available under Rules 40 or 41, whichever
to applicable.
(2006) What is forum shopping? (2.5%)
After finality of judgment? [2%]

Forum shopping is the act of a party which consists
of filing multiple suits, simultaneously or successively, for the
purpose of obtaining a favorable judgment (Leyson v. Office of AFTER FINALITY OF THE JUDGMENT, there are
the Ombudsman, G.R. No. 134990, April 27, 2000; Yulienco v. three ways to assail the judgment, which are: a petition for relief
CA, G.R. No. 131692, June 10,1999; Chemphil Export & Import under Rule 38 on the grounds of fraud, accident, mistake or
Corp. v. CA, G.R. Nos. 112438-39, December 12, 1995). excusable negligence; annulment of judgment under Rule 47
for extrinsic fraud or lack of jurisdiction; or certiorari if the
judgment to void on its face or by the judicial record.


(Balangcad vs. Justices of the Court of Appeals, G.R. No.
83888. February 12, 1992, 206 8CRA 171). Assuming that the motion to set aside complies with
the other requirements of the rule, it should be granted.
(2001) Mario was declared in default but before Although such a motion may be made after notice but before
judgment was rendered, he decided to file a motion to set aside judgment (Sec. 3[B] of Rule 9), with more reason may it be filed
the order of default. What should Mario state in his motion in after discovery even before receipt of the order of default.
Page | 15
order to justify the setting aside of the order of default? In what
form should such motion be? (1998) What are the available remedies of a party
declared in default:
In order to justify the setting aside of the order of
default, Mario should state in his motion that his failure to Before the rendition of judgment; [1%]
answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. [Sec. 3(b) of BEFORE THE RENDITION OF JUDGMENT
Rule 9,]. The motion should be under oath. (Id.) He may file a motion under oath to set aside the
order of default on the grounds of fraud, accident, mistake or
excusable negligence and that he has a meritorious defense
(1999) 1. When may a party be declared in (Sec. 3[b], Rule 9); and if it is denied, he may move to
default? (2%) reconsider, and if reconsideration is denied, he may file the
special civil action of certiorari for grave abuse of discretion
A party may be declared in default when he fails to tantamount to lack or excess of the lower court's jurisdiction.
answer within the time allowed therefor, and upon motion of the (Sec. 1, Rule 65) or he may file a petition for certiorari if he has
claiming party with notice to the defending party, and proof of been illegally declared in default, e.g. during the pendency of
such failure. (Sec. 3, Rule 9) his motion to dismiss or before the expiration of the time to
answer. (Matute vs. Court of Appeals, 26 SCRA 768; Acosta-
2. What is the effect of an Order of Default? Ofalia vs. Sundiam, 85 SCRA 412.)
(2%)
After judgment but before its finality; and [2%1
The effect of an Order of Default is that the court AFTER JUDGMENT BUT BEFORE ITS FINALITY,
may proceed to render judgment granting the claimant such he may file a motion for new trial on the grounds of fraud,
relief as his pleading may warrant unless the court in its accident, mistake, excusable negligence, or a motion for
discretion requires the claimant to submit evidence (Id.) The reconsideration on the ground of excessive damages,
party in default cannot take part in the trial but shall be entitled insufficient evidence or the decision or final order being
to notice of subsequent proceedings. (Sec. 3[A]) contrary to law (Sec. 2, Rule 37): and thereafter. If the motion
is denied, appeal to available under Rules 40 or 41, whichever
3. For failure to seasonably file his Answer to applicable.
despite due notice, A was declared in default in a case
instituted against him by B. The following day, A's mistress who After finality of judgment? [2%]
is working as a clerk in the sala of the Judge before whom his
case is pending, informed him of the declaration of default. On AFTER FINALITY OF THE JUDGMENT, there are
the same day, A presented a motion under oath to set aside three ways to assail the judgment, which are: a petition for relief
the order of default on the ground that his failure to answer was under Rule 38 on the grounds of fraud, accident, mistake or
due to fraud and he has a meritorious defense. Thereafter, he excusable negligence; annulment of judgment under Rule 47
went abroad. After his return a week later, with the case still for extrinsic fraud or lack of jurisdiction; or certiorari if the
undecided, he received the order declaring him in default. The judgment to void on its face or by the judicial record.
motion to set aside default was opposed by B on the ground (Balangcad vs. Justices of the Court of Appeals, G.R. No.
that it was filed before A received notice of his having been 83888. February 12, 1992, 206 8CRA 171).
declared in default, citing the rule that the motion to set aside
may be made at anytime after notice but before judgment. RULE 12: BILL OF PARTICULARS
Resolve the Motion. (2%)


(b) What can the defendant, in a civil case, do in the permitted, it is extraordinary in character and in derogation of
event that his motion for bill of particulars is denied? (2.5%) the usual method of Service; hence, it must faithfully and strictly
comply with the prescribed requirements and circumstances
(b) Under Rule 12; Section 5 of the Rules of Court, authorized by the rules. Compliance with the rules regarding
after notice of denial of his motion, the moving party may file the service of summons is as important as the issue of due
his responsive pleading within the period to which he was process for the Court to acquire jurisdiction. For the
presumption of regularity in the performance of official duty to Page | 16
entitled at the time of filing his motion, which shall not be less
than five (5) days in any event. If tainted with grave abuse of apply, the Sheriff’s Return must show that serious efforts or
discretion, the moving party may question the denial through a attempts were exerted to personally serve the summons and
Rule 65 certiorari. that said efforts failed. These facts must be specifically
narrated in the Return. It must clearly show that the substituted
(2003) When can a bill of particulars be availed of? service must be made on a person of suitable age and
What is the effect of non-compliance with the order of a bill of discretion living in the dwelling or residence of defendant;
particulars? otherwise, the Return is flawed and the presumption cannot be
availed of. The Supreme Court laid down the requirements as
follows:
Before responding to a pleading, a party may move
for a bill or particulars of any matter which is not averred with
1. Impossibility of prompt personal service, i.e., the
sufficient definiteness or particularity to enable him properly to
party relying on substituted service or the sheriff must show
prepare his responsive pleading. If the pleading is a reply, the
that defendant cannot be served promptly or there is
motion must be filed within ten (10) days from service thereof.
impossibility of prompt service within a reasonable time,
(Sec. 1 of Rule 12) If the order is not complied with, the court
Reasonable time being “so much time as is necessary under
may order the striking out of the pleading or the portions thereof
the circumstances for a reasonably prudent and diligent man to
to which the order was directed or make such other order as it
do, conveniently, what the contract or duty requires that should
deems just. (Sec. 4 of Rule 12)
be done, having a regard for the rights and possibility of loss, if
any..] to the other party”. Moreover, it must be indicated therein
RULE 14: SUMMONS
that the sheriff has made several attempts at personal service
for at least three (3) times on at least two (2) different dates.
[2016] VIII Juan sued Roberto for specific
2. Specific details in the return, i.e., the sheriff must
performance. Roberto knew that Juan was going to file the
describe in the Return of Summons the facts and
case so he went out of town and temporarily stayed in another
circumstances surrounding the attempted personal service.
city to avoid service of summons. Juan engaged the services
3. Substituted service effected on a person of
of Sheriff Matinik to serve the summons but when the latter
suitable age and discretion residing at defendant’s house or
went to the residence of Roberto, he was told by the caretaker
residence; or on a competent person in charge of defendant’s
thereof that his employer no longer resides at the house. The
office or regular place of business (Ma. Imelda M. Manotoc v.
caretaker is a high school graduate and is the godson of
Court of Appeals, G.R. No. 130974 August 16, 2006).
Roberto. Believing the caretaker's story to be true, Sheriff
Matinik left a copy of the summons and complaint with the
caretaker.
[2015] II. Circe filed with the RTC a complaint for
Was there a valid substituted service of summons? the foreclosure of real estate mortgage against siblings Scylla
Discuss the requirements for a valid service of summons. (5%) and Charybdis, co-owners of the property and cosignatories to
the mortgage deed. The siblings permanently reside in Athens,
Greece. Circe tipped off Sheriff Pluto that Scylla is on a
No. There was no valid substituted service of
balikbayan and is billeted at the Century Plaza Hotel in Pasay
summons. In an action strictly in personam, personal service
City, Sheriff Pluto went to the hotel and personally served
on the defendant is the preferred mode of service, that is, by
Scylla the summons, but the latter refused to receive summons
handing a copy of the summons to the defendant in person. If
for Charybdis as she was not authorized to do so. Sheriff Pluto
defendant, for excusable reasons, cannot be served with the
requested Scylla for the email address and has number of
summons within a reasonable period, then substituted service
Charybdis which the latter readily gave. Sheriff Pluto, in his
can be resorted to. While substituted service of summons is
return of the summons, stated that “Summons for Scylla was


served personally as shown by her signature on the receiving If Charlie is declared in default, he has the following
copy of the summons, Summons on Charybdis was served remedies to wit:
pursuant to the amendment of Rule 14, by facsimile transmittal
of the summons and complaint on defendant’s far number as 1) he may, at any time afterdiscovery of the default
evidenced by transmission verification report automatically but before judgment, file a motion, under oath, to set aside
generated by the fax machine indicating that it was received by the order of default on the ground that his failure to answer
the fax number to which it was sent on the date and time Page | 17
was due to fraud, accident, mistake, or excusable neglect, and
indicated therein.” that he has a meritorious defense;
Circe, sixty (60) days after her receipt of Sheriff 2) if judgment has already been rendered when he
Pluto’s return, filed a Motion to Declare Charybdis in default as discovered the default, but before the same has become final
Charybdis did not file any responsive pleading. and executor, he may file a motion for new trial under Section
1(a) of Rule 37:
A) Should the court declare Charybdis in default?
(2%) 3) if he discovered the defaultafter the judgment has
become final and executor, he may file a petition for relief
Scylla seasonably filed her answer setting forth under Section 2 of Rule 38; and
therein as a defense that Charybdis had paid the mortgage
debt. 4) he may also appeal fromthe judgment rendered
against him as contrary to the evidence or to the law, even if no
(B) On the premise that Charybdis was properly petition to set aside the order of default has been
declared in default, what is the effect of Scylla’s answer to the presented by him. (B.D. Longspan Builders, Inc. vs. R.S.
complaint? Ampeloquio Realty Development, G.R. No. 169919,
September 11, 2009).
(A) No, the Court should not declare Charybdis in
default because there was no proper service of summons. [Note: there are additional remedies to address
Section 12, Rule 14 of the Rules of Court applies only to a judgments by default: Motion for Reconsideration (Rule 37),
foreign private juridical entity that is not registered in the Annulment of Judgment (Rule 47) and Petition for Certiorari
Philippines and has no resident agent in the country, and not (Rule 65)].
to individuals (A.M. No. 11-3-6-SC, March 15, 2011). The
service of summons by facsimile under said rule is, therefore,
defective. A foreclosure of real estate mortgage is a quasi in (2009) Summons may be served by mail.
rem action, thus, the court can render a judgment as long as it
has jurisdiction over the res and any of the modes of extra- FALSE. Rule 14 of the Rules of Court, on
territorial service of summons under Sec. 15 of Rule 14 is Summons, provide only for serving Summons (a) to the
complied with prior leave of court. There is, unfortunately, no defendant in person; or (b) if this is not possible within a
showing in the problem that a prior leave of court was obtained reasonable time, then by substituted service in accordance
before resorting to extra-territorial service of summons; hence, with Sec. 7 thereof; or (c) if any of the foregoing two ways is
the service of summons is defective. not possible, then with leave of court, by publication in
accordance with the same Rule.
(B) Assuming that Charybdis was properly declared
in default, the court shall try the case against all the defendants ALTERNATIVE ANSWER:
upon the Answer filed by Scylla, and render judgment upon the TRUE, but only in extraterritorial service under Sec.
evidence presented (Section 3 (c), Rule 9, Rules of Court). 15 of the Rule on Summons where service may be effected “in
any other manner the court may deem sufficient.”
(2013) (B) If declared in default, what can Charlie
do to obtain relief? (4%) RULE 16: MOTION TO DISMISS


[2014] XXVII. Mr. Avenger filed with the Regional (b) File an appeal to the Court of Appeals under
Trial Court (RTC) a complaint against Ms. Bright for annulment Rule 41.
of deed of sale and other documents. Ms. Bright filed a motion (c) File an appeal to the Supreme Court under Rule
to dismiss the complaint on the ground of lack of cause of 45 if the appeal will raise only questions of law.
action. Mr. Avenger filed an opposition to the motion to dismiss. (d) File a petition for relief from judgment under Rule
State and discuss the appropriate remedy/remedies under 38.
each of the following situations: (6%) (e) File an action for annulment of judgment under Page | 18
Rule 47 on the ground of extrinsic fraud or lack of jurisdiction.
(A) If the RTC grants Ms. Bright’s motion to dismiss
and dismisses the complaint on the ground of lack of cause of
action, what will be the remedy/remedies of Mr. Avenger? (2000) What are the essential requisite of res
judicata? (2%)
(A) If the RTC grants Ms. Brights’s motion to
dismiss, the remedies of Mr. Avenger are: The Essential Requisites of Res Judicata are:
(a) File a motion for reconsideration under Rule 37
. 1. the judgment or order rendered must be final;
(b) Re-file the complaint. The dismissal does not bar 2. the court rendering the same must have
the re-filing of the case (S5 R16). jurisdiction of the subject matter and of the parties;
(c) Appeal from the order of dismissal. The 3. it must be a judgment or order on the merits; and
dismissal order is a final order as it completely disposes of the 4. there must be between the two cases identity of
case; hence it is appealable. parties, identity of subject matter, and identity of causes of
(d) File an amended complaint as a matter of right action. (San Diego v. Cardona, 70 Phil, 281 [1940])
curing the defect of lack of cause of action before the dismissal
order becomes final. This is because a motion to dismiss is not
a responsive pleading; hence Mr. Avenger can amend the RULE 17: DISMISSAL OF ACTIONS
complaint as a matter of right. (S2 R10).
[2018] IV Dick Dixson had sons with different
(B) If the RTC denies Ms. Bright’s motion to dismiss, women - (i) Dexter with longtime partner Delia and (ii)
what will be her remedy/remedies? Dongdong and Dingdong with his housemaid Divina. When
Dick fell ill in 2014, he entrusted all his property titles and
(B) If the RTC denies Ms. Bright’s motion to dismiss, shares of stock in various companies to Delia who, in turn,
her remedies are: handed them to Dexter for safekeeping. After the death of Dick,
(a) File a motion for reconsideration. Dexter induced Dongdong and Dingdong to sign an agreement
(b) Proceed to trial and if she loses, appeal and and waiver of their right to Dick's estate in consideration of PhP
assign the failure to dismiss as a reversible error. 45 million. As Dexter reneged on his promise to pay, Dongdong
(c) File a special civil action for certiorari and/or and Dingdong filed a complaint with the RTC of Manila for
mandamus if the denial of the order to dismiss is made with annulment of the agreement and waiver. The summons and
grave abuse of discretion amounting to lack of or excess of complaint were received by Dalia, the housemaid of Dexter, on
jurisdiction. the day it was first served. Dexter filed a motion to dismiss on
the ground of lack of jurisdiction over his person. RTC Manila
(C) If the RTC denies Ms. Bright’s motion to dismiss granted the motion to dismiss.
and, further proceedings, including trial on the merits, are
conducted until the RTC renders a decision in favor of Mr. Dongdong and Dingdong thereafter filed a new
Avenger, what will be the remedy/remedies of Ms. Bright? complaint against Dexter for annulment of the agreement and
waiver. Before Dexter could file his answer, Dongdong and
(C) If the RTC renders a decision in favor of Mr. Dingdong filed a motion to withdraw their complaint praying that
Avenger, Ms. Bright’s remedies are: it be dismissed without prejudice. An Order was issued granting
(a) File a motion for reconsideration or new trial the motion to withdraw without prejudice on the basis that the
under Rule 37 . summons had not yet been served on Dexter. Dexter filed a


motion for reconsideration of the order of dismissal. He argued following requisites should concur for the Two-Dismissal Rule
that the dismissal should have been with prejudice under the to apply:
"two-dismissal rule" of Rule 17, Section 1 of the Rules of Court,
in view of the previous dismissal of the first case. (a) There was a previous case that was dismissed by a
competent court
Will the two-dismissal rule apply making the second (b) Both cases were based on or include the same claim;
dismissal with prejudice? (5%) (c) Both notices for dismissal were filed by the plaintiff; and. Page | 19
(d) When the motion to dismiss filed by the plaintiff was
No, the two-dismissal rule will not apply, because consented to by the defendant on the ground that the latter paid
the first dismissal was at the instance of the defendant. and satisfied all the claims of the former.
The requirements for the application of the two-dismissal rule
under Rule 17, Section 1 of the Rules of Court are: (a) there In this case, the Makati City RTC had no jurisdiction
was a previous case that was dismissed by a competent court; over the first complaint which was dismissed through Agatha’s
(b) both cases were based on or include the same claim; (c) notice, because it is below its jurisdictional amount of at least
both notices for dismissal were filed by the plaintiff; and (d) P400,000.00. Therefore, the Two-Dismissal Rule cannot be
when the motion to dismiss filed by the plaintiff was consented successfully invoked in this case.
to by the defendant on the ground that the latter paid and
satisfied all the claims of the former (Ching, et al. v. Cheng, et RULE 21: SUBPOENA
al., G.R. No. 175507, 8 October 2014).
In this case the third requisite is absent because the first (2009) No.XI.B. The viatory right of a witness
dismissal was upon the motion to dismiss filed by Dexter; served with a subpoena ad testificandum refers to his right not
hence, the two-dismissal rule will not apply. to comply with the subpoena.
[2017] VIII. B. Agatha filed a complaint against FALSE. The viatory rightof a witness, embodied in
Yana in the RTC in Makati City to collect P350,000.00, an Sec. 10, Rule 21 of the Rules of Civil Procedure, refers to his
amount representing the unpaid balance on the price of the car right not to be compelled to attend upon a subpoena, by reason
Yana had bought from Agatha. Realizing a jurisdictional error of the distance from the residence of the witness to the place
in filing the complaint in the RTC, Agatha filed a notice of where he is to testify. It is available only in civil cases (People
dismissal before she was served with the answer of Yana. The vs. Montejo, 21 SCRA 722 [1965]).
RTC issued an order confirming the dismissal .
RULE 23: DEPOSITION PENDING ACTION
Three months later, Agatha filed another complaint
against Yana based on the same cause of action this time in (2000) Describe briefly at least five (5) modes of
the MeTC of Makati City. However, for reasons personal to her, discovery under the Rules of Court. (5%)
Agatha decided to have the complaint dismissed without
prejudice by filing a notice of dismissal prior to the service of Five modes of discovery under the Rules of Court
the answer of Yana. Hence, the case was dismissed by the are:
MeTC. A month later, Agatha refiled the complaint against 1. DEPOSITION. By leave of court after jurisdiction
Yana in the same MeTC. May Yana successfully invoke the has been obtained over any defendant or over property which
Two-Dismissal Rule to bar Agatha’s third complaint? Explain is the subject of the action, or without such leave after an
your answer (3%) answer has been served, the testimony of any person, whether
a party or not, may be taken, at the instance of any party, by
No, Yana cannot successfully invoke the Two- deposition upon oral examination or written interrogatories.
Dismissal Rule: In order for the Two-Dismissal Rule to apply, (Sec. 1, Rule 23, 1997 Rules of Civil Procedure.)
Rule 17, Section 1 of the Rules of Court requires that both
dismissals through plaintiff’s notices were made by a 2. DEPOSITION BEFORE ACTION OR PENDING
competent court. Moreover, in Ching v. Cheng (G.R. No. APPEAL. A person who desires to perpetuate his own
175507, October 8, 2014), the Supreme Court ruled that the testimony or that of another person regarding any matter that
may be cognizable in any court of the Philippines, may file a


verified petition in the court of the place of the residence of any
expected adverse party. (Sec 1, Rule 24 RCP) RULE 25: INTERROGATORIES TO PARTIES
3. INTERROGATORIES TO PARTIES. Under the [2016] II [a] Briefly explain the procedure on
same conditions specified in section 1 of Rule 23, any party "Interrogatories to Parties" under Rule 25 and state the effect
shall file and serve upon any adverse party written of failure to serve written interrogatories. (2.5%)
interrogatories regarding material and relevant facts to be Page | 20
answered by the party served. (Sec. 1, Rule 25, 1997 Rules of (a) PROCEDURE
Civil Procedure.)
1 Any party desiring to elicit material and relevant
4. ADMISSION BY ADVERSE PARTY. At any time facts from any adverse parties shall file and serve upon the
after issues have been joined, a party may file and serve upon latter written interrogatories to be answered by the party served
any other party a written request for the admission by the latter or, if the party served is a public or private corporation or a
of the genuineness of any material and relevant document or partnership or association, by any officer thereof competent to
of the truth of any material and relevant matter of fact. (Sec. 1, testify in its behalf (Section 1, Rule 25, Rules of Court).
Rule 26, 1997 Rules of Civil Procedure.)
2. The interrogatories shall be answered fully in
5. PRODUCTION OR INSPECTION OF writing and shall be signed and sworn to by the person making
DOCUMENTS OR THINGS. Upon motion of any party showing them. The party upon whom the interrogatories have been
good cause therefore, a court may order any party to produce served shall file and serve a copy of the answers on the party
and permit the inspection and copying or photographing of any submitting the interrogatories within fifteen (15) days after
designated documents, etc. or order any party to permit entry service thereof, unless the court on motion and for good cause
upon designated land or property for inspecting, measuring, shown, extends or shortens the time (Section 2, Rule 25, Rules
surveying, or photographing the property or any designated of Court).
relevant object or operation thereon. (Sec. 1, Rule 27, 1997
Rule 27 Rules of Civil Procedure.) 3. Objections to any interrogatories may be
presented to the court within ten (10) days after service thereof,
(1997) In an admiralty case filed by A against Y with notice as in case of a motion; and answers shall be
Shipping Lines (whose principal offices are in Manila) in the deferred until the objections are resolved, which shall be at as
RTC, Davao City, the court issued a subpoena duces tecum early a time as is practicable (Section 3. Rule 25, Rules of
directing Y, the president of the shipping company, to appear Court).
and testify at the trial and to bring with him several documents.
On what valid ground can Y refuse to comply with the Should a party fail to file and serve written
subpoena duces tecum? interrogatories on adverse party, he cannot compel the latter to
give testimony in one court or to give deposition pending
Y can refuse to comply with the subpoena duces appeal, unless allowed by the court for good cause shown and
tecum on the ground that he resides more than 50 (now 100) to prevent a failure of justice (Section 6. Rule 25, Rules of
kilometers from the place where he is to testify, (Sec. 10 of Rule Court; Spouses Vicente Afulugencia and Leticia Afulugencia v.
21). Metropolitan Bank & Trust Co., et al., G.R. No. 185145
February 5, 2014).
How can A take the testimony of Y and present the
documents as exhibits other than through the subpoena from [b] Briefly explain the procedure on "Admission by
the RTC? Adverse Party" under Rule 26 and the effect of failure to file
and serve the request. (2.5%)
A can take the testimony of Y and present the
documents as exhibits by taking his deposition through oral (b) PROCEDURE
examination or written interrogatories. (Rule 23) He may also
file a motion for the production or inspection of documents. 1. At any time after issues have been joined, a party
(Rule 27). may file and serve upon any party a written request for the


admission by the latter of the genuineness of any material and On July 21, 2009, B Lines served on A a "Notice to
relevant document described in and exhibited with the request Take Deposition," setting the deposition on July 29, 2009 at
or of the truth of any material and relevant matter of fact set 8:30 a.m. at the office of its counsel in Makati. A failed to appear
forth in the request. Copies of the documents shall be delivered at the deposition-taking, despite notice. As counsel for B Lines,
with the request unless copies have already been furnished how would you proceed? (3%)
(Section 1, Rule 26, Rules of Court).
Page | 21
As counsel for B lines (which gave notice to take the
2. Each of the matters of which an admission is deposition), I shall proceed as follows:
requested shall be deemed admitted unless, within a period
designated in the request, which shall not be less than fifteen (a) Find out why A failed to appear at the deposition
(15) days after service thereof, or within such further time as taking, despite notice;
the court may allow on motion, the party to whom the request
directed files and serves upon the party requesting the (b) If failure was for valid reason, then set another
admission a sworn statement either denying specifically the date for taking the deposition.
matters of which an admission is requested or setting forth in
detail the reasons why he cannot truthfully either admit or deny (c) If failure to appear at deposition taking was
those matters. without valid reason, then I would file a motion/application in
the court where the action is pending, for and order to show
3. Objections to any request for admission shall be submitted cause for his refusal to submit to the discovery; and
to the court by the party requested within the period for and
prior to the filing of his sworn statement as contemplated in the (d) For the court to issueappropriate Order provided
preceding paragraph and his compliance therewith shall be under Rule 29 of the Rules, for noncompliance with the show-
deferred until such obligations are resolved, which resolution cause order, aside from contempt of court.
shall be made as early as practicable (Section 2, Rule 26,
Rules of Court). RULE 33: DEMURRER TO EVIDENCE
4. Any admission made by a party pursuant to such request is (2003) Compare the effects of a denial of demurrer
for the purpose of the pending action only and shall not to evidence in a civil case with those of a denial of demurrer to
constitute an admission by him for any other purpose nor may evidence in a criminal case. 4%
the same be used against him in any other proceeding (Section
3, Rule 26). Unless otherwise allowed by the court for good In a civil case, the defendant has the right to file a
cause shown and to prevent a failure of justice a party who fails demurrer to evidence without leave of court. If his demurrer is
to file and serve a request for admission on the adverse party denied, he has the right to present evidence. If his demurrer is
of material and relevant facts at issue which are, or ought to granted and on appeal by the plaintiff, the appellate court
be, within the personal knowledge of the latter, shall not be reverses the order and renders judgment for the plaintiff, the
permitted to present evidence on such facts (emphasis defendant loses his right to present evidence. (Rule 33).
supplied] (Section 5, Rule 26, Rules of Court).
In a criminal case, the accused has to obtain leave
RULE 29: REFUSAL TO COMPLY WITH MODES OF of court to file a demurrer to evidence. If he obtains leave of
DISCOVERY court and his demurrer to evidence is denied, he has the right
to present evidence in his defense. If his demurrer to evidence
(2010) No.II. On August 13, 2008, A, as shipper is granted, he is acquitted and the prosecution cannot appeal.
and consignee, loaded on the M/V Atlantis in Legaspi City
100,000 pieces of century eggs. The shipment arrived in Manila
RULE 34: JUDGMENT ON THE PLEADINGS
totally damaged on August 14, 2008. A filed before the
Metropolitan Trial Court (MeTC) of Manila a complaint against
(1999) What are the grounds for judgment on the
B Super Lines, Inc. (B Lines), owner of the M/V Atlantis, for
pleadings? (2%)
recovery of damages amounting to P167,899. He attached to
the complaint the Bill of Lading.


The grounds for judgment on the pleadings are and invoices, as well as to the value of the principal obligation
where an answer fails to tender an issue, or otherwise admits and the amount paid as stated in the amended complaint.
the material allegations of the adverse party's pleading. (Sec. Daribell thereafter amended the complaint anew.
1, Rule 34). The amendment modified the period covered and confirmed
the partial payment of PhP 110,000 but alleged that this
A's Answer admits the material allegations of B's payment was applied to the spouses' other existing obligations.
Daribell however reiterated that the principal amount remained Page | 22
Complaint. May the court motu proprio render judgment on the
pleadings? Explain. (2%) unchanged.
No, a motion must be filed by the adverse party. (a) Is the request for admission deemed abandoned
(Sec. 1, Rule 34) The court cannot motu proprio render or withdrawn by the filing of the second amended complaint?
judgment on the pleadings. (2.5%)
A brought an action against her husband B for No. The second amended complaint merely
annulment of their marriage on the ground of psychological supersedes the first amended complaint and nothing more,
incapacity, B filed his Answer to the Complaint admitting all the pursuant to Rule 10, Section 8 of the Rules of Court; thus, the
allegations therein contained. May A move for judgment on the Request for Admission is not deemed abandoned or withdrawn
pleadings? Explain. (2%) by the filing of the Second Amended Complaint (Spouses
Villuga v. Kelly Hardware and Construction Supply, Inc., G.R.
No. 176570, 18 July 2012).
No. The court shall order the prosecutor to
investigate whether or not a collusion between the parties
exists, and if there is no collusion, to intervene for the State in (b) Can the amendment of the complaint be allowed
order to see to it that the evidence submitted is not fabricated. if it substantially alters the cause of action? (2.5%)
(Sec. 3[E], Rule 9) Evidence must have to be presented in
accordance with the requirements set down by the Supreme Such amendment could still be allowed when it is
Court in Republic vs. Court of Appeals and Molina (268 SCRA sought to serve the his/her interest of substantial justice,
198.) prevent delay, and secure a just, speedy and inexpensive
disposition of actions and proceedings (Valenzuela v. Court of
RULE 35: SUMMARY JUDGMENTS Appeals, G.R. No. 131175, August 28, 2001). The amended
complaint may be allowed if it will not prejudice the rights of the
[2018] VI Daribell Inc. (Daribell) filed a complaint for parties.
sum of money and damages against spouses Dake and Donna
Demapilis for unpaid purchases of construction materials in the
sum of PhP 250,000. In their answer, spouses Demapilis (c) Can the facts subject of an unanswered request
admitted the purchases from Daribell, but alleged that they for admission be the basis of a summary judgment? (2.5%)
could not remember the exact amount since no copies of the
documents were attached to the complaint. They nevertheless Yes. Summary judgment is a procedural device
claimed that they made previous payments in the amounts of resorted to in order to avoid long drawn-out litigations, and
PhP 110,000 and PhP 20,000 and that they were willing to pay useless delays. Such judgment is generally based on the facts
the balance of their indebtedness after account verification. In proven summarily by affidavits, depositions, pleadings, or
a written manifestation, spouses Demapilis stated that, in order admissions of the parties (Spouses Villuga v. Kelly Hardware
to buy peace, they were willing to pay the sum of PhP 250,000, and Construction Supply, Inc., G.R. No. 176570, 18 July 2012).
but without interests and costs. Subsequently, Daribell filed a
motion for partial summary judgment. Thereafter, Daribell filed In this case, the facts subject of an unanswered
an amended complaint, alleging that the total purchases of request for admission are deemed admissions by the adverse
construction materials were PhP 280,000 and only PhP 20,000 party (Rule 26, Section 2, Rules of Court). Applying the
had been paid. Daribell also served upon the spouses Supreme Court's ruling in Spouses Villuga v. Kelly Hardware
Demapilis a request for admission asking them to admit to the and Construction Supply Inc., (G.R. No. 176570, 18 July 2012),
genuineness of the statement of accounts, delivery receipts these facts may be the basis of a summary judgment.


final order was entered [Rule 38, secs. 1 & 3; Soriano v. Asi,
[2016] [b] Distinguish "Summary Judgment" and 100 Phil. 785 (1957)].
"Judgment on the Pleadings." (2.5%)
An ACTION FOR ANNULMENT may also be filed
(B) What distinguishes a judgment on the pleadings on the ground of extrinsic fraud within four (4) years from its
from a summary judgment is the presence of issues in the discovery, and if based on lack of jurisdiction, before it is barred
by laches or estoppel. (Rule 47, secs. 2 & 3) Page | 23
Answer to the Complaint. When the Answer fails to tender any
issue, that is, if it does not deny the material allegations in the
complaint or admits said material allegations of the adverse RULE 39: EXECUTION, SATISFACTION AND EFFECT OF
party’s pleadings by admitting the truthfulness thereof and/or JUDGMENT
omitting to deal with them at all, a judgment on the pleadings is
appropriate. (2007)(a) What are the rules on the recognition and
enforcement of foreign judgments in our courts? (6%)
On the other hand, when the Answer specifically
denies the material averments of the complaint or asserts Judgments of foreign courts are given recognition in
affirmative defenses, or in other words raises an issue, a our courts thus:
summary judgment is proper provided that the issue raised is
not genuine. A genuine issue means an issue of fact which In case of judgment upon a specific thing, the
calls for the presentation of evidence, as distinguished from an judgment is conclusive upon the title to the thing, unless
issue which is fictitious or contrived or which does not otherwise repelled by evidence of lack of jurisdiction, want of
constitute a genuine issue for trial (Eugenio Basbas v. Beata due notice to the party, collusion, fraud, or clear mistake of law
Sayson and Roberto Sayson, Jr., G.R. No. 172660, August 24, or fact (Rule 39, Sec. 48 [a], Rules of Court); and
2011).
In case of judgment against a person, the judgment
RULE 38: RELIEF FORM JUDGMENT, ORDERS, OR is presumptive evidence of a right as between the parties and
OTHER PROCEEDINGS their successors in interest by subsequent title, unless
otherwise repelled by evidence on grounds above stated
(2007) (b) A defendant who has been declared in (Rule 39, Sec. 48 [b], Rules of Court).
default can avail of a petition for relief from the judgment However, judgments of foreign courts may only be
subsequently rendered in the case. (3%) enforced in the Philippines through an action validly heard in
the Regional Trial Court. Thus, it is actually the judgment of the
False. The remedy of petition for relief from Philippine court enforcing the foreign judgment that shall be
judgment is available only when the judgment or order in executed.
question is already final and executor, i.e., no longer
appealable. As an extraordinary remedy, a petition for relief (b) Can a foreign arbitral award be enforced in the
from judgment may be availed only in exceptional cases where Philippines under those rules? Explain briefly. (2%)
no other remedy is available.
No, a foreign arbitral award cannot be enforced in
(2002) May an order denying the probate of a will the Philippines under the rules on recognition and enforcement
still be overturned after the period to appeal therefrom has of foreign judgments above-stated. A foreign arbitral award is
lapsed? Why? not a foreign judgment, and pursuant to the Alternative Dispute
Resolution Act of 2004 (R.A. No. 9285), in relation to 1958 New
Yes, an order denying the probate of a will may be York Convention on the Recognition and Enforcement of
overturned after the period to appeal therefrom has lapsed. A Foreign Arbitral Awards, the recognition and enforcement of
PETITION FOR RELIEF may be filed on the grounds of fraud, the foreign arbitral awards shall be in accordance with the rules
accident, mistake or excusable negligence within a period of of procedure to be promulgated by the Supreme Court. At
sixty (60) days after the petitioner learns of the judgment or final present, the Supreme Court is yet to promulgate rules of
order and not more than six (6) months after such judgment or procedure on the subject matter.


(c) How about a global injunction issued by a foreign (2009) No. XIX.A. Distinguish the two modes of
court to prevent dissipation of funds against a defendant appeal from the judgment of the Regional Trial Court to the
therein who has assets in the Philippines? Explain briefly. (2%) Court of Appeals.
Yes, a global injunction issued by a foreign court In cases decided by the Regional Trial Courts in
to prevent dissipation of funds against a defendant who has the exercise of their original jurisdiction, appeals to the Court
Page | 24
assets in the Philippines may be enforced in our jurisdiction, of Appeals shall be ordinary appeal by filing written notice of
subject to our procedural laws. appeal indicating the parties to the appeal; specifying the
judgment/final order or part thereof appealed from; specifying
As a general rule, no sovereign is bound to give the court to which the appeal is being taken; and stating the
effect within its dominion to a judgment or order of a tribunal material dates showing the timeliness of the appeal. The notice
of another country. However, under the rules of comity, utility of appeal shall be filed with the RTC which rendered the
and convenience, nations have established a usage among judgment appealed from and copy thereof shall be served
civilized states by which final judgments of foreign courts of upon the adverse party within 15 days from notice of judgment
competent jurisdiction are reciprocally respected and rendered or final order appealed from. But if the case admits of multiple
efficacious under certain conditions that may vary in different appeals or is a special proceeding, a record on appeal is
countries (St. Aviation Services Co., Pte., Ltd. v. Grand required aside from the written notice of appeal to perfect the
International Airways, Inc., 505 SCRA 30[2006]; Asiavest appeal, in which case the period for appeal and notice upon the
Merchant Bankers [M] Berhad v. Court of Appeals, 361 SCRA adverse party is not only 15 days but 30 days from notice of
489 [2001]). judgment or final order appealed from. The full amount of the
appellate court docket fee and other lawful fees required must
also be paid within the period for taking an appeal, to the clerk
(1997) A, a resident of Dagupan City, secured a of the court which rendered the judgment or final order
favorable judgment in an ejectment case against X, a resident appealed from (Secs. 4 and 5, Rule 41, Rules of Court). The
of Quezon City, from the MTCof Manila. The judgment, entered periods of 15 or 30 days above-stated are non- extendible.
on 15 June 1991, had not as yet been executed. In July 1996,
A decided to enforce the judgment of the MTCof Manila. What In cases decided by the Regional Trial Court in the
is the procedure to be followed by A in enforcing the judgment? exercise of its appellate jurisdiction, appeal to the Court of
With what court should A institute the proceedings? Appeals shall be by filing a verified petition for review with the
Court of Appeals and furnishing the RTC and the adverse party
A can enforce the judgment by another action with copy thereof, within 15 days from notice of judgment or
reviving the Judgment because it can no longer be enforced by final order appealed from. Within the same period for appeal,
motion as the five-year period within which a judgment may be the docket fee and other lawful fees required with the deposit
enforced by motion has already expired. (Sec. 6 of former and for cost should be paid. The 15- day period may be extended
new Rule 39). A may institute the proceedings in the RTC in for 15 days and another 15 days for compelling reasons.
accordance with the rules of venue because the enforcement
of the Judgment is a personal action incapable of pecuniary (2009) No.XI.E. The filing of a motion for the
estimation. reconsideration of the trial court’s decision results in the
abandonment of a perfected appeal.
ALTERNATIVE ANSWER:
A may institute the proceeding in a MTCwhich has FALSE. The trial court has lost jurisdiction after
jurisdiction over the area where the real property involved is perfection of the appeal and so it can no longer entertain a
situated. (Sec. 1 of Rule 4). motion for reconsideration.
ALTERNATIVE ANSWER:
C. APPEALS (Rule 40 – 43)
FALSE, because the appeal may be perfected as
to one party but not yet perfected as to the other party who may
RULE 41: APPEAL FROM THE REGIONAL TRIAL COURTS
still file a motion for reconsideration without abandonment


of his right of appeal even though the appeal of the case is (D) petition for review to the Court of Appeals
perfected already as to the other party.
(C) (See Sec. 34, B.P. Blg. 129)
(1999) When is an appeal from the RTC to the Court
of Appeals deemed perfected? (2%} RULE 45: APPEAL BY CERTIORARI TO THE SUPREME
COURT Page | 25
An appeal from the RTC to the Court of Appeals is
deemed perfected as to the appellant upon the filing of a notice (2009) No.VIII. On July 15, 2009, Atty.
of appeal in the RTC in due time or within the reglementary Manananggol was served copies of numerous unfavorable
period of appeal. An appeal by record on appeal is deemed judgments and orders. On July 29, 2009, he filed motions for
perfected as to the appellant with respect to the subject matter reconsideration which were denied. He received the notices of
thereof upon the approval of the record on appeal filed in due denial of the motions for reconsideration on October 2, 2009, a
time. (Sec. 9, Rule 41) Friday. He immediately informed his clients who, in turn,
uniformly instructed him to appeal. How, when and where
RULE 42: PETITION FRO REVIEW FROM THE REGIONAL should he pursue the appropriate remedy for each of the
TRIAL COURTS TO THE COURT OF APPEALS following:
[2014] XXII. Which of the following decisions may (a) Judgment of a Municipal Trial Court (MTC)
be appealed directly to the Supreme Court (SC)? (Assume that pursuant to its delegated jurisdiction dismissing his client’s
the issues to be raised on appeal involve purely questions of application for land registration?
law) (1%)
By notice of appeal, within 15 days from notice of
(A) Decision of the Regional Trial Court (RTC) rendered in the judgment or final order appealed from, to the Court of Appeals;
exercise of its appellate jurisdiction.
(B) Decision of the RTC rendered in the exercise of its original (b) Judgment of the Regional Trial Court (RTC)
jurisdiction. denying his client’s petition for a writ of habeas data?
(C) Decision of the Civil Service Commission.
(D) Decision of the Office of the President. By verified petition for review on certiorari under
Rule 45, with the modification that appellant may raise
(B) Note: In an appeal from RTC judgment in the exercise of its questions of fact or lawor both, within 5 work days from date
appellate jurisdiction, the appeal should be to the CA even if of notice of the judgment or final order to the Supreme Court
the questions are only legal. Hence A should be excluded. (Sec. 19, A.M. No. 08-1-16-SC).
(S2[c] R42).
(c) Order of a family court denying his client’s
D. PROCEDURE IN THE COURT OF petition for habeas corpus in relation to custody of a minor
child?
APPEALS (Rule 44 – 55)
By notice of appeal, within 48 hours from notice of
RULE 44: ORDINARY APPEALED CASES
judgment or final order to the Court of appeals (Sec. 14, R.A.
No. 8369 in relation to Sec. 3, Rule 41, Rules of Court).
[2014] XIV. When a Municipal Trial Court (MTC),
pursuant to its delegated jurisdiction, renders an adverse
judgment (d) Order of the RTC denying his client’s petition for
in an application for land registration, the aggrieved party ’s certiorari questioning the Metropolitan Trial Court’s denial of a
remedy is: (1%) motion to suspend criminal proceedings?
(A) ordinary appeal to the Regional Trial Court By notice of appeal, within 15 days from notice of
(B) petition for review on certiorari to the Supreme Court the final order, to the Court of appeals (Majestrado vs. People,
(C) ordinary appeal to the Court of Appeals 527 SCRA 125 [2007]).


(e) Judgment of the First Division of the Court of Tax appealed from or of the denial of the motion for new trial or
Appeals affirming the RTC decision convicting his client for reconsideration filed in due time on questions of law only Secs.
violation of the National Internal Revenue Code? 1 and 2);
By petition for review filed with the court of Tax SPECIAL CIVIL ACTION FOR CERTIORARI is
Appeals (CTA) en banc, within 30 days from receipt of the governed by Rule 65 and is filed to annul or modify judgments,
orders or resolutions rendered or issued without or in excess of Page | 26
decision or ruling in question (Sec. 9 [b], Rule 9, Rev. Rules of
CTA). jurisdiction or with grave abuse of discretion tantamount to lack
or excess of jurisdiction, when there is no appeal nor any plain,
(2008) No.XXI.A. Compare the certiorari speedy and adequate remedy in the ordinary course of law, to
jurisdiction of the Supreme Court under the Constitution with be filed within sixt (60 ) days from notice of the judgment, order
that under Rule 65 of the Rules of Civil Procedure? or resolution subject of the petition (Secs 1 and 4)
In appeal by certiorari under Rule 45, the petitioner

The certiorari jurisdiction of the Supreme Court
and respondent are the original parties to the action and the
under the Constitution is the mode by which the Court
lower court is not impleaded. In certiorari, under Rule 65, the
exercises its expanded jurisdiction, allowing it to take corrective
lower court is impleaded. In appeal by certiorari, the filing of a
action through the exercise of its judicial power. Constitutional
motion for reconsideration is not required, while in special civil
certiorari jurisdiction applies even if the decision was not
rendered by a judicial or quasi-judicial body, hence, it is action of certiorari, such a motion is generally required.
broader than the writ of certiorari under Rule 65, which is limited
to cases involving a grave abuse of discretion amounting to May a party resort to certiorari when appeal is still
lack or excess of jurisdiction on the part of any branch or available? Explain. (2%)
instrumentality of the government and there is no other claim
speedy remedy available to a party in the ordinary course of NO, because as a general rule, certiorari is proper
law. if there is no appeal (Sec. 1 of Rule 65.) However, if appeal is
not a speedy and adequate remedy, certiorari may be resorted
(2002) What are the modes of appeal to the to. (Echaus v. Court of Appeals, 199 SCRA 381.)
Supreme Court? (2%) Certiorari is sanctioned, even if appeal is available
on the basis of a patent, capricious and whimsical exercise
of discretion by a trial judge as when an appeal will not promptly
The modes of appeal to the Supreme Court are: (a)
relieve petitioner from the injurious effects of the disputed order
APPEAL BY CERTIORARI on pure questions of law under
Rule 45 through a petition for review on certiorari; and (b) (Vasquez vs. Robilla-Alenio, 271 SCRA 67)
ORDINARY APPEAL in criminal cases through a notice of
appeal from convictions imposing reclusion perpetua or life RULE 46: ORIGINAL CASES
imprisonment or where a lesser penalty is involved but for
offenses committed on the same occasion or which arose out (2008) No.XXI.B. Give at least three instances
of the same occurrence that gave rise to the more serious where the Court of Appeals may act as a trial court?
offense. (Rule 122, sec. 3) Convictions imposing the death
penalty are elevated through automatic review. The Court of Appeals mayact as a trial court in the following
instances:
(1999) Distinguish a petition for certiorari as a mode (1) In annulment of judgments(Sec. 5 & 6, Rule 47)
of appeal from a special civil action for certiorari. (2%) (2) When a motion for newtrial is granted by the Court
of Appeals (Sec. 4, Rule 53)
A PETITION FOR REVIEW ON CERTIORARI as a (3) A petition for Habeas Corpus shall be set for hearing
9Sec. 12, Rule 102)
mode of appeal may be distinguished from a special civil action
(4) To resolve factual issues in cases within its original
for certiorari in that the petition for certiorari as a mode of
appeal is governed by Rule 45 and is filed from a judgment or and appellate jurisdiction (Sec. 12, Rule 124)
final order of the RTC, the Sandiganbayan or the Court of
Appeals, within fifteen (15) days from notice of the judgment


(5) In cases of new trial based on newly discovered
evidence (Sec. 14, Rule 124 of the Rules on Criminal (1999) What are the provisional remedies under the
Procedure). rules? (2%)
(6) In Cases involving claimsfor damages arising from
provisional remedies The provisional remedies under the rules are
(7) In Amparo proceedings (A.M. No. 07- 9-12-SC) preliminary attachment, preliminary injunction, receivership,
Page | 27
replevin, and support pendente lite. (Rules 57 to 61, Rules of
RULE 47: ANNULMENT OF JUDGMENT, FINAL ORDERS Court).
AND RESOLUTIONS
RULE 57: PRELIMINARY ATTACHMENT
(2002) May an order denying the probate of a will
still be overturned after the period to appeal therefrom has (2012) No.IX.B. Briefly discuss/differentiate the
lapsed? Why? following kinds of Attachment: preliminary attachment,
garnishment, levy on execution, warrant of seizure and warrant
Yes, an order denying the probate of a will may be of distraint and levy. (5%)
overturned after the period to appeal therefrom has lapsed. A
PETITION FOR RELIEF may be filed on the grounds of fraud, PRELIMINARY ATTACHMENT- is a provisional
accident, mistake or excusable negligence within a period of remedy under Rule 57 of the Rules of Court. it may be sought
sixty (60) days after the petitioner learns of the judgment or final at the commencement of an action or at any time before entry
order and not more than six (6) months after such judgment or judgment where property of an adverse party may be attached
final order was entered [Rule 38, secs. 1 & 3; Soriano v. Asi, as security for the satisfaction of any judgment, where this
100 Phil. 785 (1957)]. adverse party is about to depart from the Philippines, where he
has intent to defraud or has committed fraud, or is not found
An ACTION FOR ANNULMENT may also be filed in the Philippines. An affidavit and a bond is required
on the ground of extrinsic fraud within four (4) years from its before the preliminary attachment issues. It is discharged upon
discovery, and if based on lack of jurisdiction, before it is barred the payment of a counterbond.
by laches or estoppel. (Rule 47, secs. 2 & 3)
GARNISHMENT- is a manner of satisfying or
(1998) What are the grounds for the annulment of a executing judgment where the sheriff may levy debts, credits,
judgment of the RTC? [2%] royalties, commissions, bank deposits, and other personal
property not capable of manual delivery that are in the control
The grounds for annulment of judgment of the RTC or possession of third persons and are due the judgment
are Extrinsic Fraud and Lack of Jurisdiction. (Sec, 2, Rule 47, obligor. Notice shall be served on third parties. The third party
1997 Rules of Civil Procedure.) garnishee must make a written report on whether or not the
judgment obligor has sufficient funds or credits to satisfy the
amount of the judgment. If not, the report shall state how much
F. PROVISIONAL REMEDIES (Rule 57 – 61) fund or credits the garnishee holds for the judgment obligor.
Such garnish amounts shall be delivered to the judgment
[2014] VI. As a rule, courts may not grant an oblige-creditor (Rule 39, Sec.9 [c]).
application for provisional remedy without complying with the
requirements of notice and hearing. These requirements, LEVY ON EXECUTION- is a manner of satisfying
however, may be dispensed with in an application for: (1%) or executing judgment where the sheriff may sell property of
the judgment obligor if he is unable to pay all or part of the
(A) writ of preliminary injunction obligation in cash, certified bank check or any other manner
(B) writ for preliminary attachment acceptable to the oblige. If the obligor does not chose which
(C) an order granting support pendente lite among his property may be sold, the sheriff shall sell personal
(D) a writ of replevin property first and then real property second. He must sell only
so much of the personal and real property as is sufficient to
(B) writ for preliminary attachment satisfy judgment and other lawful fees. (Rule 39, Sec.9 [b]).


Although the property of an incompetent under
WARRANT OF SEIZURE- is normally applied for, guardianship is in custodia legis, it may be attached as in fact
with a search warrant, in criminal cases. The warrant of it is provided that in such case, a copy of the writ of attachment
seizure must particularly describe the things to be seized. shall be filed with the proper court and notice of the attachment
While it is true that the property to be seized under a warrant served upon the custodian of such property. (Sec. 7, last par.,
must be particularly described therin and no other property Rule 57)
Page | 28
can be taken thereunder, yet the description is required to
be specific only insofar as the circumstances will ordinarily (1999) May damages be claimed by a party
allow. An application for search and seizure warrant shall be prejudiced by a wrongful attachment even if the judgment is
filed with the following: adversed to him? Explain.
(a) Any court within whose territorial jurisdiction a
crime was committed. (b) For compelling reasons stated in the Yes, damages may be claimed by a party
application, any court within the judicial region where the crime prejudiced by a wrongful attachment even if the judgment is
was committed if the place of the commission of the crime is adversed to him. This is authorized by the Rules. A claim for
known, or any court within the judicial region where the damages may be made on account of improper, irregular or
warrant shall be enforced. However, if the criminal action has excessive attachment, which shall be heard with notice to the
already been filed, the application shall only be made in the adverse party and his surety or sureties. (Sec. 20, Rule 57;
court where the criminal action is pending. Javellana v. D. O. Plaza Enterprises Inc., 32 SCRA 281.)
WARRANT OF DISTRAINT AND LEVY- is remedy

(1999) Distinguish attachment from garnishment.
available to local governments and the BIR in tax cases to (2%)
satisfy deficiencies or delinquencies in inheritance and estate
taxes, and real estate taxes. Distraint is the seizure of personal
Attachment and garnishment are distinguished from
property to be sold in an authorized auction sale. Levy is
each other as follows: ATTACHMENT is a provisional remedy
the issuance of a certification by the proper officer showing
that effects a levy on property of a party as security for the
the name of the taxpayer and the tax, fee, charge, or penalty
satisfaction of any judgment that may be recovered, while
due him. Levy is made by writing upon said certificate the
GARNISHMENT is a levy on debts due the judgment obligor or
description of the property upon which levy is made.
defendant and other credits, including bank deposits, royalties
and other personal property not capable of manual delivery
under a writ of execution or a writ of attachment.
(2001) May a writ of preliminary attachment be

RULE 58: PRELIMINARY INJUNCTION
issued ex- parte? Briefly state the reason(s) for your answer.
(3%)
(2009) No.I.C. A suit for injunction is an action in
rem.
Yes, an order of attachment may be issued ex-parte
or upon motion with notice and hearing. (Sec. 2 of Rule 57)
FALSE. A suit for injunction is an action in
The reason why the order may be issued ex parte is: that
personam. In the early case of Auyong Hian vs. Court of Tax
requiring notice to the adverse party and a hearing would
Appeals [59 SCRA 110 [1974]), it was held that a
defeat the purpose of the provisional remedy and enable the
restraining order like an injunction, operates upon a person. It
adverse party to abscond or dispose of his property before a
is granted in the exercise of equity of jurisdiction and has no in
writ of attachment issues. (Mindanao Savings and Loan
rem effect to invalidate an act done in contempt of an order
Association, Inc. v. Court of Appeals, 172 SCRA 480).
of the court except where by statutory authorization, the decree
is so framed as to act in rem on property. (Air Materiel Wing
Savings and Loan Association, Inc. vs. manay, 535 SCRA 356
(1999) In a case, the property of an incompetent
[2007]).
under guardianship was in custodia legis. Can it be attached?
Explain. (2%)
(2006) Define a temporary restraining order (TRO).
(2%)


Writ of Preliminary Injunction (Sec. 4, Rule 58 1997
A temporary restraining order is an order issued to Rules of Civil Procedure) are — A verified complaint showing;
restrain the opposite party and to maintain the status quo until The existence of a right in esse; Violation or threat of violation
a hearing for determining the propriety of granting a preliminary of such right; Damages or injuries sustained or that will be sus-
injunction (Sec. 4[c] and [d], Rule 58,1997 Rules of Civil tained by reason of such violation; Notice to all parties of raffle
Procedure). and of hearing; Hearing on the application; Filing of an
Page | 29
appropriate bond and service thereof.
(2006) What is the duration of a TRO issued by the
Executive Judge of a Regional Trial Court? (2%) While a final writ of injunction may be rendered by
judgment after trial, showing applicant to be entitled to the writ
Rule 58, section 5, 2nd parag. (Sec. 9, Rule 58 1997 Rules of Civil Procedure).
(2006) Distinguish between injunction as an

(2006) May a justice of a Division of the Court of
ancillary remedy and injunction as a main action. (2.5%)
Appeals issue a TRO? (2%)
Injunction as an ancillary remedy refers to the

Yes, a justice of a division of the Court of Appeals
preliminary injunction which requires the existence of a pending
may issue a TRO, as authorized under Rule 58 and by Section
principal case; while injunction as a main action refers to the
5, Rule IV of the IRCA which additionally requires that the
principal case itself that prays for the remedy of permanently
action shall be submitted on the next working day to the absent
restraining the adverse party from doing or not doing the act
members of the division for the ratification, modification or
recall (Heirs of the late Justice Jose B.L. Reyes v. Court of complained of.
Appeals, G.R. Nos. 135425-26, November 14, 2000).
(2003) Can a suit for injunction be aptly filed with the
Supreme Court to stop the President of the Philippines from
(2006) Differentiate a TRO from a status quo order.
entering into a peace agreement with the National Democratic
(2%)
Front? (4%)
A status quo order (SQO) is more in the nature of a
cease and desist order, since it does not direct the doing or No, a suit for injunction cannot aptly be filed with the
Supreme Court to stop the President of the Philippines from
undoing of acts, as in the case of prohibitory or mandatory
entering into a peace agreement with the National Democratic
injunctive relief. A TRO dies a natural death after the allowable
Front, which is a purely political question. (Madarang v.
period; the SQO does not. A TRO is provisional. SQO lasts until
Santamaria, 37 Phil.
revoked. A TRO is not extendible, but the SQO may be subject
304 [1917]). The President of the Philippines is immune from
to agreement of the parties.
suit.
(2006) May a Regional Trial Court issue injunction
(2001) An application for a writ of preliminary
without bond? (2%)
injunction with a prayer for a temporary restraining order is
included in a complaint and filed in a multi-sala RTC consisting
Yes, if the injunction that is issued is a final
of Branches 1,2,3 and 4. Being urgent in nature, the Executive
injunction. Generally, however, preliminary injunction cannot
Judge, who was sitting in Branch 1, upon the filing of the
issue without bond unless exempted by the trial court (Sec. 4[b]
aforesaid application immediately raffled the case in the
of Rule 58).
presence of the judges of Branches 2,3 and 4. The case was
raffled to Branch 4 and judge thereof immediately issued a
(2006) What are the requisites for the issuance of temporary restraining order. Is the temporary restraining order
(a) a writ of preliminary injunction; and (b) a final writ of valid? Why? (5%)
injunction?
No. It is only the Executive Judge who can issue
Requisites for the issuance of a: immediately a temporary restraining order effective only for
seventy-two (72) hours from issuance. No other Judge has the


right or power to issue a temporary restraining order ex parte. thereof has not been waived, reserved or instituted prior to its
The Judge to whom the case is assigned will then conduct a filing, the accused may be ordered to provide support pendente
summary hearing to determine whether the temporary lite to the child born to the offended party allegedly because of
restraining order shall be extended, but in no case beyond 20 the crime. (Sec. 6 of Rule 61.)
days, including the original 72- hour period. (Sec. 5 of Rule 58)
G. SPECIAL CIVIL ACTIONS (Rule 62 – 71) Page | 30
ALTERNATIVE ANSWER:
The temporary restraining order is not valid because 64: REVIEW OF JUDGMENT/OREDERS/RESOLUTION OF
the question does not state that the matter is of extreme COMELEC AND COM AUDIT
urgency and the applicant will suffer grave injustice and
irreparable injury. (Sec. 5 of Rule 58) Certiorari as a mode of review from the Commission
on Audit (COA) and COMELEC is elevated to the Supreme
(2001) May a writ of preliminary injunction be issued Court within 30 days from notice of the judgment, decision or
ex- parte? Why? (3%) final order or resolution sought to be reviewed, as provided for
under the Rule 64 of the 1997 Rules of Civil Procedure. In the
No, a writ of preliminary injunction may not be case of the Civil Service Commission (CSC), review of its
issued ex parte. As provided in the Rules, no preliminary judgments is through petitions for review under Sec. 5 of Rule
injunction shall be granted without hearing and prior notice to 43 of the 1997 Rules of Civil Procedure.
the party or person sought to be enjoined. (Sec. 5 of Rule 58)
The reason is that a preliminary injunction may cause grave RULE 65: CERTIORARI, PROHIBITION AND MANDAMUS
and irreparable injury to the party enjoined.
(2012) No.X.A. Where and how will you appeal the
following:
RULE 60: REPLEVIN
(1) An order of execution issued by the
(1999) What is Replevin? (2%) RTC. (1%)
Replevin or delivery of personal property consists in A petition for certiorari under Rule 65 before the
the delivery, by order of the court, of personal property by the Court of Appeals.
defendant to the plaintiff, upon the filing of a bond. (Calo v.
Roldan, 76 Phil. 445 [1946]) ALTERNATIVE ANSWER:
The mode of elevation may be either by appeal (writ
RULE 61: SUPPORT PENDENTE LITE of error or certiorari), or by a special civil action of
certiorari, prohibition, or mandamus. (Banaga vs. Majaducon
(1999) Before the RTC, A was charged with rape of cited in General Milling Corporation-Independent Labor
his 16- year old daughter. During the pendency of the case, the Union vs. General Milling Corporation, G.R. No. 183122, June
daughter gave birth to a child allegedly as a consequence of 15, 2011, Perez, J.).
the rape. Thereafter, she asked the accused to support the
child, and when he refused, the former filed a petition for (2) Judgment of RTC denying a petition for
support pendente lite. The accused, however, insists that he Writ of Amparo. (1%)
cannot be made to give such support arguing that there is as
yet no finding as to his guilt. Would you agree with the trial court
Any party may appeal from the final judgment or
if it denied the application for support pendente lite? Explain.
order to the Supreme Court by way of a petition for review
(2%)
on certiorari under Rule 45 of the Rules of Court. the period of
appeal shall be five (5) working days from the date of notice of
No. The provisional remedy of support pendente lite the adverse judgment, and the appeal may raise questions of
may be granted by the RTC in the criminal action for rape. In fact or law or both. (sec. 19, Rule on Writ of Amparo, A.M. No.
criminal actions where the civil liability includes support for the 07-9-12-SC, 25 September 2007).
offspring as a consequence of the crime and the civil aspect


C. As a mode of review of the decisions of the
(3) Judgment of MTC on a land registration National Labor Relations Commission and the Constitutional
case based on its delegated jurisdiction. (1%) Commissions.
The appeal should be filed with the Court of Certiorari as a mode of review of the decision of the
Appeals by filing a Notice of Appeal within 15 days from notice NLRC is elevated to the Court of Appeals under Rule 65, as
Page | 31
of judgment or final order appealed from. (Sec. 34, Batas held in the case of St. Martin's Funeral Home v. NLRC, G.R.
Pambansa Blg. 129, or the Judiciary Reorganization Act of No. 130866, September 16, 1998.
1980, as amended by Republic Act No. 7691, March 25, 1994).
Certiorari as a mode of review from the Commission
(4) A decision of the Court of Tax Appeal's on Audit (COA) and COMELEC is elevated to the Supreme
First Division. (1%) Court within 30 days from notice of the judgment, decision or
final order or resolution sought to be reviewed, as provided for
The decision of the Court of Tax Appeals Division under the Rule 64 of the 1997 Rules of Civil Procedure. In the
may be appealed to the CTA en banc. case of the Civil Service Commission (CSC), review of its
judgments is through petitions for review under Sec. 5 of Rule
The decisions of the Court of Tax Appeals are 43 of the 1997 Rules of Civil Procedure.
no longer appealable to the Court of Appeals. Under the
modified appeal procedure, the decision of a division of the (2005) May the aggrieved party file a petition for
CTA may be appealed to the CTA en banc. The decision of the certiorari in the Supreme Court under Rule 65 of the 1997
CTA en banc may in turn be directly appealed to the Supreme Rules of Civil Procedure, instead of filing a petition for review
Court by way of a petition for review on certiorari under Rule 45 on certiorari under Rule 45 thereof for the nullification of a
on questions of law. (Section 11, R.A. 9282, March 30, 2004). decision of the Court of Appeals in the exercise either of its
original or appellate jurisdiction? Explain.
(2006) Explain each mode of certiorari: To NULLIFY A DECISION of the Court of Appeals
the aggrieved party should file a PETITION FOR REVIEW ON
A. As a mode of appeal from the Regional Trial CERTIORARI in the Supreme Court under Rule 45 of the Rules
Court or the Court of Appeals to the Supreme Court. (2.5%) of Court instead of filing a petition for certiorari under Rule 65
except under very exceptional circumstances. A long line of
Certiorari as a mode of appeal is governed by Rule decisions of the Supreme Court, too numerous to mention,
45 of the Rules of Court which allows appeal from judgment, holds that certiorari is not a substitute for a lost appeal. It should
final order of resolution of the Court of Appeals, be noted, however, when the Court of Appeals imposes the
Sandiganbayan, the RTC or other courts whenever authorized death penalty, or a lesser penalty for offenses committed on
by law to the Supreme Court by verified petition for review such occasion, appeal by petition for review or ordinary appeal.
raising only questions of law distinctly set forth. In cases when the Court of Appeals imposes reclusion
perpetua, life imprisonment or a lesser penalty, appeal is by
B. As a special civil action from the Regional Trial notice of appeal filed with the Court of Appeals. (REVIEW THE
Court or the Court of Appeals to the Supreme Court. (2.5%) ANSWER)
Certiorari as a Special Civil Action is governed by (1998) Differentiate certiorari as an original action
Rule 65 of the Rules of Court when an aggrieved party may file from certiorari as a mode of appeal. |3%]
a verified petition against a decision, final order or resolution of
a tribunal, body or board that has acted without or in excess of Certiorari as an original action and certiorari as a
its jurisdiction or grave abuse of discretion amounting to lack or mode of appeal may be distinguished as follows:
excess of jurisdiction, when there is no appeal or any other
plain, speedy and adequate remedy in the ordinary course of 1. The first is a special civil action under Rule 65 of
law. the Rules of Court, while the second is an appeal to the


Supreme Court from the Court of Appeals, Sandiganbayan and motion for reconsideration is not required, while in special civil
the RTC under Rule 45. action of certiorari, such a motion is generally required.
2. The first can be filed only on the grounds of lack May a party resort to certiorari when appeal is still
or excess of jurisdiction or grave abuse of discretion available? Explain. (2%)
tantamount to lack or excess of jurisdiction, while the second is
based on the errors of law of the lower court. Page | 32
NO, because as a general rule, certiorari is proper
if there is no appeal (Sec. 1 of Rule 65.) However, if appeal is
3. The first should be filed within sixty (60) days from not a speedy and adequate remedy, certiorari may be resorted
notice of the judgment, order or resolution sought to be to. (Echaus v. Court of Appeals, 199 SCRA 381.)
assailed (Sec. 4. Rule 65), while the second should be filed Certiorari is sanctioned, even if appeal is available
within fifteen (15) days from notice of the judgment or final order on the basis of a patent, capricious and whimsical exercise
or resolution appealed from, or of the denial of the petitioner's of discretion by a trial judge as when an appeal will not promptly
motion for new trial or reconsideration filed in due time after relieve petitioner from the injurious effects of the disputed order
notice of the judgment. (Sec. 2, Rule 45) (Vasquez vs. Robilla-Alenio, 271 SCRA 67)
4. The first cannot generally be availed of as a RULE 70: FORCIBLE ENTRY AND UNLAWFUL DETAINER
substitute for a lost appeal under Rules 40, 41, 42, 43 and 45.
[2014] XXV. Mr. Boaz filed an action for ejectment
5. Under the first, the lower court is impleaded as a against Mr. Jachin before the Metropolitan Trial Court (MeTC).
party respondent (Sec. 5 of Rule 65), while under the second, Mr. Jachin actively participated in every stage of the
the lower court is not imp leaded. (Sec. 4 of Rule of 45) proceedings knowing fully well that the MeTC had no
jurisdiction over the action. In his mind, Mr. Jachin was thinking
(1999) Distinguish a petition for certiorari as a mode that if the MeTC rendered judgment against him, he could
of appeal from a special civil action for certiorari. (2%) always raise the issue on the jurisdiction of the MeTC. After
trial, the MeTC rendered judgment against Mr. Jachin. What is
A PETITION FOR REVIEW ON CERTIORARI as a the remedy of Mr. Jachin? (1%)
mode of appeal may be distinguished from a special civil action
for certiorari in that the petition for certiorari as a mode of (A) File an appeal
appeal is governed by Rule 45 and is filed from a judgment or (B) File an action for nullification of judgment
final order of the RTC, the Sandiganbayan or the Court of (C) File a motion for reconsideration
Appeals, within fifteen (15) days from notice of the judgment (D) File a petition for certiorari under Rule 65
appealed from or of the denial of the motion for new trial or
reconsideration filed in due time on questions of law only Secs. (A) See S8 R40. R47 is not available since appeal
1 and 2); is still available. Not C since a prohibited pleading.
SPECIAL CIVIL ACTION FOR CERTIORARI is

governed by Rule 65 and is filed to annul or modify judgments, (2009) No.XII. Mike was renting an apartment unit
orders or resolutions rendered or issued without or in excess of in the building owned by Jonathan. When Mike failed to pay
jurisdiction or with grave abuse of discretion tantamount to lack six months’ rent, Jonathan filed an ejectment suit. The
or excess of jurisdiction, when there is no appeal nor any plain, Municipal Trial Court (MTC) rendered judgement in favor of
speedy and adequate remedy in the ordinary course of law, to Jonathan, who then filed a motion for the issuance of a writ of
be filed within sixt (60 ) days from notice of the judgment, order execution. The MTC issued the writ.
or resolution subject of the petition (Secs 1 and 4)
(a) How can mike stay the execution of the MTC
In appeal by certiorari under Rule 45, the petitioner judgment? (2%)
and respondent are the original parties to the action and the
lower court is not impleaded. In certiorari, under Rule 65, the
Execution shall issue immediately upon motion,
lower court is impleaded. In appeal by certiorari, the filing of a
unless Mike (a) perfects his appeal to the RTC, (b) files a


sufficient supersedeas bond to pay the rents, damages and
costs accruing up to the time of the judgment appealed from, (2005) State the rule on venue in judicial settlement
and (c) deposits monthly with the RTC during the pendency of estate of deceased persons. (2%)
of the appeal the amount of rent due from time to time (Rule
70, Sec. 19). If the decedent is an inhabitant of the Philippines at
the time of' his death, whether a citizen or an alien, the venue
Page | 33
(b) Mike appealed to the Regional Trial Court, which shall be in the RTC in the province in which he resides at the
affirmed the MTC decision. Mike then filed a petition for review time of his death, not in the place where he used to live. (Jao
with the Court of Appeals. The CA dismissed the petition on the v. Court of Appeals, G.R. No. 128314, May 29, 2002)
ground that the sheriff had already executed the MTC decision
and had ejected Mike from the premises, thus rendering the If he is an inhabitant, of a foreign country, the RTC
appeal moot and academic. Is the CA correct? (3%) Reasons. of any province or city in which he had estate shall be the
venue. The court first taking cognizance of the case shall
NO. The Court of Appeals is not correct. The exercise jurisdiction to the exclusion of all other courts. When
dismissal of the appeal is wrong, because the execution of the the marriage is dissolved by the death of the husband or wife,
RTC judgment is only in respect of the eviction of the the community property shall be inventoried, administered and
defendant from the leased premises. Such execution pending liquidated, and the debts thereof paid, in the testate or intestate
appeal has no effect on the merits of the ejectment suit which proceedings of the deceased spouse. If both spouses have
still has to be resolved in the pending appeal. Rule 70, Sec. 21 died, the conjugal partnership shall be liquidated in the testate
of the Rules provides that the RTC judgment against the or intestate proceedings of either. (Sees. 1 and 2, Rule 73,
defendant shall be immediately executor, “without prejudice to Rules of Court)
a further appeal” that may be taken therefrom (Uy vs.
Santiago, 336 SCRA 680 [2000]). RULE 74: SUMMARY SETTLEMENT OF ESTATES
RULE 71: CONTEMPT (2001) The rules on special proceedings ordinarily

require that the estate of the deceased should be judicially
(1998) A filed a complaint for the recovery of administered thru an administrator or executor.
ownership of land against B who was represented by her What are the two exceptions to said requirements?
counsel X. In the course of the trial, B died. However, X failed (5%)
to notify the court of B's death. The court proceeded to hear the
case and rendered judgment against B. After the Judgment The two exceptions to the requirement are:
became final, a writ of execution was issued against C, who
being B's sole heir, acquired the property. (a) Where the decedent left no will and no debts
Did the failure of counsel X to inform the court of B's death and the heirs are all of age, or the minors are represented
by their judicial or legal representatives duly authorized for
constitute direct contempt?
the purpose, the parties may without securing letters of
administration, divide the estate among themselves by
No. It is not direct contempt under Sec. 1 of Rule 71, means of public instrument filed in the office of the register
but it is indirect contempt within the purview of Sec 3 of Rule of deeds, or should they disagree, they may do so in an
71. The lawyer can also be the subject of disciplinary action. ordinary action of partition. If there is only one heir, he may
(Sec. 16, Rule 3) adjudicate to himself the entire estate by means of an
affidavit filed in the office of the register of deeds. The
parties or the sole heir shall file simultaneously abound with
PART II the register of deeds, in an amount equivalent to the value
of the personal property as certified to under oath by the
SPECIAL PROCEEDINGS parties and conditioned upon the payment of any just claim
that may be filed later. The fact of the extrajudicial
settlement or administration shall be published in a
SETTLEMENT OF ESTATE OF DECEASED newspaper of general circulation in the province once a
PERSONS week for three consecutive weeks. (Sec. 1 of Rule 74, Rules
of Court)
RULE 73: VENUE AND PROCESS


(b) Whenever the gross value of the estate of a their five children. Dayanara filed a petition for the issuance of
deceased person, whether he died testate or intestate, does letters of administration. Charlene, one of the children, filed an
not exceed ten thousand pesos, and that fact is made to opposition to the petition, alleging that there was neither an
appear to the RTC having jurisdiction or the estate by the allegation nor genuine effort to settle the estate amicably
petition of an interested person and upon hearing, which
before the filing of the petition. Rule on the opposition. (5%)
shall be held not less than one (1) month nor more than
three (3) months from the date of the last publication of a Page | 34
notice which shall be published once a week for three The opposition should be overruled for lack of merit.
consecutive weeks in a newspaper of general circulation in The allegation that there was a genuine effort to settle the
the province, and after such other notice to interested estate amicably before the filing of the petition is not required
persons as the court may direct, the court may proceed by the Rules. Besides, a petition for issuance of letters of
summarily, without the appointment of an executor or
administration may be contested on either of two grounds
administrator, to settle the estate. (Sec. 2 of Rule 74, Rules
of Court) : (1) the incompetency of the person for whom letters are
prayed therein; and (2) the contestant‟s own right
RULE 76: ALLOWANCE OF DISALLOWANCE OF WILL to the administration. (Sec. 4, Rule 9).
(2012) No.X.C. What are the jurisdictional facts that RULE 79: OPPOSING ISSUANCE OF LETTERS
must be alleged in a petition for probate of a will? How do you TESTAMENTARY. PETITION AND CONTEST FOR
bring before the court these jurisdictional facts? (3%) LETTERS OF ADMINISTRATION
The jurisdictional facts in a petition for probate are: (2008) No.XVIII. Domencio and Gen lived without
(1) that a person died leaving a will; (2) in case of a resident, benefit of marriage for 20 years, during which time they
that he resided within the territorial jurisdiction of the court; and purchased properties together. After Domencio died without a
(3) in the case of a non-resident, that he left an estate within will, Gen filed a petition for letters of administration. Domencio’s
such territorial jurisdiction. siblings opposed the same on the ground that Gen has no legal
The jurisdictional facts shall be contained in a personality. Decide.
petition for allowance of will.
A petition for letters of administration may be filed
(1999) What are the requisites in order that a lost by any “interested person” (Sec. 2, Rule 79, Rules of Court).
or destroyed Will may be allowed? (2%) Gen would be considered an interested person if she
was not married to Domenico, because she can claim co-
ownership of the properties left by him under their property
In order that a lost or destroyed will may be allowed,
regime of a union without marriage under conditions provided
the following must be complied with:
in the Family Code 9Arts. 147- 148, Family Code; San Luis vs.
San Luis, G.R. No. 133743, February 6, 2007).
1. the execution and validity of the same should be
established;
2. the will must have been in existence at the time of RULE 82: REVOCATION OF ADMINISTRATION, DEATH,
the death of the testator, or shown to have been fraudulently or RESIGNATION, AND REMOVAL OF EXECUTORS AND
accidentally destroyed in the lifetime of the testator without his ADMINISTRATORS
knowledge; and
3. its provisions are clearly and distinctly proved by at (2002) What should the court do if, in the course of
least two credible witnesses. (Sec. 6, Rule 76 of the Rules of intestate proceedings, a will is found and it is submitted for
Court) probate? Explain. (2%)
If a will is found in the course of intestate

RULE 78: LETTERS TESTAMENTARY AND OF proceedings and it is submitted for probate, the intestate
ADMINISTRATION, WHEN AND WHOM ISSUED proceedings will be suspended until the will is probated. Upon
the probate of the will, the intestate proceedings will be
(2010) No.XVI. Sal Mineo died intestate, leaving a terminated. (Rule 82, sec. 1).
P1 billion estate. He was survived by his wife Dayanara and


RULE 91: ESCHEATS the action viable? Why? (2%)
[2018] XX Dominic was appointed special No, the action is not viable. The action to recover
administrator of the Estate of Dakota Dragon. Delton, escheated property must be filed within five years from July
husband of Dakota, together with their five (5) children, 1, 1990 or be forever barred. (Rule 91, sec. 4).
opposed the appointment of Dominic claiming that he
(Dominic) was just a stepbrother of Dakota. After giving (1997) Give the proper venue for the following Page | 35
Dominic the chance to comment, the court issued an Order special proceedings:
affirming the appointment of Dominic.
a) A petition to declare as escheated a parcel of land owned
(a) What is the remedy available to the oppositors? by a resident of the Philippines who died intestate and without
(2.5%) heirs or persons entitled to the property.
(a) The remedy available to the oppositors of the The venue of the escheat proceedings of a parcel of land in
appointment of Dominic as special administrator is to file a this case is the place where the deceased last resided. (Sec.
petition for certiorari under Rule 65 of the Rules of Court. The 1. Rule 91, Rules of Court).
appointment of special administrators, being discretionary, is
thus interlocutory and may be assailed through a petition for
b) A petition for the appointment of an administrator over the
certiorari under Rule 65 of the Rules of Court (Ocampo v.
land and building left by an American citizen residing in
Ocampo, G.R. No. 187879, 5 July 2010).
California, who had been declared an incompetent by an
American court.
(b) If there are no qualified heirs, can the
government initiate escheat proceedings over the assets of
the deceased? To whom, in particular, shall the estate of the The venue for the appointment of an administrator over land
deceased go and for whose benefit? (2.5%) and building of an American citizen residing in California,
declared Incompetent by an American Court, is the RTC of the
place where his property or part thereof is situated. (Sec. 1.
(b) If there are no qualified heirs, Rule 91, Section
1 of the Rules of Court provides that the Solicitor General or Rule 92).
his representatives in behalf of the Republic of the
Philippines, may file a petition with the Regional Trial Court c) A petition for the adoption of a minor residing in
where the deceased last resided or in which he had estate, Pampanga.
if he resided outside the Philippines, setting forth the facts
and praying that the estate of the deceased be declared The venue of a petition for the adoption of a minor residing
ecscheated. in Pampanga is the RTC of the place in which the petitioner
Rule 91, Section 3 of the Rules of Court provides resides. (Sec. 1. Rule 99)
that once a judgment has been rendered in escheat
proceedings, the properties of the deceased shall be RULE 102: HABEAS CORPUS
assigned as follows: (a) personal estate to the municipality
or city where he last resided in the Philippines; (b) real estate
[2015] XVII. Hercules was walking near a police
to the municipalities or cities in which the same is located;
station when a police officer signaled him to approach. As soon
and (c) if the deceased never resided in the Philippines, the
as Hercules came near, the police officer frisked him but the
whole estate may be assigned to the respective
latter found no contraband. The police officer told Hercules to
municipalities or cities where the same is located, Such
get inside the police station. Inside the police station, Hercules
estate shall be for the benefit of public schools, and public
charitable institutions and centers in said municipalities or asked the police officer, “Sir, may problema po ba?” Instead of
cities. replying, the police officer locked up Hercules inside the police
station jail.
(2002) Suppose the property of D was declared
escheated on July 1, 1990 in escheat proceedings brought (A) What is the remedy available to Hercules to
by the Solicitor General. Now, X, who claims to be an heir secure his immediate release from detention? (2%)
of D, filed an action to recover the escheated property. Is


(A) The remedy available to Hercules is to file a damages may also be adjudicated (Galvante v. Casimiro, G.R.
petition for habeas corpus questioning the illegality of his No. 162808, April 22, 2008).
warrantless arrest. The writ of habeas corpus shall extend to
all cases of illegal confinement or detention by which any ALTERNATIVE ANSWER
person is deprived of his liberty (Section 1, Rule 102, Rules of (A) Hercules may also apply for bail. Under Section
Court). 17 (c), Rule 114 of the Rules of Court, any person in custody Page | 36
who is not yet charged in court may apply for bail with any court
(B) If Hercules filed with the Ombudsman a in the province, city or municipality where he is held.
complaint for warrantless search, as counsel for the police
officer, what defense will you raise for the dismissal of the (B) As counsel for the police officer, I will argue that
complaint? (3%) the Ombudsman has no jurisdiction over the complaint filed by
Hercules. While the Ombudsman has disciplinary authority
(B) As counsel of the policemen, I will raise the over officials and members of the PNP concurrently with
defense of presumption of regularity in the performance of NAPOLCOM and PNP, the Memorandum of Agreement
duty. I can also raise the defense that the police officer has the executed by and among the Ombudsman, PNP and
duty to search Hercules under the “Stop and Frisk” rule. A stop- NAPOLCOM on September 12, 2012 specifies the
and-frisk situation must precede a warrantless arrest, be limited administrative cases that are within the primary jurisdiction of
to the person’s outer clothing, and should be grounded upon a the Ombudsman. Since the complaint filed against my client is
genuine reason, in the light of the police office and surrounding not among those administrative cases under the primary
conditions, to warrant the belief that detained has weapons jurisdiction of the Ombudsman, the complaint should
concealed about him. (Valdez v. People, G.R. No. 170180, necessarily be dismissed.
November 23, 2007).
(2009) In the exercise of its original jurisdiction, the
The “stop and frisk” search should be used “when Sandiganbayan may grant petitions for the issuance of a writ of
dealing rapidly unfolding and potentially criminal situation in the habeas corpus.
city streets where unarguably there is no time to secure a
search warrant.” “Stop and frisk” searches (sometimes referred FALSE. The Sandiganbayan may grant petitions for
to as Terry searches) necessary for law enforcement, that is, Habeas corpus only in aid of its appellate jurisdiction (R.A.
law enforcers should be given the legal arsenal to prevent the 7975, as amended by R.A 8249), not in the exercise of
commission of offenses. This should be balanced, however, “original” jurisdiction.
with the need to protect the privacy of citizens in accordance
with Article III, Section 2 of the Constitution (People of the (1998) A was arrested on the strength of a warrant of
Philippines v. Victor Cogaed, G.R. No. 200334, July 30, 2014). arrest issued by the RTC in connection with an Information for
In addition, I may also assert the defense that the complaint for Homicide. W, the live-in partner of A filed a petition for habeas
warrantless search charges no criminal offense. The conduct corpus against A's jailer and police investigators with the Court
of a warrantless search is not a criminal act, for it is not of Appeals.
penalized under the Revised Penal Code or any other special
laws. 1. Does W have the personality to file the petition for
habeas corpus? [2%]
(C) If Hercules opts to file a civil action against the
police officer, will he have a cause of action? (3%) Yes. W, the live-in partner of A, has the personality
to file the petition for habeas corpus because it may be filed by
Yes. Hercules has a cause of action to file a civil "some person in his behalf." (Sec. 3. Rule 102. Rules of Court.)
action against the police officer under Article 32 (4) in relation
to Article 2219 (6) and (10) of the New Civil Code, which 2. Is the petition tenable? [3%]
provides that a public officer may be liable for damages when
the right to be secure in one’s person, house, papers and
No. The petition is not tenable because the warrant
effects against unreasonable searches and seizures is of arrest was issued by a court which had Jurisdiction to issue
impaired. The indemnity includes moral damages. Exemplary
it (Sec. 4, Rule 102 Rules of Court)


with the RTC, stating that it was appealing the decision of the
(1999) Roxanne, a widow, filed a petition for Court of Appeals on questions of fact and law.
habeas corpus with the Court of Appeals against Major Amor
who is allegedly detaining her 18-year old son Bong without (a) Is a petition for declaration of Presumptive Death
authority of the law. a special proceeding?
After Major Amor had a filed a return alleging the Page | 37

No. the petition for Declaration of Presumptive
cause of detention of Bong, the Court of Appeals promulgated Death provided in Art. 41 of the “Family Code” is not the special
a resolution remanding the case to the RTC for a full-blown trial proceeding governing absentees under Rule 107 of the
due to the conflicting facts presented by the parties in their Rules of Court whose rules of procedure will not be followed
pleadings. In directing the remand, the court of Appeals relied (Republic vs. C.A., 458 SCRA [2005]).
on Sec.9(1), in relation to Sec. 21 of BP 129 conferring upon
said Court the authority to try and decide habeas corpus cases Said petition for Declaration of Presumptive
concurrently with the RTCs. Death under Article 41 of the Family Code is a summary
proceeding, authorized for purposes only of remarriage of the
Did the Court of Appeals act correctly in remanding present spouse, to avoid incurring the crime of bigamy.
the petition to the RTC? Why? Nonetheless, it is in the nature of a special proceeding, being
an application to establish a status or a particular fact in court.
No, because while the CA has original jurisdiction
over habeas corpus concurrent with the RTCs, it has no ALTERNATIVE ANSWER:
authority for remanding to the latter original actions filed with A petition for declaration of presumptive death may
the former. On the contrary, the CA is specifically given the be considered a special proceeding, because it is so classified
power to receive evidence and perform any and all acts in the Rules of Court (Rule 107, Rules of Court), as
necessary to resolve factual issues raised in cases falling differentiated from an ordinary action which is adversarial. It
within its original jurisdiction. is a mere application or proceeding to establish the status of
a party or a particular fact, to viz: that a person has been
ALTERNATIVE ANSWER: unheard of for a long time and under such circumstance that
Yes, because there is no prohibition in the law he may be presumed dead.
against a superior court referring a case to a lower court having
concurrent jurisdiction. The Supreme Court has referred to the (b) As the RTC judge who granted Gina’s petition,
CA or the RTC cases falling within their concurrent jurisdiction. will you give due course to the OSG’s notice of appeal?
RULE 107: ABSENTEES NO. Appeal is not a proper remedy since the
decision is immediately final and executor upon notice to the
(2009) No.V. Frank and Gina were married on June parties under Art. 247 of the Family Code (Republic vs
12, 1987 in Manila. Barely a year after the wedding, Frank Bermudez-Lorino, 449 SCRA 57 [2005]).
exhibited a violent temperament, forcing Gina, for reasons of
personal safety, to live with her parents. A year thereafter, Gina The OSG may assail RTC‟s grant of the petition
found employment as a domestic helper in Singapore, where only on the premise of grave abuse of discretion amounting to
she worked for ten consecutive years. All the time she was lack or excess of jurisdiction. The remedy should be by
abroad, Gina had absolutely no communications with Frank, certiorari under Rule 65 of the Rules of Court.
nor did she hear any news about him. While in Singapore, Gina
met and fell in love with Willie. RULE 108: CANCELLATION OR CORRECTION OF
ENTRIES IN CIVIL REGISTRY
On July 4, 2007, Gina filed a petition with the RTC
of manila to declare Frank presumptively dead, so that she (2005) Helen is the daughter of Eliza, a Filipina,
could marry Willie. The RTC granted Gina’s petition. The and Tony, a Chinese, who is married to another woman
office of the Solicitor General (OSG) filed a notice of Appeal living in China. Her birth certificate indicates that Helen is
the legitimate child of Tony and Eliza and that she is a


Chinese citizen. Helen wants her birth certificate corrected committed abroad. Hence, the contemplated criminal action is
by changing her filiation from "legitimate" to "illegitimate" not viable as the same was committed outside of the Philippine
and her citizenship from "Chinese" to "Filipino" because her courts.
parents were not married. What petition should Helen file
and what procedural requirements must be observed? (B) Is a civil action to impugn the paternity of the baby
Explain. (5%)
boy feasible, and if so, in what proceeding may such issue be
Page | 38
A petition to change the record of birth by changing determined?
the filiation from "legitimate" to "illegitimate" and petitioner's
citizenship from "Chinese" to "Filipino" because her parents Yes, under Article 171 of the Familyy Code, the
were not married, does not involve a simple summary heirs of the husband may imougn the filiation of the child in the
correction, which could otherwise be done under the following cases:
authority of R.A. No. 9048. A petition has to be filed in a
proceeding under Rule 108 of the Rules of Court, which has
now been interpreted to be adversarial in nature. (Republic a) If the husband should die before the expiration of
v. Valencia, G.R. No. L-32181, March 5, 1986) Procedural the period fixed for bringing his action:
requirements include: (a) filing a verified petition; (b) naming
as parties all persons who have or claim any interest which b) If he should die after the filing of the complaint,
would be affected; (c) issuance of an order fixing the time without having desisted therefrom; or
and place of hearing; (d) giving reasonable notice to the
parties named in the petition; and (e) publication of the order
once a week for three consecutive seeks in a newspaper of c) If the child was born afterthe death of the husband.
general circulation. (Rule 108, Rules of Court)
Since Dario is already dead when the baby was,
his heirs have the right to impugn the filiation of the child.
PART III
Consequently, the heirs may impugn the filiation either by a
CRIMINAL PROCEDURE direct action to impugn such filiation or raise the same in a
special proceeding for settlement of the estate of the
RULE 110: PROSECUTION OF OFFENSES decedent. In the said proceeding, the Probate court has the
power to determine questions as to who are the heirs of the
(2013) No.II. Yvonne, a young and lonely OFW, decedent (Reyes vs. Ysip, et. al., 97 Phil. 11, Jimenez vs. IAC,
had an intimate relationship abroad with a friend, Percy. 184 SCRA 367).
Although Yvonne comes home to Manila every six months, her
foreign posting still left her husband Dario lonely so that he also Incidentally, the heirs can also submit the baby boy
engaged in his own extramarital activities. In one particularly for DNA testing (A.M. No. 6- 11-5-SC, Rules on DNA Evidence)
exhilarating session with his girlfriend, Dario died. Within 180 or even blood-test in order to determine paternity and
days from Dario’s death, Yvonne gives birth in Manila to a filiation.
baby boy. Irate relatives of Dario contemplate criminally
charging Yvonne for adultery and they hire your law firm to In Jao vs. Court of Appeals, G.R. No. L- 49162, July
handle the case. 28, 1987, the Supreme Court held that blood grouping tests are
conclusive as to non-paternity, although inconclusive as to
Is the contemplated criminal action a viable option paternity. The fact that the blood type of the child is a possible
to bring? (3%) product of the mother and alleged father does not conclusively
prove that the child is born by such parents; but, if the blood
No. Section 5 of Rule 110 provides that the crimes type of the child is not the possible blood type when the blood
of adultery and concubinage shall not be prosecuted except of the mother and the alleged father are cross matched, then
upon complaint filed by the offended spouse. Since the the child cannot possibly be that of the alleged father.
offended spouse is already dead, then the criminal action for
Adultery as contemplated by offended party‟s relatives is no ALTERNATIVE ANSWER:
longer viable. No, there is no showing in the problem of any
ground that would serve as a basis for an action to impugn
Moreover, it appears that the adulterous acts of Yvonne were paternity of the baby boy.


examined in order to ascertain the gravity and extent of the
In Concepcion vs. Almonte, G.R. No. 123450, injuries sustained from the accident. Second, I will secure an
August 31, 2005 citing Cabatania vs. Court of Appeals, accurate police report relative to the mishap unless Horace
the Supreme Court held that the law requires that every admits his fault in writing, and request Gary to secure a car
reasonable presumption be made in favour of legitimacy. damage estimate from a car repair shop. Third, I will ask him
to execute his Sinumpaang Salaysay. Thereafter, I will use
his Sinumpaang Salaysay or prepare a Complaint-affidavit Page | 39
The presumption of legitimacy does not only flow
out of declaration in the statute but is based on the broad and file the same in the Office of the City Prosecutor of
principles of natural justice and the supposed virtue of the Mandaluyong City (Sections 1 and 15 Rule 110, Rules of
mother. It is grounded on the policyto protect the innocent Criminal Procedure).
offspring from the odium of illegitimacy. The presumption of
legitimacy proceeds from the sexual union in marriage, This being a case of simple negligence and the
particularly during the period of conception. penalty for the offense does not exceed six months
imprisonment, the court with original and exclusive jurisdiction
To overthrow this presumption on the basis of is the Metropolitan Trial Court of Mandaluyong City.
Article 166 (1) (b) of the Family Code, it must be shown
beyond reasonable doubt that there was no access that could (B) If Gary chooses to file an independent civil
have enabled the husband to father the child. Sexual action for damages, explain briefly this type of action: its legal
Intercourse is to be presumed where personal access is not basis; the different approaches in pursuing this type of action;
disposed, unless such presumption is rebutted by evidence to the evidence you would need; and types of defenses you could
the contrary. expect. (5%)
Hence, a child born to a husband and wife during a An independent civil action is an action which is
valid marriage is presumed legitimate. Thus, the child‟s entirely distinct and separate from the criminal action. Such civil
legitimacy may be impugned only under the strict standards action shall proceed independently of the criminal prosecution
provided by law (Herrera vs. Alba, G.R. No. 148220, June 15, and shall require only a preponderance of evidence. Section 3
2005). of Rule 111 allows the filing of an independent civil action by
the offended party based on Article 33 and 2176 of the New
Civil Code.
[Note: The Family Code is not covered by the 2013
bar Examination Syllabus for Remedial Law]. The different approaches that the plaintiff can
pursue in this type of action are as follows:
(2013) No.III. While in his Nissan Patrol and
hurrying home to Quezon City from his work in Makati, Gary (a) File the independent civil action and prosecute the
figured in a vehicular mishap along that portion of EDSA within criminal case separately.
the City of Mandaluyong. He was bumped from behind by a
Ford Expedition SUV driven by Horace who was observed (b) File the independent civil action without filing the
using his cellular phone at the time of the collision. Both criminal case.
vehicles - more than 5 years old – no longer carried insurance
other than the compulsory third party liability insurance. Gary (c) File the criminal casewithout need of reserving the
suffered physical injuries while his Nissan Patrol sustained independent civil action.
damage in excess of Php500,000.
Aside from the testimony of Gary, the pieces of
(A) As counsel for Gary, describe the process you evidence that would be required in an independent civil
need to undertake starting from the point of the incident if Gary action are the medical report and certificate regarding the
would proceed criminally against Horace, and identify the court injuries sustained by Gary, hospital and medical bills including
with jurisdiction over the case. (3%) receipt of payments made police report and proof of the
extent of damage sustained by his car and the Affidavit of
A) As counsel for Gary, Iwill first have him medically witnesses who saw Horace using his cellular phone at the time
the incident happened.


of electronic evidence will Dante have to secure in order to
I will also present proof of employment of Gary such prove the fraudulent online transaction? (2%)
as payslip in order to prove that he was gainfully employed at
the time of the mishap, and as a result of the injuries he He will have to present (a) his report to the bank
suffered, he was not able to earn his usual income thereof. I that he lost his credit card (b) that the ticket was purchased
will also present the attending Doctor of Gary to corroborate after the report of the lost and (c) the purchase of one-way
Page | 40
and authenticate the contents of the medical report and ticket. Dante should bring an original (or an equivalent copy)
abstract thereof. The evidence required to hold defendant printout of: 1) the online ticket purchase using his credit card;
Horace liable is only preponderance of evidence. 2) the phone call log to show that he already alerted the credit
card company of his loss; and 3) his credit card billing
The types of defenses that may be raised against statement bearing the online ticket transaction.
this action are fortuitous event, force majeure or acts of God.
The defendant can also invoke contributory negligence as (2003) In complex crimes, how is the jurisdiction of
partial defense. Moreover, the defendant can raise the usual a court determined? 4%
defenses that the: (a) plaintiff will be entitled to double
compensation or recovery, and (b) defendant will be In a complex crime, jurisdiction over the whole
constrained to litigate twice and therefore suffer the cost of complex crime must be lodged with the trial court having
litigation twice. jurisdiction to impose the maximum and most serious penalty
imposable on an offense forming part of the complex crime.
(2010) No. XVIII. While window-shopping at the (Cuyos v. Garcia, 160 SCRA 302 [1988]).
mall on August 4, 2008, Dante lost his organizer including his
credit card and billing statement. Two days later, upon
reporting the matter to the credit card company, he learned that (2001) Amando was charged with frustrated
a one-way airplane ticket was purchased online using his credit homicide. Before he entered his plea and upon the advice of
card for a flight to Milan in mid- August 2008. Upon extensive his counsel, he manifested his willingness to admit having
inquiry with the airline company, Dante discovered that the committed the offense of serious physical injuries. The
plane ticket was under the name of one Dina Meril. Dante prosecution then filed an amended information for serious
approaches you for legal advice. physical injuries against Amando.
(a) What is the proper procedure to prevent Dina What steps or action should the prosecution take so
from leaving the Philippines? (2%) that the amended information against Amando which
downgrades the nature of the offense could be validly made?
I would advise: Why? (5%)
(1) The filing of an appropriatecriminal action In order that the amended information which downgrades
cognizable by the RTC against Dina and the filing in said the nature of the offense could be validly made, the
criminal action a Motion for the issuance of a Hold Departure prosecution should file a motion to ask for leave of court with
Order; notice to the offended party. (Sec.14 of Rule 110, Revised
Rules of Criminal Procedure). The new rule is for the protection
(2) thereafter, a written request with the of the interest of the offended party and to prevent possible
Commissioner of the Bureau of Immigration for a Watch List abuse by the prosecution.
Order pending the issuance of the Hold Departure Order
should be filed; (1999) Distinguish a Complaint from Information.
(3) then, the airline companyshould be requested to

In criminal procedure, a complaint is a sworn
cancel the ticket issued to Dina.
written statement charging a person with an offense,
subscribed by the offended party, any peace officer or other
(b) Suppose an Information is filed against Dina on peace officer charged with the enforcement of the law
August 12, 2008 and she is immediately arrested. What pieces violated. (Sec. 3, Rule 110, 1985 Rules of Criminal


Procedure); while an information is an accusation in writing constitutional rights of due process and to be informed of the
charging a person with an offense subscribed by the nature and the cause of the accusation against him. (Secs.
prosecutor and filed with the court. (Sec. 4, Id.) 1, 14 (1) and (2} Art. III. 1987 Constitution)
(1999) Will injunction lie to restrain the (1997) Where is the proper venue for the filing of an
commencement of a criminal action? Explain. (2%) information in the following cases?
Page | 41
As a general rule, injunction will not lie to restrain a a) The theft of a car in Pasig City which was
criminal prosecution except: brought to Obando, Bulacan, where it was
cannibalized.
a) To afford adequate protection to the constitutional
rights of the accused; The proper venue is in Pasig City where the theft of
b) When necessary for the orderly administration of the car was committed, not in Obando where it was
justice or to avoid oppression or multiplicity of actions; cannibalized. Theft is not a continuing offense. (People v
c) When double jeopardy is clearly apparent; Mercado, 65 Phil 665).
d) Where the charges are manifestly false and
motivated by the lust for vengeance; The theft by X, a bill collector of ABC Company,
e) Where there is clearly no prima facie case against with main offices in Makati City, of his
the accused and a motion to quash on that ground has been collections from customers in Tagaytay City. In
denied. the contract of employment, X was detailed to
the Calamba branch office, Laguna, where he
(See cases cited in Roberts, Jr., vs. Court of Appeals, 254 was to turn in his collections.
SCRA 307 [1996] and Brocka v. Enrile, 192 SCRA 183 [1990].)
If the crime charged is theft, the venue is in Calamba
(1997) A was accused of homicide for the killing where he did not turn in his collections. If the crime of X is
of B. During the trial, the public prosecutor received a copy estafa, the essential ingredients of the offense took place
of the marriage certificate of A and B. in Tagaytay City where he received his collections, in
Calamba where he should have turned in his collections,
(a) Can the public prosecutor move for the and in Makati City where the ABC Company was based.
amendment of the information to charge A with the The information may therefore be filed in Tagaytay City or
crime of parricide? Calamba or Makati which have concurrent territorial
Jurisdiction. (Catingub vs. Court of Appeals, 121 SCRA
No. The Information cannot be amended to change 106).
the offense charged from homicide to parricide. Firstly, the
marriage is not a supervening fact arising from the act b) The malversation of public funds by a Philippine
constituting the charge of homicide. (Sec. 7[a] of Rule 117). consul detailed in the Philippine Embassy in London.
Secondly, after plea, amendments may be done only as to
matters of form. The amendment is substantial because it will The proper court is the Sandiganbayan which has
change the nature of the offense. (Sec. 14 of Rule 110; jurisdiction over crimes committed by a consul or higher official
Dionaldo us. Dacuycuy. 108 SCRA 736). in the diplomatic service. (Sec. 4(c). PD 1606, as amended by
RA. No. 7975). The Sandiganbayan is a national court. (Nunez
(b) Suppose instead of moving for the v. Sandiganbayan, 111 SCRA 433 [1982]. It has only one
amendment of the information, the public venue at present, which is in Metro Manila, until RA. No. 7975,
prosecutor presented in evidence the marriage providing for two other branches in Cebu and in Cagayan de
certificate without objection on the part of the Oro, is implemented.
defense, could Abe convicted of parricide?
RULE 111: PROSECUTION OF CIVIL ACTION
No. A can be convicted only of homicide not of
parricide which is a graver offense. The accused has the


(2010) No.IV. X was driving the dump truck of Y (c) X moved for the suspension of the proceedings
along Cattleya Street in Sta. Maria, Bulacan. Due to his in the criminal case to await the decision in the civil case. For
negligence, X hit and injured V who was crossing the street. his part, Y moved for the suspension of the civil case to await
Lawyer L, who witnessed the incident, offered his legal services the decision in the criminal case. Which of them is correct?
to V. V, who suffered physical injuries including a fractured Explain. (2%)
wrist bone, underwent surgery to screw a metal plate to his
wrist bone. Page | 42
No, the motion to dismiss base on alleged litis
pendencia is without merit because there is no identity of
On complaint of V, a criminal case for Reckless parties and subject matter in the two cases. Besides, Art. 33
Imprudence Resulting in Serious Physical Injuries was filed of the Civil Code and Rule 111, Sec. 3 of the Rules of Criminal
against X before the Municipal Trial Court (MTC) of Sta. Maria. Procedure authorize the separate civil action for damages
Atty. L, the private prosecutor, did not reserve the filing of a arising from physical injuries to proceed independently.
separate civil action.
(d) Suppose only X was named as defendant in the
V subsequently filed a complaint for Damages complaint for damages, may he move for the dismissal of the
against X and Y before the Regional Trial Court of Pangasinan complaint for failure of V to implead Y as an indispensable
in Urdaneta where he resides. In his "Certification Against party? (2%)
Forum Shopping," V made no mention of the pendency of the
criminal case in Sta. Maria.
Neither of them is correct. Both substantive
law (Art. 33 of the Civil Code) and procedural law (Rule 111,
(a) Is V guilty of forum shopping? (2%)
Sec. 3, Rules of Criminal Procedure) provide for the two actions
to proceed independently of each other, therefore, no
No, V is not guilty of forum shopping because the suspension of action is authorized.
case in Sta. Maria, Bulacan, is a criminal action filed in the
name of the People of the Philippines, where civil liability (e) Atty. L offered in the criminal case his affidavit
arising from the crime is deemed also instituted therewith; respecting what he witnessed during the incident. X’s lawyer
whereas the case filed in Urdaneta, Pangasinan, is a civil wanted to cross-examine Atty. L who, however, objected on the
action for quasi-delict in the name of V and against both X and ground of lawyer-client privilege. Rule on the objection. (2%)
Y for all damages caused by X and Y to V, which may be
beyond the jurisdiction of MTC. Hence, the tests of forum
The objection should be overruled. Lawyer-client
shopping, which is res adjudicate or litis pendencia, do not
privilege is not involved here. The subject on which the counsel
obtain here.
would be examined has been made public in the affidavit he
offered and thus, no longer privileged, aside from the fact that
Moreover, substantive law (Art. 33, Civil Code) and
it is in respect of what the counsel witnessed during the incident
Sec. 3, Rule 111, Revised Rules of Criminal Procedure,
and not to the communication made by the client to him or the
expressly authorize the filing such action for damages
advice he gave thereon in his professional capacity.
entirely separate and distinct from the criminal action.
(2000) CX is charged with estafa in court for failure

(b) Instead of filing an Answer, X and Y
to remit to MM sums of money collected by him (CX) for MM in
move to dismiss the complaint for damages on the ground of
payment for goods purchased from MM, by depositing the
litis pendentia. Is the motion meritorious? Explain. (2%)
amounts in his (CX’s) personal bank account. CX files a motion
to suspend proceedings pending resolution of a civil case
No, X may not move for dismissal of the civil action earlier filed in court by CX against MM for accounting and
for damages on the contention that Y is an indispensable damages involving the amounts subject of the criminal case.
party who should be impleaded. Y is not an indispensable party As the prosecutor in the criminal case, briefly discuss your
but only necessary party. Besides, nonjoinder and misjoinder grounds in support of your opposition to the motion to suspend
of parties is not a ground for dismissal of actions (Rule 3, Sec. proceedings. (5%).
11, Rules of Court).
As the prosecutor, I will argue that the motion to


suspend is not in order for the following reasons: [2016] XVI Under Section 5, Rule 113 a warrantless arrest
is allowed when an offense has just been committed and the
1. The civil case filed by CX against MM for peace officer has probable cause to believe, based on his
accounting and damages does not involve an issue similar personal knowledge of facts or circumstances, that the person
to or intimately related to the issue of estafa raised in the to be arrested has committed it. A policeman approaches you
criminal action. for advice and asks you how he will execute a warrantless
arrest against a murderer who escaped after killing a person. Page | 43
2. The resolution of the issue in the civil case for The policeman arrived two (2) hours after the killing and a
accounting will not determine whether or not the criminal certain Max was allegedly the killer per information given by a
action for estafa may proceed. (Sec. 5, Rule 111, Rules of witness. He asks you to clarify the following:
Criminal Procedure.)
[a] How long after the commission of the crime can he still
(1999) What is a prejudicial question? execute the warrantless arrest? (2.5%)
A prejudicial question is an issue involved in a civil (A)In executing a warrantless arrest under Section 5,
action which is similar or intimately related to the issue Rule 113, the Supreme Court held that the requirement that an
raised in the criminal action, the resolution of which offense has just been committed means that there must be a
determines whether or not the criminal action may large measure of immediacy between the time the offense was
proceed. (Sec. 5 of Rule 111.) A prejudicial question is one committed and the time of the arrest (Joey M. Pestilos v.
based on a fact distinct and separate from the crime but so Moreno Generoso, G.R. No. 182601, November 10, 2014). If
intimately connected with it that it determines the guilt or there was an appreciable lapse of time between the arrest and
innocence of the accused. the commission of the crime, a warrant of arrest must be
secured.
RULE 112: PRELIMINARY INVESTIGATION
In any case, personal knowledge by the arresting officer
(1999) A filed with the Office of the Fiscal a is an indispensable requirement to the validity of a valid
Complaint for estafa against B. After the preliminary warrantless arrest. The exact period varies on a case to case
investigation, the Fiscal dismissed the Complaint for lack of basis. In People v. Gerente (G.R. Nos. 95847-48, March 10,
merit. May the Fiscal be compelled by mandamus to file the 1993), the Supreme Court ruled that a warrantless arrest was
case in court? Explain. (2%) validly executed upon therein accused three (3) hours after the
commission of the crime. In People v. Tonog, Jr. (G.R. No.
94533. February 4, 1992), the Supreme Court likewise upheld
No. The public prosecutor may not be compelled
the valid warrantless arrest which was executed on the same
by mandamus to file the case in court because the
day as the commission of the crime.
determination of probable cause is within the discretion of
the prosecutor. The remedy is an appeal to the Secretary
However, in People v. Del Rosario (G.R. No.
of Justice. (Sec. 4 Rule 112.)
127755. April 14, 1999, 365 Phil. 292), the Supreme Court held
that the warrantless arrest effected a day after the commission
(1998) If the Information is not accompanied by a
of the crime is invalid. In Go v. Court of Appeals (G.R. No.
certification that a preliminary investigation has been
101837, February 11, 1992), Supreme Court also declared
conducted. Is the Information void? [3%]
invalid a warrantless arrest effected (6) days after the
commission of the crime.
No. The certification which is provided in Sec. 4,
Rule 112. Rules of Criminal Procedure, is not an
[b] What does "personal knowledge of the facts and
indispensable part of the information. (People vs. Lapura,
circumstances that the person to be arrested committed it"
255 SCRA 85.)
mean? (2.5%)
RULE 113: ARREST

(B)The phrase “personal knowledge of the facts and
circumstances that the person to be arrested committed it”


means that matters in relation to the supposed commission of No, the warrant of arrest may not be quashed on
the crime were within the actual perception, personal the grounds cited by Rapido’s counsel. a) The Supreme Court
evaluation or observation of the police officer at the scene of has held in Soliven v. Makasiar, 167 SCRA 393 (1988) that
the crime. Thus, even though the police officer has not seen Section 2 of Art. III of the Constitution does not mandatorily
someone actually fleeing, he could still make a warrantless require the judge to personally examine the complainant and
arrest if, based on his personal evaluation of the circumstances his witnesses. The judge may opt to personally evaluate the
at the scene of the crime, he could determine the existence of Page | 44
report and supporting documents submitted by the regarding
probable cause that the person sought to be arrested has the existence of probable cause and on the basis thereof issue
committed the crime; however, the determination of probable a warrant of arrest. b) There is no requirement of a prior order
cause and the gathering of facts or circumstances should be by the judge finding probable cause. The SC has held that the
made immediately after the commission of the crime in order to judge may rely upon the resolution of the investigating
comply with the element of immediacy. prosecutor provided that he personally evaluates the same
and the affidavits and supporting documents, which he did.
The arresting officer’s determination of probable cause (People v. Grey, 26 July 2010).
under Section 5(b), Rule 113 of the Revised Rules of Criminal
Procedure is based on his personal knowledge of facts or (2013) No.VIII. On his way to the PNP Academy in
circumstances that the person sought to be arrested has Silang, Cavite on board a public transport bus as a passenger,
committed the crime. These facts or circumstances pertain to Police Inspector Masigasig of the Valenzuela Police witnessed
actual facts or raw evidence, i.e., supported by circumstances an on-going armed robbery while the bus was traversing
sufficiently strong in themselves to create the probable cause Makati. His alertness and training enabled him to foil the
of guilt of the person to be arrested. A reasonable suspicion robbery and to subdue the malefactor. He disarmed the felon
therefore must be founded on probable cause, coupled with and while frisking him, discovered another handgun tucked in
good faith on the part of the peace officers making the arrest. his waist. He seized both handguns and the malefactor was
The probable cause to justify warrantless arrest ordinarily later charged with the separate crimes of robbery and illegal
signifies a reasonable ground of suspicion supported by possession of firearm.
circumstances sufficiently strong in themselves to warrant a
cautious man to believe that the person accused is guilty of the A) Where should Police Inspector Masigasig bring
offense with which he is charged, or an actual belief or the felon for criminal processing? To Silang, Cavite where he
reasonable ground of suspicion, based on actual facts (Joey M. is bound; to Makati where the bus actually was when the
Pestilos v. Moreno Generoso, G.R. No. 182601, November 10, felonies took place; or back to Valenzuela where he is
2014). stationed? Which court has jurisdiction over the criminal
cases? (3%)
{2015] X. An information for murder was filed Police Inspector Masigasig should bring the felon
against Rapido. The RTC judge, after personally evaluating to the nearest police station or jail in Makati City where the bus
the prosecutor's resolution, documents and parties' affidavits actually was when the felonies took place. In cases of
submitted by the prosecutor, found probable cause and issued warrantless arrest, the person arrested without a warrant
a warrant of arrest. Rapido's lawyer examined the rollo of the shall be forthwith delivered to the nearest police station or jail
case and found that it only contained the copy of the and shall be proceeded against in accordance with section 7
information, the submissions of the prosecutor and a copy of of Rule 11 (Section 113, Rules of Criminal Procedure).
the warrant of arrest. Immediately, Rapido's counsel filed a Consequently, the criminal case for robbery and illegal
motion to quash the arrest warrant for being void, citing as possession of firearms can be filed in Regional Trial Court of
grounds: a.) The judge before issuing the warrant did not Makati City or on any of the places of departure or arrival of
personally conduct a searching examination of the prosecution the bus.
witnesses in violation of his client's constitutionally-mandated
rights; b.) There was no prior order finding probable cause
(B) May the charges of robbery and illegal
before the judge issued the arrest warrant. May the warrant of
possession of firearm be filed directly by the investigating
arrest be quashed on the grounds cited by Rapido' s counsel?
prosecutor with the appropriate court without a preliminary
State your reason for each ground. (4%)
investigation? (4%)


ground that there exists a high degree of probability that he
Yes. Since the offender was arrested in flagrante will abscond or escape? Explain. (2%)
delicto without a warrant of arrest, an inquest proceeding
should be conducted and thereafter a case may be filed in If bail is a matter of right, it cannot be denied on
court even without the requisite preliminary investigation. the ground that there exists a high degree of probability
that the accused will abscond or escape. What the court
Page | 45
Under Section 6, Rule 112, Rules of Criminal can do is to increase the amount of the bail. One of the
Procedure, when a person is lawfully arrested without a guidelines that the judge may use in fixing a reasonable
warrant involving an offense which requires a preliminary amount of bail is the probability of the accused appearing
investigation, the complaint or information may be filed by a in trial.
prosecutor without a need of such investigation provided
an inquest has been conducted in accordance with existing (1999) When is bail a matter of right and when is
rules. it a matter of discretion? (2%)
RULE 114: BAIL When Bail is a matter of right:

All persons in custody shall (a) before or after
(2006) When is bail a matter of right and when is it conviction by the metropolitan and municipal trial courts, and
a matter of discretion? (5%) (b) before conviction by the RTC of an offense not
punishable by death, reclusion perpetua or life
Bail is a matter of right (a) before or after conviction imprisonment, be admitted to bail as a matter of right, with
by the inferior courts; (b) before conviction by the RTC of an sufficient sureties, or be released on recognizance as
offense not punishable by death, reclusion perpetua or life prescribed by law or Rule 114. (Sec. 4, Rule 114, Rules of
imprisonment., when the evidence of guilt is not strong (Sec. Court, as amended by Circular No. 12-94.)
4, Rule 114, 2000 Rules of Criminal Procedure).
Bail is discretionary: Upon conviction by the RTC of When bail is a matter of discretion:
an offense not punishable by death, reclusion perpetua or Upon conviction by the RTC of an offense not
life imprisonment (Sec. 5, Rule 114, 2000 Rules of Criminal punishable by death, reclusion perpetua or life
Procedure). imprisonment, on application of the accused. If the penalty
of imprisonment exceeds six years but not more than 20
(1999) May the Court require a witness to post bail? years, bail shall be denied upon a showing by the
Explain your answer. (2%) prosecution, with notice to the accused, of the following or
other similar circumstances:
Yes. The court may require a witness to post bail if
he is a material witness and bail is needed to secure his 1. That the accused is a recidivist, quasi-re-cidivist or
appearance. The rules provide that when the court is habitual delinquent, or has committed the crime aggravated
satisfied, upon proof or oath, that a material witness will not by the circumstance of reiteration;
testify when required, it may, upon motion of either party, 2. That the accused is found to have previously
order the witness to post bail in such sum as may be escaped from legal confinement, evaded sentence, or has
deemed proper. Upon refusal to post bail, the court shall violated the conditions of his bail without valid justification;
commit him to prison until he complies or is legally 3. That the accused committed the offense while on
discharged after his testimony is taken. (Sec. 6, Rule 119) probation, parole, or under conditional pardon;
4. That the circumstances of the accused or his case
indicate the probability of flight if released on bail; or
(1999) In what forms may bail be given? (2%)
5. That there is undue risk that during the pendency of
the appeal, the accused may commit another crime. (Sec. 1,
Bail may be given by a corporate surety, or
Id.)
through a property bond, cash deposit or recognizance.
RULE 115: RIGHTS OF THE ACCUSED

(1999) When the accused is entitled as a matter of
right to bail, may the Court refuse to grant him bail on the


(2013) No.IV. At the Public Attorney's Office station Since the accused has not been brought for
in Taguig where you are assigned, your work requires you to arraignment within the limit required in the aforementioned
act as public defender at the local Regional Trial Court and to Rule, the Information may be dismissed upon motion of the
handle cases involving indigents. accused invoking his right to speedy trial (Section 9, Rule 119)
or to a speedy dispositionof cases (Section 16, Article III, 1987
(A) In one criminal action for qualified theft where Constitution).
you are the defense attorney, you learned that the woman Page | 46
accused has been in detention for six months, yet she has not ALTERNATIVE ANSWER:
been to a courtroom nor seen a judge.
A Petition for Mandamus is also feasible.
What remedy would you undertake to address the
situation and what forum would you use to invoke this relief? In People vs. Lumanlaw, G.R. No. 164953,
(3%) February 13, 2006, the Supreme Court held that “a writ of
mandamus may be issued to control the exercise of discretion
Section 7, Rule 119 provides, if the public attorney when, in the performance of duty, there is undue delay that
assigned to defend a person charged with a crime knows that can be characterized as a grave abuse of discretion resulting
the latter is preventively detained, either because he is in manifest injustice. Due to the unwarranted delays in the
charged with a bailable crime but has no means to post bail, or, conduct of the arraignment of petitioner, he has indeed the right
is charged with a non-bailable crime, or, is serving a term to demand – through a writ of mandamus – expeditious action
of imprisonment in any penal institution, it shall be his duty to from all official tasked with the administration of justice. Thus,
do the following: he may not only demand that his arraignment be held but,
ultimately, that the information against him be dismissed on
(a) Shall promptly undertaketo obtain the the ground of the violation of his right to speedy trial.” Ergo, a
presence of the prisoner for trial or cause a notice to be writ of mandamusis available to the accused to compel the
served on the person having custody of the prisoner requiring dismissal of the case.
such person to so advise the prisoner of his right to demand
trial. ALTERNATIVE ANSWER:
The appropriate remedy of the detained accused is
(b) Upon receipt of thatnotice, the custodian to apply for bail since qualified theft is bailable, and she is
of the prisoner shall promptly advise the prisoner of the charge entitled to bail beforeconviction in the Regional Trial Court
and of his right to demand trial. If at any time thereafter the (Section 4, Rule 114 of the Rules of Criminal Procedure).
prisoner informs his custodian that he demands such trial, the
latter shall cause notice to that effect to be sent promptly to the [Note: unless the aggregate value of the property
public attorney. stolen is P500,000 and the above she will not be entitled to bail
Xxx as a matter of right, because the penalty for the offense is
Moreover, Section 1 (e), Rule 116 provides, when
reclusion perpetua pursuant to Memorandum Order No. 117].
the accused is under preventive detention, his case shall be
raffled and its records transmitted to the judge to whom the
(B) In another case, also for qualified theft, the
case was raffled within the three (3) days from the filing of the
detained young domestic helper has been brought to court five
information or complaint. The accused shall be arraigned within
times in the last six months, but the prosecution has yet to
ten (10) days from the date of the raffle. The pre-trial
commence the presentation of its evidence. You find that the
conference of his case shall be held within ten (10) days
reason for this is the continued absence of the employer-
after the arraignment.
complainant who is working overseas.
On the other hand, if the accused is not under
What remedy is appropriate and before which forum
preventive detention, the arraignment shall be held within
would you invoke this relief? (3%)
thirty (30) days from the date the court acquires jurisdiction
over the person of the accused. (Section 1 (g), Rule 116).
I will file a motion to dismiss the information in
the court where the case is pending on the ground of denial of


the accused right to speedy trial (Section 9, Rule 119; Tan vs. Similarly, in People vs. Sitco, G.R. No. 178202, May
People, G.R. No. 173637, April 21, 2009, Third Division, 14, 2010, the High Court held that in prosecutions involving
Chico-Nazario, J.). this remedy can be invoked, at any time, narcotics and other illegal substances, the substance itself
before trial and if granted will result to an acquittal. Since the constitutes part of the corpus delicti of the offense and the fact
accused has been brought to Court five times and in each of its existence is vital to sustain a judgment of conviction
instance it was postponed, it is clear that her right to a Speedy beyond reasonable doubt.
Trial has been violated. Page | 47
(D) In one other case, an indigent mother seeks
Moreover, I may requestthe court to issue assistance for her 14-year old son who has been arrested and
Subpoena Duces Tecum and Ad Testificandum to the witness, detained for malicious mischief.
so in case he disobeys same, he may be cited in contempt. I
may also file a motion to order the witness employer- Would an application for bail be the appropriate
complainant to post bail to secure his appearance in court. remedy or is there another remedy available? Justify your
(Section 14, Rule 119). chosen remedy and outline the appropriate steps to take. (3%)
ALTERNATIVE ANSWER: Yes. An application for bail is an appropriate

I will move for the dismissal of the case for failure remedy to secure provisional liberty of the 14-year old boy.
to prosecute. The grant of the motion will be with prejudice Under the Rules, bail is a matter of right before or even after
unless the court says otherwise. The Motion will be filed with conviction before the Metropolitan Trial Court which has
the Court where the action is pending. jurisdiction over the crime of malicious mischief. (Section 4,
Rule 114 of the Rules of Criminal Procedure).
C) Still in another case, this time for illegal
possession of dangerous drugs, the prosecution has rested but ALTERNATIVE ANSWER:
you saw from the records that the illegal substance allegedly Under R.A. 9344 or otherwise known as the
involved has not been identified by any of the prosecution Juvenile Justice and Welfare Act of 2006 as amended by R.A.
witnesses nor has it been the subject of any stipulation. 10630, a child in conflict with the law has the right to bail and
recognizance or to be transferred to a youth detention
Should you now proceed posthaste to the home/youth rehabilitation center. Thus:
presentation of defense evidence or consider some other
remedy? Explain the Where a child is detained, the court shall order:
remedial steps you propose to undertake. (3%)
(a) the release of theminor on
No. I will not proceed with the presentation of recognizance to his/her parents and other suitable person;
defense evidence. I will first file a motion for leave to file (b) the release of the childin conflict with the
demurrer to evidence within five (5) days from the time the law on bail; or
prosecution has rested its case. If the Motion is granted, I will (c) the transfer of the minorto a youth
file a demurrer to evidence within a non- extendible period of detention home/youth rehabilitation center.
ten (10) days from notice on the ground of insufficiency of
evidence. In the alternative, I may immediately file a demurrer The court shall not order the detention of a child in
to evidence without leave of court (Section 23, Rule 119, Rules a jail pending trial or hearing of his case. The writ of habeas
of Criminal Procedure). corpus shall extend to all cases of illegal confinement or
detention by which any person is deprived of his liberty, or by
In People vs. De Guzman, G.R. No. 186498, which the rightful custody of any person is withheld from the
March 26, 2010, the Supreme Court held that in a prosecution person entitled thereto (In The Matter Of The Petition Of
for violation of the Dangerous Drugs Act, the existence of the Habeas Corpus Of Eufemia E. Rodriguez, Filed By Edgardo
dangerous drugs is a condition sine qua non for conviction. The E.Veluz Vs.Luisar. Villanueva And Teresita R. Pabello, G.R.
dangerous drug is the very corpus delicti of the crime. No. 169482, January 29, 2008, Corona, J.).


Since minors fifteen (15) years of age and under of X‟s Miranda Rights. In order to have a valid waiver of the
are not criminally responsible, the child may not be detained to Miranda Rights, the same must be in writing and made in the
answer for the alleged offense. The arresting authority has the presence of his counsel. The uncounselled extrajudicial
duty to immediately release the child to the custody of his confession of X being without a valid waiver of his Miranda
parents or guardians or in their absence to the child‟s nearest Rights, is inadmissible, as well as any information derived
relative (Section 20, republic Act 9344). therefrom.
Page | 48
Following the hierarchy of courts, the Petition must RULE 116: ARRAIGNMENT AND PLEA
be filed in the Regional trial Court having jurisdiction over the
place where the child is being detained. (2009) No.XI.A. The accused in a criminal case has
the right to avail of the various modes of discovery.
[Note: R.A. 9344 is not covered by the 2013 Bar
Examination Syllabus for Remedial law]. TRUE. The accused has the right to move for the
production or inspection of material evidence in the possession
(2010) No.XVII. What is "res judicata in prison of the prosecution. It authorizes the defense to inspect, copy
grey"? (2%) or photograph any evidence of the prosecution in its
possession after obtaining permission from the court (Rule
“Res judicata in prison grey” is the criminal concept 116, Sec. 10; Webb vs. De Leon, 247 SCRA 652 [1995]).
of double jeopardy, as “res judicata” is the doctrine of civil law
(Trinidad vs. Office of the Ombudsman, G.R. No. 166038, ALTERNATIVE ANSWER:
December 4, 2007). FALSE. The accused in criminal case only has
the right to avail of conditional examination of his witness
Described as “res judicata in prison grey,” the before a judge, or, if not practicable, a member of a Bar in
right against double jeopardy prohibits the prosecution of a good standing so designated by the judge in the order, or if the
person for a crime of which he has been previously acquitted order be made by a court of superior jurisdiction, before an
or convicted. The purpose is to set the effects of the first inferior court to be designated therein. (sec.12 &13, Rule 119).
prosecution forever at rest, assuring the accused that he shall
not thereafter be subjected to the danger and anxiety of a Modes of discovery under civil actions does not
second charge against him for the same offense (Joel B. Caes apply to criminal proceedings because the latter is primarily
vs. Intermediate Appellate Court, November 6, 1989). governed by the REVISED RULES OF CRIMINAL
PROCEDURE (Vda. de Manguerravs Risos – 563 SCRA 499).
(2010) No.XI. X was arrested for the alleged
murder of a 6-year old lad. He was read his Mirandarights
immediately upon being apprehended. RULE 117: MOTION TO QUASH
In the course of his detention, X was subjected to (2003) When a criminal case is dismissed on
three hours of non-stop interrogation. He remained quiet until, nolle prosequi, can it later be refilled? (4%)
on the 3rd hour, he answered "yes" to the question of whether
"he prayed for forgiveness for shooting down the boy." The trial As a general rule, when a criminal case is
court, interpreting X’s answer as an admission of guilt, dismissed on nolle prosequi before the accused is placed on
convicted him. trial and before he is called on to plead, this is not equivalent
to an acquittal and does not bar a subsequent prosecution
On appeal, X’s counsel faulted the trial court in for the same offense. (Galvez v. Court of Appeals, 237 SCRA
its interpretation of his client’s answer, arguing that X 685 [1994]).
invoked his Miranda rights when he remained quiet for the first
two hours of questioning. Rule on the assignment of error. (3%)
(1998)
1. Give two (2) grounds to quash an Information.
The assignment of error invoked by X‟s counsel is
impressed with merit since there has been no express waiver
Any two of the foregoing grounds to quash an


Information are: 3. In a criminal case, a pre-trial agreement is
a) That the facts charged do not constitute an required to be reduced to writing and signed by the
offense; and accused and his counsel (See; Rule 118, Sec. 4); while in
a civil case, the agreement may be contained in the pre-
b) That the court trying the case has no jurisdiction
trial order. (Sec. 4 of former Rule 20; See 7 of new Rule
over the offense charged or the person of the
78).
accused. Page | 49
c) That the officer who filed the information had no RULE 119: TRIAL
authority to do so;
d) That it does not conform substantially to the (2010) No. XIX. (1) Enumerate the requisites of a
prescribed form; "trial in absentia " (2%) and a "promulgation of judgment in
absentia" (2%).
e) That more than one offense is charged except
in those cases in which existing laws prescribe
a single punishment for various offenses; The requisites of a valid trial in absentia are:
f) That the criminal action or liability has been

(1) accused‟s arraignment;
extinguished;
(2) his due notification of the trial;
g) That it contains averments which, if true, would (3) his unjustifiable failure to appear during trial
constitute a legal excuse or justification; and (Bernardo vs. People, G.R. No. 166980, April 4, 2007).
h) That the accused has been previously
convicted or in jeopardy of being convicted, or The requisites for a valid promulgation of judgment
acquitted of the offense charged. (Sec. 3, Rule are:
117. Rules of Criminal Procedure.)
(a) A valid notice of promulgationof
If the Information is not accompanied by a judgment;
certification that a preliminary investigation has been
conducted. Is the Information void? [3%] (b) Said notice was duly furnished to the
accused personally or thru counsel;
No. The certification which is provided in Sec. 4, Rule
112. Rules of Criminal Procedure, is not an indispensable
(c) Accused failed to appearon the
part of the information. (People vs. Lapura, 255 SCRA 85.)
scheduled date of promulgation of judgment despite due
notice;
RULE 118: PRE TRIAL
(d) Such judgment be recordedin the
(1997) Give three distinctions between a pre-trial in
criminal docket;
a criminal case and a pre-trial in a civil case.
(e) Copy of said judgment had been duly
Three distinctions between a pre-trial in a criminal served upon the accused or his counsel.
case and a pre-trial in a civil case are as follows:
(2) Name two instances where the trial court can
1. The pre-trial in a criminal case is conducted
hold the accused civilly liable even if he is acquitted. (2%)
only "where the accused and counsel agree" (Rule 118,
Sec. 1): while the pre-trial in a civil case is mandatory.
The instances where the civil liability is not
(Sec. 1 of former Rule 20; Sec, 1 of new Rule 18).
extinguished despite the acquittal of the accused where:
2. The pre-trial in a criminal case does not
(1) The acquittal is basedon reasonable
consider the possibility of a compromise, which is one
doubt;
important aspect of the pre-trial in a civil case. (Sec. 1 of
former Rule 20; Sec. 2 of new Rule 18).


(2) Where the court expresslydeclares that made known to the trial court, on arraignment, that he
the liability of the accused is not criminal but only civil in nature; adduce affirmative defense of a justifying or exempting
and circumstances and thus impliedly admitting the act imputed
to him. The trial court may then require the accused to present
(3) Where the civil liabilityis not derived from evidence first, proving the requisites of the justifying or
or based on the criminal act of which the accused is acquitted exempting circumstance he is invoking, and the prosecution
to present rebuttal evidence controverting the same. Page | 50
(Remedios Nota Sapiera vs. Court of Appeals, September 14,
1999).
(2006) As counsel of an accused charged with
(2007) No.V. (a) Distinguish the effects of the filing homicide, you are convinced that he can be utilized as a state
of a demurrer to the evidence in a criminal case and its filing in witness. What procedure will you take?
a civil case. (5%)
As counsel of an accused charged with homicide,
The following are the distinctions in effects of the procedure that can be followed for the accused to be
demurrer to the evidence in criminal cases from that in civil utilized as a state witness is to ask the Prosecutor to
cases: recommend that the accused be made a state witness. It is the
Prosecutor who must recommend and move for the
(1) In criminal cases, demurrerto the evidence acceptance of the accused as a state witness. The accused
requires leave of court, otherwise, the accused would lose his may also apply under the Witness Protection Program.
right to present defense evidence if filed and denied; in civil
cases, no leave of court is required for filing such demurrer.
(2003) Compare the effects of a denial of demurrer
(2) In criminal cases, when such demurrer is to evidence in a civil case with those of a denial of demurrer to
granted, the dismissal of the case is not appealable inasmuch evidence in a criminal case. 4%
as the dismissal would amount to an acquittal, unless made by
a court acting without or in excess of jurisdiction; in civil cases, In a civil case, the defendant has the right to file a
when such demurrer is granted, the dismissal of the case can demurrer to evidence without leave of court. If his demurrer is
be appealed by the plaintiff. denied, he has the right to present evidence. If his demurrer is
granted and on appeal by the plaintiff, the appellate court
(3) In criminal cases, theaccused loses his right to reverses the order and renders judgment for the plaintiff, the
present his defense-evidence in the trial court when he filed defendant loses his right to present evidence. (Rule 33).
the demurrer without prior leave of court; while in civil cases,
the defendant loses his right to present his defense-evidence In a criminal case, the accused has to obtain leave
only if the plaintiff appealed such dismissal and the case is of court to file a demurrer to evidence. If he obtains leave of
before the appellate court already since the case would be court and his demurrer to evidence is denied, he has the right
decide only on the basis of plaintiff‟s evidence on record. to present evidence in his defense. If his demurrer to evidence
is granted, he is acquitted and the prosecution cannot appeal.
(2007) No.V. (b) What is reverse trial and when If the accused does not obtain leave of court and his
may it be resorted to? Explain briefly. (5%) demurrer to evidence is denied, he waives his right to present
evidence and the case is decided on the basis of the evidence
A reverse trial is one where the defendant or the for the prosecution.
accused present evidence ahead of the plaintiff or prosecution
and the latter is to present evidence by way of rebuttal to the The court may also dismiss the action on the ground
former‟s evidence. This kind of trial may take place in a civil of insufficiency of the evidence on its own initiative after giving
case when the defendant‟s Answer pleads new matters by the prosecution the opportunity to be heard. (Sec. 23 of Rule
way of affirmative defense, to defeat or evade liability for 119)
plaintiff‟s claim which is not denied but controverted. In a
criminal case, a reverse trial may take place when the accused (2003) In an action for violation of Batas Pambansa


Blg. 22, the court granted the accused’s demurrer to evidence the accused filed the demurrer without leave and whether his
which he filed without leave of court. Although he was acquitted lawyer knew that the effect of filing it without leave is to waive
of the crime charged, he, however, was required by the court the presentation of the evidence for the accused. (People vs.
to pay the private complainant the face value of the check. The Fores, 269 SCRA 62.)
accused filed a Motion of Reconsideration regarding the order
to pay the face value of the check on the following grounds: 3. Without further proceeding and on the sole basis
Page | 51
of the evidence of the prosecution, can the court
a) the demurrer to evidence applied only to the criminal legally convict X for Murder?
aspect of the case; and
b) at the very least, he was entitled to adduce Yes. Without any evidence from the accused, the
controverting evidence on the civil liability. prima facie evidence of the prosecution has been converted
to proof beyond reasonable doubt.
Resolve the Motion for Reconsideration. (6%)
ALTERNATIVE ANSWER:
The Motion for Reconsideration should be If the evidence of guilt is not strong and beyond
denied. The ground that the demurrer to evidence applied reasonable doubt then the court cannot legally convict X for
only to the criminal aspect of the case was not correct murder.
because the criminal action for violation of Batas Pambansa
Blg. 22 included the corresponding civil action. (Sec. 1(b) of
(1998) What are the requisites of a trial in absentia?
Rule 111). The accused was not entitled to adduce
[2%]
controverting evidence on the civil liability, because he
filed his demurrer to evidence without leave of court. (Sec.
The requisites of trial in absentia are: (a) the
23 of Rule 119).
accused has already been arraigned; (b) he has been duly
notified of the trial; and (c) his failure to appear is
(1998) Facing a charge of Murder, X filed a petition
unjustifiable. (Sec. 14 [2], Article III. Constitution; Parada vs.
for bail. The petition was opposed by the prosecution but after
Veneracion, 269 SCRA 371 [1997].)
hearing the court granted bail to X. On the first scheduled
hearing on the merits, the prosecution manifested that it was
If an accused who was sentenced to death escapes, is
not adducing additional evidence and that it was resting its
there still a legal necessity for the Supreme Court to review
case. X filed a demurrer to evidence without leave of court but
the decision of conviction? [3%]
it was denied by the court.
1. Did the court have the discretion to deny the Yes, there is still a legal necessity for the
demurrer to evidence under the circumstances Supreme Court (as of 2004 the Court of Appeals has the
mentioned above? (2%) jurisdiction to such review) to review the decision of
conviction sentencing the accused to death, because he is
entitled to an automatic review of the death sentence.
Yes. The Court had the discretion to deny the
(Sees. 3[e] and 10, Rule 122, Rules of Criminal Procedure;
demurrer to the evidence, because although the evidence
People vs. Espargas, 260 SCRA539.)
presented by the prosecution at the hearing for bail was
not strong, without any evidence for the defense, it could
be sufficient for conviction. RULE 120: JUDGMENT
[2014] IV. An order of the court requiring a

2. If the answer to the preceding question is in the
retroactive redating of an order, judgment or document filing be
affirmative, can X adduce evidence in his defense
entered or recorded in a judgment is: (1%)
after the denial of his demurrer to evidence? [1%]
(A) pro hac vice
No. Because he filed the demurrer to the evidence (B) non pro tunc
without leave. (Sec. 15, Rule 119, Rules of Criminal (C) confession relicta verificatione
Procedure.) However, the trial court should inquire as to why (D) nolle prosequi


subject to the right of the accused to appeal to the Supreme
(B) (Note: Should be “nunc pro tunc .”). Court. (3%)
(1997) X, the accused in a homicide case before the There is no constitutional objection to providing in
RTC. Dagupan Cay, was personally notified of the the Rules of Court for an appeal to the Court of Appeals from
promulgation of judgment in his case set for 10 December the decisions of the RTC in criminal cases where the penalty
Page | 52
1996. On said date. X was not present as he had to attend to imposed is reclusion perpetua or life imprisonment subject to
the trial of another criminal case against him in Tarlac, Tarlac. the right of the accused to appeal to the Supreme Court,
The trial court denied the motion of the counsel of X to because it does not deprive the Supreme Court of the right to
postpone the promulgation. exercise ultimate review of the judgments in such cases.
(a) How shall the court promulgate the RULE 126: SEARCH AND SEIZURE
judgment in the absence of the accused?
[2018] XV Atty. Dalmacio, the Director of the
In the absence of the accused, the promulgation National Bureau of Investigation, applied for a search warrant
shall be made by recording the Judgment in the criminal docket before the Executive Judge of RTC Manila. He alleged in his
and a copy thereof served upon the accused or counsel. (Sec. application that a certain alias Django was keeping about 10
6. third par., Rule 120) kilos of shabu in a wooden cabinet located at Dillian's Store in
Paseo de Sta. Rosa, Laguna. The Executive Judge of Manila
(b) Can the trial court also order the arrest personally examined Atty. Dalmacio and his witnesses and
of X? thereafter issued the search warrant particularly describing the
place to be searched and the items to be seized.
No, the trial court cannot order the arrest of X if the
(a) Can the search warrant issued by the Executive
judgment is one of acquittal and, in any event, his failure to
Judge of Manila be enforced in Laguna? (2.5%)
appear was with justifiable cause since he had to attend to
another criminal case against him.
(a) Yes, the search warrant issued by the
Executive Judge of Manila may be enforced in Laguna.
RULE 122: APPEAL
Administrative No. 99-20-09 of the Supreme Court
(2002) What are the modes of appeal to the states all applications for search warrant personally endorsed
Supreme Court? (2%) by the head of the Philippine National Police (PNP), the
National Bureau of Investigation (NBI), The Presidential Anti-
Organized Crime Task Force (PAOC-TP) and the Reaction
The modes of appeal to the Supreme Court are: (a)
Against Crime Task Force (REACT-TF) with The Executive
APPEAL BY CERTIORARI on pure questions of law under
Judge and Vice Executive Judges of Regional Trial Courts,
Rule 45 through a petition for review on certiorari; and (b)
Manila and Quezon City, may be served in places outside the
ORDINARY APPEAL in criminal cases through a notice of
territorial jurisdiction of said courts.
appeal from convictions imposing reclusion perpetua or life
In the case at bar, the application for the issuance
imprisonment or where a lesser penalty is involved but for
of search warrant was filed by the Director of the National
offenses committed on the same occasion or which arose out
Bureau of the National Bureau of Investigation (NBI) before the
of the same occurrence that gave rise to the more serious
Executive Judge of Manila; hence, the search warrant may be
offense. (Rule 122, sec. 3) Convictions imposing the death
enforced outside the territorial jurisdiction of Manila.
penalty are elevated through automatic review.
Comment on a proposal to amend Rule 122,

(b) Can the legal concept of "venue is jurisdictional"
Section 2(b), in relation to Section 3(c), of the Revised Rules of
be validly raised in applications for search warrants? (2.5%)
Criminal Procedure to provide for appeal to the Court of
Appeals from the decisions of the RTC in criminal cases, where
the penalty imposed is reclusion perpetua or life imprisonment, (b) No, the legal concept of venue being
jurisdictional is not applicable. The Supreme Court in Malaloan


v. Court of Appeals, (G.R No. 104879, 6 May 1994), states that worded in this way:
an application for a search warrant is a special criminal
process, rather than a criminal action; hence, the legal concept PEOPLE OF THE PHILIPPINES
of venue being jurisdictional is not applicable in the case at bar. Plaintiff
(2012) No.VI. A PDEA asset/informant tipped the -versus-

Page | 53
PDEA Director Shabunot that a shabu laboratory was operating
in a house at Sta. Cruz, Laguna, rented by two (2) Chinese Ho Pia and Sio Pao, Accused.
nationals, Ho Pia and Sio Pao. PDEA Director Shabunot wants
to apply for a search warrant, but he is worried that if he applies Criminal Case No. 007 for
for a search warrant in any Laguna court, their plan might leak Violation of R.A. 9165
out.
x x
(a) Where can he file an application for search TO ANY PEACE OFFICER
warrant? (2%)
Greetings:
PDEA Director Shabunot may file an application for
search warrant in any court within the judicial region where the It appearing to the satisfaction of the undersigned
crime was committed. (Rule 126, Sec.2[b]). after examining under oath PDEA Director shabunot that there
is probable cause to believe that violations of Section 18 and
16 of R.A. 9165 have been committed and that there are good
ALTERNATIVE ANSWER:
and sufficient reasons to believe that Ho Pia and Sio Pao have
PDEA Director Shabunot may file an application for
in their possession or control, in a two (2) door apartment with
search warrant before the Executive Judge and Vice
an iron gate located at Jupiter St., Sta. Cruz, Laguna,
Executive Judges of the Regional Trial Courts of Manila or
undetermined amount of "shabu" and drug manufacturing
Quezon Cities. (A.M. No. 99-10- 09-SC, January 25, 2000).
implements and paraphernalia which should be seized and
brought to the undersigned,
(b) What documents should he prepare in
his application for search warrant? (2%) You are hereby commanded to make an immediate
search, at any time in the day or night, of the premises above
He should prepare a petition for issuance of a described and forthwith seize and take possession of the
search warrant and attach therein sworn statements and abovementioned personal property, and bring said property to
affidavits. the undersigned to be dealt with as the law directs.
(c) Describe the procedure that should be Witness my hand this 1st day of March, 2012.
taken by the judge on the application. (2%)
(signed) Judge XYZ
The judge must, before issuing the warrant,
examine personally in the form of searching questions and (d) Cite/enumerate the defects, if any, of the
answers, in writing and under oath, the complainant and the search warrant. (3%)
witnesses he may produce on facts personally known to them
and attach to the record their sworn statements, together
with the affidavits submitted. (Rule 126, Sec.5, Rules of Court). (1) The search warrant failed to
if the judge is satisfied of the existence of facts upon which the particularly describe the place to be searched and the things
application is based or that there is probable cause to believe to be seized (Rule 126, Sec.4, Rules of Court).
that they exist, he shall issue the warrant, which must be
substantially in the form prescribed by the Rules. (Rule 126, (2) The search warrant commanded the
Sec.6, Rules of Court). immediate search, at any time in the day or night. The general
rule is that a search warrant must be served in the day time
Suppose the judge issues the search warrant (Rule 126, Sec.8, Revised Rules on Criminal Procedure), or


that portion of the twenty-four hours in which a man‟s person Is the arrest of B legal?
and countenance are distinguishable (17 C.J. 1134). By way of
exception, a search warrant may be made at night when it is No. A warrantless arrest requires that the crime has in
positively asserted in the affidavit that the property is on fact just been committed and the police arresting has personal
the person or in the place ordered to be searched (Alvares vs. knowledge of facts that the person to be arrested has
CFI of Tayabas, 64 Phil. 33). There is no showing that the committed it. (Sec. 5, Rule 113). Here, the crime has not just
exception applies. been committed since a period of two days had already lapsed, Page | 54
and the police arresting has no such personal knowledge
because he was not present when the incident happened. (Go
(e) Suppose the search warrant was served vs. Court of Appeals. 206 SCRA 138).
on March 15, 2012 and the search yielded the described
a) Under the circumstances, can B be convicted of
contraband and a case was filed against the accused in RTC,
homicide?
Sta. Cruz, Laguna and you are the lawyer of Sio Pao and Ho
Pia, what will you do? (3%)
Yes. The gun is not indispensable in the conviction
of A because the court may rely on testimonial or other
If I were the lawyer of Sio Pao and Ho Pia, I would
evidence.
file a Motion to Quash the search warrant for having been
served beyond its period of validity. (Rule 126, Sec. 14, Rules
of Court). A search warrant shall be valid only for ten (10) days PART IV
from its date. Thereafter, it shall be void. (Rule 126, Sec.10,
Revised Rules of Court).
EVIDENCE
RULE 128: GENERAL PROVISIONS
(f) Suppose an unlicensed armalite was
found in plain view by the searchers and the warrant was (1998) The barangay captain reported to the police
ordered quashed, should the court order the return of the same that X was illegally keeping in his house in the barangay an
to the Chinese nationals? Explain your answer. (3%) Armalite M16 rifle. On the strength of that information, the
police conducted a search of the house of X and indeed
No, the court should not order the return of the found said rifle. The police raiders seized the rifle and
unlicensed armalite because it is contraband or illegal per se. brought X to the police station. During the investigation, he
(PDEA vs. Brodett, G.R. No. 196390, September 28, 2011). voluntarily signed a Sworn Statement that he was
The possession of an unlicensed armalite found in plain view possessing said rifle without license or authority to possess,
is mala prohibita. The same should be kept in custodial legis. and a Waiver of Right to Counsel. During the trial of X for
illegal possession of firearm, the prosecution submitted in
(1997) A was killed by B during a quarrel over a evidence the rifle. Sworn Statement and Waiver of Right to
hostess in a nightclub. Two days after the incident, and upon Counsel, individually rule on the admissibility in evidence of
complaint of the widow of A, the police arrested B without a the:
warrant of arrest and searched his house without a search
warrant. 1. Rifle; [2%]
2. Sworn Statement; and [2%1
Can the gun used by B in shooting A, which was 3. Waiver of Right to Counsel of X. [1%]
seized during the search of the house of B, be admitted in
evidence? 1. The rifle is not admissible in evidence because it was
seized without a proper search warrant. A warrantless
No. The gun seized during the search of the house
search is not justified. There was time to secure a search
of B without a search warrant is not admissible in evidence.
warrant. (People us. Encinada G.R. No. 116720, October 2.
(Secs. 2 and 3[2], Art. III of Constitution). Moreover, the
1997 and other cases)
search was not an incident to a lawful arrest of a person
under Sec. 12 of Rule 126.
2. The sworn statement is not admissible in evidence
because it was taken without informing him of his custodial
rights and without the assistance of counsel which should


be independent and competent and preferably of the choice
of the accused. (People us. Januario, 267 SCRA 608.) The RTC may motu proprio take judicial notice of the
3. The waiver of his right to counsel is not admissible street name of methamphetamine hydrochloride is shabu,
because it was made without the assistance of counsel of considering the chemical composition of shabu. (People v.
his choice. (People us. Gomez, 270 SCRA 433.) Macasling, GM, No. 90342, May 27, 1993)
(1997) What are the two kinds of objections? 2. Ordinances approved by municipalities under its Page | 55
Explain each briefly. Given an example of each. territorial jurisdiction;

Two kinds of objections are: (1) the evidence being In the absence of statutory authority, the RTC may not
presented is not relevant to the issue; and (2) the evidence take judicial notice of ordinances approved by municipalities
is incompetent or excluded by the law or the rules, (Sec. 3, under their territorial jurisdiction, except on appeal from the
Rule 138). An example of the first is when the prosecution municipal trial courts, which took judicial notice of the
offers as evidence the alleged offer of an Insurance ordinance in question. (U.S. v. Blanco, G.R, No. 12435,
company to pay for the damages suffered by the victim in November 9,1917; U.S. v. Hernandez, G.R. No. 9699,
a homicide case. (See 1997 No. 14). Examples of the August 26, 1915)
second are evidence obtained in violation of the
Constitutional prohibition against unreasonable searches 3. Foreign laws;
and seizures and confessions and admissions in violation
of the rights of a person under custodial Investigation. The RTC may not generally take judicial notice of
foreign laws (In re Estate of Johnson, G.R. No. 12767,
ALTERNATIVE ANSWERS: November 16, 1918; Fluemer v. Hix, G.R. No. 32636,
March 17, 1930), which must be proved like any other
1) Specific objections: Example: parol evidence and best matter of fact (Sy Joe Lieng v. Sy Quia, G.R. No. 4718,
evidence rule General Objections: March 19, 1910) except in a few instances, the court in the
Example: continuing objections (Sec. 37 of Rule exercise of its sound judicial discretion, may take notice of
132). foreign laws when Philippine courts are evidently familiar
2) The two kinds of objections are: (1) objection to a with them, such as the Spanish Civil Code, which had
question propounded in the course of the oral examination taken effect in the Philippines, and other allied legislation.
of the witness and (2) objection to an offer of evidence in (Pardo v. Republic, G.R. No. L- 2248 January 23, 1950;
writing. Objection to a question propounded in the course of Delgado v. Republic, G.R. No. L- 2546, January .28, 1950)
the oral examination of a witness shall be made as soon as
the grounds therefor shall become reasonably apparent 4. Rules and Regulations issued by quasi- judicial
otherwise, it is waived. An offer of objection in writing shall bodies implementingstatutes;
be made within three (3) days after notice of the offer, unless
a different period is allowed by the court. In both instances
The RTC may take judicial notice of Rules and
the grounds for objection must be specified. An example of
Regulations issued by quasi-judicial bodies implementing
the first is when the witness is being cross-examined and
statutes, because they are capable of unquestionable
the cross examination is on a matter not relevant. An
demonstration (Chattamal v. Collector of Customs, G.R.
example of the second is that the evidence offered is not the
No. 16347, November 3,1920), unless the law itself
best evidence.
considers such rules as an integral part of the statute, in
which case judicial notice becomes mandatory.
RULE 129: WHAT NEED NOT BE PROVED
(2005) Explain briefly whether the RTC may, motu

5. Rape may be committed even in public places.
proprio, take judicial notice of: (5%)
The RTC may take judicial notice of the fact that rape
may be committed even in public places. The "public
1. The street name of methamphetamine hydro-chloride
setting" of the rape is not an indication of consent. (People
is shabu.


v. Tongson, G.R. No. 91261, February 18, 1991) The v. Court of Appeals, 241 SCRA 192; Moran, Vol. 6. page 34, 1980
Supreme Court has taken judicial notice of the fact that a edition; Lim v. Collector of Customs, 36 Phil. 472). This is
man overcome by perversity and beastly passion chooses known as the PROCESSUAL PRESUMPTION.
neither the time, place, occasion nor victim. (People v,
Barcelona, G.R. No. 82589, October 31, 1990) RULE 130: RULES OF ADMISSIBILITY
(2004) Legislative facts and adjudicative facts. A. OBJECT (REAL) EVIDENCE Page | 56
Legislative facts refer to facts mentioned in a statute (2012) No.II.A. (a) Discuss the "chain of custody"
or in an explanatory note, while adjudicative facts are facts principle with respect to evidence seized under R.A. 9165 or
found in a court decision. the Comprehensive Dangerous Drugs Act of 2002. (5%)
(1997) In prosecutions involving narcotics and other illegal

a) Give three instances when a Philippine court can substances, the substance itself constitutes part of the corpus
take judicial notice of a foreign law. delicti of the offense and the fact of its existence is vital to
sustain a judgment of conviction beyond reasonable doubt. The
The three instances when a Philippine court can take chain of custody requirement is essential to ensure that
judicial notice of a foreign law are: (1) when the Philippine doubts regarding the identity of the evidence are removed
courts are evidently familiar with the foreign law (Moran. Vol. through the monitoring and tracking of the movements of the
5, p. 34, 1980 edition); (2) when the foreign law refers to the seized drugs from the accused, to the police, to the forensic
law of nations (Sec. 1 of Rule 129) and (3) when it refers chemist, and finally to the court. (People vs. Sitco, G.R. No.
to a published treatise, periodical or pamphlet on the subject 178202, May 14, 2010, Velasco, Jr. J.). Ergo, the existence of
of law if the court takes judicial notice of the fact that the writer the dangerous drug is a condition sine qua non for conviction.
thereof is recognized in his profession or calling as expert on (People vs. De Guzman Y Danzil, G.R. No. 186498, March
the subject (Sec. 46. Rule 130). 26, 2010 Nachura J.).
The failure to establish, through convincing proof,

b) How do you prove a written foreign law?
that the integrity of the seized items has been adequately
preserved through an unbroken chain of custody is enough to
A written foreign law may be evidenced by an official engender reasonable doubt on the guilt of an accused (People
publication thereof or by a copy attested by the officer having vs. De Guzman Y Danzil). Nonetheless, non-compliance with
the legal custody of the record, or by his deputy, and the procedure shall not render void and invalid the seizure and
accompanied. If the record is not kept in the Philippines, with custody of the drugs when:
a certificate that such officer has the custody, if the office in
which the record is kept is in a foreign country, the certificate (1) such non-compliance is attended by justifiable
may be made by a secretary of the embassy or legation, grounds; and
consul general, consul, vice-consul, or consular agent or by (2) the integrity and the evidentiary value of the
any officer in the foreign service of the Philippines stationed seized items are properly preserved by the apprehending team.
in the foreign country in which the record is kept, and There must be proof that these two (2) requirements were met
authenticated by the seal of his office(Sec. 24, Rule 132, before such non- compliance may be said to fall within the
Zalamea v. CA, 228 SCRA 23). scope of then proviso. (People vs. Dela Cruz, G.R. No. 177222,
October 29, 2008, 570 SCRA 273).
c) Suppose a foreign law was pleaded as part of the
defense of defendant but no evidence was presented
to prove the existence of said law, what is the ALTERNATIVE ANSWER:
presumption to be taken by the court as to the Crucial in proving chain of custody is the marking
wordings of said law"? of the seized drugs or other related items immediately after
they are seized from the accused. Marking after seizure is the
The presumption is that the wordings of the foreign starting point in the custodial link, thus, it is vital that the seized
law are the same as the local law. (Northwest Orient Airlines contraband are immediately marked because succeeding


handlers of the specimens will use the markings as reference. and object evidence. A private document may be offered and
Thus, non-compliance by the apprehending/buy-bust team with admitted in evidence both as documentary evidence and as
Sec.21 of R.A. 9165 is not fatal as long as there is justifiable object evidence. A document can also be considered as an
ground therefor, and as long as the integrity and the object for purposes of the case. Objects as evidence are
evidentiary value of the confiscated/seized items are properly those addressed to the senses of the court. (Sec. 1, Rule
preserved by the apprehending officer/team. (People vs. 130, Rules of Court) Documentary evidence consists of
Mantalaba, G.R. No. 186227, July 20, 2011). writings or any material containing letters, words, numbers, Page | 57
figures, symbols or other modes of written expressions,
(2009) No.I.[a] The Vallejo standard refers to offered ns proof of their contents. (Sec. 2, Rule 130, Rules of
jurisprudential norms considered by the court in assessing the Court) Hence, a private document may be presented as
probative value of DNA evidence. object evidence in order to 'establish certain physical
evidence or characteristics that are visible on the paper and
TRUE. In People vs. Vallejo, 382 SCRA 192 writings that comprise the document.
(2002), it was held that in assessing the probative value of DNA
evidence, courts should consider among other things, the 1. BEST EVIDENCE RULE
following data: how the samples were collected, how they
were handled, the possibility of contamination of the samples, (2009) No.XI. [d] An electronic evidence is the
whether the proper standards and procedures were followed in equivalent of an original document under the Best Evidence
conducting the tests and the qualification of the analyst who Rule if it is a printout or readable by sight or other means,
conducted tests. shown to reflect the data accurately.
(1994) At the trial of Ace for violation of the Dangerous TRUE. This statement is embodied in Sec. 1, Rule 4
Drugs Act, the prosecution offers in evidence a photocopy of of A.m. No. 01-7-01-SC, re: Rules on Electronic Evidence.
the marked P100.00 bills used in the “buy-bust” operation. Ace
objects to the introduction of the photocopy on the ground that (2003) State the rule on the admissibility of an
the Best Evidence Rule prohibits the introduction of secondary electronic evidence.
evidence in lieu of the original.
a) When is an electronic evidence regarded as being the
a) Is the photocopy real (object) evidence or equivalent of an original document under the Best
documentary evidence? Evidence Rule? 4%
The photocopy of the marked bills is real (object) Whenever a rule of evidence refers to the term
evidence not documentary evidence, because the marked writing, document, record, instrument, memorandum or any
bills are real evidence. other form of writing, such term shall be deemed to include
an electronic document as defined in these Rules. (Sec. 1 of
b) Is the photocopy admissible in evidence? Rule 3, Rules of Electronic Evidence effective August 1,
2001).
Yes, the photocopy is admissible in evidence, An electronic document is admissible in evidence if it
because the best evidence rule does not apply to object or complies with the rules on admissibility prescribed by the
real evidence. Rules of Court and related laws and is authenticated in the
manner prescribed by these Rules. (Sec. 2 of Rule 3, Id.).
The authenticity of any private electronic document must be
B. DOCUMENTARY EVIDENCE
proved by evidence that it had been digitally signed and other
appropriate security measures have been applied. (Sec. 2 of
(2005) May a private document be offered, and
Rule 5, Id.).
admitted in evidence both as documentary evidence and as
object evidence? Explain. An electronic document shall be regarded as the
equivalent of an original document under the Best Evidence
Yes, it can be considered as both documentary Rule if it is a printout or output readable by sight or other


means, shown to reflect the data accurately. (Sec. 1 of Rule Court, vol. VII. Part I, pp, 121,122)
4)
(d) An illegally obtained extrajudicial confession
(2000) If the photocopies of official receipts and
nullifies the intrinsic validity of the confession and renders
photocopies of affidavits were attached to the position paper
it unreliable as evidence of the truth. (Moran, vol. 5, p. 257)
submitted by plaintiff in an action for unlawful detainer filed with
it is the fruit of a poisonous tree. Page | 58
Municipal Trial Court on which basis the court rendered
judgment in favor of plaintiff? Explain. (2%)
(e) The reason for the rule against the admission of an
The claim of defendant is valid, because although offer of compromise in civil case as an admission of any
summary procedure requires merely the submission of position liability is that parties are encouraged to enter into
papers, the evidence submitted with the position paper must be compromises. Courts should endeavor to persuade the
admissible in evidence. (Sec. 9 of the Revised Rule on litigants in a civil case to agree upon some fair
Summary Procedure). Photocopies of official receipts and compromise. (Art. 2029, Civil Code). During pre-trial,
affidavits are not admissible without proof of loss of the courts should direct the parties to consider the possibility
originals. (Sec. 3 of Rule 130) of an amicable settlement. (Sec. 1[a] of former Rule 20:
Sec. 2 [a] of new Rule 16).
(1997) Give the reasons underlying the adoption of
the following rules of evidence: 2. SECONDARY EVIDENCE
(1997) When A loaned a sum of money to B. A typed a

(a) Dead Man Rule
single copy of the promissory note, which they both signed A
(b) Parol Evidence Rule
made two photo (xeroxed) copies of the promissory note, giving
(c) Best Evidence Rule
one copy to B and retaining the other copy. A entrusted the
(d) The rule against the admission of illegally obtained
typewritten copy to his counsel for safekeeping. The copy with
extrajudicial confession
A's counsel was destroyed when the law office was burned.
(e) The rule against the admission of an offer of
compromise in civil cases
a) In an action to collect on the promissory note, which
is deemed to be the "original" copy for the purpose of
The reasons behind the following rules are as
the "Best Evidence Rule"?
follows:
The copy that was signed and lost is the only

(a) DEAD MAN RULE: if death has closed the lips of one "original" copy for purposes of the Best Evidence Rule. (Sec.
party, the policy of the law is to close the lips of the other.
4 [b] of Rule 130).
(Goni v. Court ofAppeals, L-77434. September 23, 1986,
144 SCRA 222). This is to prevent the temptation to perjury
because death has already sealed the lips of the party.
b) Can the photocopies in the hands of the parties be
considered "duplicate original copies"?
(b) PAROL EVIDENCE RULE: It is designed to give No, They are not duplicate original copies
certainty to a transaction which has been reduced to writing,
because there are photocopies which were not signed
because written evidence is much more certain and
(Mahilum v. Court of Appeals, 17 SCRA 482). They
accurate than that which rests on fleeting memory only.
constitute secondary evidence. (Sec. 5 of Rule 130).
(Francisco, Rules of Court Vol. VII, Part I. p. 154)
c) As counsel for A, how will you prove the loan given
(c) BEST EVIDENCE RULE: This Rule is adopted for to A and B?
the prevention of fraud and is declared to be essential to
the pure administration of justice. (Moran, Vol. 5, p. 12.) If The loan given by A to B may be proved by
a party is in possession of such evidence and withholds it, secondary evidence through the photocopies of the
the presumption naturally arises that the better evidence is promissory note. The rules provide that when the original
withheld for fraudulent purposes. (Francisco. Rules of


document is lost or destroyed, or cannot be produced in of the witness refers to a witness whose testimony is
court, the offerer, upon proof of its execution or existence and believable.
the cause of its unavailability without bad faith on his part,
may prove its contents by a copy, or by a recital of its (1998) C is the child of the spouses H and W. H
contents in some authentic document, or by the testimony sued his wife W for judicial declaration of nullity of marriage
of witnesses in the order stated. (Sec. 5 of Rule 130). under Article 36 of the Family Code. In the trial, the following
Page | 59
testified over the objection of W: C, H and D, a doctor of
3. PAROL EVIDENCE RULE medicine who used to treat W. Rule on W's objections which
are the following:
[2014] XXVI. Parole evidence is an: (1%)
1. H cannot testify against her because of the rule on
(A) agreement not included in the document marital privilege; [1%]
(B) oral agreement not included in the document 2. C cannot testify against her because of the doctrine on
(C) agreement included in the document parental privilege; and [2%]
(D) oral agreement included in the document 3. D cannot testify against her because of the doctrine of
privileged communication between patient and physician.
(A) Note: It is suggested that either A or B be [2%]
considered as correct. Strictly speaking parol evidence does
not have to be an agreement; it is simply any evidence, whether 1. The rule of marital privilege cannot be invoked in the
written or oral, which is not contained in a written agreement annulment case under Rule 36 of the Family Code
subject of a case and which seeks to modify, alter, or explain because it is a civil case filed by one against the other,
the terms of the written agreement. (Sec. 22, Rule 130. Rules of Court.)
4. INTERPRETATION OF DOCUMENTS
2. The doctrine of parental privilege cannot likewise be
invoked by W as against the testimony of C, their child. C
C. TESTIMONIAL EVIDENCE
may not be compelled to testify but is free to testify against
her. (Sec. 25. Rule 130. Rules of Court; Art. 215, Family
1. QUALIFICATION OF WITNESS
Code.)
(2007) No.II. (a) The surviving parties rule bars

Maria from testifying for the claimant as to what the deceased 3. D, as a doctor who used to treat W, is disqualified to
Jose had said to her, in a claim filed by Pedro against the estate testify against W over her objection as to any advice or
of Jose. (3%) treatment given by him or any information which he may
have acquired in his professional capacity. (Sec. 24 [c],
Rule 130. Rules of Court.)
False. The said rule bars only parties- plaintiff and
their assignors, or persons prosecuting a claim against the
estate of a deceased; it does not cover Maria who is a mere ALTERNATIVE ANSWER:
witness. Furthermore, the disqualification is in respect of any
If the doctor's testimony is pursuant to the
matter of fact occurring before the death of said deceased
requirement of establishing the psychological incapacity of
(Sec. 23, Rule 130, Rules of Court, Razon v. Intermediate
W, and he is the expert called upon to testify for the
Appellate Court, 207 SCRA 234 [1992]). It is Pedro who filed
purpose, then it should be allowed. (Republic vs. Court of
the claim against the estate of Jose.
Appeals and Molina, 26S SCRA 198.)
(2004) Distinguish Competency of the witness and

credibility of the witness. 3. ADMISSIONS AND CONFESSIONS
Competency of the witness refers to a witness who (2009) No.I.D. Under the doctrine of adoptive
can perceive, and perceiving, can make known his admission, a third party’s statement becomes the admission
perception to others (Sec. 20 of Rule 130), while credibility of the party embracing or espousing it.


TRUE. The effect or consequence of the admission Recantation? [2%]
will bind also the party who adopted or espoused the same,
as applied in Estrada vs. Desierto, 356 SCRA 108 [2001]\. An Yes. The accused can testify by repeating his
adoptive admission is a party‟s reaction to a statement or earlier uncounseled extrajudicial confession, because he
action by another person when it is reasonable to treat the can be subjected to cross-examination. On the probative
party‟s reaction as an admission of something stated or implied value of an affidavit of recantation, courts look with
Page | 60
by the other person. disfavor upon recantations because they can easily be
secured from witnesses, usually through intimidation or
(2006) What are the requirements in order that an for a monetary consideration, Recanted testimony is
admission of guilt of an accused during a custodial exceedingly unreliable. There is always the probability
investigation be admitted in evidence? that it will be repudiated. (Molina vs. People. 259 SCRA
138.)
1. The admission must be voluntary.
2. The admission must be in writing.
3. The admission must be made with the assistance of 5. TESTIMONIAL KNOWLEDGE
competent, independent counsel.
4. The admission must be express (People v. Prinsipe, [2014] XIX. A vicarious admission is considered an
G.R. No. 135862, May 2, 2002). exception to the hearsay rule. It, however, does not cover: (1%)
5. In case the accused waives his rights to silence and
to counsel, such waiver must be in writing, executed (A) admission by a conspirator
with the assistance of competent, independent (B) admission by a privy
counsel. (C) judicial admission
(D) adoptive admission
(1998) A was accused of having raped X. Rule on
the admissibility of the following pieces of evidence: (C) Note: a vicarious admission is an extrajudicial
admission. Hence C is not covered by the rule regarding
1. an offer of A to marry X; and (3%] vicarious admissions.
2. a pair of short pants allegedly left by A at the crime
which the court, over the objection of A, required him
to put on, and when he did, it fit him well. [2%] (2007) No.III. (a) What is the hearsay rule? (5%)
1. A's offer to marry X is admissible in evidence as an The hearsay rule is a rule of evidence to the effect
Implied admission of guilt because rape cases are not that a witness can testify only to those facts which he knows of
allowed to be compromised. (Sec. 27 of Rule 13O; People his own knowledge or derived from his own perceptions,
vs. Domingo, 226 SCRA 156.) except as otherwise provided in the rules of court (Rule 130,
Sec. 36 Rules of Court).
2. The pair of short pants, which fit the accused well,
is circumstantial evidence of his guilt, although standing (b) In relation to the hearsay rule, what do
alone it cannot be the basis of conviction. The accused the following rules of evidence have in common? (5%)
cannot object to the court requiring him to put the short
pants on. It is not part of his right against self-incrimination (1) The rule on statements that are part of
because it is a mere physical act. the res gestae.
(2) The rule on dying declarations.
(1998) If the accused on the witness stand repeats (3) The rule on admissions against interest.
his earlier uncounseled extrajudicial confession implicating
his co-accused in the crime charged, is that testimony The rules on the evidence specified in the question
admissible in evidence against the latter? [3%] asked, have in common the following:
1. What is the probative value of a witness' Affidavit of (1) The evidence although hearsay, are


allowed by the Rules as exceptions to the hearsay rule; writing, but since he was a in a critical condition, his brother
and the policeman signed the statement. Is the statement
(2) The facts involved areadmissible in admissible as a dying declaration? Explain. (2%)
evidence for reasons of necessity and trustworthiness; and
Yes. The statement is admissible as a dying
(3) The witness is testifying on facts which declaration if the victim subsequently died and his answers
are not of his own knowledge or derived from his own
Page | 61
were made under the consciousness of impending death
perception. (Sec. 37 of Rule 130). The fact that he did not sign the
statement point to the accused as his assailant, because
(2004) Hearsay evidence and opinion evidence. he was in critical condition, does not affect its admissibility
as a dying declaration. A dying declaration need not be in
Hearsay evidence consists of testimony that is not writing (People v. Viovicente, 286 SCRA 1)
based on personal knowledge of the person testifying,
(see Sec. 36, Rule 130), while opinion evidence is expert (1998) Requisites of Dying Declaration. [2%)
evidence based on the personal knowledge skill,
experience or training of the person testifying (Sec. 49, Id.) The requisites for the admissibility of a dying
and evidence of an ordinary witness on limited matters declaration are: (a) the declaration is made by the deceased
(Sec. 50, Id.). under the consciousness of his impending death; (b) the
deceased was at the time competent as a witness; (c) the
6. EXCEPTIONS TO THE HEARSAY RULE declaration concerns the cause and surrounding
circumstances of the declarant's death; and (d) the
(1999) Define hearsay evidence? (2%) declaration is offered in a (criminal) case wherein the
declarant's death is the subject of inquiry. (People vs.
Hearsay evidence may be defined as evidence Santos, 270 SCRA 650.)
that consists of testimony not coming from personal
knowledge (Sec. 36, Rule 130, Rules of Court). Hearsay ALTERNATIVE ANSWER:
testimony is the testimony of a witness as to what he has
heard other persons say about the facts in issue. The declaration of a dying person, made under the
consciousness of an impending death, may be received in
What are the exceptions to the hearsay rule? (2%) any case wherein his death is the subject of Inquiry, as
evidence of the cause and surrounding circumstances of
The exceptions to the hearsay rule are: dying such death. (Sec. 37 of Rule 13O.)
declaration, declaration against interest, act or declaration
about pedigree, family reputation or tradition regarding
pedigree, common reputation, part of the res gestae, entries FAMILY REPUTATION OR TRADITION REGARDING
in the course of business, entries in official records, PEDIGREE
commercial lists and the like, learned treatises, and
testimony or deposition at a former proceeding. (37 to 47, (2000) Linda and spouses Arnulfo and Regina
Rule 13O, Rules of Court) Ceres were co-owners of a parcel of land. Linda died
intestate and without any issue. Ten (10) persons headed
DYING DECLRATION by Jocelyn, claiming to be the collateral relatives of the
deceased Linda, filed an action for partition with the RTC
(1999) The accused was charged with robbery and praying for the segregation of Linda’s ½ share, submitting
homicide. The victim suffered several stab wounds. It in support of their petition the baptismal certificates of
appears that eleven (11) hours after the crime, while the seven of the petitioners, a family bible belonging to Linda
victim was being brought to the hospital in a jeep, with his in which the names of the petitioners have been entered,
brother and a policeman as companions, the victim was a photocopy of the birth certificate of Jocelyn, and a
asked certain questions which he answered, pointing to the certification of the local civil registrar that its office had
accused as his assailant. His answers were put down in been completely razed by fire. The spouses Ceres refused
to partition on the following grounds:


(Sec. 1 of Rule 131), while burden of evidence is the duty of
1) the baptismal certificates of the parish priest a party to go forward with the evidence to overthrow prima
are evidence only of the administration of the sacrament facie evidence established against him. (Bautista v.
of baptism and they do not prove filiation of the alleged Sarmiento, 138 SCRA 587 [1985]).
collateral relatives of the deceased;
2) entry in the family bible is hearsay; RULE 132: PRESENTATION OF EVIDENCE
3) the certification of the registrar on non- Page | 62
availability of the records of birth does not prove filiation: (2009) No.1.[b] The One-Day Examination of
4) in partition cases where filiation to the witness Rule abbreviates court proceedings by having a
deceased is in dispute, prior and separate judicial witness fully examined in only one day during trial.
declaration of heirship in a settlement of estate
proceedings is necessary; and TRUE. Par. 5(i) of Supreme Court A.M. No. 03-1-
5) there is need for publication as real property 09-SC requires that a witness has to be fully examined in one
is involved. (1) day only. This rule shall be strictly adhered to subject to
the court‟s discretion during trial on whether or not to extend
As counsel for Jocelyn and her co-petitioners, the direct and/or cross-examination for justifiable reasons. On
argue against the objections of the spouses Ceres so as the last hearing day allotted for each party, he is required to
to convince the court to allow the partition. Discuss each make his formal offer of evidence after the presentation of his
of the five (5) arguments briefly but completely. (10%) last witness and the opposing party is required to immediately
interpose his objection thereto. Thereafter, the judge shall
(1) The baptismal certificate can show filiation or prove make the ruling on the offer of evidence in open court.
pedigree. It is one of the other means allowed under the However, the judge has the discretion to allow the offer of
Rules of Court and special laws to show pedigree. (Trinidad evidence in writing in conformity with Section 35, Rule 132.
v. Court of Appeals, 289 SCRA 188 [1998]; Heirs of ILgnacio
Conti v. Court of Appeals, 300 SCRA 345 [1998]). ALTERNATIVE ANSWER:
(2) Entries in the family bible may be received as evidence FALSE. This rule is not absolute: it will still allow the
of pedigree. (Sec. 40, Rule 130, Rules of Court). trial judge the discretion whether to extend the direct and/or
(3) The certification by the civil registrar of the non- cross examination for justifiable reasons or not. The exercise
availability of records is needed to justify the presentation of of this discretion may still result in wrangling as to the proper
secondary evidence, which is the photocopy of the birth exercise of the trial court‟s discretion, which can delay the
certificate of Jocelyn. (Heirs of Ignacio Conti v. Court of proceedings.
Appeals, supra.)
(4) Declaration of heirship in a settlement proceeding is A. EXAMINATION OF WITNESSES
not necessary. It can be made in the ordinary action for
partition wherein the heirs are exercising the right pertaining (2005) When may the trial court order that the
to the decedent, their predecessor-in- interest, to ask for testimony of a child be taken by live-link television?
partition as co-owners (Id.) Explain.
(5) Even if real property is involved, no publication is
necessary, because what is sought is the mere segregation The testimony of a child may be taken by live-link
of Linda’s share in the property. (Sec. 1 of Rule 69; Id.) television if there is a substantial likelihood that the child
would suffer trauma from testifying in the presence of the
Rule 131: BURDEN OF PROOF AND PRESUMPTIONS accused, his counsel or the prosecutor as the case may
be. The trauma must of a kind which would impair the
(2004) Distinguish Burden of proof and burden of completeness or truthfulness of the testimony of the child.
evidence. (See Sec. 25, Rule on Examination of a Child Witness).
Burden of proof is the duty of a party to present (2002) Is this question on direct examination
evidence on the facts in issue necessary to establish his objectionable: “What happened on July 12, 1999”? Why?
claim or defense by the amount of evidence required by law. (2%)


The question is objectionable because it has no (2012) No.VII. (a) Counsel A objected to a
basis, unless before the question is asked the proper basis question posed by opposing Counsel B on the grounds that
is laid. it was hearsay and it assumed a fact not yet established.
The judge banged his gavel and ruled by saying "Objection
(1997) Sustained". Can Counsel ask for a reconsideration of the
ruling? Why? (5%)
Page | 63
a) Aside from asking a witness to explain and
supplement his answer in the cross-examination, can
Yes, Counsel B may ask the Judge to specify
the proponent ask in re-direct examination questions
the ground‟s relied upon for sustaining the objection
on matters not dealt with during cross- examination?
and thereafter move its reconsideration thereof. (Rule 132,
b) Aside from asking the witness on matters stated in
Sec.38, Rules of Court).
his re-direct examination, can the opponent in his re-
cross-examination ask questions on matters not (1994) What is the difference between an offer of
dealt with during the re-direct? testimonial evidence and an offer of documentary evidence?
c) After plaintiff has formally submitted his evidence, he
realized that he had forgotten to present what he An offer of testimonial evidence is made at the time the
considered an important evidence. Can he recall a witness is called to testify, while an offer of documentary
witness? evidence is made after the presentation of a party’s
testimonial evidence. (Sec. 35, Rule 132).
(a) Yes, on redirect examination, questions on matters not
dealt with during the cross-examination may be allowed by (2003) X and Y were charged with murder. Upon
the court in its discretion. (Sec. 7 of Rule 132). application of the prosecution, Y was discharged from the
Information to be utilized as a state witness. The prosecutor
presented Y as witness but forgot to state the purpose of his
(b) Yes, the opponent in his re-cross-examination may
also ask questions on such other matters as may be testimony much less offer it in evidence. Y testified that he
and X conspired to kill the victim but it was X who actually
allowed by the court in its discretion. (Sec. 8. Rule 132).
shot the victim. The testimony of Y was the only material
evidence establishing the guilt of X. Y was thoroughly cross-
(c) Yes, after formally submitting his evidence, the examined by the defense counsel. After the prosecution
plaintiff can recall a witness with leave of court. The court rested its case, the defense filed a motion for demurrer to
may grant or withhold leave in its discretion as the interests evidence based on the following grounds.
of justice may require. (Sec. 9. Rule 132).
(a) The testimony of Y should be excluded
(1996) X states on direct examination that he once because its purpose was not initially stated and it was not
knew the facts being asked but he cannot recall them now. formally offered in evidence as required by Section 34,
When handed a written record of the facts he testifies that the Rule 132 of the Revised Rules of Evidence; and
facts are correctly stated, but that he has never seen the writing (b) Y’s testimony is not admissible against X
before. Is the writing admissible as past recollection recorded? pursuant to the rule on “res inter alios acta”.
Explain.
Rule on the motion for demurrer to evidence on the
No, because for the written record to be admissible above grounds. (6%)
as past recollection recorded. It must have been written or
recorded by X or under his direction at the time when the fact The demurrer to the evidence should be denied
occurred, or immediately thereafter, or at any other time when because:
the fact was fresh in his memory and he knew that the same
was correctly written or recorded. (Sec. 16 of Rule 132) But in a) The testimony of Y should not be excluded because
this case X has never seen the writing before. the defense counsel did not object to his testimony
despite the fact that the prosecutor forgot to state its
C. OFFER AND OBJECTION purpose or offer it in evidence. Moreover, the


defense counsel thoroughly cross- examined Y and (b) Documentary evidence
thus waived the objection. (c) Object evidence
b) The res inter alios acta rule does not apply because
Y testified in open court and was subjected to cross (a) Testimonial evidence is formally offered at the time
examination. the witness is called to testify. (Rule 132. Sec. 35, first par.).
(b) Documentary evidence is formally offered after the Page | 64
(1997) What are the two kinds of objections? presentation of the testimonial evidence. (Rule 132, Sec.
Explain each briefly. Given an example of each. 35, second par.).
(c) The same is true with object evidence. It is also
Two kinds of objections are: (1) the evidence offered after the presentation of the testimonial evidence.
being presented is not relevant to the issue; and (2) the
evidence is incompetent or excluded by the law or the RULE 133: WEIGHT AND SUFFICIENCY OF EVIDENCE
rules, (Sec. 3, Rule 128). An example of the first is when
the prosecution offers as evidence the alleged offer of an (2003) Distinguish preponderance of evidence from
Insurance company to pay for the damages suffered by the substantial evidence.
victim in a homicide case. (See 1997 No. 14). Examples of
the second are evidence obtained in violation of the PREPONDERANCE OF EVIDENCE means that the
Constitutional prohibition against unreasonable searches evidence as a whole adduced by one side is superior to that
and seizures and confessions and admissions in violation of the other. This is applicable in civil cases. (Sec. 1 of Rule
of the rights of a person under custodial Investigation. 133; Municipality of Moncada v. Cajuigan, 21 Phil, 184
[1912]).
ALTERNATIVE ANSWERS:
SUBSTANTIAL EVIDENCE is that amount of relevant
evidence which a reasonable mind might accept as
Specific objections: Example: parol evidence and best
adequate to justify a conclusion. This is applicable in case
evidence rule
filed before administrative or quasi- judicial bodies. (Sec. 5
General Objections: Example: continuing
of Rule 133)
objections (Sec. 37 of Rule 132).
SPECIAL LAWS/RULES
The two kinds of objections are: (1) objection to a
question propounded in the course of the oral examination of (2013) No.VI. While leisurely walking along the
the witness and (2) objection to an offer of evidence in writing. street near her house in Marikina, Patty unknowingly stepped
Objection to a question propounded in the course of the oral on a garden tool left behind by CCC, a construction company
examination of a witness shall be made as soon as the based in Makati. She lost her balance as a consequence and
grounds therefor shall become reasonably apparent fell into an open manhole. Fortunately, Patty suffered no major
otherwise, it is waived. An offer of objection in writing shall be injuries except for contusions, bruises and scratches that did
made within three (3) days after notice of the offer, unless a not require any hospitalization. However, she lost self-esteem,
different period is allowed by the court. In both instances the suffered embarrassment and ridicule, and had bouts of anxiety
grounds for objection must be specified. An example of the first and bad dreams about the accident. She wants vindication for
is when the witness is being cross-examined and the cross her uncalled for experience and hires you to act as counsel for
examination is on a matter not relevant. An example of the her and to do whatever is necessary to recover at least
second is that the evidence offered is not the best evidence. Php100,000 for what she suffered.
(1997) A trial court cannot take into consideration in What action or actions may Patty pursue, against
deciding a case an evidence that has not been "formally whom, where (court and venue), and under what legal basis?
offered". When are the following pieces of evidence formally (7%)
offered?
Patty may avail any ofthe following remedies:
(a) Testimonial evidence


a) She may file a complaint for damages arising the parties to the Philippine Mediation Center (PMC)
from fault or negligence under the Rules on Small Claims for the mediation of their dispute by trained and accredited
against CCC Company before the MTC of Marikina City where mediators. If CAM fails, the JDR is undertaken by the JDR
she resides or Makati City where the defendant corporation is judge, acting as a mediator-conciliator-early neutral
holding office, at her option (A.M. No. 8- 8-7-SC in relation to evaluator. The third case is during appeal, where covered
Section 2, Rule 4, Rules of Court). cases are referred to ACM.
Page | 65
b) She may also file an actionto recover moral PRECAUTIONARY PRINCPLE
damages based on quasi-delict under Article 2176 of the New
Civil Code. The law states that, whoever by act or omission (2012) No.II.B. What do you understand about the
causes damage to another, there being fault or negligence is "precautionary principle" under the Rules of Procedure for
obliged to pay for the damage done. Such fault or negligence, Environmental Cases? (5%)
if there is no pre-existing contractual relation between the
parties, is called a quasi-delict. Precautionary principles states that when human
activities may lead to threats of serious and irreversible
Under Article 2217 of the New Civil Code, moral damage to the environment that is scientifically plausible
damages include physical suffering, mental anguish, fright, but uncertain, actions shall be taken to avoid or diminish that
serious anxiety, besmirched reputation, wounded feelings, threat. In its essence, the precautionary principle calls for the
moral shock, social humiliation, and similar injury. Though exercise of caution in the face of risk and uncertainty (Sec. 4
incapable of pecuniary computation, moral damages may be [f], Rule 1, Part 1, and Rule 20, A.M. No. 09-6-8-SC, Rules
recovered if they are the proximate result of the defendant‟s of Procedure for Environment Cases).
wrongful act or omission.
HABEAS DATA
Since moral damages are incapable of pecuniary
estimation, Patty should file the action before the Regional Trial (2009) No.XIX.C. What is the writ of habeas data?
Court of Marikina City where she resides or Makati City, where
the defendant corporation is holding office, at her option A writ of habeas data is a remedy available to
(Section 19(1), B.P. 129). any persons whose right to privacy in life, liberty, or security
is violated or threatened with violation by unlawful act or
c) Patty can also file acivil action for damages omission of a public official or employee, or of a private
against the City of Marikina for maintaining an open manhole individual or entity engaged in the gathering, collecting, or
where she unfortunately fell. Under article 2189 of the Civil storing of data or information regarding the person, family,
Code, provinces, cities, and municipalities shall be liable for
home and correspondence of the aggrieved party.
damages for the death of, or injuries suffered by, any person
by reason of the defective condition of roads, streets, bridges,
WRIT OF AMPARO
public buildings, and other public works under their control or
supervision. The proper court having jurisdiction over the case
(2009) No.XIX.B. What is the writ of amparo? How
is at least Php 100,000 for as long as the aggregate of the
is it distinguished from the writ of habeas corpus?
claims for damages does not exceed Php 400,000.
A writ of amparo is a remedy available to any person

ALTERNATIVE DISPUTE RESOLUTION
whose right to life, liberty, and security is violated or
threatened with violation by an unlawful act or omission of a
(2012) No.VIII.B. Discuss the three (3) Stages of
public official or employee, or of a private individual or entity.
Court Diversion in connection with Alternative Dispute
The writ shall cover extralegal killings and enforced
Resolution. (5%)
disappearances or threats thereof.
The three stages of diversion are Court- Annexed Whereas a writ of habeas corpus is a remedy
Mediation (CAM), Judicial Dispute Resolution, and available to any individual who is deprived of liberty or whose
Appeals Court Mediation (ACM). During CAM, the judge refers


rightful custody of any person is withheld, by unlawful (A) Under A.M. No. 03-1-09-SC or the “2004
confinement or detention. Guidelines of Pre-trial and Use of Deposition-Discovery
Measures,” in civil cases where no amicable settlement was
A writ of amparo may be appealed to the Supreme reached by the parties, the trial judge is directed to determine
Court under Rule 45 raising questions of fact or law or both. the most important witnesses and limit the number of such
The appeal shall be made within 5 working days from the date witnesses to be heard. The court shall also require the parties
of notice of the adverse judgment. The period for appeal for Page | 66
and/or counsels to submit the names, addresses and contact
habeas corpus shall be 48hours from the notice of the numbers of the witnesses to be summoned by subpoena. The
judgment appealed from. facts to be proven by each witness and the approximate
number of hours per witness shall also be fixed by the trial
judge (Section (1)(A) (5) (i) of A.M. No. 03-01-09-SC or the
JUDICUAL AFIDAVIT “2004 Guidelines of Pre-trial and Use of Deposition-Discovery
Measures”, July 13, 2004).
[2016] III. What are the contents of a judicial
affidavit? (5%) (B) The rule requires that a witness has to be fully
examined in one (1) day only. This rule shall be strictly adhered
A judicial affidavit shall be prepared in the language to subject to the courts’ discretion during trial on whether or not
known to the witness and, if not in English or Filipino, to extend the direct and/ or cross-examination for justifiable
accompanied by a translation in English or Filipino, and shall reasons. On the last hearing day allotted for each party, he is
contain the following: (a) The name, age, residence or business required to make his formal offer of evidence after the
address, and occupation of the witness; (b) The name and presentation of his last witness and the opposing party is
address of the lawyer who conducts or supervises the required to immediately interpose his objection thereto.
examination of the witness and the place where the Thereafter, the judge shall make the ruling on the offer of
examination is being held; (c) A statement that the witness is evidence in open court, but the judge has the discretion to allow
answering the questions asked of him, fully conscious that he the offer of evidence in writing in conformity with Section 35,
does so under oath, and that he may face criminal liability for Rule 132 (Section (1)(A)(5)(i) of A.M. No. 03-01-09-SC or the
false testimony or perjury; (d) Questions asked of the witness “2004 Guidelines of Pre-trial and Use of Deposition-Discovery
and his corresponding answers, consecutively numbered, that: Measures”, July 13, 2004).
(1) Show the circumstances under which the witness acquired
the facts upon which he testifies; (2) Elicit from him those facts RULE 141: LEGAL FEES
which are relevant to the issues that the case presents; and (3)
Identify the attached documentary and object evidence and [2016] VII Spouses Marlon and Edith have three (3)
establish their authenticity in accordance with the Rules of children ages 15, 12 and 7, who are studying at public schools.
Court; (e) The signature of the witness over his printed name; They have a combined gross monthly income of P30,000.00
and (f) A jurat with the signature of the notary public who and they stay in an apartment in Manila with a monthly rent of
administers the oath or an officer who is authorized by law to P5,000.00. The monthly minimum wage per employee in Metro
administer the same (Section 3, A.M. No. 12-8-8 SC, Judicial Manila does not exceed P13,000.00. They do not own any real
Affidavit Rule). property. The spouses want to collect a loan of P25,000.00
from Jojo but do not have the money to pay the filing fees.
2004 GUIDELINES OF PRE-TRIAL AND USE OF [a] Would the spouses qualify as indigent litigants under
DEPOSITION-DISCOVERY MEASURES Section 19, Rule 141 on Legal Fees? (2.5%)
[b] If the spouses do not qualify under Rule 141, what other
[2016] V [a] What is the "most important witness" remedy can they avail of under the rules to exempt them from
rule pursuant to the 2004 Guidelines of Pretrial and Use of paying the filing fees? (2.5%)
Deposition - Discovery Measures? Explain. (2.5%)
(A) No. Spouses Marlon and Edith would not qualify as indigent
[b] What is the "one day examination of witness" rule pursuant litigants. Under Section 19 of Rule 141, Indigent litigants
to the said 2004 Guidelines? Explain. (2.5%) include those (a) whose gross income and that of their
immediate family do not exceed an amount double the monthly


minimum wage of an employee; and (b) who do not own real Aid Offices in the Local Chapters of the Integrated Bar of the
property with a fair market value as stated in the current tax Philippines.
declaration of more than three hundred thousand
(P300,000.00) pesos, shall be exempt from payment of legal WRIT OF CONTINUING MANDAMUS
fees (Section 19 of Rule 141, Administrative Matter No. 04-2-
04-SC, August 16, 2004; Algura v. Local Government Unit of [2016] Hannibal, Donna, Florence and Joel,
the City of Naga, G.R. No. 150135, October 30, 2006). Here, Page | 67
concerned residents of Laguna de Bay, filed a complaint for
the spouses combined gross monthly income of P30,000.00 mandamus against the Laguna Lake Development Authority,
exceeds the limit provided by Section 19, Rule 141; the Department of Environment and Natural Resources, the
accordingly, the spouses do not qualify as indigent litigants. Department of Public Work and Highways, Department of
Interior and Local Government, Department of Agriculture,
(B) The spouses can avail the following remedies under the Department of Budget, and Philippine National Police before
rules in order to be exempted from the payment of the filing the R TC of Laguna alleging that the continued neglect of
fees: defendants in performing their duties has resulted in serious
deterioration of the water quality of the lake and the
1. If the applicant for exemption meets the salary and degradation of the marine life in the lake. The plaintiffs prayed
property requirements under Section 19 of Rule 141, then the that said government agencies be ordered to clean up Laguna
grant of the application is mandatory. On the other hand, when de Bay and restore its water quality to Class C waters as
the application does not satisfy one or both requirements, then prescribed by Presidential Decree No. 1152, otherwise known
the application should not be denied outright; instead, the court as the Philippine Environment Code. Defendants raise the
should apply the “indigency test” under Section 21 of Rule 3 defense that the cleanup of the lake is not a ministerial function
and use its sound discretion in determining the merits of the and they cannot be compelled by mandamus to perform the
prayer for exemption (Algura v. Local Government Unit of the same. The RTC of Laguna rendered a decision declaring that
City of Naga, G.R. No. 150135, October 30, 2006). Hence, the it is the duty of the agencies to clean up Laguna de Bay and
spouses may be authorized to litigate as indigents if the court, issued a permanent writ of mandamus ordering said agencies
upon an ex parte application and hearing, is satisfied that they to perform their duties prescribed by law relating to the cleanup
do not have money or property sufficient and available for food, of Laguna de Bay.
shelter, and basic necessities for themselves and their family
(Rule 3, Sec. 21, Rules of Court; Re: Query of Mr. Roger [a] Is the RTC correct in issuing the writ of mandamus? Explain.
Prioreschi, A.M. No. 09-6-9-SC, August 19, 2009). (2.5%)
[b] What is the writ of continuing mandamus? (2.5%)

2. The Spouses can also file a motion to sue as
indigent under the Rules of Procedure on Small Claims. The
Motion shall be referred to the Executive Judge for immediate (A) Yes, the RTC is correct in issuing the writ of
action in case of multi-sala courts. If the motion is granted by mandamus. Generally, the writ of mandamus lies to require the
the Executive Judge, the case shall be raffled off or assigned execution of a ministerial duty. While the implementation of the
to the court designated to hear small claims cases. If the motion Government agencies mandated tasks may entail a decision-
is denied, the plaintiff shall be given five (5) days within which making process, the enforcement of the law or the very act of
to pay the docket fees, otherwise, the case shall be dismissed doing what the law exacts to be done is ministerial in nature
without prejudice. In no case shall a party, even if declared an and may be compelled by mandamus.
indigent, be exempt from the payment of the P1,000.00 fee for
service of summons and processes (Section 10, A.M. No. 08- Here, the duty to clean up Laguna lake and restore
8-7-SC, 2016 Rules of Procedure for Small Claims Cases). its water quality to Class C is required not only by Presidential
Decree No. 1152, otherwise known as the Philippine
Environment Code, but also in its charter. It is, thus, ministerial
3. The spouses may also claim exemption from
in nature and can be compelled by mandamus.
payment of legal fees by seeking the help of the Integrated Bar
of the Philippines pursuant to A.M. No. 08-11-7-SC (IRR), Rule
Accordingly, the RTC may issue a writ of continuing
on the Exemption from the Payment of Legal Fees of the
mandamus directing any agency or instrumentality of the
Clients of the National Committee on Legal Aid and of the Legal


government or officer thereof to perform an act or series of acts requested to explain the advantages derived from a petition for
decreed by final judgment which shall remain effective until the writ of kalikasan before the Supreme Court over a complaint for
judgment is fully satisfied (Metropolitan Manila Development damages before the RTC of Marinduque or vice-versa. What
Authority v. Concerned Residents of Manila Bay, G.R. Nos. action will you recommend? Explain. (5%)
171947-48, December 18, 2008).
As a lawyer for the organization, I would
Page | 68
(B) A writ of continuing mandamus is a writ issued recommend the filing of a petition for issuance of a Writ of
when any agency or instrumentality of the government or Kalikasan. The Writ of Kalikasan is a remedy available to a
officer thereof unlawfully neglects the performance of an act natural or juridical person, entity authorized by law, people’s
which the law specifically enjoins as a duty resulting from an organization, non-governmental organization, or any public
office, trust or station in connection with the enforcement or interest group accredited by or registered with any government
violation of an environmental law rule or regulation or a right agency, on behalf of persons whose constitutional right to a
therein, or unlawfully excludes another from the use or balanced and healthful ecology is violated, or threatened with
enjoyment of such right and there is no other plain, speedy and violation by an unlawful act or omission of a public official or
adequate remedy in the ordinary course of law, the person employee, or private individual or entity, involving
aggrieved thereby may file a verified petition in the proper environmental damage of such magnitude as to prejudice the
court, alleging the facts with certainty, attaching thereto life, health or property of inhabitants in two or more cities or
supporting evidence, specifying that the petition concerns an provinces (Section 1 of Rule 7, A.M. No. 09-6-8-SC also known
environmental law, rule or regulation, and praying that as Rules of Procedure for Environmental Cases).
judgment be rendered commanding the respondent to do an
act or series of acts until the judgment is fully satisfied, and to The following reliefs may be included under the writ
pay damages sustained by the petitioner by reason of the of kalikasan: (a) Directing respondent to permanently cease
malicious neglect to perform the duties of the respondent, and desist from committing acts or neglecting the performance
under the law, rules or regulations. The petition shall also of a duty in violation of environmental laws resulting in
contain a sworn certification of non-forum shopping (A.M. No. environmental destruction or damage; (b) Directing the
09-6-8-SC also known as Rules of Procedure for respondent public official, government agency, private person
Environmental Cases). or entity to protect, preserve, rehabilitate or restore the
environment; (c) Directing the respondent public official,
A Writ of Continuing mandamus is a writ issued by government agency, private person or entity to monitor strict
a court in an environmental case directing any agency or compliance with the decision and orders of the court; (d)
instrumentality of the government or officer thereof to perform Directing the respondent public official, government agency, or
an act or series of acts decreed by final judgment which shall private person or entity to make periodic reports on the
remain effective until judgment is fully satisfied (Section 7, Rule execution of the final judgment; and (e) Such other reliefs which
8, A.M. No. 09-6-8-SC also known as Rules of Procedure for relate to the right of the people to a balanced and healthful
Environmental Cases). ecology or to the protection, preservation, rehabilitation or
restoration of the environment, except the award of damages
WRIT OF KALIKASAN to individual petitioner (Sec. 15, Rule 7. Ibid).
[2016] XIII The officers of "Ang Kapaligiran ay The rules also provide interim reliefs in favor of the
Alagaan, Inc." engaged your services to file an action against petitioner upon filing a verified motion, namely: (i) Ocular
ABC Mining Corporation which is engaged in mining operations inspection; or (ii) Production or inspection of documents or
in Sta. Cruz, Marinduque. ABC used highly toxic chemicals in things (Sec. 12, Rule 7, A.M. No. 09-6-8-SC also known as
extracting gold. ABC's toxic mine tailings were accidentally Rules of Procedure for Environmental Cases).
released from its storage dams and were discharged into the
rivers of said town. The mine tailings found their way to Additionally, the petition for Writ of Kalikasan is
Calancan Bay and allegedly to the waters of nearby Romblon more advantageous compared to a complaint for damages
and Quezon. The damage to the crops and loss of earnings before the RTC because it may be filed directly with the
were estimated at Pl Billion. Damage to the environment is Supreme Court or with any of the stations of the Court of
estimated at Pl Billion. As lawyer for the organization, you are Appeals. Unlike a complaint for damages before the RTC which
can only be filed by a real-party-in-interest as defined in Rule


3(2) of the Rules of Court, the rule on locus standi is relaxed in Luczon, G.R. No: 164246, January 15, 2014; Rule 70. Section
petitions for Writ of Kalikasan which allows the petition to be 19 of the Rules of Court).
filed by parties as citizen suit. In addition, any of the following
may file a petition for Writ of Kalikasan: (a) natural or juridical ALTERNATIVE ANSWER:
person; (b) entity authorized by law; or (c) POs, NGOs or any As counsel for Jaypee, I would not advise the
public interest group accredited by or registered with any posting of a supersedeas bond. The supersedeas bond shall
government agency on behalf of persons whose constitutional Page | 69
be equivalent to the unpaid rentals, damages and costs which
right to a balanced and healthful ecology is violated (Sec. 1, accrued down to the time of the judgment (Section 19, Rule 70,
Rule 7, A.M. No. 09-6-8-SC). Besides, the petition for Writ of Rules of Court; Chua v. Court of Appeals, G.R. No. 113886,
Kalikasan is exempted from the payment of docket fees. February 24, 1998). In other words, the supersedeas bond
covers the monetary judgment of the lower court; thus, if the
From the foregoing, it is clear that filing a petition for judgment does not make any pronouncement as to the
Writ of Kalikasan would be the best remedy to address all the pecuniary liability of the defendant, the posting of the
environmental problems caused by the release of the toxic supersedeas bond should not be required. Attorney’s fees are
waste to the waters of Romblon and Quezon without the not covered by a supersedeas bonds (Once v. Gonzales, GR
burden of paying docket fees. After all, the filing of a petition for No. L-44806, March 31, 1977)
the issuance of the Writ of Kalikasan shall not preclude the
filing of separate civil, criminal or administrative actions; thus,
the organization can later file a complaint for damages with the B. A temporary restraining order (TRO) was issued
Regional Trial Court, should they desire to do so. At any rate,
on September 20, 2017 by the RTC against defendant Jeff
the rules provide that judgment must be rendered within sixty enjoining him from entering the land of Regan, the plaintiff.
(60) days from the time the petition is submitted for decision
which expedites the proceedings significantly considering the On October 9, 2017, upon application of Regan, the
urgency of the situation in the instant case. As lawyer for the trial court, allegedly in the interest of justice, extended the TRO
organization I would recommend, therefore, the filing of a
for another 20 days based on the same ground for which the
petition for a Writ of Kalikasan with the Supreme Court. TRO was issued.
HALU-HALONG TANONG (HAHAHA mahilig si examiner On October 15, 2017, Jeff entered the land subject
2017 sa halo-halo) of the TRO. May Jeff be liable for contempt of court? Why?
(4%)
[2017] XII. Judgment was rendered against
defendant Jaypee in an action for unlawful detainer. The No, Jeff may not be held liable for contempt. Under
judgment ordered Jaypee to vacate and to pay attorney’s fees Rule 58. Section 5 of the Rules of Court, a Temporary
in favor of Bart, the plaintiff. To prevent the immediate Restraining Order is valid for 20 days. Its effectivity is not
execution of the judgment would you advise the posting of a extendible without need of any judicial declaration to that effect,
supersedeas bond as counsel for Jaypee? Explain your and no court shall have authority to extend or renew the same
answer briefly (2%). on the same ground for which it was issued, thus, Jeff cannot
be held liable for contempt.
I would advise Jaypee to post a supersedeas bond,
but I would also advise him that the posting of a supersedeas B. What is the mode of appeal applicable to the
bond alone does not prevent the immediate execution of the following cases, and what issues may be raised before the
judgment. To stay the immediate execution of the judgment in reviewing court tribunal?
an ejectment case, the defendant:
(a) The decision or final order of the National Labor
1. Must perfect an appeal, Relations Commission (145%)
2. File a supersedeas bond; and
3. Periodically deposit the rentals becoming due
(a) Strictly, there is no appeal from an NLRC
during the pendency of the appeal; otherwise, the writ of
decision. However, NLRC decisions or final orders are
execution will issue upon motion of the plaintiff (Achang v. Hon.
reviewable on petition for certiorari under Rule 65 of the Rules


of Court; filed before the Court of Appeals (Martin Funeral Rulę 114 of the Rules of Court does not automatically result in
Homes v. NLRC, G.R. No. 130866, September 16, 1998). the grant of bail, Such finding will simply authorize the court to
Petitioner may raise the issue on whether the NLRC acted with use the less stringent sound discretion approach.
grave abuse of discretion amounting to lack or excess
jurisdiction (Pfizer Inc, v. Galan, G.R. No. 158460. August 24,
2007). (c) Give at least two instances when a peace officer
Page | 70
or a private person may make a valid warrantless arrest (2%)
(b) The judgment or final order of the RTC in the
exercise of its appellate jurisdiction: (1.5%) (c) Under Section 5, Rule 113 of the Rules of Court;
a peace officer or a private person may make a valid
(b) The mode of appeal is petition for review under warrantless arrest in the following instances:
Rule 42 of the Rules of Court Petitioner may raise errors of fact,
law, or both under Section 2 of Rule 42. 1. When, in his presence, the person to be arrested
has committed, is actually committing, or is attempting to
commit an offense;
[2017] Ill. Answer the following briefly
2. When an offense has just been committed, and
(a) What elements should concur for circumstantial he has probable cause to believe based on personal
evidence to be sufficient for conviction? (2%). knowledge of facts or circumstances that the person to be
arrested has committed it; and
(a) For circumstantial evidence to warrant the
conviction of the accused, the following elements should 3. When the person to be arrested is a prisoner who
concur: has escaped from a penal establishment or place where he is
serving final judgment or is temporarily confined while his case
1. There is more than one circumstance; is pending, or has escaped while being transferred from one
2. The facts from which the circumstances arose are confinement to another.
duly established in court; and
3. The circumstances form the unbroken chain of
events leading to the conclusion of the culpability of the (d) What is a tender of excluded evidence? (2%)
accused for the crime for which he is convicted (Bacolod v.
People, G.R. No. 206236, July 15, 2013). (d) Tender of excluded evidence is a remedy
embodied under Section 40. Rule 132 of the Rules of Court,
which states that “if documents or things offered in evidence
(b) When is bail a matter of judicial discretion? (2%) are excluded by the court, the offeror may have the same
attached to or made part of the record. If the evidence excluded
(b) Under Section 5, Rule 114 of the Rules of Court is oral, the offeror may state for the record the name and other
bail is a matter of judicial discretion under the following personal circumstances of the witness and the substance of the
circumstances: proposed testimony.
1. Before conviction; in cases where the offense In Cruz-Arevalo v. Querubin-Layosa (A.M. No. RT.-
charged is punishable by reclusion perpetua; and 06-2005, July 14, 2006), the Supreme Court ruled that this
procedure, also known as offer of proof, is made for purposes
2. After accused’s conviction by the Regional Trial of appeal. If an adverse judgment is eventually rendered
Court of an offense not punishable by death, reclusion against the offeror, he may in his appeal assign as error the
perpetua or life imprisonment. rejection of the excluded evidence. The appellate court will
better understand and appreciate the assignment of error if the
In People v. Leviste (G.R. No: 189122, March 17, evidence involved is included in the record of the case.
2010), the Supreme Court ruled that the absence of the
circumstances mentioned in the third paragraph of Section 5,


[2017] IV. Give brief answers to the following: Thereafter, Ms. A filed a motion for judgment on the pleadings,
alleging that Ms. B's statement in her answer is actually a
What is the doctrine of hierarchy of courts? (2%) negative pregnant. Ms. B opposed the motion, reiterating her
defense in her answer which purportedly rendered judgment on
(a) The doctrine of hierarchy of courts, as a rule, the pleadings improper. Ms. B also moved for the dismissal of
requires that recourse must be first made to the lower-ranked the case on the ground of non-joinder of XYZ Construction Co.,
which she alleged is an indispensable party to the case. Page | 71
courts exercising concurrent jurisdiction with a higher court (Dio
v. Subic Bay Marine Exploration, Inc., G.R. No. 189532. June
11, 2014). (a) Is Ms. A's motion for judgment on the pleadings
proper? Explain. (3%)
(b) What is the Harmless Error Rule in relation to
appeals? (2%) No, A’s motion for judgment on the pleadings is improper.
Under Rule 34 of the Rules of Court, judgment on the pleadings
(b) Under Rule 51, Section or of the Rules of Court is only proper when the answer fails to tender an issue. Here,
the Harmless Error Rule states that no error in either the Ms. B’s allegation that she is not the proper party liable for
admission or the exclusion of evidence and no error or defect damages since she only acquiesced to the advice of the
in any ruling or order or in anything done or omitted by the trial contactor is a material issue. The proximate cause of the
court or by any of the parties is a ground for granting a new trial damaged to Ms. A’s car is the negligence of the contractor.
or for setting aside, modifying, or otherwise disturbing a Neither she is solidary nor subsidiary liable under quasi-delict.
judgment or order, unless refusal to take such action appears Hence, Ms. B’s answer has tendered an issue which makes
to the court to be inconsistent with substantial justice. The court judgment on the pleadings improper.
at every stage of the proceeding must disregard any error or
defect which does not affect the substantial rights of the parties. Another suggested answer
Yes. When an answer falls to tender an issue, or
(c) When does a public prosecutor conduct an otherwise admits the material allegations of the adverse party's
inquest instead of a preliminary investigation? (2%) pleading, Judgment on the pleadings is appropriate. The rule
is stated in Section 1, Rule 34 of the 1997 Rules of Civil
(c) Under Rule: 112, Section 7 of the Rules of Procedure. In this relation, jurisprudence dictates that an
Court, a public prosecutor conducts inquest instead of a answer falls to tender an issue if it does not comply with the
preliminary investigation when a person is lawfully arrested requirements of a specific denial as set out In
without an arrest warrant involving an offense which requires a Sections 8 and 10 Rule 8 of the 1997 Rules of Civil Procedure,
preliminary investigation. resulting In the admission of the material allegations of the
adverse party's pleadings. As such, it is a form of Judgment
that is exclusively based on the submitted pleadings without the
SUGGESTED ANSWERS TO THE 2019 BAR Introduction of evidence as the factual issues remain
EXAMINATION QUESTIONS IN REMEDIAL uncontroverted as in the case of Ms. B.- Atty. Moya
LAW
Distinguish the concepts of lack of cause of action and
A.2. Ms. A filed a complaint for damages against Ms. B, failure to state a cause of action. Based on this distinction,
alleging that Ms. B negligently caused the demolition of her is Mr. C's opposition tenable? Explain. (5%)
house's concrete fence, the top half of which fell on the front
portion of Ms. A's car and permanently damaged its engine. In The failure to state a cause of action is raised in a
her answer, Ms. B denied any personal liability for the damage motion to dismiss under Rule 16 before a responsive pleading
caused to Ms. A's car, averring that she merely acquiesced to is filed and can only be determined only form the allegations in
the advice of her contractor, XYZ Construction Co., to have the the initiatory pleading (in this case the complaint of Mr. C for
concrete fence demolished. Thus, damages, if any, should be reconveyance of property and damages) and not from
collected from it. evidentiary or other matters aliunde (ibig sabihin nito ay trial na
at the stage of presentation of evidence).


The lack of cause of action is raised in a demurrer
to evidence under Rule 33 (o di ba trial on the merits na yan), (a) Is Ms. A entitled to a writ of amparo? Explain. (2.5%)
after the plaintiff has rested his case and can be resolved only
on the basis of the evidence he has presented in support of his No. Miss A is not entitled to a writ of Amparo. The petition for
claim. writ of amparo is a remedy available to any person whose right
to life, liberty and security is violated or threatened with
Page | 72
The first does not concern itself with the truth and violation by an unlawful act or omission of a public official or
falsity of the allegations (it means the judge would employee, or of a private individual or entity.
hypothetically admit the truthfulness of the allegation) while the
second arises precisely because the judge has determined the Here, Mr B is neither a public official or employee nor a private
truth and falsity of the allegations and has found the evidence individual acting as agent of the State. Hence, Ms. A is not
wanting. entitled to a writ of amparo. Her recourse is to file for restraining
order under RA 9262.
Ibig sabihin, the lack of cause of action can only be
determined after the presentation of evidence ng plaintiff. If the
defendant think that the evidence is insufficient or wanting, he (b) Assuming that Mr. B took away C without Ms. A's
could file for demurrer of evidence. knowledge and consent, what is the proper remedy for Ms.
A to immediately recover C's custody? Explain. (2.5%)
Hence, Mr. C’s opposition is tenable. The lack of
cause action as ground for the motion is dismiss is improper. It The proper remedy for Ms. A to immediately recover C's
can only be determined after the presentation of evidence via custody is to file a petition for writ of habeas corpus. The Rules
demurrer to evidence under Rule 33. of Court provide that petition for writ of habeas corpus may be
availed of when the rightful custody of a person was withheld
Another suggested answer from the petitioner. Further, the proceeding is summary. Thus,
The two (2) grounds are distinguished as follows: petition for writ of habeas corpus is the proper remedy for Ms.
A to immediately recover C's custody.
1. Failure to state a cause of action refers to the
insufficiency of the allegations lo the pleading. While lack of A.10. Distinguish the following:
cause of action is the insufficiency of the factual basis for the
action. (a) Writ of kalikasan and writ of
2. Dismissal for failure to state a cause of action continuing mandamus (3%)
may be raised at the earliest stages of the proceedings through
a motion to dismiss under Rule 16 of the Rules of Court. While The petition for the issuance of writ of kalikasan and
dismissal for lack of cause of action may be raised any time mandamus is a special civil action under AM 09-6-8 SC, also
after the questions of fact have been resolved on the basis of known as Rules of Procedure for Environmental Cases.
stipulations, admissions or evidence presented by the plaintiff.
– Atty. Moya Under Rule 7, a writ of kalikasan (nature) is a legal remedy
under Philippine law for persons whose constitutional right to
Yes. Mr C's opposition was tenable based on the “a balanced and healthful ecology” is violated by an unlawful
above distinctlons. act or omission of a public official, employee, or private
individual or entity involving environmental damage of such
magnitude as to prejudice the life, health or property of
A.8. Ms. A filed a petition for a writ of amparo, claiming that she inhabitants in two or more cities or provinces. It draws its
was being threatened by Mr. B, her ex-boyfriend, with whom mandate from Article II Section 16 of the 1987 Constitution,
she has a child out of wedlock, named C. Ms. A alleged that which says that the “state shall protect and advance the right
since she started dating someone else, Mr. B began stalking of the people to a balanced and healthful ecology in accord with
her, parking his car on the street outside her house, and the rhythm and harmony of nature.”
watching her house until the wee hours of the morning. She
thus feared for her life.


Under Rule 8, when an agency or instrumentality of the Upon the conduct of the seizure, law enforcement must file a
government or officer thereof unlawfully neglect the return stating the [a] devices that were subject of the WECD
performance of an act which the law specifically enjoins as a and [b] the hash value of the computer data and/or the seized
duty resulting from an office, trust or station in connection with computer device or computer system containing such data.
the enforcement or violation of an environmental law, rule or The other two warrants are Warrant to Disclose Computer Data
regulation or a right therein or unlawfully excludes another from [WDCD] and Warrant to Intercept Computer Data [WICD].
Page | 73
the use or enjoyment of such right and there is no other plain,
speedy, and adequate remedy in the ordinary course of law, B.11. Mr. X filed a complaint for sum of money against his old
the person aggrieved thereby may file a verified petition for the friend, Mr. Y. In order to ensure that Mr. Y would not be able to
issuance of writ of kalikasan in the proper court alleging the file a responsive pleading and much more, participate in the
facts with certainty, attaching thereto supporting evidence, case, Mr. X paid off Mr. Y's counsel, Atty. Z, who deliberately
specifying that the petition concerns environmental law, rule or let the case proceed as such without his client's knowledge.
regulation, and praying that judgment be rendered
commanding the respondent to do an act or series of acts until Eventually, judgment was rendered on March 1, 2016 in Mr. X's
the judgment is fully satisfied, and to pay damages sustained favor, a copy of which was received by Atty. Z on April 4, 2016.
by the petitioner by reason of the malicious neglect to perform Bothered by his conscience, Atty. Z brought the copy of the
the duties of the respondent, under the law, rules or decision to Mr. Y on June 1, 2016, thereby surprising the latter
regulations. and causing him grief.
(b) Warrant to Search, Seize, and Examine Computer Data Meanwhile, the decision became final and executory in due
(WSSECD) and Warrant to Examine Computer Data course on April 19, 2016. Thereafter, Mr. Y took steps in
(WECD) (3%) vindicating his rights, which culminated on August 15, 2016
AM No. 17-11-03 SC provides for the issuance of 4 types of when he, as represented by a new counsel, filed a petition for
warrants, among them are Warrant to Search, Seize and annulment of judgment before the Court of Appeals (CA) on the
Examine Computer Data [WSSECD] and Warrant to Examine ground of extrinsic fraud. The CA dismissed the petition on the
Computer Data. ground that Mr. Y failed to submit a satisfactory explanation as
to why he directly resorted to a petition for annulment of
[1] A WSSECD is similar to search warrant, except the subject judgment, when he could have filed a petition for relief from
matter of a WSSECD is computer data. The request for a judgment.
WSSECD must also state the relevance and necessity of the
data sought and describe particularly the information sought to (a) What are the differences between a petition for relief
be seized and examined. Also, the request must state the likely from judgment and a petition for annulment of judgment in
offense involved. In addition, the request must contain an terms of grounds and periods to file? (3%)
explanation of the search and seizure strategy to be
implemented. For Relief of Judgment under Rule 38 Section 2 may be based
Upon the conduct of the seizure, law enforcement must file a on the grounds of fraud, accident, mistake, or excusable
return stating the [a] devices that were subject of the WSSECD negligence, has been prevented from taking an appeal, he may
and [b] the hash value of the computer data and/or the seized file a petition in such court and in the same case praying that
computer device or computer system containing such data. the appeal be given due course.
The petition must be verified, filed within sixty (60) days after
[2] A WECD is a warrant issued when a computer device or the petitioner learns of the judgment, final order, or other
system is previously seized by another lawful method, such as proceeding to be set aside, AND not more than six (6) months
a warrantless arrest. Before searching any devised seized, law after such judgment or final order was entered, or such
enforcement must apply for WECD. The request for WECD proceeding was taken, and must be accompanied with
must also state the relevance and necessity of the data sought affidavits showing the fraud, accident, mistake, or excusable
and describe particularly the information sought to be negligence relied upon, and the facts constituting the
disclosed. Also, the request must state the likely offense petitioner's good and substantial cause of action or defense, as
involved. the case may be.


For Annulment of Judgment under Rule 47 Section 2 the before or after conviction by the Metropolitan and Municipal trial
grounds for annulment may be based only on the grounds of courts, MTCC or MCTC and (b) before conviction by the RTC
extrinsic fraud and lack of jurisdiction. Extrinsic fraud shall not of an offense not punishable by death, reclusion perpetua or
be a valid ground if it was availed of, or could have been availed life imprisonment.
of, in a motion for new trial or petition for relief. The period for
filing action of Annulment of Judgment if based on extrinsic (b) Is the objection of the prosecution valid? Explain. (3%)
Page | 74
fraud, the action must be filed within four (4) years from its
discovery; and if based on lack of jurisdiction, before it is barred No, the objection of the prosecutor is not valid. Under Section
by laches or estoppel. 1 and 2 of Rule 114, the bail is a security given for the release
of a person in custody of the law, to guarantee his appearance
before any court as required under the condition that the
(b) Was the CA's dismissal of Mr. Y's petition for accused shall appear before the proper court whenever
annulment of judgment proper? Explain. (2%) required by the court or these Rules.
Yes, the CA’s dismissal is proper. Here, the ground Mr. Y relied Here, Mr. P is already under custody of the law. Hence, Mr. P
on is extrinsic fraud which he could have availed of in a petition may file a petition for bail, and it is a matter of right if it shown
for relief of judgment when he learned of the adverse judgment in the hearing called for that purpose that the evidence of guilt
on June 1, 2016. He had 60 days thereafter or until July 31, is not strong. The rules did not require that the accused should
2016 (the 60th day) to file such remedy, but he acted on it only be first arraigned before he could file a petition for bail.
on August 15, 2016 by filing an annulment of Judgment which
prohibits extrinsic fraud as ground if it could have been availed B.17. In a case for specific performance and damages, plaintiff
of in a petition for relief. Hence, the CA is correct in dismissing Q presented photocopies of the contracts he had executed with
his petition. defendant R for the purpose of establishing their existence.
Defendant R's counsel objected to the admission of said
ADDENDUM: Under Rule 47, the annulment of judgment could photocopies, invoking the best evidence rule.
have anchored in three grounds, namely;
(a) Should the objection of defendant R's counsel be
1. lack of jurisdiction sustained? Explain. (3%)
2. extrinsic fraud (available sana pero nag-lapsed
na within 60 days) Yes, the objection should be sustained. Under section 5 of Rule
3. lack of due process (jurisprudence ito) 130, when the original document has been lost or destroyed,
or cannot be produced in court, the offeror, upon proof of its
In the case at bar, it is evident that due process was execution or existence and the cause of its unavailability
not properly accorded to Mr Y. No service of summons was without bad faith on his part, may prove its contents by a copy,
alleged and therefor the judgment is void for lack of jurisdiction or by recital of its contents in some authentic documents, or by
over the person of Mr. Y. testimony of witnesses in the order stated.
B.14. Mr. P was charged with Plunder before the Here, Q’s counsel did not allege if the original copies had been
Sandiganbayan along with several government officials. Before destroyed or the reason why they cannot be produced in court.
his arraignment, he filed a petition for bail. This was objected He just presented the photocopies of the contracts for the
to by the prosecution which insisted that he should first be purpose of establishing their existence. Hence, R’s counsel
arraigned before he applies for bail, considering that grant of objection should be sustained. The unavailability of the original
bail will result in the accused fleeing the court's jurisdiction. copies of the contracts must be proven as a fact as well as the
good faith or bad faith of the offeror.
(a) When is bail a matter of right before conviction? (2%)
Under Section 4 of Rule 114, all persons in custody shall be (b) Assuming that the best evidence rule applies, under
admitted to bail as a matter of right, with sufficient sureties, or what circumstances will the photocopies be admissible in
released on recognizance as prescribed by law or this Rule (a) evidence? (2%)


the guilt of Mr. M. Here, the testimony of C is not indispensable
Under Section 3 of Rule 130, when the subject of inquiry is the in the crime of attempted parricide. The crime of attempted
contents of a document, no evidence shall be admissible other parricide can be proven by the testimony of the victim herself,
than the original document itself, except in the following cases: the wife, and other circumstatial evidence corroborating her
testimony. Hence, the objection should be sustained.
[a] when the original has been destroyed or lost, or cannot be
Page | 75
produced in court, without bad faith on the part of the offeror; If mas pabor kayo sa rules of court, the answer should be like
[b] when the original is in the custody or under the control of this.
the party against whom the evidence is offered, and the latter
fails to produce it after reasonable notice; The objection should not be sustained. Under Section 25 of
[c] when the original consists of numerous accounts or other Rule 23, the child may, at his option, testify against his parents.
documents which cannot be examined in court without great Here, C cannot be compelled to testify against his father but he
loss of time and the fact sought to be established from them is cannot be prohibited if he chooses to do so.
only the general result of the whole; and
[d] when the original is a public record in the custody of a public
In the second case, the objection should not be sustained.
oficer or is recorded in a public office. Under Section 22 of Rule 130, during their marriage, neither
the husband nor the wife may testify for or against the other
B.18. In a case for Attempted Parricide brought against Mr. M without the consent of the affected spouse, except in a civil
by his wife, Mrs. N, their son, C, was called as a witness for the case by one against the other, or in a criminal case for a crime
prosecution. Mr. M's counsel objected, invoking the filial committed by one against the other or the latter’s direct
privilege rule. descendants or ascendants.
Meanwhile, in a separate case for Serious Physical Injuries Here, the crime of physically injury is committed against C, Mrs.
also brought against Mr. M, but this time by his son, C, Mrs. N N’s son. Hence, Mrs N may testify agaist Mr. M.
was called to testify against Mr. M. Mr. M's counsel objected,
invoking the marital disqualification rule.
-------------xxxxxxx--------------
Should the objections of Mr. M's counsel in both cases be

sustained? Explain. (5%) CORPORATION
CODE
In the first case, the objection should be sustained. Basahing
mabuti. Dahil may conflict sa Section 25 of Rule 130 and Article
215 of the Family Code.
Article 215 FC. No descendant shall be compelled, in a GENERAL PRINCIPLES

criminal case, to testify against his parents and grandparents,
FORMATION
except when such testimony is indispensible in a crime, against
the descendant or by one parent agaisnt the other.
(2008) No.XI. (A) Since February 8, 1935, the legislature has
not passed even a single law creating a private corporation.
Section 25 of Rule 130. No person MAY BE compelled to
What provision of the Constitution precludes the passage of
testify against his parents, other direct ascendants, children or
such a law? (3%)
other direct desendants.
In case of coflict between the Rules of Court and a substantive Under Sec. 16, Art. XII of the 1987 Constitution, Congress
law, the latter should prevail. So here, ang governing law is the cannot, except by general law, provide for the formation,
Family Code. So here is the answer. organization, or regulation of private corporations. It is only
government owned or controlled corporations that may be
The objection should be sustained provided that the tetimony created or established through special charters. Consequently,
of the child witness to the crime is not indispensable to prove it has been held that a private corporation created pursuant to
a special law is a nullity, and such special law is void for being


in violation of the Constitution (NDC v. Phil. Veterans Bank, Exchange Commission (SEC) to obtain a certificate of
G.R. Nos. 84132-33, 10 December 1990). incorporation for FSB Savings & Mortgage Bank, Inc. (5%)
(B) May the composition of the board of directors of the The documents to be submitted to the Securities and Exchange
National Power Corporation (NPC) be validly reduced to three Commission (SEC) to incorporate a new company to be called
(3)? Explain your answer fully. (2%) FSB Savings & Mortgage Bank, Inc., to obtain the certificate of
Page | 76
incorporation for said company, are:
The NPC Board may be reduced to only three (3) members,
but this would have to be affected by legislative amendment of 1) Articles of Incorporation
its charter. The National Power Corporation (NPC is a 2) Treasurer’s Affidavit;
chartered government corporation, not governed by the 3) Certificate of Authority from the Monetary Board of
general provisions of the Corporation Code which requires that the BSP;
Boards of Directors of private corporations shall not have less 4) Verification slip from the records of the SEC
than 5 members. The provisions of the Corporation Code are whether or not the proposed name has already
applicable to government corporations only in a suppletory been adopted by another corporation, partnership
manner. or association;
5) Letter undertaking to change the proposed name if
INCORPORATION REQUIREMENTS already adopted by another corporation, partnership or
association;
(2006) What is the minimum and maximum number of in- 6) Bank certificate of deposit concerning the paid-up
corporators required to incorporate a stock corporation? capital;
7) Letter authorizing the SEC or Monetary Board or its
Is this also the same minimum and maximum number of duly authorized representative to examine the bank records
directors required in a stock corporation? (2.5%) regarding the deposit of the paid-up capital;
8) Registration Sheet;
Under Section 10 of the Corporation Code, any number of
natural persons not less than five (5) but not more than fifteen MEETINGS OF BOD & STOCKHOLDERS
(15), all of legal age and a majority of whom are residents of
the Philippines, may form a private corporation for any lawful (1993) Under the Articles of Incorporation of Manila Industrial
purpose. Corp, its principal place of business shall be in Pasig, MM. The
principal corporate offices are at the Ortigas Center, Pasig, MM
This is the same minimum and maximum number of directors while its factory processing leather products, is in Manila. The
required in a stock corporation under Section 14(6) of the corporation holds its annual stockholders’ meeting at the
Corporation Code. Manila Hotel in Manila and its BOD meeting at a hotel in Makati
MM. The by-laws are silent as to the place of meetings of the
(2006) Must all incorporators and directors be residents of the stockholders and directors.
Philippines? (2.5%)
1) Who shall preside at the meeting of the directors?
2) Can Ting, a stockholder, who did not attend the
Not all directors and incorporators need to be residents of the
stockholders’ annual meeting in Manila, question
Philippines. Under Section 10 of the Corporation Code, only a
the validity of the corporate resolutions passed at
majority of the incorporators need to be residents of the
such meeting?
Philippines. As provided in Section 23 of the same Code, only
3) Can the same stockholder question the validity of
a majority of the members of the Board of Directors need to be
the resolutions adopted by the BOD at the meeting held in
residents of the Philippines.
Makati?
(2002) You have been asked to incorporate a new company to

1) The President presides over the meeting of the
be called FSB Savings & Mortgage Bank, Inc. List the
directors, if there is no position of Chairman
documents that you must submit to the Securities and
provided in the By-Laws. If there is the position of


Chairman provided in the By-Laws, the Chairman argues that the "grandfather rule" should be applied. Decide
presides over the meeting of the Directors (Sec 54 with reasons. (5%)
Corp Code)
2) No. The law provides that the annual stockholders’ The grandfather should be applied. The Supreme Court held in
a similar case that even though on paper the capital
meeting shall be held in the city or municipality
shareholding in a mining company is 60% owned by Filipinos
where the principal office of the Corporation is
and 40% by foreigners, if there is a doubt as to the locus of the Page | 77
located. For this purpose, the law also provides that
beneficial ownership and control, the grandfather rule should
Metro Manila is considered a city or municipality. apply. Based on the facts, B corporation, a Chinese
Since the principal place of business of MIC is corporation, practically exercises control over O, P and Q
Pasig, MM, the holding of the annual stockholders corporations. Such circumstances create a doubt as to where
meeting in Manila is proper. (Sec 51 Corp) control and beneficial ownership reside that warrants the
3) No. The law allows the BOD to hold its meeting application of the grandfather rule.
anywhere in the Philippines. The holding of the BOD
meeting in Makati was proper and the validity of the Take this as a lecture
resolutions adopted by the Board in that meeting
Basically, there are two acknowledged tests in determining the
cannot be questioned. (Sec 53 Corp code)
nationality of a corporation: the control test and the grandfather
rule. Paragraph 7 of DOJ Opinion No. 020, Series of 2005,
CORPORATE EXISTENCE adopting the 1967 SEC Rules which implemented the
requirement of the Constitution and other laws pertaining to the
(2014) A corporation organized under the Corporation Code
controlling interests in enterprises engaged in the exploitation
commences to have corporate existence and juridical
of natural resources owned by Filipino citizens, provides:
personality and is deemed incorporated: (1%)
Shares belonging to corporations or partnerships at least 60%
(B) from the date the SEC issues a certificate of incorporation of the capital of which is owned by Filipino citizens shall be
under its official seal considered as of Philippine nationality, but if the percentage of
Filipino ownership in the corporation or partnership is less than
NATIONALITY OF THE CORPORATION 60%, only the number of shares corresponding to such
percentage shall be counted as of Philippine nationality. Thus,
(2016) In 2015, R Corp., a domestic company that is wholly
if 100,000 shares are registered in the name of a corporation
owned by Filipinos, filed its opposition to the applications for
or partnership at least 60% of the capital stock or capital,
Mineral Production Sharing Agreements (MPSA) of 0 Corp., P
respectively, of which belong to Filipino citizens, all of the
Corp., and Q Corp. which were pending before the Panel of
shares shall be recorded as owned by Filipinos. But if less than
Arbitrators (POA) of the Department of Environment and
60%, or say, 50% of the capital stock or capital of the
Natural Resources (DENR). The three corporations wanted to
corporation or partnership, respectively, belongs to Filipino
undertake exploration and mining activities in the province of
citizens, only 50,000 shares shall be counted as owned by
Isabela. The oppositor alleged that at least 60% of the capital
Filipinos and the other 50,000 shall be recorded as belonging
shareholdings of the applicants are owned by B Corp., a 100%
to aliens.
Chinese corporation, in violation of Sec. 2, Art. XII of the
Constitution. The applicants countered that they are qualified The first part of paragraph 7, DOJ Opinion No. 020, stating
corporations as defined under the Philippine Mining Act of 1995 “shares belonging to corporations or partnerships at least 60%
and the Foreign Investments Act of 1991 since B Corp. holds of the capital of which is owned by Filipino citizens shall be
only 40% of the capital stocks in each of them and not 60% as considered as of Philippine nationality,” pertains to the control
alleged by R Corp. test or the liberal rule. On the other hand, the second part of
the DOJ Opinion which provides, “if the percentage of the
The Summary of Significant Accounting Policies statement of
Filipino ownership in the corporation or partnership is less than
B Corp. reveals that the joint venture agreements of B Corp.
60%, only the number of shares corresponding to such
with Sigma Corp. and Delta Corp. involve the 0 Corp., P Corp.,
percentage shall be counted as Philippine nationality,” pertains
and Q Corp. The ownership of the layered corporations and
to the stricter, more stringent grandfather rule.
joint venture agreements show that B Corp. practically
exercises control over the 0, P and Q corporations. 0, P and Q In ending, the “control test” is still the prevailing mode of
corporations contend that the control test should be applied determining whether or not a corporation is a Filipino
and its MPSA applications granted. On the other hand, R Corp. corporation, within the ambit of Sec. 2, Art. II of the 1987


Constitution, entitled to undertake the exploration, days or more; participating in the management, supervision or
development and utilization of the natural resources of the control of any domestic business, firm, entity or corporation in
Philippines. When in the mind of the Court there is doubt, the Philippines; and any other act or acts that imply a continuity
based on the attendant facts and circumstances of the case, in of commercial dealings or arrangements and contemplate to
the 60-40 Filipino-equity ownership in the corporation, then it that extent the performance of acts or works, or the exercise of
may apply the “grandfather rule.” some of the functions normally incident to, and in progressive
prosecution of commercial gain or of the purpose and object of Page | 78
(2015) (B) On foreign investments: the business organization: Provided, however, That the phrase
“doing business” shall not be deemed to include mere
A foreign company has a distributor in the Philippines. The investment as a shareholder by a foreign entity in domestic
latter acts in his own name and account. Will this distributorship corporations duly registered to do business, and/or the
be considered as doing business by the foreign company in the exercise of rights as such investor; nor having a nominee
Philippines? (3%) 2. ABC Corporation was organized in director or officer to represent its interests in such corporation;
Malaysia but has a branch in the Philippines. It is entirely nor appointing a representative or distributor domiciled in the
owned by Filipino citizens. Can you consider ABC Corporation Philippines which transacts business in its own name and for
a Philippine national? (2%) its own account;
The appointment of a distributor in the Philippines is not (2015) (B) On foreign investments:
sufficient to constitute doing business unless it is under the full
A foreign company has a distributor in the Philippines. The
control of the foreign corporation. If the distributor is an
latter acts in his own name and account. Will this distributorship
independent entity doing business for its own name and
be considered as doing business by the foreign company in the
account, the latter cannot be considered as doing business
Philippines? (3%) 2. ABC Corporation was organized in
(Steelcase, Inc. v. Design International Selections, Inc., G.R.
Malaysia but has a branch in the Philippines. It is entirely
No. 171995, April 18, 2012, 670 SCRA 64).
owned by Filipino citizens. Can you consider ABC Corporation
Yes, it is considered a Philippine national, as long as it is a Philippine national? (2%)
registered as doing business in the Philippines under the
Corporation Code (Section 1 of RA No. 7042, as amended by The appointment of a distributor in the Philippines is not
Section 1 of RA No. 8179). sufficient to constitute doing business unless it is under the full
control of the foreign corporation. If the distributor is an
(1998) What is the nationality of a corporation organized and independent entity doing business for its own name and
incorporated under the laws of a foreign country, but owned account, the latter cannot be considered as doing business
100% by Filipinos? (Steelcase, Inc. v. Design International Selections, Inc., G.R.
No. 171995, April 18, 2012, 670 SCRA 64).
Under the control test of corporate nationality, this foreign
Yes, it is considered a Philippine national, as long as it is
corporation is of Filipino Nationality. Where there are grounds
registered as doing business in the Philippines under the
for piercing the veil of corporate entity, that is, disregarding the
Corporation Code (Section 1 of RA No. 7042, as amended by
fiction, the corporation will follow the nationality of the
Section 1 of RA No. 8179).
controlling members or stockholders, since the corporation will
then be considered as one and the same. (2015) (A) A foreign company has been exporting goods to a
Philippine company for several years now. When the Philippine
DOING BUSINESS IN THE PHILIPPINES company failed to pay the latest exportation, the foreign
company sued to collect in the Philippines. The Philippine
(2016) What does "doing business in the Philippines" under
company interposed the defense that the foreign company was
the Foreign Investments Act of 1991 mean? (5%)
doing business in the Philippines without license; hence, could
Under the Foreign Investments Act of 1991 of Section 3(d) not sue before a Philippine court. Is this defense tenable?
“doing business” shall include soliciting orders, service Explain your answer. (3%)
contracts, opening offices, whether called “liaison” offices or
branches; appointing representatives or distributors domiciled (A) The defense is not tenable. The mere act of exporting from
in the Philippines or who in any calendar year stay in the one’s own country, without doing any specific commercial act
country for a period or periods totaling one hundred eighty [180] within the territory of the importing country, can not be deemed


as doing business in the importing country. Thus, the foreign
company may sue in the Philippines despite lack of license to (2004) Is there a difference between a de facto corporation and
do business in the Philippines (B. Van Zuiden Bros Ltd. v. a corporation by estoppel? Explain briefly. (2%)
GTVL Manufacturing Industries, G.R. No. 147905, May 28,
2007, 523 SCRA 233). A DE FACTO CORPORATION is one which actually exists for
all practical purposes as a corporation but which has no legal
Page | 79
right to corporate existence as against the State. It is essential
(1998) When is a foreign corporation deemed to be “doing to the existence of a de facto corporation that there be (1) a
business in the Philippines?” (3%) valid law under which a corporation might be incorporated, (2)
a bona fide attempt to organize as a corporation under such
A foreign corporation is deemed to be “doing business in the law, and
Philippines” if it is continuing the body or substance of the (3) actual use or exercise in good faith of corporate powers
business or enterprise for which it was organized. It is the conferred upon it by law.
intention of an entity to continue the body of its business in the
country. The grant and extension of 90- day credit terms of a A CORPORATION BY ESTOPPEL exists when persons
foreign corporation to a domestic corporation for every assume to act as a corporation knowing it to be without
purchase shows an intention to continue transacting with the authority to do so. In this case, those persons will be liable as
latter. general partners for all debts, liabilities and damages incurred
or arising as a result of their actions.
(2002) Give at least three (3) examples of the acts or activities
that are specifically identified under our foreign investment laws
as constituting “doing business” in the Philippines (3%) (1994) A corporation was created by a special law. Later, the
law creating it was declared invalid. May such corporation claim
Any three (3) of the following acts or activities constitute “doing to be a de facto corporation?
business” in the Philippines under our foreign investment laws:
1. Soliciting orders No. A private corporation may be created only under the
2. Opening offices by whatever name Corporation Code. Only public corporations may be created
3. Participating in the management, supervision or under special law.
control of any domestic entity
4. Entering into service contracts Where a private corporation is created under a special law,
5. Appointing representatives or distributors, operating there is no attempt at a valid incorporation. Such corporation
under the control of the foreign entity, who is cannot claim a de facto status.
domiciled in the Philippines or who stays in the
country for a period or periods totaling at least 180
days in any calendar year. DISTINCTION; PRIVATE VS. PUBLIC CORPORATION
(2004) Distinguish clearly a private corporation from a public

(2002) What is the legal test for determining if an unlicensed
corporation
foreign corporation is doing business in the Philippines? (2%)
A PRIVATE CORPORATION is one formed for some private

The test is whether or not the unlicensed foreign corporation
purpose, benefit or end, while a PUBLIC CORPORATION is
has performed an act or acts that imply a continuity of
formed for the government of a portion of the State for the
commercial dealings or arrangements, and contemplate to that
general good or welfare. The true test is the purpose of the
extent the performance of acts or works, or the exercise of
corporation. If the corporation is created for political or public
some of the functions normally incident to, and in progressive
purpose connected with the administration of government, then
prosecution of, commercial gain or of the purpose and object
it is a public corporation. If not, it is a private corporation
of the business corporation.
although the whole or substantially the whole interest in the
corporation belongs to the State. A public corporation is
DE FACTO CORPORATION VS. CORPORATION BY
created by special legislation or act of Congress. A private
ESTOPPEL
corporation must be organized under the Corporation Code.


meeting at which such proposal will be taken up must be sent
STOCK VS. NON-STOCK CORPORATION to each stockholder. (Sec 42 Corp Code)
(2004) Distinguish clearly a stock corporation from a non-stock VALIDITY OF CORPORATE ACTS
corporation.
(2002) Which of the following corporate acts are valid, void, or
Page | 80
A stock corporation is one that has capital stock divided into voidable? Indicate your answer by writing the paragraph
shares and is authorized to distribute to the holders of such number of the query, followed by your corresponding answer
shares dividends or allotments of the surplus profits on the as “Valid,” “Void,” or “Voidable,” as the case may be. If your
basis of the shares held. All other corporations are non-stock answer is “Void,” explain your answer. In case of a “Voidable”
corporations. answer, specify what conditions must be present or complied
with to make the corporate act valid. (5%)
STOCK CORPORATION
1) XL Foods Corporation, which is engaged in the fast-
(2001) “XY” is a recreational club which was organized to food business, entered into a contract with its
operate a golf course for its members with an original President Jose Cruz, whereby the latter would
authorized capital stock of P100M. The articles of incorporation supply the corporation with its meat and poultry
nor the by-laws did not provide for distribution of dividends requirements.
although there is a provision that after its dissolution, the assets
shall be given to a charitable corporation. Is “XY” a stock Voidable – A contract of the corporation with one or more of its
corporation? Give reasons for your answer? (5%) directors or trustees or officers is voidable, at the option of such
corporation (Sec 32, Corporation Code).
XY is a stock corporation because it is organized as a stock
corporation and there is no prohibition in its Articles of 2) The Board of Directors of XL Foods Corporation
Incorporation or its by-laws for it to declare dividends. When a declared and paid cash dividends without approval of the
corporation is organized as a stock corporation and its articles stockholders.
of Incorporation or By-Laws
are silent, the corporation is deemed to have the power to Valid
declare dividends under Sec 43. Since it has the power to
declare dividends, XY is a stock corporation. The provision of 3) XL Foods Corporation guaranteed the loan of its
the Articles of Incorporation that at dissolution the assets of the sister company XL Meat Products, Inc.
corporation shall be given to a charitable corporation does not
prohibit the corporation from declaring dividends before
Void – This is an ultra vires act on part of XL Foods
dissolution. Corporation, and is not one of the powers provided for in Sec.
36 of the Corporation Code.
POWER TO INVEST CORPORATE FUNDS FOR OTHER
PURPOSE JOINT VENTURE
(1996) When may a corporation invest its funds in another (1996) May a corporation enter into a joint venture?
corporation or business or for any other purposes?
A corporation may enter into a joint venture. However,
A corporation may invest its funds in another corporation or inasmuch as the term ‘joint venture’ has no precise legal
business or for any other purpose other than the primary definition, it may take various forms. It could take the form of a
purpose for which it was organized when the said investment simple pooling of resources (not involving incorporation)
is approved by a majority of the BOD and such approval is between two or more corporations for a specific project,
ratified by the stockholders representing at least 2/3 of the purpose or undertaking, or for a limited time. It may involve the
outstanding capital stock. Written notice of the proposed creation of a more formal structure and, hence, the formation
investment and the date, time and place of the stockholders’ of a corporation. If the joint venture would involve the creation


of a partnership, as the term is understood under the Civil Yashtag Realty collapsed and with it Yashtag Holdings
Code, then a corporation cannot be a party to it. defaulted in the payment of its loans/investments, as well as
the dishonor of the tens of thousands of postdated checks
DOCTRINE OF CORPORATE OPPORTUNITY issued to its various lenders/investors.
Yeh, Yah, and Yo filed several charges against Yashtag

(2005) Briefly discuss the doctrine of corporate opportunity. Holdings and its President, making them solidarily liable for the Page | 81
(2%) investments they failed to recover. Yeh, Yah, and Yo proved
that Yashtag Holdings, acting through Mr. Yokada, was able to
In brief, the doctrine disqualifies a director, trustee or officer get a total of PhP 800 million of loans/investments from the
from appropriating for his personal benefit a transaction or public under the scheme, and from which Mr. Yokada, as the
opportunity that pertains to the corporation, and which under controlling stockholder, was able to withdraw a total amount of
the duty of loyalty he should first bring to the corporation for its PhP 300 million for his personal account and entered into the
use or exploitation. books of Yashtag Holdings as "Advances to Stockholders." Mr.
Yokada pleads as a defense that he cannot be made
personally liable on the claim of the group under the doctrines
The doctrine of corporate opportunity is an enforcement of the
of "Separate Juridical Personality" and "Limited Liability."
duty of loyalty of corporate directors and officers. When a
director, trustee or officer attempts to acquire or (a) What are the doctrines of "Separate Juridical Personality"
and "Limited Liability"? (2.5%)
acquires, in violation of his duty, an interest adverse to the
corporation in respect of any matter which has been reposed in The doctrine of separate juridical personality is a principle of
him in confidence, he shall be liable as a trustee for the law which ordains that the corporation has a separate legal
corporation and must account for the profits which otherwise personality from the stockholders, directors and officers
composing it. The limited liability rule, on the other hand,
would have accrued to the corporation. Equity imposes liability
means that the liability of a stockholder who is not a director,
upon him not to deal for his own benefit. (Sec. 31, Corporation
officer or agent of the corporation, is limited to his subscription
Code)
to the capital stock of the corporation.
Under Sec. 34 of the Corporation Code where a director, by Alternative answer

virtue of his office, acquires for himself a business opportunity
which should belong to the corporation, thereby obtaining The following answer should also be given credit because the
profits to the prejudice of such corporation, he must account to question may be construed as to whether this defense is
the latter for all such profits by refunding the same, unless his pertinent under the second question.
act has been ratified by a vote of the stockholders owning or
The limited liability rule, also known as the real or the
representing at least two-thirds (2/8) of the outstanding capital hyphotecary nature of maritime law, simply means that that the
stock. liability of the shipowner or Ship agent arising from the
transportation of goods and passengers is limited to their
SEPARATE PERSONALITY interest in the vessel which is hyphotecated for such obligations
or which stands as a guaranty for their settlement. This rule
(2018) Yashtag Holdings' President, Mr. Yokada, convinced may be best explained by the doctrine: No vessel, no liability.
Yeh, Yah, and Yo to lend/invest money with Yashtag, which (Aboitiz Shipping Corporation vs General Accident Fire and Life
money will be invested in a sister company, Yashtag Realty, Assurance Corporation, 217 SCRA 359 )
Inc. (Yashtag Realty), a corporation that develops premium real
estate projects in the Philippines. For the amount (1999) As a result of perennial business losses, a corporation’s
loaned/invested, Yashtag Holdings issued two (2) postdated net worth has been wiped out. In fact, it is now in negative
checks to each lender/lnvestor, one representing the principal territory. Nonetheless, the stockholders did not like to give up.
amount, and the other covering the guaranteed interest that Creditor-banks, however, do not share the confidence of the
ranged between 18-32% p.a. On the maturity dates of the stockholders and refuse to grant more loans.
checks, the individual lender/investor can review the
loans/investment, and may either collect only the interest or roll
a) What tools are available to the stockholders to
over the same with the principal amounts. Eventually, the
replenish capital? (3%)
bursting of the real estate bubble brought about a serious
financial crisis around the world, including the Philippines.


b) Assuming that the corporation continues to operate 2. COLLECT or COMPROMISE an indebtedness to
even with depleted capital, would the stockholders or the the corporation arising out of unpaid subscription in a
managers be delinquency sale;
solidarily liable for the obligations incurred by the 3. to PURCHASE delinquent shares sold during the
corporation? Explain. (3%) sale; and
4. to PAY dissenting or withdrawing stockholders
entitled to such payment under the Corporation Page | 82
a) In the face of the refusal of the creditor-banks to
grant more loans, the following are tools available Code. (Sees. 41 and 82, Corporation Code)
to the stockholders to replenish capital, to wit:
1) additional subscription to shares of stock MERGER OF CORPORATIONS

of the corporation by stockholders or by investors;
2) advances by the stockholders to the (2016) In 2015, Total Bank (Total) proposed to sell to Royal
Bank (Royal) its banking business for P 10 billion consisting of
corporation;
specified assets and liabilities. The parties reached an eventual
3) payment of unpaid subscription by the
agreement, which they termed as "Purchase and Assumption
stockholders.
(P & A) Agreement," in which Royal would acquire Total's
specified assets and liabilities, excluding contingent claims,
b) No. As a general rule, the stockholders or the with the further stipulation that it should be approved by the
managers cannot be held solidarily liable for the Bangko Sentral ng Pilipinas (BSP). BSP imposed the condition
obligations incurred by the corporation. The that Total should place in escrow Pl billion to cover for
corporation has a separate and distinct personality contingent claims against it. Total complied. After securing the
from that of the stockholders or managers. The approval of the BSP, the two banks signed the agreement.
latter are presumed to be acting in good faith in
continuing the operation of the corporation. The BSP thereafter issued a circular advising all bank and non-bank
intermediaries that effective January 1, 2016, "the banking
obligations incurred by the corporation are those of
activities of Total Bank and Royal Bank have been
the corporation which alone is liable therefor.
consolidated and the latter has carried out their operations
However, when the corporation is already insolvent,
since then."
the directors and officers become trustees of the
business and assets of the corporation for the [a] Was there a merger and consolidation of the two
benefit of the creditors and are liable for negligence banks in point of the Corporation Code? Explain. (2.5%)
or mismanagement.
There was no merger or consolidation of the two banks from
the viewpoint of the Corporation Code. The Supreme Court
ruled in GR 195615, September 21, 2014, that there can be no
RIGHT OF REPURCHASE OF SHARES
merger if the requirements and procedure for merger were not
observed and no certificate of merger was by the SEC.
(2005) Under what conditions may a stock corporation acquire
its own shares? (2%) Take this as a lecture.
In line with the trust fund doctrine that generally renders it NO. Merger is a re-organization of two or more corporations
unlawful for the corporation to return assets to the stockholders that results in their consolidating into a single corporation,
which is one of the constituent corporations, one disappearing
representing capital, a corporation may acquire its own shares
or dissolving and the other surviving. To put it another way,
only when there exists in the books unrestricted retained
merger is the absorption of one or more corporations by
earnings to cover the repurchase of shares. The purpose of the
another existing corporation, which retains its identity and takes
repurchase of shares must be a legitimate business purpose of over the rights, privileges, franchises, properties, claims,
the corporation, such as to: liabilities and obligations of the absorbed corporation(s). The
absorbing corporation continues its existence while the life or
1. ELIMINATE fractional shares arising out of stock lives of the other corporation(s) is or are terminated.
dividends;
The Corporation Code requires the following steps for merger
or consolidation:


(1) The board of each corporation draws up a plan of merger In Bank of Commerce v Radio Philippines Network, citing the
or consolidation. Such plan must include any amendment, if book Philippine Corporate Law by Dean Cesar Villanueva,
necessary, to the articles of incorporation of the surviving explained that under the Corporation Code, "a de facto merger
corporation, or in case of consolidation, all the statements can be pursued by one corporation acquiring all or substantially
required in the articles of incorporation of a corporation. all of the properties of another corporation in exchange of
shares of stock of the acquiring corporation. The acquiring
(2) Submission of plan to stockholders or members of each corporation would end up with the business enterprise of the Page | 83
corporation for approval. A meeting must be called and at least target corporation; whereas, the target corporation would end
two (2) weeks’ notice must be sent to all stockholders or up with basically its only remaining assets being the shares of
members, personally or by registered mail. A summary of the stock of the acquiring corporation." No de facto merger took
plan must be attached to the notice. Vote of two-thirds of the place in the present case simply because the Royal Bank
members or of stockholders representing two thirds of the owners did not get in exchange for the bank’s assets and
outstanding capital stock will be needed. Appraisal rights, when liabilities an equivalent value in Total Bank’s shares of stock.
proper, must be respected. Total Bank and Royal Bank agreed with BSP approval to
exclude from the sale the TRB’s contingent judicial liabilities.
(3) Execution of the formal agreement, referred to as the
The BSP Circular is not an indication of a de facto merger
articles of merger o[r] consolidation, by the corporate officers
because what was "consolidated" per the above letter was the
of each constituent corporation. These take the place of the
banking activities and transactions of Total Bank and Royal
articles of incorporation of the consolidated corporation, or
Bank, not their corporate existence.
amend the articles of incorporation of the surviving corporation.
The BSP did not remotely suggest a merger of the two
(4) Submission of said articles of merger or consolidation to the
corporations. What controls the relationship between those
SEC for approval.
corporations cannot be the BSP letter circular, which had been
(5) If necessary, the SEC shall set a hearing, notifying all issued without their participation, but the terms of their P & A
corporations concerned at least two weeks before. Agreement that the BSP approved through its Monetary Board
and the requirements of law.
(6) Issuance of certificate of merger or consolidation.
Indubitably, it is clear that no merger took place between Total NELL DOCTRINE
Bank and Royal Bank as the requirements and procedures for
a merger were absent. (2017) Under the Nell Doctrine, so called because it was first
pronounced by the Supreme Court in the 1965 ruling in Nell v.
A merger does not become effective upon the mere agreement Pacific Farms, Inc. (15 SCRA 415), the general rule is that
of the constituent corporations. All the requirements specified where one corporation sells or otherwise transfers all of its
in the law must be complied with in order for merger to take assets to another corporation, the latter is not liable for the
effect. Section 79 of the Corporation Code further provides that debts and liabilities of the transferor. State the exceptions to
the merger shall be effective only upon the issuance by the the Nell Doctrine. (4%)
Securities and Exchange Commission (SEC) of a certificate of
merger. Here, Total Bank and Royal Bank remained separate Nell Doctrine states the general rule that the transfer of all the
corporations with distinct corporate personalities. What assets of a corporation to another shall not render the latter
happened is that TRB sold and Bancommerce purchased liable to the liabilities of the transferor except:
identified recorded assets of TRB in consideration of
Bancommerce’s assumption of identified recorded liabilities of a. Where the purchaser expressly or impliedly agrees
TRB including booked contingent accounts. There was no to assume such debts;
merger or consolidation but a mere "sale of assets with b. Where the transaction amounts to a consolidation
assumption of liabilities". or merger of the corporations;
[b] What is meant by a de facto merger? Discuss. (2.5%) c. Where the purchasing corporation is merely a
continuation of the selling corporation (business enterprise
De facto merger means that a corporation called the acquiring transfer); and
corporation acquired the assets and liabilities of another
corporation in exchange for equivalent value of shares of stock d. Where the transaction is entered into fraudulently in
of the acquiring corporation. order to escape liability for such debts.
Take this as a lecture. QUORUM



(2014) What vote is needed to consider every decision to be a association and the public; (2) between the corporation,
valid corporate act? (1%) partnership or association and the State insofar as its
franchise, permit or license to operate is concerned; (3)
(A) a majority of the directors present at the meeting between the corporation, partnership or association and its
stockholders, partners, members or officers; and (4) among the
(B) two-thirds of the directors present at the meeting stockholders, partners or associates themselves. Under the
nature of the controversy test, “the controversy must not only Page | 84
(C) a majority of the directors present at the meeting at
be rooted in the existence of an intra-corporate relationship, but
which there is a quorum. Sec 25 of the Old Corpo) must as well pertain to the enforcement of the parties’
correlative rights and obligations under the Corporation Code
(D) two-thirds of the directors present at the meeting at
and the internal and intra-corporate regulatory rules of the
which there is a quorum SUGGESTED ANSWER corporation.”
(2014) To constitute a quorum for the transaction of corporate As ruled in the case of Gonzales v. JGH Land, applying the
business, only a majority of the number of Board of Directors is relationship test and the nature of the controversy test, the
required: (1%) current suit between the parties is clearly rooted in the
existence of an intra-corporate relationship and pertains to the
(A) as fixed by the corporate by-laws enforcement of their correlative rights and obligations under the
Corporation Code and the internal and intra-corporate
(B) as fixed in the articles of incorporation
regulatory rules of the corporation, hence, intra-corporate.
(C) actually serving in the board
(b) Assuming that it was Z Company which instead filed a case
(D) actually serving in the board but constituting a against Mr. Y in order to collect the unpaid balance of his stock
subscriptions, is the case considered an intra-corporate
quorum
dispute? Explain. (2.5%)
The alternative answers are A and B. Makikita mo
Yes, the case filed is still considered an intra-corporate dispute
ang quorum requirement sa by-laws and bot on the article of
since he is still considered a stockholder of the company
the incorporation in spite of Art. 25 of the Old Coproration Code whether the consideration is fully paid or not.
INTRA-CORPORATE To determine if a case involves an intra-corporate controversy,

the courts have applied two tests: the relationship test and the
CONTROVERSY nature of the controversy test. Furthermore, a person becomes
a shareholder the moment he enters into a subscription
(2019) A.5. Mr. Y filed a case captioned as “Injunction with contract with an existing corporation. This means that he is a
Prayer for Status Quo Order, Temporary Restraining Order and stockholder upon acceptance of the corporation of his offer to
Damages” against Z Company to prohibit the latter from selling subscribe whether the consideration is fully paid or not.
shares which Mr. Y purportedly bought from Z Company. Mr. Y
As applied in this case, Mr. Y is thus considered a stockholder
alleged that the subscription for the said shares was already
of the company because he is an owner of the shares of stock
partly paid by him, but the subject shares were nonetheless
thereof despite not having fully paid the full purchase price.
being offered for sale by Z Company to the corporation’s other
Thus, being a stockholder, such situation is clearly rooted in
stockholders.
the existence of an intra-corporate relationship and the nature
(a) Is the case filed by Mr. Y against Z Company considered an of the controversy test.
intra-corporate dispute? Explain. (2.5%)
Yes, the case filed is an intra-corporate dispute as the issue (1996) Jennifer and Gabriel owned the controlling stocks in
arose out of intra-corporate relations. MFF Co and CLO Inc, both family corporations. Due to serious
disagreements, Jennifer assigned all her shares in MFF to
In determining whether a dispute constitutes an intra-corporate Gabriel, while Gabriel assigned all his shares in CLO to
controversy, the Court uses two tests, namely, the relationship
Jennifer. Subsequently, Jennifer and CLO filed a complaint
test and the nature of the controversy test. An intra-corporate
against Gabriel and MFF in the SEC seeking to recover the
controversy is one which pertains to any of the following
corporate records and funds of CLO which Gabriel allegedly
relationships: (1) between the corporation, partnership or
refused to turn over, and which remained in the offices of MFF.


more assets to satisfy the judgment. Rehouse moved for an
Is there an intra-corporate controversy in this case? Alias Writ of Execution against Fairfield Bank (FB), the parent
company of D-Securities. FB opposed the motion on the
Yes, there is an intra-corporate controversy in this case. The grounds that it is a separate entity and that it was never made
fact that, when the complaint against Gabriel and MFF was filed a party to the case. The RTC granted the motion and issued
with the SEC (per 2006, RTC’s Jurisdiction), Jennifer and CLO the Alias Writ of Execution. In its Resolution, the RTC relied on
the following facts: 499,995 out of the 500,000 outstanding Page | 85
were no longer stockholders of MFF did not divest the SEC (per
2006, RTC’s Jurisdiction) of its jurisdiction over the case shares of stocks of D-Securities are owned by FB; FB had
inasmuch as Jennifer was a former stockholder of MFF and the actual knowledge of the subject matter of litigation as the
controversy arose out of this relation. (SEC v CA GR 93832 lawyers who represented D-Securities are also the lawyers of
Aug 23 91; 201s124) FB. As an alter ego, there is no need for a finding of fraud or
illegality before the doctrine of piercing the veil of corporate
(2006) What is an intra-corporate controversy? (8%) fiction can be applied. The RTC ratiocinated that being one and
the same entity in the eyes of the law, the service of summons
upon D-Securities has bestowed jurisdiction over both the
An intra-corporate controversy is a conflict between
stockholders, members or partners and the corporation, parent and wholly-owned subsidiary. Is the RTC correct? (4%)
association or partnership regarding the regulation of the
The RTC is WRONG. As FB is a separate entity and was never
corporation. The controversy must arise out of intra- corporate
made a party to the case, the judgment sought to be enforced
or partnership relations of the parties; or between such
against D-Securities cannot be made against its parent
corporation, partnership or association and the State insofar as
company, FB.
it concerns their individual franchises. It is further required that
the dispute be intrinsically connected with the regulation of the CONSIDER THIS AS A LECTURE
corporation (Speed Distributing Corp., et al. v. Court of
Appeals, et al, G.R. No. 149351, March 17, 2004; Intestate Piercing the corporate veil based on the alter ego theory
Estate of Alexander T.Tyv. Court of Appeals, G.R. No. 112872, requires the concurrence of three elements:
April 19, 2001).
(1) Control of the corporation by the stockholder or parent
corporation,
Is the Securities and Exchange Commission the venue for
actions involving intra-corporate controversies? (2%) (2) Fraud or fundamental unfairness imposed on the plaintiff,
and
No, pursuant to Subsection 5.2 of the Securities Regu- lation
Code, the quasi-judicial jurisdiction of the Securities and (3) harm or damage caused to the plaintiff by the fraudulent or
Exchange Commission to hear corporate cases, including unfair act of the corporation. The absence of all these elements
intra-corporate controversies, under Section 5 of Pres. Decree in the problem prevents the piercing of the corporate veil.
No. 902-A, has been expressly transferred to the designated
The absence of any one of these elements prevents piercing
Regional Trial Court. Pursuant to a memorandum circular
the corporate veil. In applying the alter ego doctrine, the courts
issued by the Supreme Court, only particularly designated RTC
are concerned with reality and not form, with how the
special commercial courts in each judicial region have original
corporation operated and the individual defendant’s
and exclusive jurisdiction over such cases (Intestate Estate of
relationship to that operation. Hence, all three elements should
Alexander T. Ty v. Court of Appeals, G.R. No. 112872, April
concur for the doctrine to be applicable.
19, 2001).
Mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stock of a
PIERCING THE VEIL
corporation is not of itself sufficient ground for disregarding the
(2014) In an action for collection of a sum of money, the separate corporate personality. Neither is the existence of
Regional Trial Court (RTC) of Makati City issued a decision interlocking directors, corporate officers and shareholders
finding D-Securities, Inc. liable to Rehouse Corporation for enough justification to pierce the veil of corporate fiction in the
P10,000,000.00. Subsequently, the writ of execution was absence of fraud or other public policy considerations.
issued but returned unsatisfied because D-Securities had no


To justify treating the sole stockholder or holding company as 5) Shield a violation of the proscription against forum
responsible, it is not enough that the subsidiary is so organized shopping (First Philippine International Bank v.
and controlled as to make it “merely an instrumentality, conduit Court of Appeals, G.R. No. 137537, January 24,
or adjunct” of its stockholders. It must further appear that to 1996).
recognize their separate entities would aid in the 6) Work inequities among members of the corporation
consummation of a wrong. internally, involving no rights of the public or third
persons (Secosa v. Heirs of Erwin Suarez Page | 86
Control, by itself, does not mean that the controlled corporation Francisco, G.R. No. 156104, June 29, 2004).
is a mere instrumentality or a business conduit of the mother 7) Evade the lawful obligations of the corporation like
company. Even control over the financial operational concerns a judgment credit (Sibagat Timber Corp. v. Garcia,
of a subsidiary company does not by itself call for disregarding G.R. No. 112546, December 11, 1992).
its corporate fiction. There must be a perpetuation of fraud 8) Escape liability arising from a debt (Arcilla v. Court
behind the control or at least a fraudulent or illegal purpose of Appeals, G.R. No. 88113, October 23, 1992).
behind the control in order to justify piercing the veil. Such 9) Avoid inclusion of corporate assets as part of the
fraudulent intent is lacking in this case (Pacific Rehouse estate of the decedent (Cease v. Court of Appeals,
Corporation vs CA (2014) G.R. No. L-35861, October 18, 1979).
10) To promote or to shield unfair objectives
(Villanueva v. Adre, G.R. No. 80863, April 27,
(2004) How does one pierce the veil of corporate fiction?
1989).
The veil of corporate fiction may be pierced by proving in court

that the notion of legal entity is being used to defeat public DISSOLUTION
convenience, justify wrong, protect fraud, or defend crime or
the entity is just an instrument or alter ego or adjunct of another (2012) AAA Corporation is a bank. The operations of AAA
entity or person. Corporation as a bank was not doing well. So, to avert any bank
run, AAA Corporation, with the approval of the Monetary Board,
sold all its assets and liabilities to BBB Banking Corporation
(2006) What is the doctrine of "piercing the veil of corporate
which includes all deposit accounts. In effect then, BBB
entity?" Explain.
Corporation will service all deposits of all depositors of AAA
Corporation.
The doctrine of "piercing the veil of corporate entity," is the
doctrine that allows the courts to look behind the separate Will the sale of all assets and liabilities of AAA Corporation to
juridical personality of a corporation and treat the corporation BBB Banking Corporation automatically dissolve or
as an association of persons and thereby make the individual terminate the corporate existence of AAA Corporation? Explain
actors personally liable for corporate liabilities. The fiction of your answer. (5%)
corporate identity is disregarded and the individuals comprising
it can be treated identically. The stockholders can be held
No, the sale of all the assets and liabilities of AAA Corporation
directly liable for corporate obligations, even to the extent of
to BBB Banking Corporation will not result in the automatic
their personal assets (Concept Builders v. NLRC, Marabe, et
dissolution of termination of the existence of the former. A
al, G.R. No. 108734, May 29, 1996).
decision to dissolve AAA Corporation or to terminate its
corporate existence would require a separate approval by a
To what circumstances will the doctrine apply? (2.5%) majority of the Board of Directors of AAA Corporation and its
stockholders holding at least two thirds of the total outstanding
The doctrine is applicable when the notion of legal entity is capital stock, as well as the separate approval by the Monetary
used to — Board.
1) Defeat public convenience.
2) Justify wrong.
What are the legal requirements in order that a corporation may
3) Protect fraud. be dissolved? (5%)
4) Defend crime (PNB v. Andrada Electric, G.R. No.
142936, April 17, 2002).
A corporation may be dissolved voluntarily under Section 118


(where no creditors are affected) or under Section 119 (where 2) SELLING THE PROPERTY to a third person and
creditors are affected), or by shortening of the corporate term dividing the proceeds among the five stockholders in proportion
under Section 120, or involuntarily by the SEC under Section to their stockholdings; or
122, all of the Corporation Code. Dissolution under Section
118,119 and 120 require the same corporate approvals stated 3) after the determination of the value of the property,
in (a) above. by ASSIGNING or TRANSFERRING THE PROPERTY to one
stockholder with the obligation on the part of said stockholder Page | 87
Note that the SEC also has the authority under Section 6 of PD to pay the other four stockholders the amount/s in proportion to
902-A to revoke the certificate of registration of a corporation the value of the stockholding of each.
upon any of the grounds provided by law, including the
aforementioned Section 6-A (1997) The corporation, once dissolved, thereafter continues to
be a body corporate for three years for purposes of prosecuting
(2002) Name three (3) methods by which a stock corporation and defending suits by and against it and of enabling it to settle
may be voluntarily dissolved. Explain each method. (5%) and close its affairs, culminating in the final disposition and
distribution of its remaining assets. If the 3 year extended life
The three (3) methods by which a stock corporation may be expires without a trustee or receiver being designated by the
voluntarily dissolved are: corporation within that period and by that time (expiry of the 3
year extended term), the corporate liquidation is not yet over,
1) Voluntary Dissolution where no creditors are how, if at all, can a final settlement of the corporate affairs be
affected. This is done by a majority vote of the made?
directors, and resolution of at least 2/3 vote of
stockholders, submitted to the Securities and The liquidation can continue with the winding up. The members
Exchange Commission. of the BOD can continue with the winding of the corporate
2) Voluntary dissolution where creditors are affected. affairs until final liquidation. They can act as trustees or
This is done by a petition for dissolution which must receivers for this purpose.
be filed with the Securities and Exchange
Commission, signed by a majority of the members
of the board of directors, verified by the president or
secretary, and upon affirmative vote of stockholders
BOARD OF DIRECTORS
representing at least 2/3 of the outstanding capital QUALIFICATIONS
stock.
3) Dissolution by shortening of the corporate term. (2012) No.VI. X is a Filipino immigrant residing in Sacramento,
This is done by amendment of the articles of incorporation. California. Y is a Filipino residing in Quezon City, Philippines.
Z is a resident alien residing in Makati City. GGG Corporation
(2001) X Corporation shortened its corporate life by amending is a domestic corporation - 40% owned by foreigners and 60%
its Articles of Incorporation. It has no debts but owns a prime owned by Filipinos, with T as authorized representative. CCC
property located in Quezon City. How would the said property Corporation is a foreign corporation registered with the
be liquidated among the five stockholders of said corporation? Philippine Securities and Exchange Commission. KKK
Discuss two methods of liquidation. (5%) Corporation is a domestic corporation (100%) Filipino owned.
S is a Filipino, 16 years of age, arid the daughter of Y.
The prime property of X Corporation can be liquidated among
the five stockholders after the property has been conveyed by Who can be incorporators? Who can be subscribers? (2%)
the corporation to the five stockholders, by dividing or
partitioning it among themselves in any two of the following X,Y,Z and T could all be incorporators and subscribers. Note,
ways: however, that Sec.10 of the Corporation Code requires that
there must be at least five but not more than fifteen
1) by PHYSICAL DIVISION or PARTITION based on incorporators (who must all be natural persons) and that a
the proportion of the values of their stockholdings; or majority of the incorporators must be residents of the
Philippines. S, being a minor, could neither be an incorporator


nor a subscriber. GGG Corporation, CCC Corporation, and the Philippines (Sec. 10, Corporation Code).
KKK Corporation, CCC Corporation, and KKK Corporation
could not be incorporators as they are not natural persons. [Note: The problem does not state what kind of business the
However, they could be subscribers. corporation would engaged in. Neither does it state whether
X,Y,Z and T are all of legal age and otherwise have the capacity
What are the differences between an incorporator and a to enter into contracts. Accordingly, the suggested answer set
Page | 88
subscriber, if there are any? (2%) out below assume that the corporation would not be engaging
in a nationalized activity and that X,Y,Z and T are all of legal
Some of the differences are as follows: first, all the age and otherwise have the capacity to enter into contracts.]
incorporators are required to sign and acknowledge the Articles
of Incorporation while the subscribers, as such, are not subject LIMITING QUALIFICATIONS OF BOD MEMBERS
to the same requirement; second, the incorporators could be
either natural or juridical persons; and third, the number of (2000) At the annual stockholders’ meeting of MS Corporation,
incorporators cannot exceed fifteen while the number of the stockholders unanimously passed a resolution authorizing
subscribers could be more than fifteen (subject to compliance, the Board of Directors to amend the corporate by-laws so as to
in the appropriate cases, with the requirements of the disqualify any stockholder who is also a director or stockholder
Securities Regulation Code). of a competing business from being elected to the Board of
Directors of MS Corporation. The by-laws were accordingly
Who are qualified to become members of the board of directors amended. GK, a stockholder of MS Corporation and a majority
of the corporation? (2%) stockholder of a competitor, sought election to the Board of
Directors of MS Corporation. His nomination was denied on the
ground that he was ineligible to run for the position. Seeking a
X,Y,Z and T could be directors (subject to the residency
nullification of the offending disqualification provision, GK
requirement mentioned in (a) above and any nationality
consults you about its validity under the Corporation Code of
requirement under the law governing the business of the
the Phils. What would your legal advice be? (3%)
corporation) but not GGG Corporation, CCC Corporation, and
KKK Corporation as they are not natural persons. However, the
aforementioned corporations could have their respective The provision in the amended by-laws disqualifying any
representatives nominated and possibly elected as directors by stockholder who is also a director or stockholder of a competing
the stockholders. Each director must own at least one share of business from being elected to the Board of Directors of MS
the capital stock of the corporation (Sec.23, Corporation Code). Corp is valid. The corporation is empowered to adopt a code of
by-laws for its government not inconsistent with the Corp Code.
Such disqualifying provision is not inconsistent with the Corp
Who are qualified to act as Treasurer of the company? (2%)
Code.
The Corporation Code does not impose any nationality or
(2001) Is a by-law provision of X Corporation “rendering
residency requirement in respect of the Treasurer. Any such
ineligible or if elected, subject to removal, a director if he is also
requirement or any other reasonable requirement may be
a director in a corporation whose business is in competition
adopted by the corporation and reflected in its by-laws, or
with or is antagonistic to said corporation” valid and legal?
required by the law(s) governing the business of the
State your reasons. (5%).
corporation or a law of general application (e.g., the Anti-
Dummy Law which applies to all nationalized businesses).
Accordingly, anybody with the qualifications required under the Yes, the by-law provision is valid. It is the right of a corporation
by-laws of the corporation or under the law(s) governing the to protect itself against possible harm and prejudice that may
business of the corporation, could be elected Treasurer by the be caused by its competitors. The position of director is highly
Board of Directors. Note, however, that the Treasurer could not sensitive and confidential. To say the least, to allow a person,
be the President at the same time (Sec. 25, Corporation Code). who is a director in a corporation whose business is in
competition with or is antagonistic to X Corporation, to become
also a director in X Corporation would be harboring a conflict of
Who can be appointed Corporate Secretary? (2%)
interest which is harmful to the latter (Gokongwei Jr v SEC 89
S 336 (1979); 97 S 78 (1980)).
The Secretary is required to be both a resident and a citizen of


other than cash, valued in excess of its fair value. Any director
(2003) To prevent the entry of Marlo Enriquez, whom it or officer of a corporation consenting to the issuance of watered
considered as one antagonistic to its interests, into its Board of stocks or who, having knowledge thereof, does not forthwith
Directors, Bayan Corporation amended its articles of express his objection in writing and file the same with the
incorporation and by-laws to add certain qualifications of corporate secretary, shall be solidarily liable with the
stockholders to be elected as members of its Board of stockholder concerned to the corporation and its creditors for
Directors. When presented for approval at a meeting of its the difference between the fair value received at the time of Page | 89
stockholders duly called for the purpose, the amendments were issuance of the stock and the par or issued value of the same
overwhelmingly ratified. Marlo Enriquez brought suits against (Section 65 of the Corporation Code).
Bayan Corporation to question the amendments. Would the
action prosper? Why? (4%) (2001) Suppose that the by-laws of X Corp, a mining firm
provides that “The directors shall be relieved from all liability for
The SC reiterated in the case of SMC vs. SEC decided in April any contract entered into by the corporation with any firm in
11, 1979, that it is recognized by all authorities that 'every which the directors may be interested.” Thus, director A
corporation has the inherent power to adopt by-laws 'for its acquired claims which overlapped with X’s claims and were
internal government, and to regulate the conduct and prescribe necessary for the development and operation of X’s mining
the rights and duties of its members towards itself and among properties.
themselves in reference to the management of its affairs.'" At
common law, the rule was "that the power to make and adopt a) Is the by-law provision valid? Why? (3%)
by- laws was inherent in every corporation as one of its b) What happens if director A is able to consummate
necessary and inseparable legal incidents. And it is settled his mining claims over and above that of the corporation’s
throughout the United States that in the absence of positive claims? (2%)
legislative provisions limiting it, every private corporation has
this inherent power as one of its necessary and inseparable a) No. It is in violation of Section 32 of the Corp Code.
legal incidents, independent of any specific enabling provision
in its charter or in general law, such power of self-government b) A should account to the corporation for the profits
being essential to enable the corporation to accomplish the which he realized from the transaction. He grabbed
purposes of its creation." the business opportunity from the corporation.
(Section 34, Corp Code)
DOCTRINE OF APPARENT AUTHORITY (1996) When may a corporate director, trustee, or officer be
held personally liable with the corporation?
(2015) (B) Define:
Doctrine of apparent authority (2%) A corporate director, trustee or officer may be held personally
liable with the corporation under the following circumstances:
By the doctrine of apparent authority, the corporation will be
estopped from denying the agent’s authority if it knowingly 1) When he assents to a patently unlawful act of the
permits one of its officers or any other agent to act within the corporation;
scope of an apparent authority, and it holds him out to the 2) When he acts in bad faith or with gross negligence
public as possessing the power to do those acts (Advance in directing the affairs of the corporation, or in
Paper Corporation v. Arma Traders Corporation, G.R. No. conflict with the interest of the corporation resulting
176897, December 11, 2013, 712 SCRA 313). in damages to the corporation, its stockholders or
other persons;
LIABILITY OF BOD 3) When he consents to the issuance of watered
(2015) (B) What is “watered stock” and what is the legal stocks or who, having knowledge thereof, does not
consequence of the issuance of such stock? (3%) forthwith file with the corporate secretary his written
objection thereto;
(B) Watered stocks are stocks issued for a consideration less 4) When he agrees to hold himself personally and
than its par or issued value or for a consideration in any form solidarily liable with the corporation; or


5) When he is made, by a specific provision of law, to (1995) Chito Santos is a director of both Platinum Corporation
personally answer for the corporate action. (Tramat Mercantile and Kwik Silver Corporation. He owns 1% of the outstanding
Inc. v CA capital stock of Platinum and 40T of Kwik. Platinum plans to
GR 111008) enter into a contract with Kwik that will make both companies
earn very substantial profits. The contract is presented at the
REMOVAL OF A MEMBER OF THE BOD respective board meetings of Platinum and Kwik.
Page | 90
(2016) Henry is a board director in XYZ Corporation. For being 1. In order that the contract will not be voidable, what
the "fiscalizer" in the Board, the majority of the board directors conditions will have to be complied with? Explain.
want him removed and his shares sold at auction, so he can no 2. If these conditions are not met, how may this
longer participate even in the stockholders' meetings. Henry contract be ratified? Explain.
approaches you for advice on whether he can be removed as
board director and stockholder even without cause. What is
1. At the meeting of the BOD of Platinum to approve
your advice?
the contract, Chito would have to make sure that
He cannot be removed by his fellow directors. The power to
remove belongs to the stockholders. He can only be removed a) his presence as director at the meeting
by the stockholders representing at least 2/3 of the outstanding is not necessary to constitute a quorum for such meeting;
capital stock in a meeting called for that purpose. The removal b) his vote is not necessary for the approval
may be with or without cause except that in this case, the of the contract; and
removal has to be with cause because it is intended to deprive c) the contract is fair and reasonable under
minority stockholders of the right of representation. the circumstances.
Explain "amotion" and the procedure in removing a director.

At the meeting of the BOD of Kwik to approve the contract,
(5%)
Chito would have to make sure that -
Amotion is the ousting of an officer from his or her post in the
corporation prior to the end of the term for which the officer was a) there is no fraud involved; and
appointed or elected, without taking away the person's right to b) the contract is fair and reasonable under
be a member of the corporation. the circumstances.
2. If the conditions relating to the quorum and required

COMPENSATION
number of votes are not met, the contract must be ratified by
the vote of stockholders representing at least 2/3 of the
(1991) After many difficult years, which called for sacrifices on
outstanding capital stock in a meeting called for the purpose.
the part of the company’s directors, ABC Manufacturing Inc
Furthermore, the adverse interest of Chito in the contract must
was finally earning substantial profits. Thus, the President
be disclosed and the contract is fair and reasonable. (Secs. 32
proposed to the BOD that the directors be paid a bonus
and 33, BP 68)
equivalent to 15% of the company’s net income before tax
during the preceding year. The President’s proposal was
(1996) Leonardo is the Chairman and President, while Raphael
unanimously approved by the BOD. A stockholder of ABC
is a Director of NT Corporation. On one occasion, NT Co,
questioned the bonus. Does he have grounds to object?
represented by Leonardo and A Ent, a single proprietorship
owned by Raphael, entered into a dealership agreement
Yes, the stockholder as a valid and legal ground to object to
whereby NT Co appointed A Ent as exclusive distributor of its
the payment to the directors of a bonus equivalent to 15% of
products in Northern Luzon. Is the dealership agreement valid?
the company’s net income. The law provides that the total
Explain.
annual compensation of the directors, in the preceding year,
cannot exceed 10% of the company’s net income before
The dealership agreement is voidable at the option of NT Co
income tax (Sec 30 Corp Code).
inasmuch as the facts do not indicate that the same was
approved by the BOD of NT Co before it was signed or,
INTERLOCKING DIRECTORS


assuming such approval, that it was approved under the STOCK DIVIDENDS are simply transfers of retained earnings
following conditions: to capital stock, thereby increasing the number of shares of
stocks of each stockholder with no required cash contribution.
1) That the presence of Raphael, the owner of A Ent, A two-thirds vote of the stockholders, coupled with a majority
in the meeting of the BOD at which the agreement was vote of the Board of Directors, is needed to declare stock
approved was not necessary to constitute a quorum for such dividends.
meeting; Page | 91
2) That the vote of Raphael was not necessary for the SOURCES OF DIVIDENDS
approval of the agreement;
3) That the agreement is fair and reasonable under the (2005) From what funds are cash and stock dividends
circumstances (Sec 32 Corp Code) sourced? Explain why. (2%)
ALTERNATIVE ANSWER: All cash and stock dividends are always paid out of the
The dealership agreement is valid upon the assumption that unrestricted retained earnings (also called surplus profit) of the
the same was approved by the BOD of NT Co before it was corporation. If the corporation has no unrestricted retained
signed and that such approval was made under the following earnings, the dividends would have to be sourced from the
conditions: capital stock. This is illegal. It violates the "TRUST FUND
DOCTRINE" that provides that the capital stock of the
1) That the presence of Raphael, the owner of A Ent, corporation is a trust fund to be kept intact during the life of the
in the meeting of the BOD at which the agreement was corporation for the benefit of the creditors of the corporation.
approved was (Commissioner of Internal- Revenue v. Court of Appeal®, G.R.
not necessary to constitute a quorum for such No. 108576, January 20, 1999; Boman Environmental
meeting; Development Corp. v. Court of Appeals, G.R. No. 77860,
2) That the vote of Raphael was not necessary for the November 22, 1988; and Steinberg v. Velasco, G.R. No.
approval of the agreement; 30460, March 12,1929)
3) That the agreement is fair and reasonable under the
circumstances (Sec 32 Corp Code) DECLARATION OF DIVIDENDS
(2009) No.I. (D) Dividends on shares of stocks can only be
declared out of unrestricted retained earnings of the
DIVIDENDS corporation.
DIVIDENDS VS. PROFIT: CASH DIVIDEND VS. STOCK
DIVIDEND True. Dividends on shares of stock of a corporation, whether
cash dividend or stock dividend, can be validly declared only
(2005) Distinguish dividend from profit; cash dividend from out of unrestricted retained earnings (Sec. 43, Corporation
stock dividend. (2%) Code). It cannot be declared out of the capital. Otherwise, such
declaration of dividend will violate the trust fund doctrine.
PROFITS are residual amounts representing return of capital
after deducting all corporate costs and expenses from
revenues. The accumulated profits, from year to year, DECLARATION OF DIVIDENDS
represent the corporate retained earnings from which the
dividends can be declared. (2005) Under what circumstances may a corporation declare
dividends? (2%)'
CASH DIVIDENDS represent an actual distribution of
accumulated profits to the stockholders as a return on their No form of dividends can be declared and paid by the
investments. Declaration of cash dividends requires only the corporation except from unrestricted retained earnings
approval of the majority of the Board of Directors in a proper appearing on its books. Dividends must be paid in amounts
resolution. proportional to all stockholders on the basis of outstanding
stock held by them. Cash or property dividends, can be
declared from such unrestricted retained earnings by a proper


resolution of the Board of Directors. Stock dividends, however, Trust Fund Doctrine provides that the capital stock, property,
must be declared by a proper resolution of the Board of and other assets of the corporation are regarded as equity in
Directors from existing unrestricted retained earnings and trust for the payment of the corporate creditors. The subscribed
ratified by stockholders representing at least two-thirds (2/8) of capital stock of the corporation is a trust fund for the payment
the outstanding capital stock of the corporation, obtained in a of debts of the corporation, which the creditors have the right
meeting duly called for the purpose. (Sec. 43, Corporation to look for the satisfaction of their credits and the corporation
Code) may not dissipate this and the creditors may sue stockholders Page | 92
directly for the unpaid subscription.
( 2015) Trust fund doctrine (2%)

(2001) For the past three years of its commercial operation, X,
an oil company, has been earning tremendously in excess of By the trust fund doctrine, subscriptions to the capital stock of
100% of the corporation’s paid-in capital. All of the stockholders a corporation constitute a fund to which the creditors have the
have been claiming that they share in the profits of the right to look for satisfaction of their claims. The scope of the
corporation by way of dividends but the Board of Directors doctrine encompasses not only the capital stock, but also other
failed to lift its finger. property and assets generally regarded in equity as a trust fund
for the payment of corporate debts (Halley v. Printwell, Inc.,
a) Is Corporation X guilty of violating a law? If in the G.R. No. 157549, May 30, 2011, 649 SCRA 116; Ong v. Tiu,
affirmative, state the basis (2%) G.R. Nos. 144476 & 144629, April 8, 2003, 401 SCRA 1).
Corporation X is guilty of violating Section 43 of the Corp Code.

This provision prohibits stock corporations from retaining (2007) No.VI. Discuss the trust fund doctrine. (5%)
surplus profits in excess of 100% of their paid-in capital.
The trust fund doctrine means that the capital stock, properties
b) Are there instances when a corporation shall not be and other assets of a corporation are regarded as equity in trust
held liable for not declaring dividends? (3%) for the payment of corporate creditors. Stated simply, the trust
fund doctrine states that all funds received by the corporation
The instances when a corporation shall not be held liable for in payment of the shares of stock shall be held in trust for the
not declaring dividends are: corporate creditors and other stockholders of the corporation.
Under such doctrine, no fund shall be used to buy back the
1) when justified by definite corporate expansion issued shares of stock except only in instances specifically
projects or programs approved by the BOD; or allowed by the Corporation Code (Boman Environmental
Development Corporation v. Court of Appeals, 167 SCRA 540
2) when the corporation is prohibited under any loan [1988]).
agreement with any financial institution or creditor,
whether local or foreign, from declaring dividends WATERED STOCKS
without its or his consent, and such consent has not
(2015) (B) What is “watered stock” and what is the legal
yet been secured; or
consequence of the issuance of such stock? (3%)
3) when it can be clearly shown that such retention is (B) Watered stocks are stocks issued for a consideration less
necessary under special circumstances obtaining in than its par or issued value or for a consideration in any form
the corporation, such as when there is need for other than cash, valued in excess of its fair value. Any director
special reserve for probable contingencies. or officer of a corporation consenting to the issuance of watered
stocks or who, having knowledge thereof, does not forthwith
express his objection in writing and file the same with the
corporate secretary, shall be solidarily liable with the
SHARES OF STOCK stockholder concerned to the corporation and its creditors for
STOCKS: TRUST FUND DOCTRINE the difference between the fair value received at the time of
issuance of the stock and the par or issued value of the same
(2019) (a) Trust fund doctrine (2%) (Section 65 of the Corporation Code).


STOCK AND TRANSFER BOOK The rights of a stockholder are as follows:
1) The right to vote, including the right to appoint a
(2009) No.XVIII. (C) What is a stock and transfer book? (1%) proxy;
2) The right to share in the profits of the corporation,
A Stock and transfer book is a book which records all stocks in including the right to declare stock dividends;
the name of the stockholders alphabetically arranged; the 3) The right to a proportionate share of the assets of
Page | 93
installments paid or unpaid on all stocks for which subscription the corporation upon liquidation;
has been made and the date of payment of any installment, a 4) The right of appraisal;
statement of every alienation, sale or transfer of stock made, 5) The pre-emptive right to shares;
the date thereof, and by and to whom made; and such other 6) The right to inspect corporate books and records;
entries as the by-laws may prescribe (Section 74, Corporation 7) The right to elect directors;
Code). 8) Such other rights as may contractually be granted
to the stockholders by the corporation or by special law
INCREASE OF CAPITAL STOCK
APPRAISAL RIGHT
(2001) Suppose X Corporation has an authorized capital stock
(2018) Yenetic Corporation wants to increase its Authorized
of P1M divided into 100,000 shares of stock with par value of
Capital Stock (which is currently fully subscribed and issued) to
P10 each.
be able to increase its working capital to undertake business
expansions. The Board of Directors consults with you as legal
a) Give two ways whereby said authorized capital counsel on the proper answers to the following issues: (2.5%
stock may be increased to about P1.5M. (3%) each)
b) Give three practical reasons for a corporation to
increase its capital stock (2%) (a) Can Yenetic's AOI be formally amended to remove the right
of appraisal on all dissenting stockholders in all matters under
a) Two ways of increasing the Authorized Capital the law which requires a ratification vote of the stockholders?
Stock of X corporation to P1.5M are:
Yenetic’s AOI cannot be amended to remove appraisal right of
1) Increase the number of shares from the stockholders on matters requiring their approval in cases
100,000 to 150,000 shares with the same par value of P10.00 where the law grants them such appraisal right, like:
each.
2) Increase par value of 100,000 shares to i) In case any amendment to the articles of incorporation which
P15.00 each. has the effect of changing or restricting the rights of any
stockholder or class of shares, or of authorizing preferences in
b) Three practical reasons for a corporation to any respect superiors to those of outstanding shares of any
increase its capital stock are: class, or of extending or shortening the term of corporate
existence;
1) to generate more working capital;
2) to have more shares with which to pay ii) In case of sale, lease, exchange, transfer , mortgage, pledge
for the acquisition of more assets like acquisition of company or other disposition of all or substantially all of the corporate
car, stocks, property and assets;
house, machinery or business; and
3) to have extra share with which to cover iii) In case of merger, (Section 81 of the Corporation Code )
or meet the requirement for declaration of stock dividend. iv) In case of investment of funds in the secondary purpose of
the corporation or another business (Section 42)
Appraisal right is a statutory right. It cannot be denied to the

RIGHTS OF THE STOCKHOLDERS stockholders in cases where the law allows such right. For all
the other matters under the Corporation Code which require
RIGHTS OF A STOCKHOLDER ratificatory approval of the shareholders, the AOI may be
formally amended to remove appraisal right because the right
(1996) What are the rights of a stockholder? does not exist anyway in those cases.


(b) If the increase in Authorized Capital Stock is formally (a) Explain the concept of pre-emptive right under the
submitted to the stockholders in a meeting duly called for the Corporation Code. (2 %)
purpose, what is the vote necessary for the stockholders'
ratification, and may the dissenting stockholders exercise their Pre-emptive right under Section 38 of the Revised Corporation
appraisal right? Code is the right of all stockholders in a stock corporation to
subscribe to all issues or disposition of shares of any class, in
Any provision or matter stated in the AOI may be amended by proportion to their respective shareholdings. Page | 94
a Majority vote of the board of directors and the vote or written
assent of the stockholders representing at least 2/3 of the The law further provides, however, that such pre-emptive right
outstanding capital stock. Stockholders cannot exercise any shall not extend to shares issued in compliance with laws
appraisal right in case of amendment to the articles of requiring stock offerings or minimum stock ownership by the
incorporation to increase capital stock because this is not one public and to shares issued in good faith with the approval of
of the cases allowed by law where appraisal right may be the stockholders representing two-thirds (2/3) of the
exercised (Articles 81 and 42 of the Corporation Code. outstanding capital stock in exchange for property needed for
corporate purposes or in payment of previously contracted
(2003) In what instances may the right of appraisal be availed debt.
of under the Corporation Code?
(b) Is Ms. Z’s contention correct? Explain. (3%)
SECTION 81. Instances of Appraisal Right. — Any stockholder Section 38 of the Revised Corporation Code provides that the
of a corporation shall have the right to dissent and demand stockholders’ pre-emptive right may be denied by the articles
payment of the fair value of his shares in the following of incorporation of a stock corporation, or an amendment
instances: thereto.
1. In case any amendment to the articles of Corollarily, the articles of incorporation may also limit the
exercise of pre-emptive by the stockholders, as in the present
incorporation has the effect of changing or
case. The notice sent to stockholders, including Ms. Z in the
restricting the rights of any stockholders or class of
present case, merely reiterates that limit imposed by the
shares, or of authorizing preferences in any respect
articles of incorporation. Likewise, Ms. Z’s preemptive right
superior to those of outstanding shares of any class, may be validly waived in accordance thereto, without an
or of extending or shortening the term of corporate express waiver in writing.
existence;
2. In case of sale, lease, exchange, transfer, Thus, the contention of Ms. Z is incorrect as her pre-emptive
mortgage, pledge or other disposition of all or right is already validly waived.
substantially all of the corporate property and assets
as provided in the Code; and
PRE-EMPTIVE RIGHT VS. APPRAISAL RIGHT
3. In case of merger or consolidation. (n)
(1999) ABC Corporation has an authorized capital stock of

PRE-EMPTIVE RIGHTS P1M divided into 50,000 common shares and 50,000 preferred
shares. At its inception, the Corporation offered for subscription
(2019) A.3. In June 2018, DEF Corp. sent notices to its all the common shares. However, only 40,000 shares were
stockholders informing them of the corporation’s issuance of subscribed. Recently, the directors thought of raising additional
new shares of stock. The notice included a reminder that, capital and decided to offer to the public all the authorized
pursuant to DEF Corp.’ s Articles of Incorporation, any
shares of the Corporation at their market value.
stockholder who fails to exercise his or her pre-emptive right
within three (3) weeks from receipt of notice would be
a) Would Mr. X, a stockholder holding 4,000 shares,
considered to have waived the same.
have pre-emptive rights to the remaining 10,000 shares? (2%)
Ms. Z, a stockholder of DEF Corp., failed to exercise her pre- b) Would Mr. X have pre-emptive rights to the 50,000
emptive right within the said period. However, she claimed that preferred shares? (2%)
she did not validly waive her right to do so because a waiver c) Assuming that the existing stockholders are entitled
must be expressed in writing. to pre-emptive rights, at what price will the shares be offered?
(2%)


d) Assuming a stockholder disagrees with the Sid thus became a minority stockholder and a minority member
issuance of new shares and the pricing for the of the Board of Directors. Excellent, being the leading beverage
shares, may the stockholder invoke his appraisal manufacturer in the country, became the monopoly when
rights and demand payment for his shareholdings? Meridian’s own beverage business was merged with
(2%) Excellent’s, thereby making Excellent virtually the only
beverage manufacturer in the country. Left out and ignored by
the management, Sid became a fiscalizer of sorts, questioning Page | 95
a. Yes. Mr. X, a stockholder holding 4,000 shares, has pre-
during the Board meetings the direction being pursued by
emptive right to the remaining 10,000 shares. All stockholders Excellent’s officers. Ultimately, Sid demanded the inspection of
of a stock corporation shall enjoy pre- emptive right to the books and other corporate records of Excellent. The
subscribe to all issues or disposition of shares of any class, in management refused to comply, saying that his right as a
proportion to their respective shareholdings. minority stockholder has been much reduced.
ALTERNATIVE ANSWER. State under what conditions may Sid properly assert his right
to inspect the books and other corporate records of Excellent.
a. No, Mr X does not have pre-emptive right over the
Explain your answer. (3%)
remaining 10,000 shares because these shares
have already been offered at incorporation and he Sid may properly assert his right to inspect the books and other
chose not to subscribe to them. He, therefore, has separate records of Excellent under the following conditions:
waived his right thereto and the corporation may
offer them to anyone. 1. The purpose of his inspection is legitimate and germane to
his interest as a stockholder
b. Yes. Mr. X would have pre-emptive rights to the a. To ascertain the financial condition of the
50,000 preferred shares. All stockholders of a stock company or the propriety of dividends;
corporation shall enjoy pre-emptive right to b. the value of the shares of stock for sale or
subscribe to all issues or disposition of shares of investment;
any class, in proportion to their respective c. whether there has been mismanagement;
shareholdings. d. in anticipation of shareholders' meetings to obtain
a mailing list of shareholders to solicit proxies or influence
ALTERNATIVE ANSWER: voting;
b. Yes, Mr. X has preemptive right over the 50,000 e. to obtain information in aid of litigation with the
preferred shares because they were not offered corporation or its officers as to corporate transactions.
before by the corporation for subscription.
2. The right should be exercised during reasonable hours on
business day
c. The shares will be offered to existing stockholders,
who are entitled to preemptive right, at a price fixed
3. He has not improperly used any information secured in
by the BOD, which shall not be less than the par
previous examination
value of such shares.
If the right is to be denied on Sid, the burden of proof is upon
d. No, the stockholder may not exercise appraisal right the corporation to show that the purpose of the shareholder is
because the matter that he dissented from is not improper, by way of defense.
one of those where right of appraisal is available
under the corporation code. DERIVATIVE SUIT
(2019) A.2. In May 2018, ABC Corp. entered into a

RIGHT TO INSPECT THE BOOKS AND OTHER merchandising contract which terms and conditions were totally
CORPORATE RECORDS lopsided in favor of the counterparty, XYZ, Inc. As a result, ABC
Corp. suffered tremendous financial losses.
(2017) Sid used to be the majority stockholder and
President of Excellent Corporation (Excellent). When Meridian A year after, or in May 2019, Mr. X became a stockholder of
Co., Inc. (Meridian), a local conglomerate, took over control ABC Corp. Learning about the circumstances surrounding the
and ownership of Excellent, it brought along its team of officers. merchandising contract, Mr. X filed a derivative suit against


ABC Corp. ‘s directors to claim damages on behalf of ABC of Directors for the latter to sue. Here, such a demand would
Corp. due to their mismanagement. be futile, since the directors who comprise the majority
(namely, BB, CC, DD and EE) are the ones guilty of the wrong
(a) What is a derivative suit? (2%)
complained of.
Derivative suits are those brought by one or more stockholders
or members in the name and on behalf of the corporation, to Second, AA appears to be stockholder at the time the alleged
misappropriation of corporate funds. Page | 96
redress wrongs committed against it, or protect or vindicate
corporate rights whenever the officials of the corporation refuse
to sue or the ones to be sued or has control of the corporation. Third, the suit is brought on behalf and for the benefit of MOP
Corporation. In this connection, it was held in Conmart (Phils.)
(b) Was Mr. X’s filing of a derivative suit proper? Explain. (3%) Inc. v. Securities and Exchange Commission, 198 SCRA 73
(1991) that to grant to the corporation concerned the right of
No. The derivative suit filed by Mr. X was not proper, as Mr. X
withdrawing or dismissing the suit, at the instance of the
was not yet a stockholder when the act complained off was
majority stockholders and directors who themselves are the
performed. For a derivative suit to be proper or valid, the
following requisites must be met, to wit: (1) He was a persons alleged to have committed the breach of trust against
stockholder or member at the time the acts or transactions the interests of the corporation would be to emasculate the right
subject of the action occurred and at the time the action was of minority stockholders to seek redress for the corporation.
filed; (2) He exerted all reasonable efforts, and alleges the Filing such action as a derivative suit even by a lone
same with particularity in the complaint, to exhaust all remedies stockholder is one of the protections extended by law to
available under the articles of incorporation, by-laws, laws or minority stockholders against abuses of the majority.
rules governing the corporation or partnership to obtain the
relief he desires; (3) No appraisal rights are available for the
act or acts complained of; (4) The suit is not a nuisance or WATERED STOCK
harassment suit; and (5) Corporation must be impleaded as a
plaintiff.
(1993) A became a stockholder of Prime Real Estate
In the instant case, the first requisite is wanting. Mr. X became Corporation (PREC) on July 10, 1991, when he was given one
a stockholder on May 2019, the transaction assailed by Mr. X share by another stockholder to qualify him as a director. A was
was made in May 2018, or a year before he became a not re-elected director in the July 1, 1992 annual meeting but
stockholder. Hence, not being a stockholder at the time the acts he continued to be a registered shareholder of PREC.
or transactions subject of the action occurred, the derivative
suit is not proper. When he was still a director, A discovered that on Jan 5, 1991,
PREC issued free of charge 10,000 shares to X a lawyer who
REQUISITES assisted in a court case involving PREC.
1) Can A now bring an action in the name of the
(2004) AA, a minority stockholder, filed a suit against BB, CC, corporation to question the issuance of the shares
DD, and EE, the holders of majority shares of MOP to X without receiving any payment?
Corporation, for alleged misappropriation of corporate funds.
The complaint averred, inter alia, that MOP Corporation is the 2) Can X question the right of A to sue him in behalf of
corporation in whose behalf and for whose benefit the the corporation on the ground that A has only one share in his
derivative suit is brought. In their capacity as members of the name?
Board of Directors, the majority stockholders adopted a
resolution authorizing MOP Corporation to withdraw the suit. 3) Cannot the shares issued to X be considered as
Pursuant to said resolution, the corporate counsel filed a watered stock?
Motion to Dismiss in the name of the MOP Corporation. Should
the motion be granted or denied? Reason briefly. (5%)
1) As a general rule, A cannot bring a derivative suit in
the name of the corporation concerning an act that
No. All the requisites for a valid derivative suit exist in this case. took place before he became a stockholder.
However, if the act complained of is a continuing
First, AA was exempt from exhausting his remedies within the one, A may do so.
corporation, and did not have to make a demand on the Board


2) No. In a derivative suit, the action is instituted/ TAKE NOTE: The RTC has jurisdiction over the cases which
brought in the name of a corporation and reliefs are involves intra-corporate controversy. As of 2006, the applicable
prayed for therein for the corporation, by a minority rule is that there is a TRANSFERRED JURISDICTION under
stockholder. The law does not qualify the term Sec. 5.2 of the SRC, the Commission’s jurisdiction over all
“minority” in terms of the number of shares owned cases enumerated under PD 902-A sec. 5 has been transferred
by a stockholder bringing the action in behalf of the to the Courts of general jurisdiction or the appropriate Regional
Page | 97
corporation. (SMC v Khan 176 SCRA 448) Trial Court.
3) No. WATERED SHARES are those sold by the

corporation for less than the par/book value. In the ULTRA VIRES ACTS
instant case, it will depend upon the value of
services rendered in relation to the total par value of (2009) When is there an ultra vires act on the part of (a) the
the shares. corporation; (b) the board of directors; and (c) the corporate
officers? (3%)
CORPORATION SOLE 1. the corporation;
DEFINITION Under Section 45 of the Corporation Code, no corporation shall

(2004) What is a corporation sole? possess or exercise any corporate power except those
conferred by the Code or by its articles of incorporation and
Section 110 of the Corporation Code defines a "corporation except such as are necessary or incidental to the exercise of
sole" as one formed for the purpose of administering and the powers so conferred. When a corporation does an act or
managing, as trustee, the affairs, property and temporalities of engages in an activity which is outside of its express, implied
any religious denomination, sect or church. It is formed by the or incidental powers set out in its articles of incorporation, the
chief archbishop, bishop, priest, minister, rabbi or other act is deemed to be ultra vires.
presiding elder of such religious denomination, sect or church.
2. the board of directors;
EXPECT ONE QUESTION ABOUT SOLE CORPORATION
THIS 2021 BAR. When the Board engages in an activity or enters into a contract
without the ratificatory vote of the stockholders in those
SECURITY AND EXCHANGE instances where the Corporation Code so Requires such
ratificatory vote, such as when the corporation is made to invest
COMMISSION in another corporation or engage in a business which is not in
pursuit of its primary purpose, the board resolution not ratified
TRANSFERRED JURISDICTION by stockholders owning or representing at least two-thirds of
the outstanding capital stock would make the transaction void,
(1996) What is the original and exclusive jurisdiction of the as being ultra vires.
SEC?
3. the corporate officers
The SEC has original and exclusive jurisdiction over cases involving:
a) Devices or schemes amounting to fraud and
misrepresentation;
When a corporate officer enters into a contract on behalf of the
b) Controversies arising out of intra-corporate or partnership corporation without having been so expressly or impliedly
relations; authorized by the Board of Directors, even when the act or
c) Controversies in the election or appointment of directors, contract falls within the corporation’s express, implied or
officers, etc; incidental power, then the unauthorized act of the corporate
d) Petitions to be declared in a state of suspension of officer is deemed to be ultra vires.
payments (Sec 5 PD 902-A)
-------------xxx------------


TAXATION LAW
BIR rulings are administrative opinions issued by
the Commissioner of Internal Revenue interpretative of a
provision of a tax law. They are the best guess of the moment
and incidentally often contain such well- considered and sound
PART 1 law, but the courts have held that they do not prevent an entire
change of front at any time and are merely advisory – sort of
REMEDIES AND AGENCIES an information service to the taxpayer. (Aban, Law of Basic Page | 98
FIRST MOST ASKED TOPIC FROM Taxation in the Philippines, p. 149 citing Quiazon and Lukban).
1994 – 2019 TAX BAR
(B) What is required to make a BIR ruling or
EXAMINATION first impression a valid one?
A BIR ruling of first impression to be valid must not

BUREAU OF INTERNAL REVENUE be against the law and it must be issued only by the
Commissioner of Internal Revenue. (Philippine Bank of
Communications v. CIR, 302 SCRA 241 [1999]; Section 7,
AUTHORITY OF CIR NIRC).
(2007) III. What kind of taxes, fees and charges are
(C) Does a BIR ruling have a retroactive
considered as National Internal Revenue Taxes under the
effect, considering the principle that tax exemptions should be
National Internal Revenue Code (NIRC)? (5%)
interpreted strictly against the taxpayer?
The following taxes, fees and charges are No. A BIR ruling cannot be given retroactive effect
considered to be National Internal Revenue Taxes under the if its retroactive application is prejudicial to the taxpayer.
National Internal Revenue Code: (Section 246, NIRC; CIR v. Court of Appeals et. Al. 267 SCRA
(A) Income tax; 557 [1997]).
(B) Estate and donor’s taxes; ANOTHER ALTERNATIVE ANSWER:
(C) Value-added tax; The general rule is that a BIR ruling does not have
a retroactive effect if giving it a retroactive application is
(D) Other percentage taxes; prejudicial to the taxpayer. However, if the first ruling is tainted
with either of the following: (1) misstatement or omission of
(E) Excise taxes; materials facts, (2) the facts gathered by the BIR are materially
(F) Documentary stamp taxes; and different from the facts upon which the ruling is based, or (3)
the taxpayer acted in bad faith, a subsequent ruling can have
Such other taxes as are or hereafter may be a retroactive application. (ABS-CBN Broadcasting Co. v. CTA
imposed and collected by the Bureau of Internal Revenue. & CIR, 08 SCRA 142 [1981]; Sec 246, NIRC).
(Section 21, NIRC)
(2005) State the conditions required by the Tax
(2007) IV.XYZ Corporation, an export-oriented Code before the Commissioner of Internal Revenue could
company, was able to secure a Bureau of Internal Revenue authorize the refund or credit of taxes erroneously or illegally
(BIR) ruling in June 2005 that exempts from tax the importation received.
of some of its raw materials. The ruling is of first impression,
which means the interpretations made by the Commissioner of Under Sec. 204(C), NIRC, the following conditions
Internal Revenue is one without established precedents. must be met:
Subsequently, however, the BIR issued another ruling which in
1. There must be a written claim for refund
effect would subject to tax such kind of importation. XYZ
filed by the taxpayer with the Commissioner.
Corporation is concerned that said ruling may have a
retroactive effect, which means that all their importations done 2. The claim for refund must be a
before the issuance of the second ruling could be subject to categorical demand for reimbursement.
tax. (10%)
(A) What are BIR rulings?


3. The claim for refund must be filed within A. Compromise the payment of any internal
two (2) years from date of payment of the tax or penalty revenue tax? (2%)
regardless of any supervening cause.
The Commissioner of Internal Revenue may be
(2005) State and discuss briefly whether the authorized to compromise the payment of any internal revenue
following cases may be compromised or may not be tax where:
compromised: Page | 99
1) A reasonable doubt as to the validity of
a) Delinquent accounts; the claim against the taxpayer exists; or
b) Cases under administrative protest, after 2) the financial position of the taxpayer
issuance of the final assessment notice to the taxpayer, which demonstrates a clear inability to pay the assessed tax.
are still pending;
B. Abate or cancel a tax liability? (3%)
c) Criminal tax fraud cases;
The Commissioner of Internal Revenue may abate
d) Criminal violations already filed in court; or cancel a tax liability when:
e) Cases where final reports of 1) The tax or any portion thereof appears to
reinvestigation or reconsideration have been issued resulting be unjustly or excessively assessed; or
in the reduction of the original assessment agreed to by the
taxpayer when he signed the required agreement form. (5%) 2) The administration and collection costs
involved do not justify the collection of the amount due. [Sec.
The following cases may still be compromised (R.R. 204 (B), NIRC of 1997]
30-02 [2002]) because of the taxpayer's financial incapacity to
pay the tax due or the assessment's doubtful validity: (1996) Explain the extent of the authority of the
Commissioner of Internal Revenue to compromise and abate
a) DELINQUENT ACCOUNTS may be taxes?
compromised because there is no showing that there is a duly-
approved schedule of installment payments; and The authority of the Commissioner to compromise
encompasses both civil and criminal liabilities of the taxpayer.
b) Cases under administrative protest, after The civil compromise is allowed only in cases
issuance of the final assessment notice to the taxpayer, which
are still pending. 1) where the tax assessment is of doubtful
validity, or
The following cases MAY NO LONGER BE
COMPROMISED (R.R. 30-02 [2002]) because the 2) when the financial position of the
taxpayer has not paid his taxes for reasons other than his taxpayer demonstrates a clear inability to pay the tax.
financial incapacity or the doubtful validity of the assessment:
The compromise of the tax liability is possible at any
a) CRIMINAL TAX FRAUD cases as may stage of litigation and the amount of compromise is left to the
be determined by the Commissioner or his authorized agents discretion of the Commissioner except with respect to final
may not be compromised; assessments issued against large taxpayers wherein the
Commissioner cannot compromise for less than fifty percent
b) CRIMINAL VIOLATIONS ALREADY (50%). Any compromise involving large taxpayers lower than
FILED IN COURT so that the taxpayer will not profit from his fifty percent (50%) shall be subject to the approval of the
fraud which would encourage tax evasion; and Secretary of Finance.
c) Cases where final reports of
reinvestigation or reconsideration have been issued resulting
in the reduction of the original assessment agreed to by the All criminal violations except those involving fraud,
taxpayer when he signed the required agreement form. The can be compromised by the Commissioner but only prior to the
taxpayer is estopped from applying for a compromise. filing of the information with the Court. The Commissioner may
also abate or cancel a tax liability when
(2000) Under what conditions may the
Commissioner of Internal Revenue be authorized to: 1. the tax or any portion thereof appears to
have been unjustly or excessively assessed; or


2. the administrative and collection costs (b) Are the deficiency tax assessment
involved do not Justify collection of the amount due. (Sec. 204, and warrant of distraint and/or levy issued against
NIRC) KLM Corp. valid? Explain. (3%)
No, the deficiency tax assessment and

REMEDIES warrant of distraint and/or levy issued against KLM
Corp. are not valid because KLM Corp. did not receive Page | 100
AGAINST TAXPAYER a PAN. After the investigation of BIR, if it is
determined that there exists sufficient basis to assess
ASSESSMENT the taxpayer for any deficiency tax or taxes, the BIR
shall issue to the taxpayer, at least by registered mail,
2019 A1 On October 5, 2016, the
a PAN for the proposed assessment, showing in detail
Bureau of Internal Revenue (BIR) sent KLM
the facts and the law on which the assessment is
Corp. a Final Assessment Notice (FAN), stating
based. The taxpayer must be informed of his liability
that after its audit pursuant to a Letter of
for deficiency taxes through a PAN and the non-
Authority duly issued therefor, KLM Corp. had
service of a PAN is fatal to the validity of the
deficiency value-added and withholding taxes.
assessment.
Subsequently, a warrant of distraint and/or levy
was issued against KLM Corp. KLM Corp. 2014 XV When is a pre-assessment notice required
opposed the actions of the BIR on the ground under the following cases? (1%)
that it was not accorded due process because
it did not even receive a Preliminary (A) When the finding for any deficiency tax
Assessment Notice (PAN) after the BIR‘s is the result of mathematical error in the computation of the tax
investigation, which the BIR admitted. as appearing on the face of the return.
(a) Distinguish a PAN from a FAN. (2%) (2012) (X) Explain the following statements:
A PAN is a communication issued by the
Regional Assessment Division, or any other (B) Should the accused be found guilty
concerned BIR Office, informing a Taxpayer who beyond reasonable doubt for violation of Section 255 of the Tax
has been audited of the findings of the Revenue Code (for failure for file tax return or to supply correct
Officer, following the review of these findings. If the information), the imposition of the civil liability by the CTA
Taxpayer disagrees with the findings stated in the should be automatic and no assessment notice from the BIR is
PAN, he shall then have fifteen (15) days from his necessary? (2%)
receipt of the PAN to file a written reply contesting
the proposed assessment. Yes. If the failure to file tax return or to supply
correct information resulted to unpaid taxes the amount of
A FAN, on the other hand, is a which is proven during trial, the CTA shall not only impose the
declaration of deficiency taxes issued to a taxpayer criminal penalty but must likewise order the payment of the civil
who: liability (Section 205(b), NIRC). As a matter of fact, it is well-
recognized that in the case of failure to file a return, a
(1) fails to respond to a PAN within the proceeding in court for the collection of the tax may be filed
prescribed period of time, or (2) whose reply to the without the need of an assessment, which recognizes that the
PAN was found to be without merit. A FAN contains civil liability of a taxpayer maybe established without the need
not only a computation of tax liabilities, but also a of an assessment (Section 222(a), NIRC).
demand for payment within a prescribed period. The
formal letter of demand calling for payment of the (2008) VII. After examining the books and records
taxpayer‘s deficiency tax or taxes shall state the of EDS Corporation, the 2004
facts, the law, rules and regulations, or final assessment notice, showing basic tax of
jurisprudence on which the assessment is based, P1,000,000, deficiency interest of P400,000, and due date for
otherwise, the formal letter of demand and the payment of April 30, 2007, but without the demand letter, was
notice of assessment shall be void. If the Taxpayer mailed and released by the BIR on April 15, 2007. The
disagrees with the findings stated in the FAN, he registered letter, containing the tax assessment, was received
shall then have thirty (30) days from receipt of FAN by the EDS Corporation on April 25, 2007.
to file a protest, either a request for reconsideration
or a request for reinvestigation.


(A) What is an assessment notice? What are the Revenue v. Court of Appeals, City Trust Banking Corporation
requisites of a valid assessment? Explain. (3%) and Court of Tax Appeals, G.R. No. 106611, July 21, 1994)
An assessment notice is a computation prepared by (1998) When is a revenue tax considered

the BIR of the alleged unpaid taxes, plus interests, penalties or delinquent? [3%)
surcharges, if any. However, an assessment notice must be
accompanied by a demand letter from the BIR in order to result A revenue tax is considered delinquent when it is Page | 101
in valid assessment (RR No. 12- 99). unpaid after the lapse of the last day prescribed by law for its
payment. Likewise, it could also be considered as delinquent
(B) As tax lawyer of EDS Corporation, what where an assessment for deficiency tax has become final and
legal defense(s) would you raise against the assessment? the taxpayer has not paid it within the period given in the notice
Explain. (3%) of assessment.
I would raise the defense that there is no valid (1996) Distinguish a false return from a fraudulent
assessment because EDS Corporation did not receive a return.
demand letter from the BIR.
The distinction between a false return and a
(2008) VII. After examining the books and records fraudulent return is that the first merely implies a deviation from
of EDS Corporation, the 2004 the truth or fact whether intentional or not, whereas the second
final assessment notice, showing basic tax of is intentional and deceitful with the sole aim of evading the
P1,000,000, deficiency interest of P400,000, and due date for correct tax due (Aznar us. Commissioner, L-20569, August 23,
payment of April 30, 2007, but without the demand letter, was 1974).
mailed and released by the BIR on April 15, 2007. The
registered letter, containing the tax assessment, was received ALTERNATIVE ANSWER:
by the EDS Corporation on April 25, 2007.
A false return contains deviations from the truth
(A) What is an assessment notice? What are the which may be due to mistakes, carelessness or ignorance of
requisites of a valid assessment? Explain. (3%) the person preparing the return. A fraudulent return contains an
intentional wrongdoing with the sole object of avoiding the tax
An assessment notice is a computation prepared by and it may consist in the intentional under declaration of
the BIR of the alleged unpaid taxes, plus interests, penalties or income, intentional over declaration of deductions or the
surcharges, if any. However, an assessment notice must be recurrence of both. A false return is not necessarily tainted with
accompanied by a demand letter from the BIR in order to result fraud because the fraud contemplated by law is actual and not
in valid assessment (RR No. 12- 99). constructive. Any deviation from the truth on the other hand,
whether intentional or not, constitutes falsity. (Aznar vs.
(B) As tax lawyer of EDS Corporation, what Commissioner, L-20569, August 23, 1974)
legal defense(s) would you raise against the assessment?
Explain. (3%) CRIMINAL PROSECUTION
I would raise the defense that there is no valid (2013) (XII) You are the retained tax counsel of
assessment because EDS Corporation did not receive a ABC Corp. Your client informed you that they have been
demand letter from the BIR. directly approached with a proposal by a BIR insider (i.e., a
middle rank BIR official) on the tax matter they have referred to
(2005) Is a deficiency tax assessment a bar to a
you for handling. The BIR insider's proposal is to settle the
claim for tax refund or tax credit? Explain.
matter by significantly reducing the assessment, but he will get
Yes, the deficiency tax assessment is a bar to a tax 50% of the savings arising from the reduced assessment.
refund or credit. The Taxpayer cannot be entitled to a refund What tax, criminal and ethical considerations will
and at the same time liable for a tax deficiency assessment for you take into account in giving your advice? Explain the
the same year. The deficiency assessment creates a doubt as relevance of each of these considerations. (9%)
to the truth and accuracy of the Tax Return. Said Return cannot
therefore be the basis of the refund (Commissioner of Internal I will advise my client not to accept the settlement
Revenue v. Alltel [2002], citing Commissioner of Internal proposal but instead pay the entire amount of tax that is legally
due to the government.


On the tax aspect, I will tell my client that a proposed False. There is a different between a false return
assessment covering deficiency taxes which are legally due and a fraudulent return. The first merely implies a deviation
must be fully paid to exonerate the taxpayer from further from the truth or fact whether intentional or not, whereas the
liabilities. The unwarranted reduction of the proposed second is intentional and deceitful with the aim of evading the
assessment into half and the payment thereof will not close the correct tax due (Aznar v. Commissioner, GR NO. L-20569, Aug
case but can be re-opened anytime within ten years from 23, 1974, 58 SCRA 519 (1974)).
discovery so as to collect the correct amount of taxes from ABC Page | 102
Corp. (2005) Josel agreed to sell his condominium unit to
Jess for P2.5 Million. At the time of the sale, the property had
The act of deliberately paying an amount of tax that a zonal value of P2.0 Million. Upon the advice of a tax
is less than what is known by my client to be legally due through consultant, the parties agreed to execute two deeds of sale,
a cause of action that is unlawful is considered as tax evasion. one indicating the zonal value of P2.0 Million as the selling
I will advise my client that conniving with a BIR insider to reduce price and the other showing the true selling price of P2.5
the proposed assessment for a fee us unlawful which can Million. The tax consultant filed the capital gains tax return
expose the officers of the corporation to criminal liability. using the deed of sale showing the zonal value of P2.0 Million
Likewise, the payment to be made to the BIR official of 50% of as the selling price. Discuss the tax implications and
the savings constitutes direct bribery punishable under the consequences of the action. (5%)
Revised Penal Code. Insofar as the BIR officer is concerned he
will also be a principal to direct bribery and to the criminal The action of the parties constitutes tax evasion and
violation penalized under Section 269 of the Tax Code. exposes Josel to:
On ethical grounds, agreeing to the settlement (1) DEFICIENCY FINAL INCOME TAX on
scheme being proposed by the BIR insider is agreeing to the the sale of real property in the Philippines classified as a capital
perpetration of a dishonest act. Since taxation is symbiotic asset. Under Sec. 24(D) of the NIRC, the final tax of six percent
relationship, fair dealing on both sides is of paramount (6%) shall be based on the gross selling price of P2.5 Million or
importance. I will remind my client that taxpayers owe honesty zonal value of P2.0 Million, whichever is higher, i.e., P2.5
to government just as government owes fairness to taxpayers. Million;
(CIR v. Tokyo Shipping Co. Ltd., G.R. No. 68252, May 26,
1996) (2) FRAUD PENALTY amounting to 50%
surcharge on the amount evaded (Sec. 248[B] NIRC); and
(2012) X. Explain the following statements:
(3) DEFICIENCY INTEREST of 20% per
(A) The acquittal of the taxpayer in a criminal annum on the deficiency. (Sec. 249[A][B], NIRC)
action under the Tax Code does not necessarily result in
exoneration of said taxpayer from his civil liability to pay taxes. ALTERNATIVE ANSWER:
(3%)
There is tax evasion because of the concurrence of
In taxation, the taxpayer becomes criminally liable the following factors:
because of a civil liability. While he may be acquitted on the
1) The payment of less than that known by
criminal case, his acquittal could not operate to discharge him
the taxpayer to be legally due, or the non-payment of tax when
from the duty to pay tax, since that duty is imposed by statute
it is shown that a tax is due. It is evident that the parties that
prior to and independent of any attempt on the taxpayer to
the tax due should be computed based on the valuation of P2.5
evade payment. The obligation to pay the tax is not a mere
million and not P2.0 million;
consequence of the felonious acts charged in the information,
nor is a mere civil liability derived from crime that would be 2) An accompanying state of mind which is
wiped out by the declaration that the criminal acts charged did described as being "evil" on "bad faith," "willful," or "deliberate
not exist (Castro v. Collector of Internal Revenue, L-12174, and not accidental." Despite the above knowledge, the parties
April 26, 1962). deliberately misrepresented the true basis of the sale; and
(2009) I(E) True or False. Explain your answer in 3) A course of action or failure of action
not more than two (2) sentences. which is unlawful. This is shown by the preparation of the two
deeds of sale which showed different values. (Commissioner
A false return and a fraudulent return are one and of Internal Revenue v. The Estate ofBenigno P, Tbda, Jr., G.R.
the same. (5%) No. 147188, September 14, 2004)


The tax evasion committed should result to the BANK DEPOSITS SECRECY VIOLATION
imposition of a 50% fraud surcharge on the amount evaded
(Sec. 248[B], NIRC) payment of the Deficiency Tax, and (2000) A taxpayer is suspected not to have declared
interest of 20% per annum on the deficiency. (Sec. 249[A][B], his correct gross income in his return filed for 1997. The
NIRC) The parties may likewise be subject to criminal examiner requested the Commissioner to authorize him to
prosecution for willfully failing to pay the tax, as well as for filing inquire into the bank deposits of the taxpayer so that he could
a false and fraudulent return. (Sees. 254, 255 and 257, NIRC) proceed with the net worth method of investigation to establish Page | 103
fraud. May the examiner be allowed to look into the taxpayer's
(2002) What constitutes prima facie evidence of a bank deposits? In what cases may the Commissioner or his
false or fraudulent return to justify the imposition of a 50% duly authorized representative be allowed to inquire or look into
surcharge on the deficiency tax due from a taxpayer? Explain. the bank deposits of a taxpayer? (5%)
(5%)
No, as this would be violative of Republic Act No.
There is a prima facie evidence of false or 1405, the Bank Deposits Secrecy Law. The Commissioner of
fraudulent return when the taxpayer SUBSTANTIALLY Internal Revenue or his duly authorized representative may be
UNDER- DECLARED his taxable sales, receipts or income, or allowed to inquire or look into the bank deposits of a taxpayer
SUBSTANTIALLY OVERSTATED his deductions, the in the following cases:
taxpayer's failure to report sales, receipts or income in an
amount exceeding 30% of that declared per return, and a claim a) For the purpose of determining the gross
of deduction in an amount exceeding 30% of actual deduction estate of a decedent;
shall render the taxpayer liable for substantial under
b) Where the taxpayer has filed an
declaration and over declaration, respectively, and will justify
application for compromise of his tax liability by reason of
the imposition of the 50% surcharge on the deficiency tax due
financial incapacity to pay such tax liability. (Sec. 6 (F), NIRC
from the taxpayer. (Sec. 248, NIRC).
of 1997]
(1998) What constitutes prima facie evidence of a c) Where the taxpayer has signed a waiver
false or fraudulent return? [2%] authorizing the Commissioner or
his duly authorized representatives to
There is prima facie evidence of a false or
Inquire into the bank deposits.
fraudulent return when the taxpayer has willfully and knowingly
filed it with the intent to evade a part or all of the tax legally due (1998) Can the Commissioner of Internal Revenue
from him (Ungab v. Cusi,, 97 SCRA 877). There must appear inquire into the bank deposits of a taxpayer? If so, does this
a design to mislead or deceive on the part of the taxpayer, or power of the Commissioner conflict with R.A. 1405 (Secrecy of
at least culpable negligence. A mistake not culpable in respect Bank Deposits Law) [5%]
of its value would not constitute a false return. (Words and
Phrases, Vol. 16, page 173). The Commissioner of Internal Revenue is
authorized to inquire into the bank deposits of:
(1998) Is assessment necessary before a taxpayer
may be prosecuted for willfully attempting in any manner to 1) a decedent to determine his gross
evade or defeat any tax imposed by the Internal Revenue estate;
Code? [5%)
2) any taxpayer who has filed an
No. Assessment is not necessary before a taxpayer application for compromise of his tax liability by means of
maybe prosecuted if there is a prima facie showing of a willful financial incapacity to pay his tax liability (Sec. 6(F). NIRC).
attempt to evade taxes as in the taxpayer's failure to declare a
specific item of taxable income in his income tax returns 3) Where the taxpayer has signed a waiver
(Ungab v. Cusi 97 SCRA 877). On the contrary, if the taxes authorizing the Commissioner or his duly authorized
alleged to have been evaded is computed based on reports representatives to Inquire into the bank deposits. (Note: This
approved by the BIR there is a presumption of regularity of the answer was not part of the answers enumerated in the UP Law
previous payment of taxes, so that unless and until the BIR has Answers to the Bar in this but was later added in the recent UP
made a final determination of what is supposed to be the Law Answers to the Bar as a result of AMLA Law of 2001)
correct taxes, the taxpayer should not be placed in the crucible The limited power of the Commissioner does not
of criminal prosecution (CIR v. Fortune Tobacco Corp., GR No. conflict with R.A. No. 1405 because the provisions of the Tax
119322, June 4, 1996).


Code granting this power is an exception to the Secrecy of (2009) I(B) True or False. Explain your answer in
Bank Deposits Law as embodied in a later legislation. not more than two (2) sentences. (5%)
Furthermore, in case a taxpayer applies for an When the financial position of the taxpayer
application to compromise the payment of his tax liabilities on demonstrates a clear inability to pay the tax, the Commissioner
his claim that his financial position demonstrates a clear of Internal Revenue may validly compromise the tax liability.
inability to pay the tax assessed, his application shall not be Page | 104
considered unless and until he had waived in writing his True. Financial incapacity is a ground allowed by
privilege under R.A. No. 1405, and such waiver shall constitute law in order that the Commissioner of Internal Revenue may
the authority of the Commissioner to inquire into the bank validly compromise a tax liability. (Sec 204, NIRC)
deposits of the taxpayer.
(1999) A died, survived by his wife and three
(1998) Is the BIR authorized to issue a warrant of children. The estate tax was properly paid and the estate
garnishment against the bank account of a taxpayer despite settled and divided and distributed among the four heirs. Later,
the pendency of his protest against the assessment with the the BIR found out that the estate failed to report the income
BIR or appeal with the Court of Tax Appeals? [5%] received by the estate during administration. The BIR issued a
deficiency income tax assessment plus interest, surcharges
The BIR is authorized to issue a warrant of and penalties. Since the 3 children are residing abroad, the BIR
garnishment against the bank account of a taxpayer despite sought to collect the full tax deficiency only against the widow.
the pendency of protest (Yabes v. Flojo, 15 SCRA 278). Is the BIR correct? (10%)
Nowhere in the Tax Code is the Commissioner required to rule
first on the protest before he can institute collection Yes, the BIR is correct. In a case where the estate
proceedings on the tax assessed. The legislative policy is to has been distributed to the heirs, the collection remedies
give the Commissioner much latitude in the speedy and prompt available to the BIR in collecting tax liabilities of an estate may
collection of taxes because it is in taxation that the Government either
depends to obtain the means to carry on its operations
(1) sue all the heirs and collect from each of them
(Republic u. Tim Tian Teng Sons, Inc., 16 SCRA 584).
the amount of tax proportionate to the inheritance received or
ALTERNATIVE ANSWER:
(2) by virtue of the lien created under Section 219,
sue only one heir and subject the property he received from the
No, because the assessment has not yet become
estate to the payment of the estate tax.
final, executory and demandable. The basic consideration in
the collection of taxes is whether the assessment is final and The BIR, therefore, is correct in pursuing the second
unappealable or the decision of the Commissioner is final, remedy although this will give rise to the right of the heir who
executory and demandable, the BIR has legal basis to collect pays to seek reimbursement from the other heirs. (CIR v.
the tax liability by either administrative or judicial action. Pineda, 21 SCRA 105). In no case, however, can the BIR
enforce the tax liability in excess of the share of the widow in
COLLECTION OF TAX DEFICIENCY the inheritance.
2017 b. Distinguish compromise from abatement (1998) Is the BIR authorized to collect estate tax
of taxes. deficiencies by the summary remedy of levy upon and sale of
real properties of the decedent without first securing the
Based on section 204 of the NIRC authority of the court sitting in probate over the supposed will
A compromise of tax is a remedy which is available of the decedent?
when there is a reasonable doubt as to the validity of the claim
Yes. The BIR is authorized to collect estate tax
against the taxpayer exits, or when the financial position of the
deficiency through the summary remedy of levying upon and
taxpayer demonstrates a clear inability to pay the assessed tax.
sale of real properties of a decedent, without the cognition and
Abatement of tax, on the other hand, is available as authority of the court sitting in probate over the supposed will
a remedy when the tax or any portion thereof appears to be of the deceased, because the collection of estate tax is
unjustly or excessively as e sed, or when the administration executive in character. As such the estate tax is exempted from
and collection costs involved do not ju tify the collection of the the application of the statute of non-claims, and this is justified
amount due. by the necessity of government funding, immortalized in the


maxim that taxes are the lifeblood of the government (Marcos taxpayer, is present. A compromise of a tax liability is possible
v. CIR, G.R. No. 120880, June 5, 1997). at any stage of litigation, even during appeal, although legal
propriety demands that prior leave of court should be obtained
ALTERNATIVE ANSWER: (Pasudeco vs. CIR L-39387, June 29, 1982).
Yes, if the tax assessment has already become

final, executory and enforceable. The approval of the court TAXPAYER REMEDIES Page | 105
sitting in probate over the supposed will of the deceased is not
a mandatory requirement for the collection of the estate tax. AGAINST
The probate court is determining issues which are not against THE COMMISSIONER OF INTERNAL
the property of the decedent, or a claim against the estate as
such, but is against the interest or property right which the heir,
REVENUE
legatee, devisee, etc. has in the property formerly held by the
decedent. (Marcos v. CIR, G.R, No. 120880, June 5, 1997). PRESCRIPTION
(1998) May the Commissioner of the Internal
2019 B17AB XYZ Corp. is listed as a top
Revenue compromise the payment of withholding tax (tax
deducted and withheld at source) where the financial position 20,000 Philippine corporation by the Bureau of
of the taxpayer demonstrates a clear inability to pay the Internal Revenue. It secured a loan from ABC
assessed tax? [5%1 Bank with a 6% per annum interest. All interest
payments made by XYZ Corp. to ABC Bank is
No. A taxpayer who is constituted as withholding subject to a 2% creditable withholding tax. At
agent who has deducted and withheld at source the tax on the the same time, XYZ Corp. has a trust deposit
income payment made by him holds the taxes as trust funds with ABC Bank in the amount of
for the government (Sec. 58[D]) and is obligated to remit them Php100,000,000.00, which earns a 2% interest
to the BIR. The subsequent inability of the withholding agent to per annum, but is subject to a 20% final
pay/remit the tax withheld is not a ground for compromise withholding tax on the interest income
because the withholding tax is not a tax upon the withholding
received by XYZ Corp.
agent but it is only a procedure for the collection of a tax.
(1996) 1. May the Court of Tax Appeals issue an A. Who are the withholding agents in
injunction to enjoin the collection of taxes by the Bureau of the case of:
Internal Revenue? Explain.
1. The 20% final withholding tax; and
Yes. When a decision of the Commissioner on a tax 2. The 2% creditable withholding
protest is appealed to the CTA pursuant to Sec. 11 of RA. No. tax? Explain. (2.5%)
1125 (law creating the CTA) in relation to Sec. 229 of the NIRC,
such appeal does not suspend the payment, levy, distraint For the 20% final withholding tax, the
and/or sale of any of the taxpayer's property for the satisfaction withholding agent is ABC Bank being in control
of his tax liability. However, when in the opinion of the CTA the of the payment subject to withholding tax. (R.R. 2-98,
collection of the tax may jeopardize the interest of the Sec. 2.57.3). On the other hand, XYZ Corporation is
Government and/or the taxpayer, the Court at any stage of the the withholding agent for the 2% creditable
proceedings may suspend or restrain the collection of the tax withholding tax being the party paying for the
and require the taxpayer either to deposit the amount claimed interest payments on the loan secured, and being
or to file a surety bond for not more than double the amount listed as a top 20,000 Philippine Corporation by the
with the Court. BIR. (RR No. 6-2009).
2. May the tax liability of a taxpayer be B. When is the deadline for filing a
compromised during the pendency of an appeal? Explain. judicial claim for refund for any excess or erroneous
taxes paid in the case of: 1. The 20% final withholding
Yes. During the pendency of the appeal, the tax; and 2. The 2% creditable withholding tax? (2.5%)
taxpayer may still enter into a compromise settlement of his tax
liability for as long as any of the grounds for a compromise i.e.; The deadline for filing a judicial claim for
refund for any excess or erroneous taxes paid for
doubtful validity of assessment and financial incapacity of
both the (1) 20% final withholding tax and (2) the 2%


creditable withholding tax is two (2) years from the Yes, the CIR‘s motion to dismiss should be
date of payment of the tax. (Section 229, NIRC). granted. Under RR18-13, the taxpayer or authorized
representative or agent has thirty (30) days from date of
2019 B18 After a Bureau of Internal
receipt of the FAN to protest the same. If the taxpayer
Revenue (BIR) audit, T. Corp., a domestic fails to file a valid protest against the FAN within 30 days,
corporation engaged in buying and selling of the assessment shall become final executory and
scrap metals, was found to have deficiency demandable. Page | 106
income tax of Php 25,000,000.00, including
interests and penalties, for the year 2012. For Here, T Corp. received the FAN on April 11,
2012, T Corp. filed its income return (ITR) on 2016. T. Corp has until May 11, 2016 to protest the
April 15, 2013 because it used the calendar same. However, T Corp. only filed the protest letter on
year for its accounting. The BIR sent the June 25, 2016. Thus, the motion to dismiss should be
Preliminary Assessment Notice (PAN) on granted.
December 23, 2015, and eventually, the Final
(2010) (IId) What is the effect of the execution by a
Assessment Notice (FAN) on April 11, 2016,
taxpayer of a "waiver of the statute of limitations" on his
which were received by T Corp. on the same defense of prescription? (2%)
dates that they were sent. Upon receipt of the
FAN, T Corp. filed it protest letter on June 25, The waiver of the statute of limitation executed by a
2016. taxpayer is not a waiver of the right to invoke the defense of
prescription. The waiver of the statute of limitation is merely an
agreement in writing between the taxpayer and the BIR that the
Thereafter, and without action from the period to assess and collect taxes due is extended to a date
Commissioner of Internal Revenue (CIR), T. Corp. filed certain. If prescription has already set in at the time of
a petition for review before the Court of Tax Appeals, execution of the waiver or if the said waiver is invalid, the
alleging that the assessment has prescribed. For its taxpayer can still raise prescription as defense (Phil.
part, the CIR moved to dismiss the case, pointing out Journalists Inc., v. CIR, G.R. No. 162852, Dec. 16, 2004)
that the assessment had already become final
because the protest was filed beyond the allowable (2010) I (a) True or False. In civil cases involving
the collection of internal revenue taxes, prescription is
period.
construed strictly against the government and liberally in favor
A. Is T Corp.‘s contention regarding the of the taxpayer. (1%)
prescription of the assessment meritorious? Explain.
(2.5%) True. (CIR v. BF Goodrich., Phils. Inc., G.R. No.
104171, Feb. 24, 1999; Phil. Journalists, Inc. v. CIR, G.R. No.
No, T Corp.‘s contention regarding 162852, Dec. 16, 2004.)
prescription of the assessment is not meritorious. Under
Section 203 of the National Internal Revenue Code, as a JURISDICTION
general rule, internal revenue taxes shall be assessed
within three (3) years after the last day prescribed by law
for the filing of the return. The deadline for filing the WAIVER OF STATUTE OF LIMITATION
annual income tax return (ITR) of corporations is the
15th day of the 4th month following the close of the 2017 X On January 27, 2017, Ramon, the
fiscal year. comptroller of Vantage Point, Inc., executed a document
entitled "Waiver of the Statute of Limitations" in connection with
Here, the 15 day of the 4th month following the the BIR's investigation of the tax liabilities of the company for
close of the fiscal year 2012 of T Corp. is April 15, the year 2012. However, the Board of Directors of Vantage
2013, which is also the date the ITR of T Corp. was filed. Point, Inc., did not adopt a board resolution authorizing Ramon
The BIR has until April 15, 2016 to assess for proper to execute the waiver.
taxes. The FAN was sent to and received by T Corp.
on April 11, 2016, which is within the prescriptive period. On October 14, 2017, Vantage Point, Inc., received
a preliminary assessment notice from the BIR indicating its
B. Should the CIR‘s motion to deficiency withholding taxes for the year 2012. Vantage Point,
dismiss be granted? Explain (2.5%) Inc., file its protest. On October 30, 2017, the BIR issued a


formal letter of demand and final assessment notice. Vantage Appeals assailing the jurisdiction of the CTA and the Order to
Point, Inc., again filed a protest. The Commissioner of Internal make refund to the Estate on the ground that no claim for
Revenue denied the protests and directed the collection of the refund was filed with the BIR.
assessed deficiency taxes. Accordingly, Vantage Point, Inc.,
filed a petition for review in the CTA to seek the cancellation A. Is the stand of the Commissioner
and withdrawal of the assessment on the ground of correct? Reason. (2%)
prescription. Page | 107
Yes. There was no claim for refund or credit that has
a. What constitutes a valid waiver of the statute of been duly filed with the Commissioner of Internal Revenue
limitations for the assessment and collection of taxes? Explain which is required before a suit or proceeding can be filed in any
your answer. (3%) court (Sec. 229. NIRC of 1997). The denial of the claim by the
Commissioner is the one which will vest the Court of Tax
Generally, a valid waiver of the statute of limitations Appeals jurisdiction over the refund case should the taxpayer
for the assessment and collection of taxes must be executed decide to appeal on time.
by the taxpayer and accepted by the BIR prior to the expiration
of the period which it seeks to extend. The same must also be B. Why is the filing of an administrative
executed by the taxpayer or his duly authorized representative, claim with the BIR necessary? (3%)
or in the case of a corporation, it must be signed by any of its
responsible officers [CIR v. Kudos Metal Corporation, G.R. No. The filing of an administrative claim for refund with
178087 (2010)]. Such requirements must be met considering the BIR is necessary in order:
that a waiver of the statute of limitations under the NIRC, to a
1) To afford the Commissioner an
certain extent, is a derogation of the taxpayer's right to
opportunity to consider the claim and to have a chance to
security against prolonged and unscrupulous investigations
correct the errors of subordinate officers (Gonzales v. CTA, et
and must therefore be carefully and strictly construed
al, 14 SCRA 79); and
{Philippine Journalists, Inc. v. CIR, G.R. No. 162852 (2004)].
2) To notify the Government that such
b. Has the right of the Government ·to taxes have been questioned and the notice should be borne in
assess and collect deficiency taxes from Vantage Point, Inc. for mind in estimating the revenue available for expenditures.
the year 2012 prescribed? Explain your answer. (3%) (Bermejo v. Collector, G.R. No. L- 3028. July 29, 1950)
Yes, the right of the Government has prescribed. (1996) Is protest at the time of payment of taxes and
The final assessment was issued beyond the three-year duties a requirement to preserve the taxpayers' right to claim a
prescriptive period to make an assessment [Section 203, 1997 refund? Explain.
NIRC, as amended]. The Waiver did not extend the three-year
prescriptive period, since it was executed after the expiration For TAXES imposed under the NIRC, protest at the
of such period. time of payment is not required to preserve the taxpayers' right
to claim refund. This is clear under Section 230 of the NIRC
PROTEST which provides that a suit or proceeding maybe maintained for
the recovery of national internal revenue tax or penalty alleged
(2000) On June 16, 1997, the Bureau of Internal to have been erroneously assessed or collected, whether such
Revenue (BIR) issued against the Estate of Jose de la Cruz a tax or penalty has been paid under protest or not.
notice of deficiency estate tax assessment, inclusive of
surcharge, interest and compromise penalty. The Executor of For DUTIES imposed under the Tariff and Customs
the Estate of Jose de la Cruz (Executor) filed a timely protest Code, a protest at the time of payment is required to preserve
against the assessment and requested for waiver of the the taxpayers' claim for refund. The procedure under the TCC
surcharge, interest and penalty. The protest was denied by the is to the effect that when a ruling or decision of the Collector of
Commissioner of Internal Revenue (Commissioner) with finality Customs is made whereby liability for duties is determined, the
on September 13, 1997. Consequently, the Executor was party adversely affected may protest such ruling or decision by
made to pay the deficiency assessment on October 10, 1997. presenting to the Collector, at the time when payment is made,
The following day, the Executor filed a Petition with the Court or within 15 days thereafter, a written protest setting forth his
of Tax Appeals (CTA) praying for the refund of the surcharge, objections to the ruling or decision in question (Sec. 2308.
interest and compromise penalty. The CTA took cognizance TCC).
of the case and ordered the Commissioner to make a refund.
The Commissioner filed a Petition for Review with the Court of TAX REFUNDS


(2005) Does a withholding agent have the right to Tax amnesty is an immunity from all criminal, civil
file an application for tax refund? Explain. and administrative liabilities arising from nonpayment of taxes.
It is a general pardon given to all taxpayers. It applies only to
Yes. A taxpayer is "any person subject to tax." past tax periods, hence of retroactive application. (People v.
Since, the withholding tax agent who is "required to deduct and Costonedo, G.R. No. L-46881, 1988).
withheld any tax" is made "personally liable for such tax" should
the amount of the tax withheld be finally found to be less than Tax exemption is an immunity from the civil liability Page | 108
that required to be withheld by law, then he is a taxpayer. Thus, only. It is an immunity or privilege, a freedom from a charge or
he has sufficient legal interest to file an application for refund, burden to which others are subjected. (Florer v. Sheridan, 137
of the amount he believes was illegally collected from him. Ind. 28, 36 ME 365). It is generally prospective in application.
(Commissioner of Internal Revenue v. Procter & Gamble, G.R.
No. 66838, December 2, 1991) JUDICIAL REMEDIES
(2002) A. What must a taxpayer do in order to (2009) (XVIII) A taxpayer received an
claim a refund of, or tax credit for, taxes and penalties which he assessment notice from the BIR on February 3, 2009. The
alleges to have been erroneously, illegally or excessively following day, he filed a protest, in the form of a request for
assessed or collected? (3%) reinvestigation, against the assessment and submitted all
relevant documents in support of the protest. On September
The taxpayer must comply with the following 11, 2009, the taxpayer, apprehensive because he had not yet
procedures in claiming a refund of, or tax credit for, taxes and received notice of a decision by the Commissioner on his
penalties which he alleges to have been erroneously, illegally protest, sought your advice.
or excessively assessed or collected:
What remedy or remedies are available to the
1. He should file a written claim for refund with the taxpayer? Explain. (4%)
Commissioner within two years after the date of payment of the
tax or penalty (Sec. 204, NIRC); The remedy of a taxpayer is to avail of either of two
options:
2. The claim filed must state a categorical demand
for reimbursement (Bermejo v. Collector, 87 Phil. 96 [1950]). 1. File a petition for review with the CTA within 30 days
after the expiration of the 180-day period from submission of all
3. The suit or proceeding for recovery must be relevant documents; or
commenced in court within two years from date of payment of
the tax or penalty regardless of any supervening event that will 2. Await the final decision of the Commissioner on the
arise after payment (Sec. 229, NIRC). disputed assessment and appeal such final decision to the CTA
within 30 days after receipt of a copy of such decision.
B. Can the Commissioner grant a refund or
tax credit even without a written claim for it? (2%) These options are mutually exclusive such that resort to one
bars the application of the other (RCBC v. CIR, 522 SCRA 144
Yes. When the taxpayer files a return which on its (2007)).
face shows an overpayment of the tax and the option to refund/
claim a tax credit was chosen by the taxpayer, the ADMINISTRATIVE REMEDIES
Commissioner shall grant the refund or tax credit without the
need for a written claim. This is so, because a return filed 2019 B19 On May 10, 2011, the final
showing an overpayment shall be considered as a written claim withholding tax for certain income payments to
for credit or refund. (Sees. 76 and 204, NIRC). Moreover, the W Corp. was withheld and remitted to the
law provides that the Commissioner may, even without a Bureau of Internal Revenue (BIR), and the
written claim therefor, refund or credit any tax where on the face corresponding return therefor was
of the return upon which payment was made, such payment concomitantly filed on the same date. Upon
appears clearly to have been erroneously paid. (Sec. 229, discovering that the amount withheld was
NIRC).
excessive, W Corp. filed with the BIR a claim
for refund for erroneously withheld and
TAX AMNESTY VS. TAX EXEMPTION collected final withholding income tax on May
(2001) Distinguish a tax amnesty from a tax 3, 2013. A week after, and without waiting for
exemption. (3%) any decision from the Commissioner of


Internal Revenue (CIR), W Cor. Filed a petition No, the answer will not be the same. Under
for review before the Court of Tax Appeals Section 112 of the Tax Code provides that the
(CTA) to make sure that the petition was filed taxpayer, whose sales are zero-rated or effectively
within the two (2)-year period for claiming zero-rated, has two years after the close of the
refunds. taxable quarter when the sales were made, to apply
for an administrative claim for refund. Thereafter,
the Commissioner of Internal Revenue (CIR) has 120 Page | 109
In resisting the claim, the BIR days from the submission of complete supporting
contended that the claim must be dismissed by documents to act upon the claim for refund. In
the CTA on the ground of non-exhaustion of case of full or partial denial of the claim or failure of
administrative remedies because it did not the CIR to act on the application within 120 days, the
give the CIR the opportunity to act on the claim taxpayer may appeal with the Court of Tax Appeals
of refund. (CTA) within 30 days from receipt of the decision or
upon expiration of the 120-day period.
A. Is the BIR‘s contention
(2012) VI. The BIR issued in 2010 a final
meritorious? Explain (2.5%)
assessment notice and demand letter against X Corporation
No, the BIR‘s contention is not meritorious. covering deficiency income tax for the year 2008 in the amount
Under Sections 204 and 229 of the NIRC pertain to the of P10 Million, X Corporation earlier requested the advice of a
refund of erroneously or illegally collected taxes. lawyer on whether or not it should file a request for
Section 204 applies to administrative claims for refund, reconsideration or a request for reinvestigation. The lawyer
while Section 229 to judicial claims for refund. In both said it does not matter whether the protest filed against the
instances, the taxpayer‘s claim must be filed within two assessment is a request for reconsideration or a request for
(2) years from the date of payment of the tax or reinvestigation, because it has the same consequences or
penalty. However, Section 229 of the NIRC further implications.
states the condition that a judicial claim for refund may (A) What are the differences between a request for
not be maintained until a claim for refund or credit has reconsideration and a request for reinvestigation? (5%)
been duly filed with the Commissioner. However,
Section 229 does not imply that the Collector of Request for Reconsideration – plea for evaluation
Internal Revenue (CIR) first act upon the taxpayer‘s of assessment on the basis of existing records without need of
claim, and that the taxpayer shall not go to court before presentation of additional evidence. It does not suspend the
he is notified of the Collector‘s action. The claim with the period to collect the deficiency tax.
CIR was intended primarily as a notice of warning that
unless the tax or penalty alleged to have been Request for Reinvestigation – plea for re- evaluation
collected erroneously or illegally is refunded, court on the basis of newly discovered evidence which are to be
action will follow, but the period of two years provided in introduced for examination for the first time. It suspends the
the last clause shall not be deemed interrupted pending prescriptive period to collect.
consideration of the claim. (CBK Power Company vs
CIR, G.R. No. 193383-84, January 14, 2014). (B) Do you agree with the advice of the lawyer? Explain
your answer. (5%)
B. Assuming that the claim for
refund filed by W Corp. is for excess and/or No, in view of the aforesaid difference between
unutilized input VAT for the second quarter of 2011, Request for Reconsideration & Request for Reinvestigation.
and for which the return was timely filed on July 25,
2011, would your answer be the same? Explain. (2000) Describe separately the procedures on the
(2.5%) legal remedies under the Tax Code available to an aggrieved
taxpayer both at the administrative and judicial levels. (5%)
The legal remedies of an aggrieved taxpayer under

the Tax Code, both at the administrative and judicial levels,
may be classified into those for assessment, collection and
refund.


The procedures for the ADMINISTRATIVE Should the Bureau of Internal Revenue decide to
REMEDIES for ASSESSMENT are as follows: utilize its Judicial tax remedies for collecting the taxes by
means of an ordinary suit filed with the regular courts for the
a. After receipt of the Pre-Assessment collection of a sum of money, the taxpayer could oppose the
Notice, he must within fifteen (15) days from receipt explain same going up the ladder of judicial processes from the
why no additional taxes should be assessed against him. Municipal Trial Court (as the case may be) to the Regional Trial
Court, to the Court of Appeals, thence to the Supreme Court. Page | 110
b. If the Commissioner of Internal Revenue
issues an assessment notice, the taxpayer must The remedies of an aggrieved taxpayer on a claim
administratively protest or dispute the assessment by filing a for refund is to appeal the adverse decision of the
motion for reconsideration or reinvestigation within thirty (30) Commissioner to the CTA in the same manner outlined above.
days from receipt of the notice of assessment. (4th par.. Sec.
228, NIRC of 1997)
c. Within sixty (60) days from filing of the

BUREAU OF CUSTOMS
protest, the taxpayer shall submit all relevant supporting
documents.
WHEN IMPORATION BEGINS AND ENDS?
2015 XVIIIB Under the Tariff and Customs Code, as
The JUDICIAL REMEDIES of an aggrieved
amended:
taxpayer relative to an ASSESSMENT NOTICE are as follows:
a. When does importation begin and when
a. Where the Commissioner of Internal
is it deemed terminated?
Revenue has not acted on the taxpayer's protest within a period
of one hundred eighty (180) days from submission of all
a. Importation begins when the carrying
relevant documents, then the taxpayer has a period of thirty
vessel or aircraft enters the jurisdiction of the Philippines with
(30) days from the lapse of said 180 days within which to intention to unlade therein. Importation is deemed terminated
interpose a petition for review with the Court of Tax Appeals. upon payment of the duties, taxes and other charges upon the
b. Should the Commissioner deny the articles, or secured to be paid, at a port of entry and the legal
taxpayer's protest, then he has a period of thirty (30) days from permit for withdrawal shall have been granted, or incase said
receipt of said denial within which to interpose a petition for articles are free of duties, taxes and other charges, until they
review with the Court of Tax Appeals. have legally left the jurisdiction of the customs.
In both cases the taxpayer must apply with the b. In what instance/s is the decision of the
Court of Tax Appeals for the Issuance of an Injunctive writ to Collector automatically reviewed by the Commissioner of
enjoin the Bureau of Internal Revenue from collecting the Customs? In what instance/s is the decision of the
disputed tax during the pendency of the proceedings. Commissioner automatically appealed to the Secretary of
Finance? (4%)
NOTE: A 2004 Amendment - The decision of the
division of CTA is in turn appeallable within fifteen (15) days to Whenever the decision of the Collector of Customs
the CTA en banc. The decision of the CTA en banc is directly is adverse to the government, the said decision is automatically
appeallable to the Supreme Court on question of law on elevated to the Commissioner of Customs for review, and if
certiorari. such decision is affirmed by the Commissioner of Customs,
the same will be automatically elevated to and be finally
The employment by the Bureau of Internal Revenue reviewed by the Secretary of Finance.
of any of the Administrative Remedies for the collection of the
tax like distraint, levy, etc. may be administratively appealed by (1995) When does importation begin and when
the taxpayer to the Commissioner whose decision is does it end?
appealable to the Court of Tax Appeals under other matter
arising under the provisions of the National Internal Revenue IMPORTATION begins from the time the carrying
Code. vessel or aircraft enters Philippine territorial jurisdiction with the
intention to unload therein and ends at the time the goods are
The judicial appeals start with the Court of Tax released or withdrawn from the customhouse upon payment of
Appeals, and continues in the same manner as shown above. the customs duties or with legal permit to withdraw (Viduya vs.
Berdiago, 73 SCRA 553).


FLEXIBLE TARIFF CLAUSE The distinctions between countervailing duty and
dumping duty are the following:
(2001) What do you understand by the term "flexible
tariff clause" as used in the Tariff and Customs Code? (5%) (1) Basis: The countervailing duty is
imposed whenever there is granted upon the imported article
The term "flexible tariff clause "refers to the by the country of origin a specific subsidy upon its production,
authority given to the President to adjust tariff rates under manufacture or exportation and this results or threatens injury Page | 111
Section 401 of the Tariff and Customs Code, which is the to local industry while the basis for the imposition of dumping
enabling law that made effective the delegation of the taxing duty is the importation and sale of imported items at below their
power to the President under the Constitution. normal value causing or likely to cause injury to local industry.
[Note: It is suggested that if the examinee cites the (2) Amount: The countervailing duty
entire provision of Sec. 401 of the Tariff &, Customs Code, he imposed is equivalent to the value of the specific subsidy while
should also be given full credit.] the dumping duty is equivalent to the margin of dumping which
is equal to the difference between the export price to the
CUSTOM DUTIES Philippines and the normal value of the imported article.
(2005) State and explain the basis of dutiable value (1997) Explain briefly each of the special customs
of an imported article subject to an ad valorem tax under the duties authorized under the Tariff and Customs Code.
Tariff and Customs Code.
The following are the Special Duties imposed under
The basis of dutiable value of an imported article the Tariff and Customs Code:
subject to an ad valorem tax under the Tariff and Customs
Code is its TRANSACTION VALUE. (Sec. 201[A], Tariff and (a) Dumping Duty - This is a duty levied on
Customs Code, as amended by R.A. No. 9135) If such value imported goods where it appears that a specific kind or class of
could not be determined, then the following values are to be foreign article is being imported into or sold or is likely to be
utilized in their sequence: Transaction value of identical goods sold in the Philippines at a price less than its fair value;
(Sec. 201[B]); Transaction value of similar goods (Sec. 201[C]); (b) Countervailing Duty - This is a duty equal
Deductive value (Sec. II.E.1, CA.O. No. 4-2004); Computed to the ascertained or estimated amount of the subsidy or
value (Sec., II.F.l, C.A.O. No. 1-20040) and Fallback value. bounty or subvention granted by the foreign country on the
(Sec. 201[F]) production, manufacture, or exportation into the Philippines of
any article likely to injure an industry in the Philippines or retard
ALTERNATIVE ANSWER:
or considerable retard the establishment of such industry;
The basis of dutiable value of an imported article (c) Marking Duty - This is a duty on an ad
subject to an ad valorem tax under the Tariff and Customs valorem basis imposed for improperly marked articles. The law
Code is its transaction value, which shall be the price actually requires that foreign importations must be marked in any official
paid or payable for the goods when sold for export to the language of the Philippines the name of the country of origin of
Philippines, adjusted by adding certain cost elements to the the article;
extent that they are incurred by the buyer but are not included
in the price actually paid or payable for the imported goods. (d) Discriminatory or Retaliatory Duty - This
(Sec. 201[A], Tariff and Customs Code, as amended by R.A. is a duty imposed on imported goods whenever it is found as a
9135) fact that the country of origin discriminates against the
commerce of the Philippines in such a manner as to place the
If such value could not be determined, then the commerce of the Philippines at a disadvantage compared with
following values are to be utilized in their sequence: the commerce of any foreign country.
Transaction value of identical goods (Sec. 201[B]); Transaction
value of similar goods (Sec. 201[C]); Deductive value (Sec. (1995) Under the Tariff and Customs Code, what
II.E.1, CA.O. No. 4-2004); Computed value (Sec. II.F.l, C.A.O. are
No. 1-20040) and Fallback value. (Sec. 201[F])
a) dumping duties
(2005) Distinguish countervailing duty from
dumping duty. (5%) b) countervailing duties
c) marking duties


d) discriminatory duties? On the other hand, in technical smuggling, the good
and articles are brought into the country through fraudulent,
Dumping duties are special duties imposed by the falsified or erroneous declarations, to substantially reduce, if
Secretary of Finance upon recommendation of the Tariff not totally avoid, the payment of correct taxes, duties and
Commission when it is found that the price of the imported other cha rges. Such goods and a r ticle s pass th roug h the
articles is deliberately or continually fixed at less than the fair BOC, but the processing and clearing proced ure s are
market value or cost of production, and the importation would attended by fraudulent acts in order to evade the payment of Page | 112
cause or likely cause an injury to local industries engaged in correct taxes, duties, and other charges [Bureau of Customs v.
the manufacture or production of the same or similar articles or The Honorable Agnes VST Devanadera, et al., G.R. No.
prevent their establishment. 193253(2015)).
Countervailing duties are special duties imposed by Sec 102. CMTA: Technical Smuggling refers to the
the Secretary of Finance upon prior investigation and report of act of importing goods into the country by means of
the Tariff Commission to offset an excise or inland revenue tax fraudulent, falsitied or erroneous declaration of the goods to its
upon articles of the same class manufactured at home or nature, kind, quality, quantity or weight, for the purpo e of
subsidies to foreign producers or manufacturers by their reducing or avoiding payment of prescribed taxes, duties and
respective governments. other charges.
Marking duties are special duties equivalent to 5% 2014 VI Choose the correct answer. Smuggling -
ad valorem imposed on articles not properly marked. These are (1%)
collected by the Commissioner of Customs except when the
improperly marked articles are exported or destroyed under (C) is committed by any person who shall
customs supervision and prior to final liquidation of the fraudulently import or bring into the Philippines, or assist in so
corresponding entry. These duties are designed to prevent doing, any article, contrary to law, or shall receive, conceal,
possible deception of the customers. buy, sell or any manner facilitate the transportation,
concealment or sale of such article after importation, knowing
Discriminatory duties are special duties collected in
the same to have been imported contrary to law. (Section 3601,
an amount not exceeding 100% ad valorem, imposed by the
Tariff and Customs Code)
President of the Philippines against goods of a foreign country
which discriminates against Philippine commerce or against
goods coming from the Philippines and shipped to a foreign
country.
COLLECTOR OF
SMUGGLING
CUSTOMS REMEDIES
AGAINST IMPORTER
2017 XVIIIAB a. Distinguish outright smuggling
from technical smuggling.
ADMINISTRATIVE AND JUDICIAL
In outright smuggling (or unlawful importation), REMEDIES
goods and article s of commerce are brought into the country
without the required importation documents, or are disposed of (1997) The Tariff and Customs Code allows the
in the local market without having been cleared by the BOC or Bureau of Customs to resort to the administrative remedy of
other authorized government agencies to evade the paymen t seizure, such as by enforcing the tax lien on the imported
of correct taxes, duties and other charges. [Bureau of Customs article, and to the judicial remedy of filing an action in court.
v. The Honorable Agnes VST Devanadera, et al., G.R. No. When does the Bureau of Customs normally avail itself;
193253(2015)].
(a) of the administrative, instead of the
Sec 102 CMTA : Outright Smuggling refers to an act judicial remedy, or
of importing goods into the country without complete customs
(b) of the latter, instead of the former,
prescribed importation documents, or without being cleared by
remedy?
customs or other statutory government agencies, for the pur
pose of evading payment of prescribed taxes, duties and other (a) The Bureau of Customs normally avails
government charges. itself of the ADMINISTRATIVE REMEDY of seizure, such as by
enforcing the tax lien on the imported articles, instead of the


judicial remedy when the goods to which the tax lien attaches, the Collector, conditioned for the payment of the appraised
regardless of ownership, is still in the custody or control of the value of the article and/or any fine, expenses and costs which
Government. In the case, however, of importations which are may be adjudged in the case; provided, that articles the
prohibited or undeclared, the remedy of seizure and forfeiture importation of which is prohibited by law shall not be released
may still be exercised by the Bureau of Customs even if the under bond.
goods are no longer in its custody.
The importer may also offer to pay to the collector a Page | 113
(b) On the other hand, when the goods are fine imposed by him upon the property to secure its release or
properly released and thus beyond the reach of tax lien, the in case of forfeiture, the importer shall offer to pay for the
government can seek payment of the tax liability through domestic market value of the seized article, which offer subject
judicial action since the tax liability of the importer constitutes a to the approval of the Commissioner may be accepted by the
personal debt to the government, therefore, enforceable by Collector in settlement of the seizure case, except when there
action. In this case judicial remedy is normally availed of is fraud. Upon payment of the fine or domestic market value,
instead of the administrative remedy. the property shall be forthwith released and all liabilities which
may or might attach to the property by virtue of the offense
AUTOMATIC REVIEW which was the occasion of the seizure and all liability which
might have been incurred under any bond given by the importer
(2002) Whenever the decision of the Collector of in respect to such property shall thereupon be deemed to be
Customs is adverse to the government, it is automatically discharged.
elevated to the Commissioner for review and, if it is affirmed by
him, it is automatically elevated to the Secretary of Finance for PRESCRIPTION
review. What is the basis of the automatic review procedure in
the Bureau of Customs? Explain your answer. (5%) (2013) (VI) On October 15, 2005, ABC Corp.
imported 1,000 kilos of steel ingots and paid customs duties
Automatic review is intended to protect the interest and VAT to the Bureau of Customs on the importation. On
of the Government in the collection of taxes and customs duties February 17, 2009, the Bureau of Customs, citing provisions of
in seizure and protest cases. Without such automatic review, the Tariff and Customs Code on post-audit, investigated and
neither the Commissioner of Customs nor the Secretary of assessed ABC Corp. for deficiency customs duties and VAT.
Finance would know about the decision laid down by the
Collector favoring the taxpayer. The power to decide seizure Is the Bureau of Customs correct? (7%)
and protest cases may be abused if no checks are instituted.
Automatic review is necessary because nobody is expected to No. The Bureau of Customs (BOC) has lost its right
appeal the decision of the Collector which is favorable to the to assess deficiency customs duties and VAT. The imported
taxpayer and adverse to the Government. This is the reason steel ingots in 2005 have been entered and the customs duties
why whenever the decision of the Collector is adverse to the thereon had been paid by thereby making the liquidation of the
Government, the said decision is automatically elevated to the importation final and conclusive upon all parties after the
Commissioner for review; and if such decision is affirmed by expiration of three (3) years from the date of final payment of
the Commissioner, the same shall be automatically elevated to duties and taxes (Sec 1603, TCC, as amended by RA 9135).
and be finally reviewed by the Secretary of Finance (Yaokasin
[Note: Insofar as VAT on importation is concerned, the
v. Commissioner of Customs, 180 SCRA 591 [1989]).
underpayment will be automatically cured when these are
credited against the output tax due upon sale by the imported
when the VAT return is filed. Be that as it may, an assessment
IMPORTER’S REMEDIES for deficiency VAT can only be made by the BIR (not by BOC),
VAT being an internal revenue tax, within three (3) years from
the last day prescribed by law for filing of the VAT return. (Sec
GENERAL REMEDIES 203, NIRC)].
(1996) Discuss briefly the remedies of an importer JURISDICTION

during the pendency of seizure proceedings.
(2008) IV. JKL Corporation is a domestic
During the pendency of seizure proceedings, the corporation engaged in the importation and sale of motor
importer may secure the release of the imported property for vehicles in the Philippines and is duly registered with the Subic
legitimate use by posting a bond in an amount to be fixed by Bay Metropolitan Authority (SBMA). In December 2007, it


imported several second- hand motor vehicles from Japan and 4. Petition for Review on Certiorari
Korea, which it stores in a warehouse in Subic Bay. It sold Supreme Court (Rule 45 of the 1997 Rules of Civil Procedure
these motor vehicles in April 2008, to persons residing in the (RA 9282).
customs territory.
NON-TAXABLE ITEMS
(A) Are the importations of motor vehicles from abroad
subject to customs duties and value added taxes? Explain. (2005) Jacob, after serving a 5-year tour of duty as Page | 114
(4%) military attache in Jakarta, returned to the Philippines bringing
with him his personal effects including a personal computer and
No. because domestic corporations importing used a car. Would Jacob be liable for taxes on these items? Discuss
vehicles that are “stored, used or traded” within the Subic fully. (5%)
Naval Base Area enjoy an exemption from customs duties and
VAT, provided they are registered with the SBMA (R.A. 7096; No, Jacob is not liable for taxes on his personal
Executive Secretary v. Southwing Heavy Industries, G.R. No. computer and the car because he is tax-exempt by law. He has
164171, 20 February 2006). met the following requirements for exemption under P.D. No.
922 (1976):
(B) If they are taxable, when must the duties and taxes
is paid? What are the bases for and purposes of computing a) He was a military attache assigned to
customs duties and VAT? To whom must the duties and VAT Jakarta;
be paid? Explain. (3%)
b) He has served abroad for not less than
Duties and taxes must be paid upon release of the two (2) years;
vehicle from Customs’ custody. Custom duties for motor
vehicles are based on the value being used by the Bureau for c) He is returning to the Philippines after
assessing customs duties. VAT is also based on the value serving his tour of duty; and
being used by the Bureau for motor vehicles (Sec. 107[A] d) He has not availed of the tax exemption
NIRC). Duties must be paid to the Bureau of Customs. VAT for the past four (4) years.
must be paid to the Bureau of Internal Revenue.
He is entitled to tax exemption on his personal and
(2006) The Collector of Customs issued an household effects including a car; provided,
assessment for unpaid customs duties and taxes on the
importation of your client in the amount of P980,000.00. Where a) The car must have been ordered or
will you file your case to protect your client's right? Choose the purchased prior to the receipt by the Philippine mission or
correct courts/ agencies, observing their proper hierarchy. (5%) consulate in Jakarta of Jacob's recall order;
1. Court of Tax Appeals b) the car is registered in Jacob's name;
2. Collector of Customs c) the exemption shall apply to the value of

the car;
3. Commissioner of Customs
d) the exemption shall apply to the
4. Regional Trial Court aggregate value of his personal and household effects
(including the personal computer) not exceeding thirty per
5. Metropolitan Trial Court
centum (30%) of the total amount received by Jacob as salary
6. Court of Appeals and allowances during his assignment in Jakarta, but not to
exceed four (4) years;
7. Supreme Court
e) Jacob must not have availed of the
1. Protest with the Collector of Customs exemption more oftener than one every four years. (Last par.,
(Sec. 2308, TCC) Sec. 105, Tariff and Customs Code)
2. Appeal to the Commissioner of Customs (2003) X and his wife, Y, Filipinos living in the
(Sec. 2313, TCC). Philippines, went on a three-month pleasure trip around the
world during the months of June, July and August 2002. In the
3. Appeal to the CTA (RA 9282) course of their trip, they accumulated some personal effects


which were necessary, appropriate and normally used in which may be extended for another fifteen (15) days or such
leisure trips, as well as souvenirs in non-commercial quantities. period as the Court of Tax Appeals may decide.
Are they "returning residents" for purposes of Section 105 of
the Tariff and Customs Code? Explain. (8%) NIRC VS. TCC REMEDIES
No. The term "returning residents" refers to (1996) Compare the taxpayer's remedies under the
nationals who have stayed in a foreign country for a period of National Internal Revenue Code and the Tariff and Customs Page | 115
at least six (6) months. (Section 105(f) of the Tariff and Code.
Customs Code). Due to their limited duration of stay abroad X
and Y are not considered as "returning residents" but they are The taxpayer's remedies under the NATIONAL
merely considered as travelers or tourists who enjoy the benefit INTERNAL REVENUE CODE may be categorized into
of conditionally free importation. remedies before payment and remedies after payment. The
remedy BEFORE PAYMENT consists of Administrative
[Note: Credit must likewise be given if the candidate Remedy which is the filing of protest within 30 days from receipt
answered in the affirmative, considering that travelers or of assessment, and Judicial Remedy which is the appeal of the
tourists are given the same tax treatment as that of returning adverse decision of the Commissioner on the protest with the
residents, treating their personal effects, not in commercial Court of Tax Appeals, and finally with the Supreme Court.
quantities, as conditionally free importation.]
The remedy AFTER PAYMENT is availed of by
PROTEST paying the assessed tax within 30 days from receipt of
assessment, and the filing of a claim for refund or tax credit of
(1994) The Collector of Customs instituted seizure these taxes on grounds that they are erroneously paid within
proceedings against a shipment of motor vehicles for having two years from date of payment. If there is a denial of the claim,
been misdeclared as second-hand vehicles. State the appeal to the CTA shall be made within 30 days from denial but
procedure for the review of the decision up to the Supreme within two years from date of payment. If the Commissioner
Court of the Collector of Customs adverse to the importer. fails to act on the claim for refund or tax credit and the two-year
period is about to expire, the taxpayer should consider the
The procedure in seizure cases may be continuous inaction of the Commissioner as a denial and
summarized as follows: elevate the case to the CTA before the expiration of the two-
year period.
(a) The collector issues a warrant for the
detention or forfeiture of the imported articles; (Sec. 2301, Tariff Under the Tariff and Customs Code, taxpayer's
and Customs Code) remedies arise only after payment of duties. The administrative
remedies consist of filing a claim for refund which may take the
(b) The Collector gives the importer a
form of abatement or drawback. The taxpayer can also file a
written notice of the seizure and fixes a hearing date to give the
protest within 15 days from payment if he disagrees with the
importer an opportunity to be heard; (Sec. 2303, TCC)
ruling or decision of the Collector of Customs regarding the
(c) A formal hearing is conducted; (Sec. legality or correctness of the assessment of customs duties. If
2312, TCC) the decision of the Collector is adverse to the taxpayer, he can
notify the Collector within 15 days from receipt of said decision
(d) The Collector renders a declaration of of his desire to have his case reviewed by the Commissioner.
forfeiture; (Sec. 2312, TCC) The decision of the Collector on the taxpayer's protest, if
adverse to the Government, is automatically elevated to the
(e) The Importer aggrieved by the action of Commissioner for review; and if such decision is affirmed by
the Collector in any case of seizure may appeal to the the Commissioner, the same shall be automatically elevated to
Commissioner for his review within fifteen (15) days from and finally reviewed by the Secretary of Finance. Resort to
written notice of the Collector's decision; (Sec. 2313, TCC) judicial relief can be had by the taxpayer by appealing the
decision of the Commissioner or of the Secretary of Finance
(f) The importer aggrieved by the action or
(for cases subject to automatic review) within 30 days from the
ruling of the Commissioner in any case of seizure may appeal
promulgation of the adverse decision to the CTA
to the Court of Tax Appeals; (Sec. 2402, TCC)
(g) The importer adversely affected by the

decision of the Court of Tax Appeals (Division) may appeal to
the Court of Tax Appeals (en banc) within fifteen (15) days


LOCAL GOVERNMENT 2018 I. KM Corporation, doing business in the City
of Kalookan, has been a distributor and retailer of clothing and
UNITS household materials. It has been paying the City of Kalookan
LocaL taxes based on Sections 15 (Tax on Wholesalers,
POWER TO TAX Distributors or Dealers) and 17 (Tax on Retailers) of the
Revenue Code of City (Code). Subsequently, the Sangguniang Page | 116
2019 A10 In 2018, City X amended its Panglungsod enacted an ordinance amending the Code by
Revenue Code to include a new provision inserting Section 21 which imposes a tax on “Businesses
imposing a tax on every sale of merchandise Subject to Excise, Value-Added and Percentage Taxes under
by a wholesaler based on the total selling price the National Internal Revenue Code (NIRC),” at the rate of 50%
of the goods, inclusive of value-added taxes of 1 % per annum on the gross sales and receipts on persons
(VAT). ABC Corp., a wholesaler operating “who sell goods and services in the course of trade or
within the city, challenged the new provision business.” KM Corporation paid the taxes due under Section
based on the following contentions: [1] The 21 under protest, claiming that (a) local government units could
new provision is a form of prohibited double not impose a tax on businesses already taxed under the NIRC
taxation because it essentially amounts to City and (b) this would amount to double taxation, since its business
X imposing VAT which was already being was already taxed under Sections 15 and 17 of the Code.
levied by the national government; and [2]
since the tax being imposed is akin to VAT, it (a) May local government units impose a tax on
is beyond the power of City X to levy the same. businesses already subjected to tax under the NIRC? (2.5%)
Rule on each of ABC Corp.‘s contentions. Yes. Section 143 in relation to Section 151 of the
(5%) Local Governmenf Code (LGC provides for the power of cities
to impose a local busioess tax, and one of those which may be
As regard to the first contention, ABC subjected to such tax are those businesses that are subject to
Corp is not correct. Under the NIRC, direct “excise tax, value-added tax or percentage tax” under the
double taxation exists only when all of the NIRC, other than those specifically enumerated by the same
following requisites are present: provision. The tax to be imposed by the city shall not exceed
2% of gross sales or gross receipts of the preceding calendar
The two taxes must be imposed on the year (Sec. 143(h), In relation to Sec. 151, LGC). UPLC
same:
(b) Does this amount to double taxation? (2.5%)
1. subject matter,
Yes. The three taxes are all in the nature of local
2. purpose,
business taxes on wholesalers, retailers, and service providers
3. by the same taxing authority,
which are imposed by the same taxing authority on the same
4. within the same jurisdiction
subject matter for the same tax period; hence, the elements of
5. during the same taxing period;
double taxation are present (Nursery Care CorporaHon v.
6. the taxes must be of the same kind
Anthony Acevedo GRNo. 180651, July 30,2014).
or character.
Using the afore-mentioned test, there is indeed,
Here, the taxing authorities are double taxation since KM Corporation is subjected to the taxes
different. Hence, the tax to be imposed by the under Sections 15 [Tax on Wholesalers, Distributors or
LGU is not a form of direct double taxation. Dealers”), 17 (Tax on Retailers) and 21 {tax on Businesses
Subject to Excise, Value-Added and Percentage Taxes under
As regard to the second contention, the NIRC) of the Revenue Code of Kalookan City. UPLC
ABC Corp is not correct. Under the LGC, LGU‘s
are empowered to enact ordinances that will aid These taxes are being imposed: (1) on the same
in their revenue generation, which is consonance subject matter – the privilege of doing business in Kalookan
with the principle of the fiscal autonomy of LGU‘s. City; (2) for the same purpose – to make persons conducting
Although the tax to be imposed is akin to business within Kalookan City contribute to city revenues; (3)
VAT, the LGU may nevertheless impose such by the same taxing authority – Kalookan City; (4) within the
local business tax. same taxing jurisdiction – within the territorial jurisdiction of


Kalookan City; (5) for the same taxing periods – per calendar The local government units exercise the power to
year; and (6) of the same kind or character- a local business tax by levying taxes, fees and charges consistent with the basic
tax imposed on gross sales or receipts of the business (City of policy of local autonomy, and to assess and collect all these
Manila v. Coca-Cola Bottlers Philippines, lnc., GRNo. 181845, taxes, fees and charges which will exclusively accrue to them.
August 4,2009, and G.R. No. 167283, February 10, 2010, The local government units are authorized to pass tax
reiterated in Swedish Match Philippines, Inc. v. The Treasurer ordinances (levy) and to pursue actions for the assessment and
of the City of Manila, GRNO. 181277, July 3, 2013, both cited collection of the taxes imposed in the said ordinances. (Section Page | 117
in Nursery Cure Corporation v. Acevedo, 180651, July 129, and 132, Local Government Code).
30,2014). UPLC
(2005) A city outside of Metro Manila plans to enact
2015 XIX A In 2014, M City approved an ordinance an ordinance that will impose a special levy on idle lands
levying customs duties and fees on goods coming into the located in residential subdivisions within its territorial
territorial jurisdiction of the city. Said city ordinance was duly jurisdiction in addition to the basic real property tax. If the lot
published on February 15, 2014 with effectivity date on March owners of a subdivision located in the said city seek your legal
1, 2014. advice on the matter, what would your advice be? Discuss.
(5%)
a. Is there a ground for opposing said
ordinance? (2%) I would advise the lot owners that a city, even if it is
outside Metro Manila, may levy an annual tax on idle lands at
a. Yes, the ordinance is ultra-vires. The the rate not exceeding five percent (5%) of the assessed value
taxing powers of local government units, such as M City, of the property which shall be in addition to the basic real
cannot extend to the levy of taxes, fees and charges already property tax. (Sec. 236, Local Government Code) I would
imposed by the national government, and this include, among likewise advise them that the levy may apply to residential lots,
others, the levy of customs duties under the Tariff and Customs regardless of land area, in subdivisions duly approved by
Code. proper authorities, the ownership of which has been transferred
to individual owners who shall be liable for the additional tax.
b. What is the proper procedural remedy
(Last par., Sec. 237)
and applicable time periods for challenging the ordinance?
(4%) The term "Idle Lands" means, land not devoted
directly to any crop or to any definite purpose for at least one
b. Any question on the constitutionality or year prior to the notice of expropriation, except for reasons
legality of tax ordinances may be raised on appeal within thirty other than force majeure or any fortuitous event, but used to be
(30) days from the effectivity to the Secretary of Justice. The devoted or is suitable to such crop or is contiguous to land
Secretary of Justice shall render a decision within sixty (60) devoted directly to any crop and does not include land devoted
days from the date of receipt of the appeal. Thereafter, within permanently or regularly to other essential and more productive
thirty (30) days after receipt of the decision or the lapse of the purpose. (Philippine Legal Encyclopedia, by Sibal, 1986 Ed.)
sixty-day period without the Secretary of Justice acting upon
the appeal, the aggrieved party may file the appropriate Finally, I would advise them to construct or place
proceedings with the Regional Trial Court. improvements on their idle lands by making valuable additions
to the property or ameliorations in the land's conditions so the
(2007) I. What is the nature of the taxing power of lands would not be considered as idle. (Sec. 199[m]) In this
the provinces, municipalities and cities? How will the local manner their properties would not be subject to the ad valorem
government units be able to exercise their taxing powers? (5%) tax on idle lands.
The taxing power of the provinces, municipalities (2003) In order to raise revenue for the repair and
and cities is directly conferred by the Constitution by giving maintenance of the newly constructed City Hall of Makati, the
them the authority to create their own sources of revenue. The City Mayor ordered the collection of P1.00, called "elevator
local government units do not exercise the power to tax as an tax", every time a person rides any of the high-tech elevators
inherent power or by a valid delegation of the power by the in the city hall during the hours of 8:00 a.m. to 10:00 a.m. and
Congress, but pursuant to a direct authority conferred by the 4:00 p.m. to 6:00 p.m. Is the "elevator tax" a valid imposition?
Constitution. (Mactan Cebu International Airport Authority v. Explain. (8%)
Marcos, 261 SCRA 667 [1996]; NPC v. City of Cabanatuan,
401 SCRA 259 [2003]). No. The imposition of a tax, fee or charge or the
generation of revenue under the Local Government Code, shall


be exercised by the SANGUNIAN of the local government unit three other real property taxes. Accordingly, an alternative
concerned through an appropriate ordinance (Section 132 of answer should be considered and given full credit]
the Local Government Code). The city mayor alone could not
order the collection of the tax; as such, the "elevator tax" is an A. The following taxes, aside from basic real estate
invalid imposition. tax, may be imposed by:
1. Provincial Government
(2003) The City of Makati, in order to solve the traffic Page | 118
problem in its business districts, decided to impose a tax, to be a. Printer's or publisher's tax
paid by the driver, on all private cars entering the city during
peak hours from 8:00 a.m. to 9:00 a.m. from Mondays to b. Franchise Tax
Fridays, but exempts those cars carrying more than two
occupants, excluding the driver. Is the ordinance valid? c. Professional tax
Explain. (8%)
2. City Government - may levy taxes which
The ordinance is in violation of the Rule of the province or municipality are authorized to levy (Sec. 151,
Uniformity and Equality, which requires that all subjects or LGC)
objects of taxation, similarly situated must be treated alike in a. Printer's or publisher's tax
equal footing and must not classify the subjects in an arbitrary
manner. In the case at bar, the ordinance exempts cars b. Franchise tax
carrying more than two occupants from coverage of the said
ordinance. Furthermore, the ordinance only imposes the tax on c. Professional tax
private cars and exempts public vehicles from the imposition of
3. Municipalities in the Metro Manila Area -
the tax, although both contribute to the traffic problem. There
may levy taxes at rates which shall not exceed by 50% the
exists no substantial standard used in the classification by the
maximum rates prescribed in the Local Government Code.
City of Makati.
a. Annual fixed tax on manufacturers,
Another issue is the fact that the tax is imposed on
assemblers, repackers, processors, brewers, distillers,
the driver of the vehicle and not on the registered owner of the
rectifiers and compounders of liquors, distilled spirits, and
same. The tax does not only violate the requirement of
wines or manufacture of any article of commerce of whatever
uniformity, but the same is also unjust because it places the
kind or nature;
burden on someone who has no control over the route of the
vehicle. The ordinance is, therefore, invalid for violating the rule b. Annual fixed tax on wholesalers,
of uniformity and equality as well as for being unjust. distributors, or dealers in any article of commerce of whatever
kind or nature;
(2002) Aside from the basic real estate tax, give
three (3) other taxes which may be imposed by provincial and c. Percentage tax on retailers
city governments as well as by municipalities in the Metro
Manila area. (3%) [Note: Other taxes may comprise the enumeration
because many other taxes are authorized to be imposed by
The following real property taxes aside from the LGUs.]
basic real property tax may be imposed by provincial and city
governments as well as by municipalities in the Metro Manila (2000) Give at least two (2) fundamental principles
area: governing real property taxation, which are limitations on the
taxing power of local governments insofar as the levying of the
1. Additional levy on real property for the realty tax is concerned. (2%)
Special Education Fund (Sec. 235, LGC);
Two (2) fundamental principles governing real
2. Additional Ad-valorem tax on Idle lands property taxation are:
(Sec. 23§, LGC); and
1) The appraisal must be at the current and
3. Special levy (Sec. 240). fair market value; and
[Note: The question is susceptible to dual 2) Classification for assessment must be
interpretation because it is asking for three other taxes and not on the basis of actual use. (Sec. 198, Local Government Code)


ALTERNATIVE ANSWER: iii) Quezon City branch 60%
The examinee should be given credit if he chooses Total 100%

the above two (2) or any two (2) of those enumerated below:
Where should the applicable local taxes on the
1) Assessment must be on the basis of shoes be paid? Explain. (3%)
uniform classification;
Twenty-five percent (25%) of total sales or P2.5 Page | 119
2) Appraisal, assessment, levy and million shall be taxed in Cebu and 15% of total sales or P1.5
collection shall not be let to private persons; and million shall be taxed in Davao. For the remaining 60% sales
amounting to P6 million which are recorded in the principal
3) Appraisal and assessment must be office, 30% thereof or P1.8 million is taxable in Quezon City
equitable. (Sec. 198, Local Government Code) where the principal office is located and 70% or P4.2 million is
taxable in Marikina City where the factory is located.
(2000) May local governments impose an annual
realty tax in addition to the basic real property tax on idle or Under the law, manufacturers maintaining a branch
vacant lots located in residential subdivisions within their or sales outlet shall record the sale in the branch or sales outlet
respective territorial jurisdictions? (3%) making the sale and pay the tax in the city or municipality where
the branch or outlet is located. Since Ferremaro, Inc. maintains
Not all local government units may do so. Only one factory, the sales recorded in the principal office shall be
provinces, cities, and municipalities within the Metro Manila allocated and 30% of said sales are taxable in the place where
area (Sec. 232, Local Government Code) may impose an ad the principal office is located while 70% is taxable in the place
valorem tax not exceeding five percent (5%) of the assessed where the factory is located (Sec. 150, LGC).
value (Sec. 236, Ibid.) of idle or vacant residential lots in a
subdivision, duly approved by proper authorities regardless of RETIRING BUSINESS
area. (Sec.237, Ibid.)
(2010) (IIf) How are retiring businesses taxed under
LOCAL TAXATION the Local Government Code? (2%)
BUSINESS TAX ON CONTRACTORS Retiring businesses under the LGC are taxed in
their gross sales or gross receipts in the current year and not
(2010) (IIe) What is the basis for the computation of in the preceding year. If the tax paid in the current year is less
business tax on contractors under the Local Government than the tax due on gross sales or receipts of the current year,
Code? (2%) the difference shall be paid before the business is considered
officially retired (Sec 145, LGC).
The business tax on contractors is a graduated
annual fixed tax based on the gross receipts for the preceding REAL PROPERTY TAXATION
calendar year. However, when the gross receipts amount to P2
million or more, the business tax on contractors is imposed as (2002) Under the Local Government Code, what
a percentage tax at the rate of 50% of 1% (Sec 143 (e), LGC). properties are exempt from real property taxes? (5%)
SITUS OF TAXATION The following properties are exempt from real

property taxes: (Sec. 234, LGC).
(2010) (XII) Ferremaro, Inc., a manufacturer of
handcrafted shoes, maintains its principal office in Cubao, 1. Real property owned by the Republic of
Quezon City. It has branches/sales offices in Cebu and Davao. the Philippines or any of its political subdivisions except when
Its factory is located in Marikina City where most of its workers the beneficial use thereof has been granted, for consideration
live. Its principal office in Quezon City is also a sales office. or otherwise, to a taxable person;
Sales of finished products for calendar year 2009 in 2. All lands, buildings and improvements
the amount of P10 million were made at the following locations: actually, directly, and exclusively used for religious, charitable
or educational purposes by charitable institutions, churches,
i) Cebu branch 25%
parsonages or convents appurtenant thereto, mosques,
ii) Davao branch 15% nonprofit or religious cemeteries;


3. All machineries and equipment that are 5) The appraisal and assessment of real
actually, directly and exclusively used by local water districts property shall be equitable.
and government-owned or controlled corporations engaged in
the supply and distribution of water and/or generation and (1995) In 1990, Mr. Naval bought a lot for
transmission of electric power; P1,000,000.00 In a subdivision with the intention of building his
residence on it. In 1994, he abandoned his plan to build his
4. All real property owned by duly residence on it because the surrounding area became a Page | 120
registered cooperatives as provided for under R.A. No. 6938; depressed area and land values in the subdivision went down;
and instead, he sold it for P800.000.00. At the time of the sale, the
zonal value was P500.000.00.
5. Machinery and equipment used for
pollution control and environmental protection. 1) Is the land a capital asset or an ordinary
asset? Explain.
(1998) What does the term "ordinary income"
include? [2%] 2) Is there any income tax due on the sale?
Explain.
The term ordinary income includes any gain from
the sale or exchange of property which is not a capital asset. 1) The land is a capital asset because it is
These are the gains derived from the sale or exchange of neither for sale in the ordinary course of business nor a
property such as stock in trade of the taxpayer or other property property used in the trade or business of the taxpayer. (Sec.
of a kind which would properly be included in the inventory of 33. NIRC).
the taxpayer if on hand at the close of the taxable year, or
2) Yes, Mr. Naval is liable to the 5% capital
property held by the taxpayer primarily for sale to customers in
gains tax imposed under Section 21(e) of the Tax Code based
the course of his trade or business, or property used in trade or
on the gross selling price of P800.000.00 which is an amount
business of a character which is subject to the allowance for
higher than the zonal value
depreciation, or real property used in trade or business of the
taxpayer. (Sec. 22 [Z] in relation to Sec. 39[A](1), both of the
NIRC).
ALTERNATIVE ANSWER:
LGU’S REMEDIES
The term ordinary income includes income from
AGAINST TAXPAYER
performance of services, whether professional or personal,
REMEDIES
gains accruing from business, and profit arising from the sale
or exchange of ordinary assets. (1997) Give the remedies available to local
government units to enforce the collection of taxes, fees, and
(1997) State the fundamental principles underlying charges?
real property taxation in the Philippines.
The remedies available to the local government
The following are the fundamental principles units to enforce collection of taxes, fees, and charges are:
governing real property taxation:
1) ADMINISTRATIVE REMEDIES of
1) Real property shall be appraised at its distraint of personal property of whatever kind whether tangible
current and fair market value; or intangible, and levy of real property and interest therein; and
2) Real property shall be classified for 2) JUDICIAL REMEDY by institution of an
assessment purposes on the basis of its actual use: ordinary civil action for collection with the regular courts of
3) Real property shall be assessed on the proper jurisdiction.
basis of a uniform classification within each local government
unit; ASSESSMENT
4) The appraisal, assessment, levy, and (2008) XIII. MNO Corporation was organized on
collection of real property tax shall not be let to any private July 1, 2006, to engage in trading of school supplies, with
person; and principal place of business in Cubao, Quezon City. Its books of


accounts and income statement showing gross sales as (IXa) Was the protest of the corporation filed on
follows: time? Explain. (3%)
July 1, 2006 to December 31, 2006 P 5,000,000. The protest was filed on time. The taxpayer has the
right to protest an assessment within 60 days from receipt
January 1, 2007 to June 30, 2007 P10,000,000.
thereof (Sec 195, LGC).
July 1, 2007 to December 31, 2007 P15,000,000. Page | 121
(IXb) Was the appeal with the Pasay RTC filed on
Since MNO Corporation adopted fiscal year ending time? Explain. (3%)
June 30 as its taxable year for income tax purposes, it paid its
2% business tax for fiscal year ending June 30, 2007 based on The appeal was not filed on time. When an
gross sales of P15 million. However, the Quezon City assessment is protested, the treasurer has 60 days within
Treasurer assessed the corporation for deficiency business tax which to decide. The taxpayer has 30 days from receipt of the
for 2007 based on gross sales of P25 million alleging that local denial of the protest or from the lapse of the 60-day period to
business taxes shall be computed based on calendar year. decide whichever comes first, otherwise the assessment
becomes conclusive and unappeallable. Since no decision on
(A) Is the position of the city treasurer tenable? Explain. the protest was made, the taxpayer should have appealed to
(3%) the RTC within 30 days from the lapse of the period to decide
the protest (Sec 195, LGC).
Yes. Under Sec. 165 of the Local Government
Code, the taxable period for the payment of business taxes is
the calendar year.
REAL PROPERTY TAXATION
2019 B20 ABC, Inc. owns a 950-square
(B) May the deficiency business tax be paid in
meter commercial lot in Quezon City. It
installments without surcharge and interest? Explain. (3%)
received a notice of assessment from the City
Yes, provided there is a valid tax ordinance enacted Assessor, subjecting the property to real
for that purpose that does not impose such surcharge and/or property taxes (RPT). Believing that the
interest on any taxes not paid (Sec. 192, Local Government assessment was erroneous, ABC, Inc. filed a
Code). protest with the City Treasurer. However, for
failure to pay the RPT, the City Treasurer
ALTERNATIVE ANSWER: dismissed the protest.
No, there is no ordinance authorizing the instalment

A. Was the City Treasurer
payment of business taxes without interest and surcharges
correct in dismissing ABC, Inc.’s protest.
(See Sec. 192, Local Government Code).
Explain. (2.5%)
TAXPAYER REMEDIES Yes, the City Treasurer was correct in

dismissing ABC Inc.‘s protest.
AGAINST LGU
Under Section 252 of the Local Government
LOCAL TAXATION Code, no protest shall be entertained unless the
taxpayer first pays the tax, in which the words ―paid
(2010) (IX) On May 15, 2009, La Manga Trading under protest‖ shall be annotated on the tax receipts.
Corporation received a deficiency business tax assessment of
P1,500,000.00 from the Pasay City Treasurer. On June 30, Here, ABC Inc. failed to first pay the real
2009, the corporation contested the assessment by filing a property tax assessed by the Quezon City when it filed
written protest with the City Treasurer. a protest before the City Treasurer.
On October 10, 2009, the corporation received a B. Assuming that ABC, Inc. decides to
collection letter from the City Treasurer, drawing it to file on appeal the dismissal, where should the appeal be filed.
October 25, 2009 an appeal against the assessment before the (2.5%)
Pasay Regional Trial Court (RTC).


Assuming that ABC, Inc. decides to appeal 2. File the protest with local treasurer – The
the dismissal, the appeal should be filed with the Local protest in writing must be filed within thirty (30) days from
Board of Assessment Appeals (LBAA). payment of the tax to the provincial, city treasurer or municipal
treasurer, in the case of a municipality within Metropolitan
If the local treasurer denies the protest or fails Manila Area, who shall decide the protest within sixty (60) days
to act upon it within the 60-day period provided for in from receipt (Section 252, LGC)
Section 252, the taxpayer/real property owner may then Page | 122
appeal or directly file a verified petition with the LBAA 3. Appeal to the LBAA – If protest is denied
within sixty days from denial of the protest or receipt of or upon the lapse of the 60-day period for the treasurer to
the notice of assessment, as provided in Section 226 decide, the taxpayer may appeal to the LBAA within 60 days
of R.A. No. 7160. and the cases decided within 120 days Section 226 & 229,
LGC)
2019 B14 City R owns a piece of land
which it leased to V Corp. In turn, V Corp. 4. Appeal to the CBAA – If not satisfied with
constructed a public market thereon and leased the decision of the LBAA, appeal to the CBAA within 30 days
the stalls to vendors and small storeowners. The from receipt of a copy of the decision (Section 229 (c), LGC).
City Assessor then issued a notice of
(B) May Madam X refuse to pay the
assessment against V Corp. for the payment of
deficiency tax assessment during the pendency of her appeal?
real property taxes (RPT) accruing on the public
market building, as well as on the land where No, Madam may not refuse. Under Section 252,
the said market stands. LGC, the payment of the deficiency tax is a condition before
she can protest the deficiency assessment. It is the decision on
Is the City Assessor correct in the protest or inaction thereon that gives her the right to appeal.
including the land in its assessment of RPT This means that she cannot refuse to pay the deficiency
against V Corp., even if the same is owned by assessment during the pendency of the appeal because it is
City R? Explain (3%) the payment itself which gives rise to the remedy. The law
provides that no protest (which is the beginning of the
Yes. Under Section 234 of the Local disputation process) shall be entertained unless the taxpayer
Government Code, real property owned by the first pays the tax.
Republic of the Philippines or any of its political
subdivision is exempt from payment of real (2013) (VIII) Mr. Amado leased a piece of land
property tax except when the beneficial use owned by the Municipality of Pinagsabitan and built a
thereof has been granted, for consideration or warehouse on the property for his business operations. The
otherwise, to a taxable person or entity. Municipal Assessor assessed Mr. Amado for real property
taxes on the land and the warehouse. Mr. Amado objected to
the assessment, contending that he should not be asked to pay
2014 XVIIIAB Madam X owns real property in realty taxes on the land since it is municipal property.
Caloocan City. On July 1, 2014, she received a notice of
assessment from the City Assessor, informing her of a Was the assessment proper? (5%)
deficiency tax on her property. She wants to contest the
assessment. (4%) Yes, the assessment is proper. The land, although
owned by the municipality, is not exempt from real property tax
(A) What are the administrative remedies because the beneficial use has been granted to a taxable
available to Madam X in order to contest the assessment and person. (Sec 234 (a), LGC)
their respective prescriptive periods?
(2010) (XIV) A inherited a two-storey building in
(A) The administrative remedies available to Makati from his father, a real estate broker in the „60s. A
Madam X to contest the assessment and their respective group of Tibetan monks approached A and offered to
prescriptive periods are as follows: lease the building in order to use it as a venue for their Buddhist
rituals and ceremonies. A accepted the rental of P1 million for
1. Pay the deficiency real property tax the whole year. The following year, the City Assessor issued
under protest (Section 252, LGC) an assessment against A for non-payment of real property
taxes.


Is the assessor justified in assessing A‟s 2011, as the CIR had not yet made any ruling on its claim for
deficiency real property taxes? Explain. (3%) refund/credit, KKI, fearful that its period to appeal to the courts
might prescribe, filed an appeal with the Court of Tax Appeals
No. The property is exempt from real property tax (CTA).
by virtue of the beneficial use thereof by the Tibetan monks for
their religious rituals and ceremonies. A property that is (a) Can the CTA act on KKI’s appeal? (2.5%)
actually, directly and exclusively used for religious purposes is Page | 123
exempt from the real property tax (Sec 234, LGC; Sec 28(3), No. Pursuant to the pronouncement made the
Article IV, Phil. Constitution). The test of exemption from the Supreme Court in the case of Commissioner of Internal
tax is not ownership but beneficial use of the property (City of Revenue v. Aichi Forging Company of Asia, Inc. (G.R. No.
Baguio v. Busuego, L-29772, Sept 18, 1980). 184823, October 6,2010), the observance of the “120+30-day*
period is jurisdictional. Now, counting 120 days from October
(2006) What properties are exempt from the real 10, 2010, the last day for the CIR to act on the claim for refund/
property tax? (5%) credit fell on February 7,2011, thus making the February 1,
2011 filing premature.
The following properties are exempt from the real
property tax (Section 234, Local Government Code): 2018 XIV The City of Kabankalan issued a notice of
assessment against KKK, Inc. for deficiency real property taxes
(1) Real property owned by the REPUBLIC for the taxable years 2013 to 2017 amount of PhP20 million.
OF THE PHILIPPINES or any of its political subdivisions except KKK paid the taxes under protest and instituted a complaint
when the beneficial use thereof has been granted for entitled “Recovery of Illegally and/or Erroneously-Collected
consideration or otherwise to a taxable person; Local Business Tax, Prohibition with Prayer to Issue TRO and
Writ of Preliminary Injunction” with the RTC of Negros
(2) CHARITABLE INSTITUTIONS,
Occidental.
churches, parsonages or convents appurtenant thereto,
mosques, non-profit or religious cemeteries, and all lands, The RTC denied the application for TRO. Its motion
buildings, and improvements actually, directly and exclusively for reconsideration having been denied as well, KKK filed a
used for religious, charitable or educational purposes; petition for certiorari with the Court of Appeals (CA) assailing
the denial of the TRO.
(3) All machineries and equipment that are
actually, directly and exclusively used by LOCAL WATER Will the petition prosper? (5%)
UTILITIES and government-owned or controlled corporations
engaged in the supply and distribution of water and/or No, the petition will not prosper. The Court of
generation and transmission of electric power; Appeals (CA) has no jurisdiction over the case considering that
it is the CTA which has exclusive appellate jurisdiction aver
(4) All real property owned by duly cases involving local taxes decided by RTC in the exercise of
REGISTERED COOPERATIVES as provided for under R.A. latter’s original jurisdiction.
6938; and
The power of the CTA includes that of determining
(5) Machinery and equipment used for whether or not bas been grave abuse of discretion amounting
POLLUTION CONTROL and ENVIRONMENTAL to lack or excess of jurisdiction on the part of the RTC in issuing
PROTECTION. an interlocutory order in cases falling within the exclusive
appellate jurisdiction of the tax court. It, thus, follows that it is
the CTA, by constitutional mandate, which is vested with
APPELLATE COURT jurisdiction to issue writs of certiorari in these cases (Philam
Life v. Secretary of Finance, G.R. No. 210987, November
JURISDICTION 24,2014); hence, the petition filed with the CA will not prosper.
2018 XX Krisp Kleen, Inc. (KKI) is a corporation 2017XVI The BIR assessed the Babuyan Water
engaged in the manufacturing and processing of steel and its District (BWD) with deficiency income taxes amounting to P8.5
by-products. It is both registered with the Board of Investments, million, inclusive of interest and surcharge. The BWD disputed
with a pioneer status, and with the BIR as a VAT entity. On the assessment, and argued that it was a wholly-owned
October 10,2010, it filed a claim for refund/credit of input VAT government entity performing essential government functions.
for the period January 1 to March 31,2009 before the However, the BIR denied the protest.
Commissioner of Internal Revenue (CIR). On February 1,


The BWD filed a petition for arbitration in the Office proceeding may suspend the collection and require the
of the Secretary of Justice pursuant to Sections 66 to 71, taxpayer either to deposit the amount claimed or to file a surety
Chapter 14, Book IV of the Administrative Code of 1987 to bond for not more than double the amount with the Court.
assail the denial of its protest, and to seek the proper
interpretation of Section 32(B)(7)(b) of the Tax Code that b. Is the CTA Division justified in requiring
excluded from gross income the income derived by the Globesmart Services, Inc., to post a surety bond as a condition
Government or its political subdivisions. The Secretary of for the suspension of the deficiency tax collection? Explain your Page | 124
Justice rendered a decision declaring the BWD exempt from answer. (3%)
the payment of income tax.
No. The Supreme Court in the Tridharma Case cited
The Commissioner of Internal Revenue appealed to the case of Pacquiao v. Court of Tax Appeals [G.R. No.
the CTA on the sole ground that the Secretary of Justice had 213394, 2016] where it ruled that the CTA should first conduct
no jurisdiction to review the assessment of the BIR. Is the a preliminary hearing for the proper determination of the
appeal meritorious? Explain your answer. (4%) necessity of a sureety bond or the reduction thereof. In the
conduct of its preliminary hearing, the CTA must balance the
[Note: (On recent jurisprudence not covered by the scale between the inherent power of the State to tax and its
2017 Bar Syllabus) The Supreme Court held in Commissioner right to prosecute perceived transgressors of the law, on one
of Internal Revenue v. Secretary of Justice and PAGCOR [G.R. side, and the constitutional rights of petitioners to due process
No. 177387 (2016)] that the Secretary of Justice does not have of law and the equal protection of the laws, on the other. In this
any jurisdiction to review any disputed assessments arising case, the CTA failed to consider that the amount of the surety
under the Tax Code. The Secretary of Justice should have bond that it is asking Globesmart Services, Inc. to pay is more
desisted from dealing with the petition and referred the matter than its net worth. It is, thus, necessary for the CTA to first
to the Court of Tax Appeals that has jurisdiction over appeals conduct a preliminary hearing to give the taxpayer an
on the decisions of the BIR in tax assessment cases]. opportunity to prove its inability to come up with such amount.
UPLC
2017 XIV Globesmart Services, Inc. received a final
assessment notice with formal letter of demand from the BIR MEMORIZE 2016 II State at least five (5) cases
for deficiency income tax, value-added tax and withholding tax under the exclusive appellate jurisdiction of the Court of Tax
for the taxable year 2016 amounting to P48 million. Globesmart Appeals (CTA). (5%)
Services, Inc. filed a protest against the assessment, but the
Commissioner of Internal Revenue denied the protest. Hence, The following cases are under the exclusive
Globesmart Services, Inc. filed a petition for review in the CTA appellate jurisdiction of the Court of Tax Appeals.
with an urgent motion to suspend the collection of tax.
A. Exclusive appellate jurisdiction to review by appeal:
After hearing, the CTA Division issued a resolution
granting the motion to suspend but required Globesmart 1. Decisions of the Commissioner of Interanl
Services, Inc., to post a surety bond equivalent to the Revenue in cases involving disputed assessments, refunds of
deficiency assessment within 15 days from notice of the interna! Revenue taxes, fees or other charges, penalties in
resolution. Globesmart Services, Inc. moved for the partial relation thereto, or other matters arising under the NIRC or
reconsideration of the resolution and for the reduction of the other laws administered by the BlR;
bond to an amount it could obtain. The CTA division is ued
2. Inaction of the Commissioner of Internal Revenue
another resolution reducing the amount of the surety bond to
in cases involving disputed assessments, refunds of internal
P24 million. The latter amount was still more than the net worth
revenue taxes, fees or other charges, penalties in relation
of Globesmart Services, Jnc., as reported in its audited
thereto, or other matters arising under the NIRC or other laws
financial statements.
administered by the BIR, where the NIRC provides a specific
a. May the collection of taxes be period of action, in which case the inaction shall be deemed a
suspended? Explain your answer. (3%) denial;
3. Decisions, orders or resolutions of the RTC in

Yes, the collection of taxes may be suspended.
local tax cases original W decided or resoived by them in the
Under RA No. 1125, as amended by RA No. 9282, that when
exercise of their original or appellate jurisdiction;
in the opinion of the Court the collection by the aforementioned
government agencies may jeopardize the interest of the 4. Decisions of the Commissioner of Customs in
Government and/or the taxpayer, the Court at any stage of the cases involving liability of customs duties, fees or other money


charges, seizure, detention or release of property affected, The CTA may suspend the collection of internal
fines, forfeitures or other penalties in relation thereto, or other revenue taxes if the following conditions are met:
matters arising under the Customs Law or other laws
administered by the Bureau of Customs; and 1. the case is pending appeal with the CTA;
5. Decisions of the Central Board of Assessment 2. in the opinion of the Court the collection will
Appeals in the exercise of its appellate jurisdiction over cases jeopardize the interest of the Government and/or the taxpayer;
Page | 125
involving the assessment and taxation of real property and than double the amount of the tax (Sec 11, RA 1125, as
originally decided by the provincial or city board of assessment amended by RA 9282).
appeals,
3. The taxpayer is willing to deposit in Court
6. Decisions of the Secretary of Finance on customs the amount being collected or to file a surety bond for not more
cases elevated to him automatical for review from decisions of ??? (please check this out sa BQA Taxation.)
the Commissioner of Customs adversed to the Government
under Sec. 2315 of the Tariff and Customs Code; and (2010) (Id) Proceedings before the CTA in the
exercise of its exclusive original jurisdiction are in the nature of
7. Decisions of the Secretary of Trade and Industry, trial de novo. (1%)
in the case of nonagricultural product, commodity or article, and
the Secretary of Agriculture, in the case of agricultural product, True. (CIR v. Manila Mining Corp. G.R. No. 153204,
commodity or article, involving dumping and countervailing Aug. 31, 2005)
duties under Sec. 301 and 302, respectively, of the Tariff and
Customs Code, and safeguard measures under RA Mo. 8800, (2010) (V) Does the Court of Appeals have the
where either party may appea! The decision to impose or not power to review compromise agreements forged by the
impose said duties. Commissioner of Internal Revenue and a taxpayer? Explain.
(5%)
B. Exclusive appellate jurisdiction in criminal offenses:
No, for either of two reasons (1) in instances in
1. Over appeals from the judgments, resolutions or which the Commissioner of Internal Revenue is vested with
orders Regional Trial Courts in tax cases originally decided by authority to compromise, such authority should be exercised in
them, in their respective territorial jurisdiction; and accordance with the Commissioner’s discretion, and courts
have no power, as a general rule, to compel him to exercise
2. Over petitions for review of the judgments, such discretion one way or another (Koppel Phils., Inc. v. CIR,
resolutions or orders of the Regional Trial Courts in the 87 Phil, 351 (1950);
exercise of their appellate jurisdiction over tax cases originally
decided by the Metropolitan Trial Courts, Municipal Trial Courts (2) If the Commissioner abuses his discretion by not
and Municipal Circuit Trial Courts in their respective following the parameters set by law, the CTA, not the Court of
jurisdiction. Appeals, may correct such abuse if the matter is appealed to
it. In case of arbitrary or capricious exercise by the
[NOTE: It is recommended that any five (5) of the Commissioner of the power to compromise, the compromise
above-enumerated cases be given credit]. can be attacked and reversed through the judicial process. It
must be noted however, that a compromise is considered as
other matters arising under the NIRC which vests the CTA with
(2010) (Ic) In criminal cases where the Court of Tax jurisdiction, and since the decision of the CTA is appealable to
Appeals (CTA) has exclusive original jurisdiction, the right to the Supreme Court, the Court of Appeals is devoid of any
file a separate civil action for the recovery of taxes may be power of review a compromise settlement forged by the
reserved. (1%) Commissioner (PNOC v. Savellano, G.R. No. 109976, April
26, 2005; RA 9282 on jurisdiction of CTA).
False. (Sec. 11, Rule 9, 2005 Rules of the Court of Tax
Appeals, as amended) (Note: It is respectfully requested that if the examinee gives any
one of the two reasons presented above, the answer should be
(2010) (VII) What are the conditions that given full credit.)
must be complied with before the Court of Tax Appeals may
suspend the collection of national internal revenue taxes? (3%) (2010) (Ie) Judgments, resolutions or orders of the
Regional Trial Court in the exercise of its original jurisdiction
involving criminal offenses arising from violations of the NIRC


are appealable to the CTA, which shall hear the cases en banc. 1990 – 2019 TAX BAR EXAMINATION
(1%)
False. (Sec. 3(b)(2), Rule 4, 2005 Revised Rules of

TAX ON INDIVIDUALS
the Court of Tax Appeals)
2019 B11 Mr. D, a Filipino amateur
boxer, joined an Olympic qualifying tournament
(2010) (VIII) What is the rule on appeal from Page | 126
held in Las Vegas, USA, where he won the gold
decisions of the Collector of Customs in protest and seizure
medal. Pleased with Mr. D‘s accomplishment,
cases? When is the decision of the Collector of Customs
the Philippine Government, through the
appealable to the Court of Tax Appeals? Explain. (5%)
Philippine Olympic Committee, awarded him a
Decisions of the Collector of Customs in protest and cash prize amounting to P1,000,000.00. Upon
seizure cases are appealable to the Commissioner of Customs receipt of the funds, he went to a casino in
within 15 days from receipt of notice of the written decision. As Pasay City and won the P30,000,000.00 jackpot
a rule, decisions of the Collector of Customs are not appealable in the slot machine. The next day, he went to a
to the Court of Tax Appeals. If the Collector of Customs, nearby Lotto outlet and bought a Lotto ticket
however, does not decide a protest for a long period of time, which won him a cash prize of P5,000.00.
the inaction may be considered as an adverse decision by the
Collector of Customs and the aggrieved taxpayer may appeal Which of the above sums of money is/are
to the CTA even without the Collector’s and Commissioner’s subject to income tax? Explain (5%)
actual decision (Commissioner of Customs v. Planters
Products, Inc. G.R. No. 82018, March 16, 1989).
Mr. D‘s winnings from the casino in
(2009) (XVIII) A taxpayer received an Pasay City, worth P30,000,000.00 is subject to
assessment notice from the BIR on February 3, 2009. The income tax. Under the TRAIN Law, other prizes
following day, he filed a protest, in the form of a request for and winnings in excess of P10,000 shall be
reinvestigation, against the assessment and submitted all subject to a 20% final tax on the entire amount
relevant documents in support of the protest. On September of the winnings. In this case, Mr. D‘s winnings
11, 2009, the taxpayer, apprehensive because he had not yet from the casino in Pasay City are more than
received notice of a decision by the Commissioner on his P10,000. Hence, it shall be subject to income
protest, sought your advice. tax.
What remedy or remedies are available to the With regard to Mr. D‘s cash prize
taxpayer? Explain. (4%) award after winning in an Olympic qualifying
tournament held in Las Vegas, it is not subject
The remedy of a taxpayer is to avail of either of two to income tax. Under the NIRC, prizes and
options: awards granted to athletes in local and
international sports competitions and
1. File a petition for review with the CTA within 30 days tournaments whether held in the PH or abroad
after the expiration of the 180-day period from submission of all and SANCTIONED by their national sports
relevant documents; or associations, which in this case is the
2. Await the final decision of the Commissioner on the Philippine Olympic Committee, shall not be
disputed assessment and appeal such final decision to the CTA subject to income tax. (take note of the word
within 30 days after receipt of a copy of such decision. sanctioned)
These options are mutually exclusive such that resort to one With regard to Mr. D‘s Lotto winnings,
bars the application of the other (RCBC v. CIR, 522 SCRA 144 it is not subject to income tax. Under the NIRC,
(2007)). any winnings through the PCSO Lotto that are
in the amount of P10,000 or less shall be
PART 2 exempt from income tax. In this case, Mr. D
won P5,000 thru the PCSO Lotto. Hence, it shall
INCOME TAXATION not be subject to income tax.
SECOND MOST ASKED TOPICS FROM



2018 II Kronge Konsult, Inc. (KKI) is a Philippine for housing and other basic needs, Kamilo requested that all
corporation engaged in architectural design, engineering, and his salaries paid in Taiwanese dollars, be paid to his wife in
construction work. Its principal office is located in Makati City, Manila in its Philippine Peso equivalent;
but it has various infrastructure projects in the country and
abroad. Thus, KKI employs both local and foreign workers. The Not taxable and no need to file tax returns. Kamilo
company has adopted a policy that the employees’ salaries are is a non-resident citizen who is taxable only on income from
paid in the currency of the country where they are assigned or within. Compensation for services rendered outside of the Page | 127
detailed. Philippines is income from without which is not subject to the
Philippine income tax (Sec. 23 and Sec. 42, NIRC).
Below are some of the employees of KKI.
Determine whether the compensation they received from KKI Karen Karenina, a Filipino architect in KKI’s Design
in 2017 is taxable under Philippine laws and whether they are Department who reported back to KKI’s Makati office in June
required to file tax returns with the Bureau of Internal Revenue 2017 after KKI’s project in Kuala Lumpur, Malaysia was
(BIR). completed.
(a) Kris Konejero, a Filipino accountant in KKl’s Tax Compensation from January 1 up to the time of her
Department Makati office, and married to a Filipino engineer return in June 2017 is income from without which is not taxable
also working in KK1; if received by a non-resident citizen (Sec. 23 and Sec. 42,
NIRC). Compensation from June 2017 to December 31,2017
Taxable (Sec. 22 and 24(A), NIRC). Kris must file is income from within and taxable to Karen who is taxable on
tax returns with the BIR, unless she qualifies for substituted worldwide income from the time she regained the status of a
filing of income tax returns because the tax was correctly resident citizen and accordingly, must file returns to pay for the
withheld by the employer (Sec. 51(A) (2Kb), MRC). tax, unless she is a purely compensation income earner for
which the withholding tax on wages was correctly withheld by
(b) Klaus Kloner, a German national who heads
KKI (Sec 51(A) (2b), NIRC.
KKI’s Design Departmerit in its Makati office;
(2013) (XI) In 2000, Mr. Belen bought a residential
Taxable, being income earned by a resident alien
house and lot for P1,000,000. He used the property as his and
from Philippine sources (Sec. 23 and 24(A), NIRC. Klaus is
his family's principal residence. It is now year 2013 and he is
required to file a tax return, unless the compensation income
thinking of selling the property to buy a new one. He seeks your
from KK1 is his only returnable income and the withholding tax
advice on how much income tax he would pay if he sells the
thereon was correctly withheld by his employer (Sec. 51 (A) 2
property. The total zonal value of the property isP5,000,000
B, NIRC. and the fair market value per the tax declaration is P2,500,000.
He intends to sell it for P6,000,000.
c. Krisanto Konde, a Filipino engineer in KKI’s
Design Department who was hired to work at the principal What material considerations will you take into
office last January 2017. In April 2017, he was assigned and account in computing the income tax? Please explain the legal
detailed in the company’s project in Jakarta, Indonesia, which relevance of each of these considerations. (7%)
project is expected to be completed in April 2019;
Since the planned sale involves a real property
His compensation from January 1 up to the time he classified as a capital asset, the material considerations to take
left the Philippines is taxable and he must file tax returns, into account to compute the income tax are:
unless the compensation income is his only returnable income
and the withholding tax thereon was correctly withheld by KKI 1. The current fair market value of the property to be
(Sec. 51(A)(2)(b), NIRC. The compensation for his services sold. The current fair market value is the higher between the
abroad from the date of his actual assignment thereat upto the zonal value and the fair market value per tax declaration.
time of the completion of the project is tax-exempt being
income from without earned by a non-resident citizen (Sec. 23 2. The gross selling price of the property.
and Sec. 42, MRQ. He is not required to file a return for this
3. Determination of the tax base which is the higher
income derived from without, because said income is not
between the gross selling price and the current fair market of
subject to income tax in the Philippines (See. 23, NlRC).
the property.
Kamilo Konde, Krisanto’s brother, also an engineer
assigned to KKI’s project in Taipei, Taiwan. Since KKI provides


The income tax is computed as 6% of the tax base (Sec. 24[B1] NIRC). An expanded foreign currency deposit
which is in the nature of a final capital gains tax. (Sec 24 (D)(1), refers to any bank authorized by the Central Bank to transact
NIRC). business in local and acceptable foreign currencies.
However, since the property to be sold is a principal Judy Garcia, who is a resident of the Philippines, is
residence and the purpose is to buy a new one, I will advise Mr. liable for 7.5% final income tax on interest income (Sec. 24[B1]
Belen that the sale can be exempt from 6% capital gains tax if NIRC). Page | 128
he is willing to comply with the following conditions:
Is the bank correct in withholding the 20% final tax
a. He must utilize the proceeds of sale acquiring a new on the entire interest income? Explain.
principal residence within 18 months from the date of
disposition; No, the bank should withhold only 7.5% on the final
interest income of the wife. The husband is exempt.
b. He should notify the Commissioner of his intention
to avail of the exemption within 30 days from date of sale; (2004) Citing Section 10, Article VIII of the 1987
Constitution which provides that salaries of judges shall be
c. He should open an escrow account with a bank and fixed by law and that during their continuance in office their
deposit the 6% capital gains tax due on the sale. If he complies salary shall not be decreased, a judge of MM Regional Trial
with the utilization requirement he will be entitled to get back Court questioned the deduction of withholding taxes from his
his deposit; otherwise, the deposit will be applied against the salary since it results into a net deduction of his pay. Is the
capital gains tax due. (Sec 24 (D)(2), NIRC) contention of the judge correct? Reason briefly. (5%)
(2010) A non-resident alien who stays in the No. The contention is incorrect. The salaries of
Philippines for less than 180 days during the calendar year judges are not tax-exempt and their taxability is not contrary to
shall be entitled to personal exemption not to exceed the the provisions of Section 10, Article VIII of the Constitution on
amount allowed to citizens of the Philippines by the country of the non-diminution of the salaries of members of the judiciary
which he is subject or citizen. during their continuance in office. The clear intent of the
Constitutional Commission that framed the Constitution is to
False. (Sec 25 (A)(1) in relation to Sec 35, NIRC)
subject their salaries to tax as in the case of all taxpayers.
Hence, the deduction of withholding taxes, being a manner of
(2008) Will Z, a non-resident citizen, be liable to
collecting the income tax on their salary, is not a diminution
pay income tax on the P45,000 monthly rental income? Reason
contemplated by the fundamental law. (Nitafan et. al. v. CIR,
briefly.
152 SCRA 284 [1987]).
Yes. The rental income from property located in the
(2001) What do you think is the reason why cash
Philippines is considered as income derived from within. Z, a
dividends, when received by a resident citizen or alien from a
non- resident citizen is taxable on income derived from sources
domestic corporation, are taxed only at the final tax of 10% and
within the Philippines. (Section 42 in relation to Section 23,
not at the progressive tax rate schedule under Section 24(A) of
NIRC).
the Tax Code? Explain your answer. (5%)
(2007) XV. In 2007, spouses Renato and Judy
The reason for imposing final withholding tax rather
Garcia opened peso and dollar deposits at the Philippine
than the progressive tax schedule on cash dividends received
branch of the Hong Kong Bank in Manila. Renato is an
by a resident citizen or alien from a domestic corporation, is
overseas worker in Hong Kong while Judy lives and works in
to ensure the collection of income tax on said income. If we
Manila. During the year, the bank paid interest income of
subject the dividend to the progressive tax rate, which can only
P10,000 on the peso deposit and US$1,000 on the dollar
be done through the filing of income tax returns, there is no
deposit. The bank withheld final income tax equivalent to 20%
assurance that the taxpayer will declare the income, especially
of the entire interest income and remitted the same to the BIR.
when there are other items of gross income earned during the
Are the interest incomes on the bank deposits of spouses
year. It would be extremely difficult for the BIR to monitor
Renato and Judy Garcia subject to income tax? Explain. (4%)
compliance considering the huge number of stockholders. By
The interest income of Renato, who is a non- shifting the responsibility to remit the tax to the corporation, it
resident, is exempt from income tax under Sec. 27(D3)(2) is very easy to check compliance because there are fewer
NIRC. Any bank interest of non-residents from an expanded withholding agents compared to the number of income
foreign currency deposit system is exempt from income tax recipients.


Likewise, the imposition of a final withholding tax will (1995) Five years ago Marquez, Peneyra, Jayme,
make the tax available to the government at an earlier time. Posadas and Manguiat, all lawyers, formed a partnership which
Finally, the final withholding tax will be a sure revenue to the they named Marquez and Peneyra Law Offices. The
government unlike when the dividend is treated as a returnable Commissioner of Internal Revenue thereafter issued Revenue
income where the recipient thereof who is in a tax loss position Regulation No. 2-93 implementing RA. 7496 known as the
is given the chance to offset such loss against dividend income Simplified Net Income Taxation Scheme (SNITS). Revenue
thereby depriving the government of the tax on said dividend Regulation No. 2-93 provides in part: Page | 129
income. [Note: It is recommended that any of the foregoing
Sec. 6. General Professional Partnership. — The
answers can be given full credit because the question involves
general professional partnership and the partners are covered
a policy issue which can only be found in the deliberations of
by R.A. 7496. Thus, in determining profit of the partnership,
Congress.
only the direct costs mentioned in said law are to be deducted
ALTERNATIVE ANSWER: from partnership income. Also, the expenses paid or Incurred
by partners in their individual capacities in the practice of their
The reason why cash dividends received by a profession which are not reimbursed or paid by the partnership
resident citizen or alien from a domestic corporation are but are not considered as direct costs are not deductible from
subjected to the final withholding tax of 10% and not at the his gross income.
progressive rate tax schedule is to lessen the impact of a
1) Marquez and Peneyra Law Offices filed a
second layer of tax on the same income.
taxpayer's suit alleging that Revenue Regulation No. 2-93
(1998) From what sources of income are the violates the principle of uniformity in taxation because general
following persons/corporations taxable by the Philippine professional partnerships are now subject to payment of
government? income tax and that there is a difference in the tax treatment
between individuals engaged in the practice of their respective
Citizen of the Philippines residing therein; [1%] professions and partners in general professional partnerships.
Is this contention correct? Explain.
A citizen of the Philippines residing therein is
taxable on all income derived from sources within and without The contention is not correct. General professional
the Philippines. partnerships remain to be a non-taxable entity. What is taxable
are the partners comprising the same and they are obligated to
Non-resident citizen; report as income their share in the income of the general
professional partnership during the taxable year whether
A nonresident citizen is taxable only on income distributed or not. The SNITS treat professionals as one class
derived from sources within the Philippines. of taxpayer so that they shall be treated alike irrespective of
whether they practice their profession alone or in association
An individual citizen of the Philippines who is
with other professionals under a general professional
working and deriving income from abroad as an overseas
partnership. What are taxed differently are individuals and
contract worker;
corporations. All individuals similarly situated are taxed alike
An individual citizen of the Philippines who is under the regulations, therefore, the principle of uniformity in
working and deriving income from abroad as an overseas taxation is not violated. On the contrary, all the requirements of
contract worker is taxable only on income from sources within a valid classification have been complied with (Ton vs. Del
the Philippines. Rosario et al G.R No. 109289, Octobers, 1994).
An alien individual, whether a resident or not of the 2) Is Revenue Regulation No. 2-93 now considered
Philippines; as having adopted a gross income method instead of retaining
the net income taxation scheme? Explain.
An alien individual, whether a resident or not of the
Philippines, is taxable only on income derived from sources No. Revenue Regulation No. 2-93
within the Philippines implementing RA No. 7496 have indeed significantly reduced
the items of deduction by limiting it to direct costs and expenses
A domestic corporation; or the 40% of gross receipts maximum deduction in cases
where the direct costs are difficult to determine. The allowance
A domestic corporation is taxable on all income of limited deductions however, is still in consonance with the
derived from sources within and without the Philippines. net income taxation scheme rather than the gross income


method. While it is true that not all the expenses of earning the Aggrieved, XYZ Air filed a protest,
income might be allowed, this can well be justified by the fact arguing that, as a non-resident foreign
that deductions are not matters of right but are matters of corporation, it should only be taxed for income
legislative grace. derived from sources within the Philippines.
However, since it only serviced passengers
(1994) Four Catholic parishes hired the services of outside the Philippine territory, the situs of the
Frank Sinatra, a foreign non-resident entertainer, to perform for income from its ticket sales should be Page | 130
four (4) nights at the Folk Arts Theater. Sinatra was paid considered outside the Philippines. Hence, no
P200,000.00 a night. The parishes earned P1,000,000.00 income tax should be imposed on the same. Is
which they used for the support of the orphans in the city. Who XYZ Air’s protest meritorious? Explain.
are liable to pay taxes?
The following are liable to pay income taxes: No, the protest of XYZ Air is not
meritorious. Under the law, an international air
(a) The four catholic parishes because the income carrier with no landing rights in the Philippines is
received by them, not being income earned "as such" in the a resident foreign corporation if its local sales
performance of their religious functions and duties, is taxable agent sells and issues tickets in its behalf. An
income under the last paragraph of Sec. 26, in relation to Sec. offline international carrier selling passage tickets
26(e) of the Tax Code. In promoting and operating the Sinatra in the Philippines through a local general sales
Show, they engaged in an activity conducted for profit. (Ibid.) agent, is considered a resident foreign corporation
doing business in the Philippines. As such, it is
(b) The income of Frank Sinatra, a non-resident alien taxable on income derived from sources within the
under our law is taxable at the rate of 30%, final withholding tax Philippines and not on Gross Philippine Billings,
based on the gross income from the show. Mr. Sinatra is not subject to any applicable tax treaty. (Air Canada vs.
engaged in any trade or business in the Philippines. Commissioner of Internal Revenue G.R. No.
169507, January 11,2016).
(1994) What is the principle of mobilia sequuntur
personam in income taxation? In the case at bar, XYZ Air was able to sell
its airplane tickets in the Philippines through ABC
Principle of Mobilia Sequuntur Personam in income Agency, it‘s general agent in the Philippines. As
taxation refers to the principle that taxation follows the property such, it is taxable on income derived from sources
or person who shall be subject to the tax. within the Philippines and not on Gross Philippine
Billings, subject to any applicable tax treaty.
TAX ON CORPORATIONS
2019 B12 JKL-Philippines is a domestic
2019 A6 XYZ Air, a 100% foreign-owned corporation affiliated with JKL-Japan, a Japan-
airline company based and registered in based information technology company with
Netherlands, is engaged in the international affiliates across the world. Mr. F is a Filipino
airline business and is a member signatory of engineer employed by JKL-Philippines. In 2018,
the International Air Transport Association. It’s Mr. F was sent to the Tokyo branch of JKL-Japan
commercial airplanes neither operate within the based on a contract entered into between the
Philippine territory nor as its service two (2) companies. Under the said contract, Mr.
passengers embarking from Philippine airports. F would be compensated by JKL-Philippines for
Nevertheless, XYZ Air is able to sell its airplane the months spent in the Philippines, and JKL-
tickets in the Philippines through ABC Agency, Japan for months spent in Japan. For the
it’s general agent in the Philippines. As XYZ entirety of 2018, Mr. F spent ten (10) months in
Air’s ticket sales, sold through ABC Agency for the Tokyo branch.
the year 2013, amounted to P5,000,000.00, the
Bureau of Internal Revenue (BIR) assessed XYZ On the other hand, Mr. J., a
Air deficiency income taxes on the ground that Japanese engineer employed by JKL-Japan,
the income from the said sales constituted was sent to Manila to work with JKL-
income derived from sources within the Philippines as a technical consultant. Based
Philippines. on the contract between the two (2)
companies, Mr. J‘s annual compensation


would still be paid by JKL- Japan. However, is considered as a NRANETB, and shall be
he would be paid additional compensation by subjected to flat rate of 25% based on gross
JKL-Philippines for the months spent income earned within the Philippines.
working as a consultant. For 2018, Mr. J
stayed in the Philippines for five (5) months. 2019 A9 GHI Inc., is a corporation
authorized to engage in the business of
In 2019, the Bureau of Internal manufacturing ultra-high density Page | 131
Revenue (BIR) assessed JKL-Philippines for microprocessor unit packages. After its
deficiency withholding taxes for both Mr. F and registration on July 5, 2005, GHI, Inc.
Mr. J for the year 2018. As to Mr. F, the BIR constructed buildings and purchased
argued that he is a resident citizen, hence, his machineries and equipment. As of December
income tax should be based on his worldwide 31, 2005, the total cost of the machineries and
income. As to Mr. J, the BIR argued that he is equipment amounted to P250,000,000.00.
a resident alien; hence, his income tax should However, GHI, Inc. failed to commence
be based on his income from sources within operations. Its factory was temporarily closed
the Philippines at a schedular rate under Sec effective Sept 15, 2010. On October 1, 2010, it
24 (A) (2) of the Tax Code, as amended by sold its machineries and equipment to JKL
Republic Act No. 10963, or the Tax Reform Integrated for P300,000,000.00. Thereafter,
for Acceleration and Inclusion Law. GHI, Inc. was dissolved on November 30, 2010.
A. Is the BIR correct in [A] Is the sale of machineries and

basing its income tax assessment on equipment to JKL Integrated subject to normal
Mr. F‘s worldwide income? Explain. corporate income tax or capital gains tax?
(3%) Explain. (3%)
No, the BIR is not correct in The sale of machineries and

basing its income tax assessment on Mr. F‘s equipment to JKL Integrated is subject to
worldwide income. Under the NIRC, non-resident normal corporate income tax. Under Sec. 27 D
citizens are only taxed for income earned within sub. Par. 5 of the NIRC, a corporation is only
the Philippines. Here, the hybrid status of the subject to capital gains tax for the sale of land
taxpayer cannot be applied, regardless of his and buildings. In this case, GHI Inc., a
initial 2-month stay in the Philippines and corporation, sold machineries and equipment.
subsequent transfer to Japan. For all intents and Hence, the sale is subject to normal corporate
purposes, F is considered a non-resident citizen income tax
in the year 2018. Hence, the income tax for 2018
should only be assessed on income earned within
the Philippines. Under Sec. 39 of the NIRC, the term 'capital
assets' means property held by the taxpayer (whether or
B. Is the BIR correct in basing its
not connected with his trade or business), but does not
income tax on Mr. J‘s income within the
include stock in trade of the taxpayer or other property of
Philippines at a schedular rate? Explain (3%).
a kind which would properly be included in the inventory
of the taxpayer if on hand at the close of the taxable year
No, the BIR is not correct in basing its or property held by the taxpayer primarily for sale to
income tax on Mr. J‘s income within the customers in the ordinary course of his trade or
Philippines at a schedular rate. Under the NIRC, business, or property used in the trade or business, of a
non-resident aliens not engaged in trade or character which is subject to the allowance for
business are subject to a flat of rate of 25% based depreciation provided in Subsection (F) of Section 34;
on the gross income. The NIRC states that non- or real property used in trade or business of the
resident aliens that have an aggregate number of taxpayer.
days staying in the Philippines less than 180
days, are considered to be not engaged in trade 2018 VI Kria, Inc., a Korean corporation engaged in
or business. Here, Mr. J only stayed for five the business of manufacturing electric vehicles, established a
months or 150 days in the Philippines. Hence, he branch office in the Philippines in 2010. The Philippine branch


constructed a manufacturing plant in Kabuyao, Laguna, and Manila Wine Merchants, Inc. v. CIR, G.R. No. L-26145, Feb.
the construction lasted three (3) years. Commercial operations 20, 1984)
guna plant began in 2014.
(2001) What is the rationale of the law in imposing
Just two (2) years of operation, the Philippine what is known as the Minimum Corporate Income tax on
branch had remittable profits in an amount exceeding 175% of Domestic Corporations? (3%)
its capital. However, the head office in Korea instructed the Page | 132
branch not to remit the profits to the Korean head office until The imposition of the Minimum Corporate Income
instructed otherwise. The branch chief finance officer is Tax (MCIT) is designed to forestall the prevailing practice of
concerned that the BIR might hold the Philippine branch liable corporations of over claiming deductions in order to reduce
for the 10% improperly acemulated earnings tax (IAET) for their income tax payments. The filing of income tax returns
permitting its profits to accumulate beyond reasonable showing a tax loss every year goes against the business motive
business needs. which impelled the stockholders to form the corporation. This
is the reason why domestic corporations and resident foreign
(a) Is the Philippine branch of Kria subject to the corporations) after the recovery period of four years from the
10% IAET under the circumstances stated above? (2.5%) time they commence business operations, they become liable
to the MCIT whenever this tax imposed at 2% of gross income
No. The IAET will not apply to a branch of a foreign
exceeds the normal corporate income tax imposed on net
corporation, it being a Resident Foreign Corporation (RR No.
income. (Sponsorship Speech, Chairman of Senate Ways and
2-2001). The IAET applies only to Domestic Corporations
Means Committee).
which permit their profits to accumulate beyond their
reasonable business needs, instead of being distributed as (2001) Is a corporation which is exempted from the
dividends. minimum corporate income tax automatically exempted from
the regular corporate income tax? Explain your answer. (2%)
(b) Is it subject to 15% branch profit remittance tax
(BPRT)? (2.5%) No. The minimum corporate income tax is a proxy
for the normal corporate income tax, not the regular corporate
No. It will be subject to BPRT only when actual or
income tax paid by a corporation. For instance, a proprietary
constructive remittance of branch profits is made. The law
educational institution may be subject to a regular corporate
provides that any profits remitted by a branch to its head office
income tax of 10% (depending on its dominant income), but it
shall be subject to the BPRT (Sec. 28(A5), NIRC; Bank of
is exempt from the imposition of MCIT because the latter is not
America v. CA, G.R. No. 103092
intended to substitute special tax rates. So is with PEZA
enterprises, CDA enterprises etc.
(2010) Is the capitalization rules may be resorted to
by the BIR in order to compel corporate taxpayers to declare
[Note: If what is meant by regular income tax is the
dividends to their stockholders regularly.
32% tax rate imposed on taxable income of corporations, the
True. (Sec 244, NIRC; Rev. Reg. No. 2- 2001 answer would be in the affirmative, because domestic
implementing Sec 29, NIRC) corporations and resident foreign corporations are either liable
for the 2% of gross income (MCIT) or 32% of net income (the
(2010) (IIb) What is the "immediacy test"? Explain normal corporate income tax) whichever is higher.]
briefly. (2%)
ALTERNATIVE ANSWER:
The “immediacy test” is applied to determine
whether the accumulation of after tax profits by a domestic or No. A corporation which is exempted from the
resident foreign corporation is really for the reasonable needs minimum corporate income tax is not automatically exempted
of the business. Under this test, the reasonable needs of the from the regular corporate income tax. The reason for this is
business are construed to mean the immediate needs of the that MCIT is imposed only beginning on the fourth taxable year
business, including reasonably anticipated needs. The immediately following the year in which such corporation
corporation should be able to prove an immediate need for the commenced its business operations. Thus, a corporation may
accumulation of earnings and profits, or the direct correlation be exempt from MCIT because it is only on its third year of
of anticipated needs to such accumulation of profits to justify operations following its commencement of business
the said accumulation (Sec 3, RR No. 2-2001; Mertens, Law of operations.
Federal Income Taxation, Vol. 7, Chapter 39, p. 103, cited in
COMPUTATION OF GROSS INCOME


2019 B13 As a way to augment the gross receipts tax on the interest income of Express Transport
income of the employees of DEF Inc., a private without deducting the 20% final withholding tax. Is the BIR
corporation, the management decided to grant a correct? Explain. (5%)
special stipend of P50,000.00 for the first
vacation leave that any employee takes during a Yes. The term "Gross Receipts" is broad enough to
given calendar year. In addition, the senior include income constructively received by the taxpayer. The
engineers were also giving housing inside the amount withheld is paid to the government on its behalf, in Page | 133
factory compound for the purpose of ensuring satisfaction of withholding taxes. The fact that it did not actually
that there are available engineers within the receive the amount does not alter the fact that it is remitted in
premises everytime there is a breakdown in the satisfaction of its tax obligations. Since the income withheld is
factory machineries and equipment. an income owned by Express Transport, the same forms part
of its gross receipts (CIR v. Solidbank Corp., G.R. No. 148191,
A. Is the special stipend November 25, 2003).
part of the taxable income of the
employees receiving the same? I f so, No. The term "gross receipts," as applied to the
what tax is applicable and what tax rate? business of a common carrier consists of revenues from
Explain. (3%) carriage of goods, cargoes, and passengers. It does not
comprehend or include interest income which is properly
Yes, the special stipend is part of described as "Other Income."
the taxable income of the employees since the
same may very well be considered income on (2005) State with reasons the tax treatment of the
his part following in the preparation of annual income tax returns:
Dividends received by a domestic corporation from (i) another
2019 B13B As a way to augment the domestic corporation; and (ii) a foreign corporation;
income of the employees of DEF Inc., a private
corporation, the management decided to grant a (i) Dividends received by a domestic corporation from
special stipend of P50,000.00 for the first a domestic corporation shall not be subject to tax (Sec.
vacation leave that any employee takes during a 27[D][4], NIRC), hence, excluded from the income tax return.
given calendar year. In addition, the senior
(ii) Dividends received by a domestic corporation from
engineers were also giving housing inside the
a foreign corporation form part of the gross income and are
factory compound for the purpose of ensuring
accordingly subject to net income tax, hence included in the
that there are available engineers within the
annual ITR (Sec. 42[A][2][b], NIRC), hence, must be included
premises everytime there is a breakdown in the
in the income tax return.
factory machineries and equipment.
B. Is the cash equivalent value of (2005) Explain briefly whether the following items
the housing facilities received by the senior are taxable or non-taxable: (5%)
engineers subject to fringe benefits tax? Explain.
a) Income from JUETENG;
(3%)
Taxable. Gross income includes "all income derived
from whatever source" (Sec. 32[A], NIRC), which was
No, the cash equivalent value of the
housing facilities received by the senior engineers is interpreted as all income not expressly excluded or exempted
not subject to fringe benefits tax. The same is exempt from the class of taxable income, irrespective of the voluntary
from FBT since the housing is located within the or involuntary action of the taxpayer in producing the income.
Company's premises and is generally for the Thus, the income may proceed from a legal or illegal source
convenience of the employer such as from jueteng. Unlawful gains, gambling winnings, etc.
(2006) Congress enacts a law imposing a 5% tax are subject to income tax. The tax code stands as an indifferent
on gross receipts of common carriers. The law does not define neutral party on the matter of where the income comes from.
the term "gross receipts." Express Transport, Inc., a bus (Commissioner of Internal Revenue v. Manning, G.R. No. L-
company plying the Manila-Baguio route, has time deposits 28398, August 6, 1975)
with ABC Bank. In 2005, Express Transport earned P1 Million
interest, after deducting the 20% final withholding tax from its b) Gain arising from EXPROPRIATION OF
time deposits with the bank. The BIR wants to collect a 5% PROPERTY;


Taxable. Sale exchange or other disposition of EXCLUSIONS from gross income refer to a flow of
property to the government of real property is taxable. It wealth to the taxpayer which are not treated as part of gross
includes taking by the government through condemnation income, for purposes of computing the taxpayer’s taxable
proceedings. (Gonzales v. Court of Tax Appeals, G.R. No. L- income, due to the following reasons: (1) It is exempted by the
14532, May 26, 1965) fundamental law; (2) It is exempted by statute; and (3) It does
not come within the definition of income. (Section 61, RR No.
c) TAXES paid and subsequently refunded; 2). DEDUCTIONS from gross income, on the other hand, are Page | 134
the amounts, which the law allows to be deducted from gross
Taxable only if the taxes were paid and claimed as income in order to arrive at net income.
deduction and which are subsequently refunded or credited. It
shall be included as part of gross income in the year of the Exclusions pertain to the computation of gross
receipt to the extent of the income tax benefit of said deduction. income, while deductions pertain to the computation of net
(Sec. 34[C][1], NIRC) Not taxable if the taxes refunded were income. Exclusions are something received or earned by the
not originally claimed as deductions. taxpayer which do not form part of gross income while
deductions are something spent or paid in earning gross
d) Recovery of BAD DEBTS previously charged off; income.
Taxable under the TAX BENEFIT RULE. Recovery Example of an exclusion from gross income is
of bad debts previously allowed as deduction in the preceding proceeds of life insurance received by the beneficiary upon the
years shall be included as part of the gross income in the year death of the insured which is not an income or 13th month pay
of recovery to the extent of the income tax benefit of said of an employee not exceeding P30.000 which is an income not
deduction. (Sec. 34[E][1], NIRC) This is sometimes referred as recognized for tax purposes. Example of a deduction is
the RECAPTURE RULES. business rental.
e) Gain on the sale of a car used for personal (2000) Under what conditions are retirement
purposes. benefits received by officials and employees of private firms
excluded from gross income and exempt from taxation? (3%)
Taxable. Since the car is used for personal
purposes, it is considered as a capital asset hence the gain is The conditions to be met in order that retirement
considered income. (Sec. 32[A][3] and Sec. 39[A][1], NIRC) benefits received by officials and employees of private firms are
excluded from gross income and exempt from taxation are as
(2003) A "fringe benefit" is defined as being any follows:
good, service or other benefit furnished or granted in cash or in
kind by an employer to an individual employee. Would it be the Under Republic Act No. 4917 (those received under
employer or the employee who is legally required to pay an a reasonable private benefit plan):
income tax on it? Explain. (4%)
a. the retiring official or employee must have been in
It is the employer who is legally required to pay an service of the same employer for at least ten (10)
income tax on the fringe benefit. The fringe benefit tax is years;
imposed as a FINAL WITHHOLDING TAX placing the legal
b. that he is not less than fifty (50) years of age at the
obligation to remit the tax on the employer, such that, if the tax
time of retirement; and
is not paid the legal recourse of the BIR is to go after the
employer. Any amount or value received by the employee as a c. that the benefit is availed of only once.
fringe benefit is considered tax paid hence, net of the income
tax due thereon. The person who is legally required to pay
(same as statutory incidence as distinguished from economic
incidence) is that person who, in case of non-payment, can be Under Republic Act No. 7641 (those received from
legally demanded to pay the tax. employers without any retirement plan):
2001 Distinguish "Exclusion from Gross Income" a. Those received under existing collective bargaining
from "Deductions From Gross Income". Give an example of agreement and other agreements are exempt; and
each. (2%)
b. In the absence of retirement plan or agreement
providing for retirement benefits the benefits are excluded from
gross income and exempt from income tax if:


i. retiring employee must have served at For category (B) employees, all the benefits
least five (5) years; and received by them will also be exempt from income tax, hence
not subject to withholding tax. These are benefits received on
ii. that he is not less than sixty (60) years account of separation due to causes beyond the employees'
of age but not more than sixty-five (65). control, which are specifically excluded from gross income.
(Section 32(B), NIRC).
(2000) What is meant by taxable income? (2%) Page | 135
ALTERNATIVE ANSWER;
TAXABLE INCOME means the pertinent items of
gross income specified in the Tax Code, less the deductions All of the payments are not subject to income tax
and/or personal and additional exemptions, if any, authorized and should not also be subject to withholding tax. The
for such types of income by the Tax Code or other special laws. employees were laid off, hence separated for a cause beyond
(Sec. 31, NIRC of 1997) their control. Consequently, the amounts to be paid by reason
of such involuntary separation are excluded from gross income,
(1999) A Co., a Philippine corporation, has two irrespective of whether the employee at the time of separation
divisions — manufacturing and construction. Due to the has rendered less than ten years of service and/or is below fifty
economic situation, it had to close its construction division and years of age. (Section 32(B), NIRC).
lay- off the employees in that division. A Co. has a retirement
plan approved by the BIR, which requires a minimum of 50 (1996) X, an employee of ABC Corporation died.
years of age and 10 years of service in the same employer at ABC Corporation gave X’s widow an amount equivalent to X’s
the time of retirement. There are 2 groups of employees to be salary for one year. Is the amount considered taxable income
laid off: to the widow? Why?
1) Employees who are at least 50 years of age and has No. The amount received by the widow from the
at 10 years of service at the time of termination of employment. decedent's employer may either be a gift or a separation benefit
on account of death. Both are exclusions from gross income
2) Employees who do no meet either the age or length
pursuant to provisions of Section 28(b) of the Tax Code.
of service A Co. plans to give the following:
a. For category (A) employees - the ALTERNATIVE ANSWER:

benefits under the BIR approved plan
No. Since the amount was given to the widow and
plus an ex gratia payment of one month
not to the estate, it becomes obvious that the amount is more
of every year of service.
of a gift. In one U.S. tax case (Estate of Hellstrom vs.
b. For category (B) employees - one month Commissioner, 24 T.C. 916), it was held that payments to the
for every year of service. widow of the president of a corporation of the amount the
president would have received in salary if he lived out the year
For both categories, the cash equivalent of unused constituted a gift and not an income.
vacation and sick leave credits. A Co. seeks your advice as to
whether or not it will subject any of these payments to WT. The controlling facts which would lead to the
Explain your advice. (5%) conclusion that the amount received by the widow is not an
income are as follows:
For category (A) employees, all the benefits
received on account of their separation are not subject to 1. the gift was made to the widow rather than the estate:
income tax, hence no withholding tax shall be imposed. The
2. there was no obligation for the corporation to make further
benefits received under the BIR-approved plan upon meeting
payments to the deceased;
the service requirement and age requirement are explicitly
excluded from gross income. The ex gratia payment also 3. the widow had never worked for the corporation;
qualifies as an exclusion from gross income being in the nature
of benefit received on account of separation due to causes 4. the corporation received no economic benefit; and
beyond the employees' control. (Section 32(B), NIRC). The
5. the deceased had been fully compensated for his services
cash equivalent of unused vacation and sick leave credits
(Estate of Sydney Carter vs. Commissioner, 453 F. 2d 61
qualifies as part of separation benefits excluded from gross
(2dCir. 1971).
income (CIR v. Court of Appeals, GR No. 96O16, October 17,
1991).


(1996) X is employed as a driver of a corporate the Tax Code includes within the purview of gross income all
lawyer and receives a monthly salary of P5,000.00 with free Income from whatever source derived. Hence, the illegality of
board and lodging with an equivalent value of P1,500.00. the income will not preclude the imposition of the income tax
thereon.
1. What will be the basis of X's income tax? Why?
2) The contention that the receipts from his swindling
The basis of X’s income tax would depend on did not constitute income because of his obligation to return the Page | 136
whether his employer is an employee or a practicing corporate amount swindled is likewise not correct. When a taxpayer
lawyer. acquires earnings, lawfully or unlawfully, without the
consensual recognition, express or implied, of an obligation to
• If his employer is an employee, the basis of X's
repay and without restriction as to their disposition, he has
income tax is P6,500.00 equivalent to the total of the basic
received taxable income, even though it may still be claimed
salary and the value of the board and lodging. This is so
that he is not entitled to retain the money, and even though he
because the employer/corporate lawyer has no place of
may still be adjudged to restore its equivalent (James vs.
business where the free board and lodging may be given.
U.S.,366 U.S. 213, 1961). To treat the embezzled funds not as
• On the other hand, if the corporate lawyer is a taxable income would perpetuate injustice by relieving
"practicing lawyer (self-employed), X should be taxed only on embezzlers of the duty of paying income taxes on the money
P5,000.00 provided that the free board and lodging is given in they enrich themselves with through embezzlement, while
the business premises of the lawyer and for his convenience honest people pay their taxes on every conceivable type of
and that the free lodging was given to X as a condition for income. (James vs. U.S.)
employment.
3) The deficiency income tax assessment is a direct
tax imposed on the owner which is an excise on the privilege
2. Will your answer in question (a) be the same if X's
to earn an income. It will not necessarily be paid out of the
employer is an obstetrician? Why?
same income that were subjected to the tax. Mr. Lajojo's liability
If the employer is an obstetrician who is self- to pay the tax is based on his having realized a taxable income
employed, the basis of X's income will only be P5,000.00 if it is from his swindling activities and will not affect his obligation to
proven that the free board and lodging is given within the make restitution. Payment of the tax is a civil obligation
business premises of said employer for his convenience and imposed by law while restitution is a civil liability arising from a
that the free lodging is required to be accepted by X as crime.
condition for employment. Otherwise, X would be taxed on
(1995) What is a "delinquency interest" for purposes
P6,500.00.
of the income tax? Illustrate.
(1995 Bar) Mr. Lajojo is a big-time swindler. In one
Delinquency interest is the interest of 20% or the
year he was able to earn P1 Million from his swindling activities.
Manila Reference Rate, whichever is higher, required to be
When the Commissioner of Internal Revenue discovered his
paid in case of failure to pay:
income from swindling, the Commissioner assessed him a
deficiency income tax for such income. The lawyer of Mr. Lajojo (a) the amount of the tax due on any return required to
protested the assessment on the following grounds: 1) The be filed; or
income tax applies only to legal income, not to illegal income;
2) Mr. Lajojo's receipts from his swindling did not (b) the amount of the tax due for which return is
constitute income because he was under obligation to return required; or
the amount he had swindled, hence, his receipt from swindling
was similar to a loan, which is not income, because for every (c) the deficiency tax or any surcharge or interest
peso borrowed he has a corresponding liability to pay one thereon, on the due date appearing in the notice and demand
peso; and 3) If he has to pay the deficiency income of the Commissioner of Internal Revenue.
tax assessment, there will be hardly anything left to return to
If in the above illustration the assessment notice
the victims of the swindling.
was released on December 31, 1994 and the amount of
How will you rule on each of the three grounds for deficiency tax, inclusive of surcharge and deficiency interest
the protest? Explain. were computed up to January 30, 1995 which is the due date
for payment per assessment notice, failure to pay on this latter
1) The contention that the income tax applies to legal date will render the tax delinquent and will require the
income and not to illegal income is not correct. Section 28(a) of payment of delinquency interest(


(1995 Bar) What is a "deficiency interest" for Capital is the tree while income is the fruit (Vicente Madrigal et
purposes of the income tax? Illustrate. al v. James Rafferty, 38 Phil. 414).
DEFICIENCY INTEREST for purposes of the (1994) Disguised dividends in income taxation?
income tax is the interest due on any amount of tax due or Give an example.
installment thereof which is not paid on or before the date
prescribed for its payment computed at the rate of 20% per Disguised dividends are those income payments Page | 137
annum or the Manila Reference Rate, whichever is higher, from made by a domestic corporation, which is a subsidiary of a non-
the date prescribed for its payment until it is fully paid. resident foreign corporation, to the latter ostensibly for services
rendered by the latter to the former, but which payments are
If for example after the audit of the books of XYZ disproportionately larger than the actual value of the services
Corp. for taxable year 1993 there was found to be due a rendered. In such case, the amount over and above the true
deficiency income tax of P125,000.00 inclusive of the 25% value of the service rendered shall be treated as a dividend,
surcharge imposed under Section 248 of the Tax Code, the and shall be subjected to the corresponding tax of 35% on
interest will be computed on the P125.000.00 from April 15, Philippine sourced gross income, or such other preferential rate
1994 up to its date of payment. as may be provided under a corresponding Tax Treaty.
Example: Royalty payments under a corresponding licensing
(1995) What is "gross Income" for purposes of the agreement.
Income tax?
(1994) Distinguish "schedular treatment" from
GROSS INCOME means all income from whatever "global treatment" as used in income taxation.
source derived, including (but not limited to) compensation for
services, including fees, commissions, and similar items; gross Under a SCHEDULAR SYSTEM, the various
income from business; gains derived from dealings in property; types/items of income (compensation; business/professional
interest; rents; royalties; dividends; annuities; prizes and income) are classified accordingly, and are accorded different
winnings; pensions; and partner's distributive share of the tax treatments, in accordance with schedules characterized by
gross income of general professional partnership (Sec. 28, graduated tax rates. Since these types of income are treated
NIRC). separately, the allowable deductions shall likewise vary for
each type of income.
ALTERNATIVE ANSWER:
Under the GLOBAL SYSTEM, all income received
a) Gross income means all wealth which flows into the by the taxpayer are grouped together, without any distinction
taxpayer other than as a mere return of capital. It includes the as to the type or nature of the income, and after deducting
forms of income specifically described as gains and profits therefrom expenses and other allowable deductions, are
including gains derived from the sale or other disposition of subjected to tax at a fixed rate.
capital.
ALLOWABLE DEDUCTIONS
2019 A7 Differentiate tax exclusions from tax
b) Gross income means income (in the broad sense)
deductions. (3%)
less income which is, by statutory provision or otherwise,
Tax exclusions pertain to the computation
exempt from the tax imposed by law (Sec. 36, Rev. Reg. No.
of gross Income while tax deductions pertain
2). Gross income from business means total sale, less cost of
to computation of net Income. Tax exclusions
goods sold, plus any income from investments and from
are something received or earned by the
incidental or outside operations or sources (Sec. 43, Rev. Reg.
taxpayer which do not form part of gross
No. 2).
income while tax deductions are something
(1995) How does "Income" differ from "capital"? spent or paid in earning gross income. Lastly,
Explain. the former is flow of wealth to the taxpayer
which are not treated as part of gross income
Income differs from capital in that income is any for purposes of computing the taxpayer’s
wealth which flows into the taxpayer other than a return of taxable income due to the following reasons;
capital while capital constitutes the investment which is the [1] it is exempted by the fundamental law; [2] it
source of income. Therefore, capital is fund while income is the is exempted by a statute; and [3] It does not
flow. Capital is wealth, while income is the service of wealth. fall within the definition of income.


Cinema filed a petition with RTC claiming that RA 9257 is
On the other hand, tax deductions are the unconstitutional as it forcibly deprives sellers a part of the price
amounts which the law allows to be subtracted without just compensation.
from gross income in order to arrive at net
(A) What is the effect of converting the 20% discount from a
income.
“tax credit” to a “tax deduction”? (2.5%)
Page | 138
The effect of converting the 20% discount from a
2019 A8 B transferred his ownership
“tax credit” to a “tax deduction” is that the tax benefit enjoyed
over a 1,000-square meter commercial land
by sellers of goods and services to senior citizens is effectively
and three-door apartment to ABC Corp., a
reduced. A tax credit reduces the tax liability while a tax
family corporation of which B is a stockholder.
deduction merely reduces the tax base. Under the tax credit
The transfer was in exchange of 10,000 shares
scheme, the establishments are paid back 100% of the
of stock of ABC Corp. As a result, B acquired
discount they give to senior citizens while under the tax
51% ownership of ABC Corp., with all the
deduction scheme, they are only paid back about 32% of the
shares of stock having the right to vote. B paid
20% discount granted to senior citizens.
no tax on the exchange, maintaining that it is a
tax avoidance scheme allowed under the law.
(8) If you are the judge, how will you decide the case? Briefly
The Bureau of Internal Revenue, on the other
explain your answer.
hand, insisted that B‘s alleged scheme
amounted to tax evasion. I will decide in favor of the Constitutionality of the
law. The 20% discount as well as the tax deduction scheme is
Should B pay taxes on the exchange? a valid exercise of the police power of the State (Manila
Explain. (3%)
Memorial Park Inc. v. Deportment of Social Welfare arid
Development, G.R. No. 175356, December 3,2013, 711SCRA
No, B should not pay taxes on the said 302).
exchange. As a general rule, upon the sale or
exchange of property, the entire amount of the gain 2016 III Rakham operates the lending company that
or loss, as the case may be, shall be recognized.
made a loan to Alfonso amount of P120,000.00 subject of a
However, the rule accepts some exceptions and
one of the accepted exceptions to the said rule is promissory note which is due within one (1) year from the note’s
when a property is transferred to a corporation by issuance. Three years after the loan became due and upon
a person in exchange for stock or unit of information that Alfonso is nowhere to be found, Rakham asks
participation in such a corporation of which as a you for advice on how to treat the obligation as “bad debt.”
result of such exchange said person, alone or Discuss the requisites for deductibility of a “bad debt?” (5%)
together with others, not exceeding four persons,
gains control of said corporation: provided, that I will advise Rakham that the obligation of Alfonso
stocks issued for services shall not be considered may now be considered bad debts for having met the yardstick
as issued in return for property (NIRC. Sec. 40 C of a debt which had become worthless. In order to be
(6)(c)). Moreover, control, in the said case, means considered worthless, the taxpayer should estabfish that during
ownership of stocks in a corporation possessing at the year from which a deduction is sought, a situation
least (51%) of the total voting power of all classes developed as a result of which it became evident in the
of stocks entitled to vote. exercise of sound, objective business judgment that there
remained no practical, but only vaguely theoretical prospect
Here, B transferred his ownership over a
that the debt would ever be paid (Collector of Internal Revenue
1,000-square meter commercial land and three-
door. As a result, B acquired 51% ownership of v. Goodrich Internationa! Rubber Co, G.R. No. 1-22265,
ABC Corp., with all the shares of stock having the December 22,1967,21SCRA1336). A bad debt is deductible if
right to vote. it complies with the following requisites:
(a) There must be a valid and subsisting debt.

2016 X Congress issued a law allowing a 20%
discount on the purchases of senior citizens from, among (b) The obligation is connected with the taxpayer’s trade or
others, recreation centers. This 20% discount can then be used business and is not between related parties.
by the sellers as a “tax credit”. At the initiative of BIR, however,
Republic Act No. (RA) 9257 was enacted amending the (c) There is an actual ascertainment that the debt is worthless.
treatment of the 20% discount as a “tax deduction.” Equity


(d) The debt is charged-off during the taxable year. A partial 2. The debtor has been adjudged bankrupt or
write-off is not allowed (PRC v. CA, G.R. No. 118794, May insolvent;
8,1996,256 SCRA667).
3. Collateral shares have become worthless; and
(2010) (Xb) True or False. A corporation can claim
4. There are numerous debtors with small amounts of
the optional standard deduction equivalent to 40% of its gross
debts and further action on the accounts would entail expenses
sales or receipts, as the case may be. (1%) Page | 139
exceeding the amounts sought to be collected.
False. (Sec 34 (L), NIRC, as amended by RA No.
ALTERNATIVE ANSWER:
9504)
The following are the factors to be considered in
(2010) (IIa) What is the "all events test"? Explain
determining whether or not the debts are bad debts:
briefly. (2%)
1. The debt must be valid and subsisting;
The “all events test” is a test applied in the
realization of income and expense by an accrual-basis 2. The debt is connected with the taxpayer's trade or
taxpayer. The test requires (1) the fixing of a right to the income business, and is not between related parties;
or liability to pay; and (2) the availability of reasonably accurate
determination of such income or liability, to warrant the 3. There is an actual ascertainment that the debt is
inclusion of the income or expense in the gross income or worthless; and
deductions during the taxable year. (CIR v. Isabela Cultural
4. The debt is charged-off within the taxable year.
Corporation, G.R. No. 172231, Feb. 12, 2007)
(PRC v. CA, 256 SCRA 667 [1996]; Revenue Regs. No. 5-99).
(2010) (Xc) True or False. Premium payment for
(2003) What is the rationale for the rule prohibiting
health insurance of an individual who is an employee in an
the deduction of capital losses from ordinary gains? Explain.
amount of P2,500 per year may be deducted from gross
income if his gross salary per year is not more than P250,000. It is to insure that only costs or expenses incurred in
(1%) earning the income shall be deductible for income tax purposes
consonant with the requirement of the law that only necessary
False. (Sec 34 (M), NIRC)
expenses are allowed as deductions from gross income. The
(2004) PQR Corp. claimed as a deduction in its tax term "NECESSARY EXPENSES" presupposes that in order to
returns the amount of P1,000,000 as bad debts. The be allowed as deduction, the expense must be business
corporation was assessed by the Commissioner of Internal connected, which is not the case insofar as capital losses are
Revenue for deficiency taxes on the ground that the debts concerned. This is also the reason why all non-business
cannot be considered as "worthless," hence they do not qualify connected expenses like personal, living and family expenses,
as bad debts. The company asks for your advice on "What are not allowed as deduction from gross income (Section
factors will held in determining whether or not the debts are bad 36(A)(1) of the 1997 Tax Code).
debts?" Answer and explain briefly. (5%) The prohibition of deduction of capital losses from
ordinary gains is designed to forestall the shifting of deductions
In order that debts be considered as bad debts
from an area subject to lower taxes to an area subject to higher
because they have become worthless, the taxpayer should
taxes, thereby unnecessarily resulting in leakage of tax
establish that during the year for which the deduction is sought,
revenues. Capital gains are generally taxed at a lower rate to
a situation developed as a result of which it became evident in
prevent, among others, the bunching of income in one taxable
the exercise of sound, objective business judgment that there
year which is a liberality in the law begotten from motives of
remained no practical, but only vaguely theoretical, prospect
public policy (Rule on Holding Period). It stands to reason
that the debt would ever be paid (Collector of Internal Revenue
therefore, that if the transaction results in loss, the same should
v. Goodrich International Rubber Co., 21 SCRA 1336 [1967]).
be allowed only from and to the extent of capital gains and not
"Worthless" is not determined by an inflexible formula or slide
to be deducted from ordinary gains which are subject to a
rule calculation, but upon the exercise of sound business
higher rate of income tax. (Chirstein, Federal Income Taxation,
judgment. The factors to be considered include, but are not
1977 Ed.)
limited to, the following:
1. The debtor has no property nor visible income; (2003) (a) What is meant by the "tax benefit rule"?


(a) TAX BENEFIT RULE states that the (1999) Explain if the following items are deductible
taxpayer is obliged to declare as taxable income subsequent from gross income for income tax purposes. Disregard who is
recovery of bad debts in the year they were collected to the the person claiming the deduction. (5%)
extent of the tax benefit enjoyed by the taxpayer when the bad
1. Reserves for bad debts.
debts were written-off and claimed as a deduction from income.
It also applies to taxes previously deducted from gross income 2. Worthless securities
but which were subsequently refunded or credited. The Page | 140
taxpayer is also required to report as taxable income the 1. RESERVE FOR BAD DEBTS are not allowed as
subsequent tax refund or tax credit granted to the extent of the deduction from gross income. Bad debts must be charged off
tax benefit the taxpayer enjoyed when such taxes were during the taxable year to be allowed as deduction from gross
previously claimed as deduction from income. income. The mere setting up of reserves will not give rise to
any deduction. (Section 34(E). NTRC).
(b) Give an illustration of the application of
the tax benefit rule.
(b) X Company has a business connected 2. WORTHLESS SECURITIES, which are ordinary
receivable amounting to P100,000.00 from Y who was declared assets, are not allowed as deduction from gross income
bankrupt by a competent court. Despite earnest efforts to because the loss is not realized. However, if these worthless
collect the same, Y was not able to pay, prompting X Company securities are capital assets, the owner is considered to have
to write-off the entire liability. During the year of write-off, the incurred a capital loss as of the last day of the taxable year and,
entire amount was claimed as a deduction for income tax therefore, deductible to the extent of capital gains. (Section
purposes reducing the taxable net income of X Company to 34(D)(4), NIRC). This deduction, however, is not allowed to a
only P1,000,000.00. Three years later, Y voluntarily paid his bank or trust company. (Section 34(E)(2), NIRC).
obligation previously written-off to X Company. In the year of
recovery, the entire amount constitutes part of gross income of (1999) Explain if the following items are deductible
X Company because it was able to get full tax benefit three from gross income for income tax purposes. Disregard who is
years earlier. the person claiming the expense. (5%)
2001 BAR Distinguish Allowable Deductions from 1) Interest on loans used to acquire capital equipment
Personal Exemptions. Give an example of an allowable or machinery.
deduction and another example for personal exemption. (5%)
2) Depreciation of goodwill.
The distinction between allowable deductions and personal
exemptions are as follows: 1) Interest on loans used to acquire capital
equipment or machinery is a deductible item from gross
a. As to amount — Allowable deductions generally income. The law gives the taxpayer the option to claim as a
refer to actual expenses incurred in the pursuit of trade, deduction or treat as capital expenditure interest incurred to
business or practice of profession while personal exemptions acquire property used in trade, business or exercise of a
are arbitrary amounts allowed by law. profession. (Section 34(B) (3), NIRC).
b. As to nature — Allowable deductions constitute 2) Depreciation for goodwill is not allowed
business expenses while personal exemptions pertain to as deduction from gross income. While intangibles maybe
personal expenses. allowed to be depreciated or amortized, it is only allowed to
those intangibles whose use in the business or trade is
c. As to purpose — Deductions are allowed to enable
definitely limited in duration. (Basilan Estates, Inc. v, CIR, 21
the taxpayer to recoup his cost of doing business while
SCRA 17). Such is not the case with goodwill.
personal exemptions are allowed to cover personal, family and
living expenses. ALTERNATIVE ANSWER:
d. As to claimants — Allowable deductions can be
Depreciation of goodwill is allowed as a deduction
claimed by all taxpayers, corporate or otherwise, while
from gross income if the goodwill is acquired through capital
personal exemptions can be claimed only by individual
outlay and is known from experience to be of value to the
taxpayers. business for only a limited period. (Section 107, Revenue
Regulations No. 2). In such case, the goodwill is allowed to be


amortized over its useful life to allow the deduction of the allowance for the exhaustion, wear and tear (including
current portion of the expense from gross income, thereby reasonable allowance for obsolescence) of said property. The
paving the way for a proper matching of costs against revenues reasonable allowance shall include, but not limited to, an
which is an essential feature of the income tax system. allowance computed under any of the following methods:
(1998) Give the requisites for deducibility of a loss. (a) straight-line method;
(5%1 Page | 141
(b) declining-balance method;
The requisites for deducibility of a loss are
(c) sum-of-years-digit method; and
1) loss belongs to the taxpayer;
(d) any other method which may be prescribed by the
2) actually sustained and charged off during the Secretary of Finance upon recommendation of the
taxable year; Commissioner of Internal Revenue (Sec. 34(F). NIRC).
3) evidenced by a closed and completed transaction;
4) not compensated by Insurance or other forms of 2. The annual depreciation of the depreciable fixed
indemnity; asset may be computed on the straight-line method which will
allow the taxpayer to deduct an annual depreciation of
5) not claimed as a deduction for estate tax purposes
Php4,500, arrived at by dividing the depreciable value (Php
in case of individual taxpayers; and
100,000 – Php1,.000) of Php 90,000 by the estimated useful
6) if it is a casualty loss it is evidenced by a declaration life (20 years).
of loss filed within 45 days with the BIR.
The facts given in the problem are sufficient to
The question is vague. There are different kinds of compute the annual depreciation either under the declining
losses recognized as deductible under the Tax Code. These balance method or sum-of-years-digit method. Any answer
are losses, in general (Sec. 34[D](1); net operating loss arrived at by using any of the recognized methods should be
carryover (Sec. 34[D](3); capital losses (Sec. 34[D](4); Losses given full credit. It is suggested that no question requiring
from wash sales of stocks or securities (Sec. 34[D](5) in computation should be given in future bar examinations.
relation to Sec. 38); wagering losses (Sec. 34[D](6); and
abandonment losses (Sec. 34(D](7). Losses are also ACCOUNTING PERIODS AND
deductible from the gross estate (Sec. 86[A](l)(e), NIRC). METHODS OF ACCOUNTING
(1998) MC Garcia, a contractor who won the bid for
the construction of a public highway, claims as expenses, (2010) True or False. An individual taxpayer can
facilitation fees which according to him is standard operating adopt either the calendar or fiscal period for purposes of filing
procedure in transactions with the government. Are these his income tax return. (1%)
expenses allowable as deduction from gross income? [5%]
False. (Sec 43, NIRC)
No. The alleged facilitation fees which he claims as
standard operating procedure in transactions with the RETURNS AND PAYMENT OF
government comes in the form of bribes or "kickback" which
are not allowed as deductions from gross income (Section
TAXES
34(A)(l)(c), NIRC).
2019 B15 Mr. C is employed as a Chief
Executive Officer of MNO Company, receiving
(1998) 1. What is the proper allowance for
an annual compensation of P10,000,000.00
depreciation of any property used in trade or business? [3%)
while Mr. S is a security guard in the same
2. What is the annual depreciation of a depreciable company earning an annual compensation of
fixed asset with a cost of P100,000 and an estimated useful life P200,000.00. Both of them source their income
of 20 years and salvage value of P 10,000 after its useful life? only from their employment with MNO
Company.
1. The proper allowance of depreciation of any
property used in trade or business refers to the reasonable


A. At the end of the year, is (2005) State with reasons the tax treatment of the
Mr. C personally required to file an annual following in the preparation of annual income tax returns:
income tax return? Explain. (2.5%) Interest on deposits with: (i) BPI Family Bank; and (ii) a local
offshore banking unit of a foreign bank;
No, individuals receiving
purely compensation income from a single Both items are excluded from the income tax return:
employer, which has been correctly Page | 142
withheld are no longer required to file their (i) Interest income from any currency bank deposit
annual ITR. is considered passive income from sources within the
Philippines and subject to final tax. Since it is subject to final
B. How about Mr. S? Is he tax it is not to be included in the annual ITR. (Sec. 24[B][1],
personally required to file an annual income NIRC) (u) Same as No. (j).
tax return? Explain. (2.5%)
(2005) State with reasons the tax treatment of the
No, individuals receiving purely following in the preparation of annual income tax returns:
compensation income from a single employer, Income realized from sale of: (i) capital assets; and (ii) ordinary
which has been correctly withheld are no longer assets.
required to file their annual ITR.
(i) Income realized from sale of capital assets is
(2010) True or False. The Tax Code allows an subject to the final withholding tax at source and therefore
individual taxpayer to pay in two equal instalments, the first excluded from the Income Tax Return (Sec. 24[C] and [D],
instalment to be paid at the time the return is filed, and the NIRC);
second on or before July 15 of the same year, if his tax due (ii) Income realized from sale of ordinary assets is part
exceeds P2,000. (1%) of Gross Income, included in the Income Tax Return. (Sec.
32[A][3], NIRC)
True. (Sec 56 (A)(2), NIRC)
(2001) Is a non-resident alien who is not engaged
(2005) State with reasons the tax treatment of the
in trade or business or in the exercise of profession in the
following in the preparation of annual income tax returns: 13th
Philippines but who derived rental income from the Philippines
month pay and de minimis benefits;
required to file an income tax return on April of the year
The 13th month pay not exceeding P30,000.00 shall following his receipt of said income? If not, why not? Explain
not be reported in the income tax return because it is excluded your answer. (5%)
from gross income (Sec. 32[B][7], [e], NIRC) The amount of the
No. The income tax on all income derived from
13th month pay in excess of P30,000.00 shall be reported in
Philippine sources by a non-resident alien who is not engaged
the annual income tax return.
in trade or business in the Philippines is withheld by the lessee
De minimis benefits which do not exceed the as a Final Withholding Tax. (Section 57(A), NIRC). The
ceilings are excluded from gross income, and not to be government cannot require persons outside of its territorial
considered for determining the P30,000.00 ceiling hence not jurisdiction to file a return; for this reason, the income tax on
reportable in the annual income tax return. (Sec. 2.78.1[A][3], income derived from within must be collected through the
R.R. 2-98 as amended by Sec. 2.33 [C] and further amended withholding tax system and thus relieve the recipient of the
by R.R. No. 8-2000) income the duty to file income tax returns. (Section 51, NIRC).
(2005) State with reasons the tax treatment of the (1997) During the year, a domestic corporation
following in the preparation of annual income tax returns: derived the following items of revenue: (a) gross receipts from
Proceeds of life insurance received by a child as irrevocable a trading business; (b) interests from money placements in the
beneficiary; banks; (c) dividends from its stock investments in domestic
corporations; (d) gains from stock transactions through the
Not to be reported in the annual income tax returns Philippine Stock Exchange; (e) proceeds under an insurance
because the proceeds of the life insurance are excluded from policy on the loss of goods. In preparing the corporate income
gross income. Proceeds of Life insurance policies paid to the tax return, what should be the tax treatment on each of the
heirs or beneficiaries upon the death of the insured is an above items?
exclusion from gross income. (Sec.32[B][l],NIRC)


The gross receipts from trading business is Choose the correct answer. Explain. (5%)
includible as an item of income in the corporate income tax
return and subject to corporate income tax rate based on net (D) reduce his gross estate. Vanishing deduction or
income. The other items of revenue will not be included in the property previously taxed is one of the items of deduction
corporate income tax return. allowed in computing the net estate of a decedent (Section
86[A][2] and 86[B][2], NIRC).
The interest from money market placements is Page | 143
subject to a final withholding tax of 20%; QUARTERLY CORPORATE INCOME
The dividends from domestic corporation are TAX ANNUAL DECLARATION
exempt from income tax; and AND QUARTERLY PAYMENTS OF
gains from stock transactions with the Philippine INCOME TAXES
Stock Exchange are subject to transaction tax which is in lieu
of the income tax. 2019 B16 A. Differentiate between a
calendar year and a fiscal year.
The proceeds under an insurance policy on the loss
of goods is not an item of income but merely a return of capital Calendar year means an accounting
hence not taxable. period of twelve months ending on the last day of
December. On the other hand, fiscal year means an
ALTERNATIVE ANSWER: accounting period of twelve months ending on the
last day of any month other than the month of
The gross receipts from trading business is December.
includible as an item of income in the corporate income tax
return. Likewise, the gain or loss realized as a consequence of B. When is the deadline for the
the receipt of proceeds under an insurance policy on the loss filing of a corporation’s final adjustment return
of goods will be included in the corporate income tax return for a calendar year? How about for a fiscal
either as a taxable gain or a deductible loss. The gain or loss year? (2.5%)
is arrived at by deducting from the proceeds of insurance
(amount realized) the basis of the good lost (Sec. 34(a), NIRC). For a calendar year, the final return
The net income of the corporation shall be subject to corporate should be filed on or before the 15th day of April
income tax rate of 35%. following the close of the taxable year. For a fiscal
year, the final return is filed on or before the 15th
The other items of revenue will not be included in day of the 4th month following the close of the
the corporate income tax return. The interest from money taxable year.
market placements is subject to a final withholding tax of 20%;
dividends from domestic corporations are exempt from income (2001) a) How often does a domestic corporation
tax; and gains from stock transactions with the Philippine Stock file income tax return for income earned during a single taxable
Exchange are subject to transaction tax which is in lieu of the year? Explain the process. (3%)
income tax.
A domestic corporation is required to file income tax
returns four (4) times for income earned during a single taxable
ESTATES AND TRUSTS year. Quarterly returns are required to be filed for the first three
quarters where the corporation shall declare its quarterly
summary of gross income and deductions on a cumulative
(2006) Vanishing deduction is availed of by
basis. (Section 75, NIRC). Then, a final adjustment return is
taxpayers to:
required to be filed covering the total taxable income for the
a. Correct his accounting records to reflect the actual entire year, calendar or fiscal. (Section 76, NIRC).
deductions made
b) What is the reason for such procedure? (2%)
b. Reduce his gross income
b) The reason for this procedure is to ensure the
c. Reduce his output value-added tax liability timeliness of collection to meet the budgetary needs of the
government. Likewise, it is designed to ease the burden on the
d. Reduce his gross estate taxpayer by providing it with an installment payment scheme,


rather than requiring the payment of the tax on a lump-sum (2010) (Xa) True or False. Gains realized by the
basis after the end of the year. investor upon redemption of shares of stock in a mutual fund
company are exempt from income tax. (1%)
ALTERNATIVE ANSWER:
True. (Sec 32 (B)(7)(h), NIRC)
b) The reason for the quarterly filing of tax returns is
to allow partial collection of the tax before the end of the taxable (2006) The Constitution provides "charitable Page | 144
year and also to improve the liquidity of government. institutions, churches, personages or convents appurtenant
thereto, mosques, and non-profit cemeteries and all lands,
WITHHOLDING OF WAGES buildings, and improvements actually directly and exclusively
used for religious, charitable or educational purposes shall be
exempt from taxation." This provision exempts charitable
(2001) What is meant by income subject to "final institutions and religious institutions from what kind of taxes?
tax"? Give at least two examples of income of resident Choose the best answer. Explain. (5%)
individuals that is subject to the final tax. (3%)
a. from all kinds of taxes, i.e., income, VAT, customs
Income subject to final tax refers to an income duties, local taxes and real property tax
wherein the tax due is fully collected through the withholding
tax system. Under this procedure, the payor of the income b. from local tax only
withholds the tax and remits it to the government as a final c. from value-added tax
settlement of the income tax due on said income. The recipient
is no longer required to include the item of income subjected to d. from real property tax only
"final tax" as part of his gross income in his income tax returns.
Examples of income subject to final tax are dividend income, e. from capital gains tax only
interest from bank deposits, royalties, etc.
The provision exemptions charitable institutions and
(2000) To start a business of his own, Mr. Mario de religious institutions from (d) REAL PROPERTY TAXES only.
Guzman opted for an early retirement from a private company The exemption is only for taxes assessed as property taxes, as
after ten (10) years of service. Pursuant to the company's distinguished from excise taxes (CIR v. CA, CTA & YMCA,
qualified and approved private retirement benefit plan, he was G.R. No. 124043, October 14, 1998; Lladoc v. Commissioner
paid his retirement benefit which was subjected to withholding of Internal Revenue, L-19201, June 16,1965).
tax. Is the employer correct in withholding the tax? Explain.
(2%) (2004) XYZ Colleges is a non-stock, non-profit
educational institution run by the Archdiocese of BP City. It
(a) It depends. An employee retiring under a collected and received the following:
company's qualified and private retirement plan can only be
(a) Tuition fees
exempt from income tax on his retirement benefits if the
following requisites are met: (b) Dormitory fees
(1) that the retiring employee must have been in service (c) Rentals from canteen concessionaires
of the same employer for at least ten (10) years;
(d) Interest from money-market placements of the
(2) that he is not less than 50 years of age at the time tuition fees
of retirement; and
(e) Donation of a lot and building by school alumni
(3) the benefit is availed of only once.
(A) Which of these above cited income and donation
In the instant case, there is no mention whether the would not be exempt from taxation? Explain briefly. (5%)
employee has likewise complied with requisites number (2) and
(3). A. All of the income derived by the non-stock,
nonprofit educational institution will be exempt from taxation
EXEMPTIONS provided they are used actually, directly and exclusively for
educational purposes. The Constitution provides that all
revenues and assets of non-stock, non-profit educational
institution which are actually, directly and exclusively used for


educational purposes are exempt from taxation (Section 4 par. 27(B), NMC). Accordingly, all of the income enumerated in the
3, Article XIV, 1987 Constitution). problem will be taxable.
The donation is, likewise, exempt from the donor's The donation of lot and building will likewise be
tax if actually, directly and exclusively used for educational subject to the donor's tax because a donation to an educational
purposes, provided not more than 30% of the donation is used institution is exempt only if the school is incorporated as a non-
by the donee for administration purposes. The donee, being a stock entity paying no dividends. Page | 145
non-stock, non-profit educational institution, is a qualified entity
to receive an exempt donation subject to conditions prescribed Since the donee is a proprietary educational
by law (Section 4 par. 4, Art. XIV, 1987 Constitution, in relation institution, the donation is taxable (Section 101(AX3), NJRC).
to Section 101(AX3), NJRC).
(2000) Article VI, Section 28 (3) of the 1987
Accordingly, none of the cited income and donation Philippine Constitution provides that charitable institutions,
collected and received by the non-stock, non-profit educational churches and personages or covenants appurtenant thereto,
institution would not be exempt from taxation. mosques, non-profit cemeteries and all lands, buildings and
improvements actually, directly and exclusively used for
ALTERNATIVE ANSWER: religious, charitable or educational purposes shall be exempt
from taxation.
The following receipts by the non-stock, non-profit
educational institution are not exempt from taxation, viz: a) To what kind of tax does this exemption apply? (2%)
(c) Rentals from Canteen Concessionaires. This exemption applies only to property taxes. What
Rental income is considered as unrelated to the school is exempted is not the institution itself but the lands, buildings
operations; hence, taxable (DOF Order No. 137-87, Dec. 16, and improvements actually, directly and exclusively used for
1987) religious, charitable and educational purposes. (Commissioner
of Internal Revenue v. Court of Appeals, et al, G.R. No.
(d) Interest from money-market placements 124043, October 14, 1998).
of the tuition fees. The interest on the placement is taxable
(DOF Order No. 137-87). If however, the said interest is used b) Is proof of actual use necessary for tax exemption
actually, directly and exclusively for educational purposes as purposes under the Constitution? (3%)
proven by substantial evidence, the same will be exempt from
taxation (CIR v. CA, 298 SCRA 83 11998]}. Yes, because tax exemptions are strictly construed
against the taxpayer. There must be evidence to show that the
The other items of income which were all derived taxpayer has complied with the requirements for exemption.
from school-related activities will be exempt from taxation in the Furthermore, real property taxation is based on use and not on
hands of the recipient if used actually, directly and exclusively ownership, hence the same rule must also be applied for real
for educational purposes (Section 4 par. 3, Article XTV, 1987 property tax exemptions.
Constitution).
(2000) Under Article XTV, Section 4 (3) of the
The donation to a non-stock, non-profit educational 1987 Philippine Constitution, all revenues and assets of non-
institution will be exempt from the donor's tax if used actually,
stock, nonprofit educational institutions, used actually, directly
directly and exclusively for educational purposes and provided, and exclusively for educational purposes, are exempt from
that, not more than 30% of the donation is used for taxes and duties. Are income derived from dormitories,
administration purposes (Section 4, par. 4, Art. XJV, 1987 canteens and bookstores as well as interest income on bank
Constitution, in relation to Section 101(AM3), NJRC). deposits and yields from deposit substitutes automatically
exempt from taxation? Explain. (5%)
B. Suppose that XYZ Colleges is a proprietary
educational institution owned by the Archbishop's family, rather
No. The interest income on bank deposits and
than the Archdiocese, which of those above cited income and
yields from deposit substitutes are not automatically exempt
donation would be exempt from taxation? Explain briefly. (5%) from taxation. There must be a showing that the incomes are
included in the school's annual information return and duly
If XYZ Colleges is a proprietary educational
audited financial statements together with:
institution, all of its income from school related and non-school
related activities will be subject to the income tax based on its
aggregate net income derived from both activities (Section


1. Certifications from depository banks as to the favor on tax exemptions they being contrary to the life-blood
amount of interest income earned from passive investments theory which is the underlying basis for taxes.
not subject to the 20% final withholding tax;
(1994) In December 1993, the Sangguniang Bayan
2. Certification of actual, direct and exclusive authorized a Christmas bonus of P3,000.00, a cash gift of
utilization of said income for educational purposes; P5,000.00 and transportation and representation allowance of
P6,000.00 for each of the municipal employees. Page | 146
3. Board resolution on proposed project to be funded
out of the money deposited in banks or placed in money market 1) Is the Christmas bonus subject to any tax?
placements (Finance Department Order No. 149-95 issued
November 24, 1995), which must be used actually, directly and 2) How about the cash gift?
exclusively for educational purposes.
3) How about the transportation and representation
The income derived from dormitories, canteens and allowances?
bookstores are not also automatically exempt from taxation.
1) The CHRISTMAS BONUS given by the
There is still the requirement for evidence to show actual, direct
Sangguniang Bayan to the municipal employees is taxable as
and exclusive use for educational purposes. It is to be noted
additional compensation (Sec. 21 (a). Tax Code).
that the 1987 Philippine Constitution does not distinguish with
respect to the source or origin of the income. The distinction is 2) The cash gift per employee of P5.000.00
with respect to the use which should be actual, direct and being substantial may be considered taxable also. They
exclusive for educational purposes. partake the nature of additional compensation income as it is
highly doubtful if municipal governments are authorized to
Consequently, the provisions of Sec. 30 of the NIRC
make gifts in substantial sums such as this. They are not
of 1997, that a non-stock and nonprofit educational institution
furthermore gifts of "small value" which employers might give
is exempt from taxation only "in respect to income received by
to their employees on special occasions like Christmas - items
them as such" could not affect the constitutional tax exemption.
which could be exempt under BIR Revenue Audit Memo No. 1-
Where the Constitution does not distinguish with respect to
87.
source or origin, the Tax Code should not make distinctions.
3) The transportation and representation
(1996) A, an employee of the Court of Appeals,
allowances are actually reimbursements for expenses incurred
retired upon reaching the compulsory age of 65 years. Upon
by the employee for the employer. Said allowances spent by
compulsory retirement, A received the money value of his
the employee for the employer are designed to enhance the
accumulated leave credits in the amount of P500.000.00. Is
quality of the service that the employer is supposed to perform
said amount subject to tax? Explain.
for its clientele like the people of the municipality.
No. The commutation of leave credits, more
(1994) The University of Bigaa, a non-stock, non-
commonly known as terminal leave pay, i.e., the cash
profit entity, operates a canteen for its students and a
equivalent of accumulated vacation and sick leave credits
bookstore inside the campus. It also operates two dormitories
given to an officer or employee who retires, or separated from
for its students, one of which is in the campus. Is the University
the service through no fault of his own, is exempt from income
liable to pay income taxes for the operation of the: 1) canteen?
tax. (BIR Ruling 238-91 dated November 8, 1991;
2) bookstore? 3) two dormitories?
Commissioner v. CA and Efren Castaneda, GR No. 96016,
October 17, 1991). 1) For the operation of the canteen inside the campus,
the income thereon being incidental to the operations of the
(1996) Why are tax exemptions strictly construed
University as a school, is exempt (Art. XIV (4) (3), Constitution;
against the taxpayer?
DECS Regulations No. 137-87, Dec. 16, 1987).
Tax exemptions are strictly construed against the 2) For the same reasons, the University of Bigaa is not
taxpayer because such provisions are highly disfavored and liable to pay income taxes for the operation of the bookstore,
may almost be said to be odious to the law (Manila Electric since this is an ancillary activity the conduct of which is carried
Company vs. Vera, 67 SCRA 351). The exception contained in out within the school premises.
the tax statutes must be strictly construed against the one
claiming the exemption because the law does not look with 3) The University of Bigaa shall not be liable to pay
income taxes for the operation of the dormitory located in the
campus, for same reasons as the foregoing. However, the


latter shall be liable for income taxes on income from area. Accordingly, the RDO wanted to make a re-computation
operations of the dormitory located outside the school of the taxes due by using the fair market value appearing in a
premises. nearby bank’s valuation list which is practically double
the existing zonal value. The RDO also wanted to assess a
CAPITAL ASSETS/CAPITAL GAINS donor’s tax on the difference between the selling price based
on the zonal value and the fair market value appearing in
TAX a nearby bank’s valuation list. (10%) Page | 147
2019 A9 [B] Distinguish an ordinary (A) Does the RDO have the authority or
asset from a capital asset. (2%) discretion to unilaterally use the fair market value as the basis
for determining the capital gains tax and not the zonal value as
The following are the distinctions between determined by the Commissioner of Internal Revenue? Reason
an ordinary asset from a capital asset: briefly.
[1] As to taxability, an ordinary asset is No. The RDO has no authority to use a fair market
subject to income tax; whereas, a capital asset is value other than that prescribed in the Tax Code. The fair
subject to capital gains tax; market value prescribed for the computation of any internal
[2] As to nature, as a rule, an ordinary asset revenue tax shall be, whichever is the higher of:
is regularly used in the normal course of trade or (1) The fair market value as determined by the
business; whereas, a capital asset is an asset not Commissioner (referred to as zonal value); or
regularly used in the normal course of trade or
business. (2) the fair market value as shown in the schedule
of values of the provincial and city assessors (FMV per tax
(2008) I. In January 1970, Juan Gonzales bought declaration). (Section 6(E), NIRC). The use of the fair market
one hectare of agricultural land in Laguna for P100,000. This value appearing in a nearby bank’s valuation list, therefore,
property has a current fair market value of P10 million in view is not allowed for purposes of computing internal revenue
of the construction of a concrete road traversing the property. taxes.
Juan Gonzales agreed to exchange his agricultural lot in
Laguna for a one-half hectare residential property located in (B) Should the difference in the supposed
Batangas, with a fair market value of P10 million, owned by taxable value be legally subject to donor‟s tax? Reason
Alpha Corporation, a domestic corporation engaged in the briefly.
purchase and sale of real property. Alpha Corporation acquired
the property in 2007 for P9 million. No. The difference in the supposed taxable value
cannot be legally subject to the donor’s tax, because the use of
(A) What is the nature of the real properties a fair market value other than that prescribed by the Tax Code
exchanged for tax purposes - capital asset or ordinary asset? is not allowed for computing any internal revenue tax. (Section
Explain. 6(E), NIRC).
With regard to the Laguna property, it is a capital ALTERNATIVE ANSWER:
asset because it is agricultural land. The Batangas property, in
contrast, is an ordinary asset because it is either (1) held for The difference in value is not subject to donor’s tax,
sale to customers in the ordinary course of business or (2) real because the sale is not for an insufficient consideration. A
property used in the trade of business of a realtor like Alpha deemed gift subject to tax arises only if a tax is avoided as a
Corp (Secs. 24[D1], 39[A1]2 NIRC; and RR No. 7-2003). result of selling a property at a price lower than its fair market
value. In a sale subject to the 6% capital gains tax, the tax is
(2007) V. ABC Corporation sold a real property in always based on the gross selling price or fair market value,
Malolos, Bulacan to XYZ Corporation. The property has been whichever is higher, and therefore, the seller cannot avoid any
classified as residential and with a zonal valuation of P1,000 tax by selling his property below its fair market value. This
per square meter. The capital gains tax was paid based on the means that the deemed gift provision provided for under the
zonal value. The Revenue District Officer (RDO), however, Tax Code will not apply to a sale of real property subject to the
refused to issue the Certificate Authorizing Registration for the 6% capital gains tax. (Section 100, NIRC).
reason that based on his ocular inspection the property should
have a higher zonal valuation determined by the Commissioner (2007) VI. Z is a Filipino immigrant living in the
of Internal Revenue because the area is already a commercial United States for more than 10 years. He is retired and he came


back to the Philippines as a balikbayan. Every time he comes (2003) Distinguish a "capital asset" from an
back to the Philippines, he stays here for about a month. He "ordinary asset".
regularly receives a pension from his former employer in the
United States, amounting to US$1,000 a month. While in the The term "capital asset" regards all properties not
Philippines, with his pension pay from his former employer, he specifically excluded in the statutory definition of capital assets,
purchased three condominium units in Makati which he is the profits or loss on the sale or the exchange of which are
renting out for P15,000 a month each. (5%) treated as capital gains or capital losses. Conversely, all those Page | 148
properties specifically excluded are considered as ordinary
(B) Is his purchase of the three condominium units assets and the profits or losses realized must have to be
subject to any tax? Reason briefly. treated as ordinary gains or ordinary losses. Accordingly,
"Capital Assets" includes property held by the taxpayer
Yes. The purchase will be subject to the capital whether or not connected with his trade or business, but the
gains tax imposed on the sale of real property and the term does not include any of the following, which are
documentary stamp tax on conveyance of real property, if consequently considered "ordinary assets":
these units are acquired from individual unit owners or
domestic corporations who hold them as capital assets. (1) stock in trade of the taxpayer or other
(Section 24(D), 27(D)(5) and 196, NIRC). If these properties, property of a kind which would properly be included in the
however were acquired from dealers and/or lessors of real inventory of the taxpayer if on hand at the close of the taxable
property the purchase will give rise to the imposition of the year;
regular income tax, value added tax and documentary stamp
tax. (Section 24-28 and 196, NIRC). (2) property held by the taxpayer primarily
for sale to customers in the ordinary course of trade or
ALTERNATIVE ANSWER: business;
Yes, the purchase of the three condominium units is (3) property used in the trade or business of
subject to the following taxes: a character which is subject to the allowance for depreciation
provided in Section 34 (F) of the Tax Code; or
i. Capital gains tax, if held as capital assets by the
seller (Section 24(D) and 27(D)(5), NIRC), otherwise, the (4) real property used in trade or business of
regular income tax (Section 24-28, NIRC); the taxpayer.
ii. Documentary stamp tax (Section 196, NIRC); The statutory definition of "capital assets" practically
excludes from its scope, it will be noted, all property held by the
iii. Local transfer tax (Section 135, LGC); and taxpayer if used in connection with his trade or business.
iv. Value-added tax if acquired from real estate (2000) Last July 12, 2000, Mr. & Mrs. Peter
developers or lessors of real property. Camacho sold their principal residence situated in Tandang
Sora, Quezon City for Ten Million Pesos (P10,000,000.00) with
[Note: Value-added tax and documentary stamp taxes are the intention of using the proceeds to acquire or construct a
outside the coverage of the BAR Examination. It is requested new principal residence in Aurora Hills, Baguio City. What
that full credit be given even if these two taxes are not conditions must be met in order that the capital gains presumed
mentioned in the answer.] to have been realized from such sale may not be subject to
capital gains tax? (5%)
ANOTHER ALTERNATIVE ANSWER:
The conditions are:
The purchase is only subject to the documentary
stamp tax, a tax that is imposed indifferently on the parties to a 1. The proceeds are fully utilized in
transaction (Section 173 and 196, NIRC). Other taxes that may acquiring or constructing a new principal residence within
be due on the transaction, other than the documentary stamp eighteen (18) calendar months from the sale or disposition of
tax, are the legal liabilities of the seller which cannot be the principal residence or eighteen (18) months from July 12,
considered as a tax on the purchase but a tax on the sale. To 2000.
the purchaser, these taxes are not taxes but merely part of the
purchase price if, by the nature of the tax, the economic 2. The historical cost or adjusted basis of
incidence can be shifted to him. the real property sold or disposed shall be carried over to the
new principal residence built or acquired.


3. The Commissioner of Internal Revenue ALTERNATIVE ANSWER:
must have been informed by Mr. & Mrs. Peter Camacho within
thirty (30) days from the date of sale or disposition on July 12, The basis in computing capital gains tax in a
2000 through a prescribed return of their intention to avail of qualified tax- free exchange under Sec. 34 (c) (2) is:
the tax exemption.
(a) With respect to the asset received by the
4. That the said exemption can only be corporation the same as it would be in the hands of the
Page | 149
availed of once every ten (10) years. transferor increased by the amount of the gain recognized to
the transferor on the transfer.
5. If there is no full utilization of the
proceeds of sale or disposition, the portion of the gain (b) With respect to the shares received by the
presumed to have been realized from the sale or disposition stockholders in exchange of the assets - the same as the basis
shall be subject to capital gains tax [Sec. 24 (D) (2), NIRC of of the property, stock or securities exchanged, decreased by
1997] the money received and the fair market value of the other
property received, and increased by the amount treated as
(1994) In a qualified merger under Section 34 (c) dividend of the shareholder and the amount of any gain that
(2) of the Tax Code, what is the tax basis for computing the was recognized on the exchange.
capital gains on: (a) the sale of the assets received by the
surviving corporation from the absorbed corporation; and (b)
the sale of the shares of stock received by the stockholders
from the surviving corporation?
PART 3
In a qualified merger under Section 34 (c) (2) of the
GENERAL PRINCIPLES
Tax Code, the tax basis for computing the capital gains on: THIRD MOST ASKED TOPIC FROM
1990 – 2019 TAX BAR EXAMINATION
(a) the sale of the assets received by the surviving
corporation from the absorbed corporation shall be the
original/historical cost of the assets when still in the hands of 2019 BAR In 2018, City X amended its
the absorbed corporation. Revenue Code to include a new provision
imposing a tax on every sale of merchandise
(b) the sale of the shares of stock received by the
by a wholesaler based on the total selling price
stockholders from the surviving corporation shall be the
of the goods, inclusive of value-added taxes
acquisition/historical cost of assets transferred to the surviving
(VAT). ABC Corp., a wholesaler operating
corporation.
within the city, challenged the new provision
(1994) In a qualified tax-free exchange of property based on the following contentions: 1. The new
for shares under Section 34 (c) (2) of the Tax Code, what is the provision is a form of prohibited double
tax basis for computing the capital gains on: (a) the sale of the taxation because it essentially amounts to City
assets received by the Corporation; and (b) the sale of the X imposing VAT which was already being
shares received by the stockholders in exchange of the assets? levied by the national government; and 2. since
the tax being imposed is akin to VAT, it is
In a qualified tax free exchange of property for beyond the power of City X to levy the same.
shares under Section 34 (c) (2) of the Tax Code, the tax basis
for computing the gain on the: Rule on each of ABC Corp.‘s contentions.
(5%)
(a) sale of the assets received by the corporation shall
be the original/historical cost (purchase price plus expenses of As regard to the first contention, ABC
acquisition) of the property/ assets given in exchange of the Corp is incorrect. Under the NIRC, direct double
shares of stock. taxation exists only when all of the following
requisites are present:
(b) sale of the shares of stock received by the
stockholders in exchange of the assets shall be the The two taxes must be imposed on the
original/historical cost of the property given in exchange of the same:
shares of stock.
1. subject matter,


2. purpose, Yes. The three taxes are all in the nature of local
3.by the same taxing authority, business taxes on wholesalers, retailers, and service providers
4. within the same jurisdiction which are imposed by the same taxing authority on the same
5. during the same taxing period; subject matter for the same tax period; hence, the elements of
6. the taxes must be of the same kind double taxation are present (Nursery Care CorporaHon v.
or character. Anthony Acevedo GRNo. 180651, July 30,2014).
Page | 150
In this case, the taxing authorities are Using the afore-mentioned test, there is indeed,
different. Hence, the tax to be imposed by the double taxation since KM Corporation is subjected to the taxes
LGU is not a form of direct double taxation. under Sections 15 [Tax on Wholesalers, Distributors or
Dealers”), 17 (Tax on Retailers) and 21 {tax on Businesses
As regard to the second contention, Subject to Excise, Value-Added and Percentage Taxes under
ABC Corp is incorrect. Under the LGC, LGU‘s are the NIRC) of the Revenue Code of Kalookan City. UPLC
empowered to enact ordinances that will aid in
These taxes are being imposed: (1) on the same
their revenue generation, which is consonance
with the principle of the fiscal autonomy of LGU‘s. subject matter – the privilege of doing business in Kalookan
Although the tax to be imposed is akin to City; (2) for the same purpose – to make persons conducting
VAT, the LGU may nevertheless impose such business within Kalookan City contribute to city revenues; (3)
local business tax. by the same taxing authority – Kalookan City; (4) within the
same taxing jurisdiction – within the territorial jurisdiction of
Kalookan City; (5) for the same taxing periods – per calendar
2018 I. KM Corporation, doing business in the City
year; and (6) of the same kind or character- a local business
of Kalookan, has been a distributor and retailer of clothing and
tax imposed on gross sales or receipts of the business (City of
household materials. It has been paying the City of Kalookan
Manila v. Coca-Cola Bottlers Philippines, lnc., GRNo. 181845,
LocaL taxes based on Sections 15 (Tax on Wholesalers,
Distributors or Dealers) and 17 (Tax on Retailers) of the August 4,2009, and G.R. No. 167283, February 10, 2010,
Revenue Code of City (Code). Subsequently, the Sangguniang reiterated in Swedish Match Philippines, Inc. v. The Treasurer
Panglungsod enacted an ordinance amending the Code by of the City of Manila, GRNO. 181277, July 3, 2013, both cited
in Nursery Cure Corporation v. Acevedo, 180651, July
inserting Section 21 which imposes a tax on “Businesses
Subject to Excise, Value-Added and Percentage Taxes under 30,2014). UPLC
the National Internal Revenue Code (NIRC),” at the rate of 50%
2017 XVIIIAB a. Distinguish outright smuggling
of 1 % per annum on the gross sales and receipts on persons
from technical smuggling.
“who sell goods and services in the course of trade or
business.” KM Corporation paid the taxes due under Section a. In outright smuggling (or unlawful
21 under protest, claiming that (a) local government units could importation), goods and article s of commerce are brought into
not impose a tax on businesses already taxed under the NIRC the country without the required importation documents, or are
and (b) this would amount to double taxation, since its business disposed of in the local market without having been cleared by
was already taxed under Sections 15 and 17 of the Code. the BOC or other authorized government agencies to evade
the paymen t of correct taxes, duties and other charges.
(a) May local government units impose a tax on
[Bureau of Customs v. The Honorable Agnes VST
businesses already subjected to tax under the NIRC? (2.5%)
Devanadera, et al., G.R. No. 193253(2015)].
Yes. Section 143 in relation to Section 151 of the
Sec 102ff CMTA : Outright Smuggling refers to an
Local Governmenf Code (LGC provides for the power of cities
act of importing goods into the country without complete
to impose a local busioess tax, and one of those which may be
customs prescribed importation documents, or without being
subjected to such tax are those businesses that are subject to
cleared by customs or other statutory government agencies, for
“excise tax, value-added tax or percentage tax” under the
the pur pose of evading payment of prescribed taxes, duties
NIRC, other than those specifically enumerated by the same
and other government charges.
provision. The tax to be imposed by the city shall not exceed
2% of gross sales or gross receipts of the preceding calendar On the other hand, in technical smuggling, the good
year (Sec. 143(h), In relation to Sec. 151, LGC). UPLC and articles are brought into the country through fraudulent,
falsified or erroneous declarations, to substantially reduce, if
(b) Does this amount to double taxation? (2.5%) not totally avoid, the payment of correct taxes, duties and
other cha rges. Such goods and a r ticle s pass th roug h the


BOC, but the processing and clearing proced ure s are Rule on the constitutionality and validity of RA
attended by fraudulent acts in order to evade the payment of 10701. (5%)
correct taxes, duties, and other charges [Bureau of Customs v.
The Honorable Agnes VST Devanadera, et al., G.R. No. RA 10701 is valid and constitutional. A levy of tax is
193253(2015)). not unconstitutional because it is not intrinsically equal and
uniform in its operation. The uniformity rule does not prohibit
Sec 102pp CMTA: Technical Smuggling refers to classification for purposes of taxation [British American Page | 151
the act of importing goods into the country by means of Tobacco v. Jose Isidro N. Camacho, G.R. No. 163583 (2009)].
fraudulent, falsitied or erroneous declaration of the goods to its
nature, kind, quality, quantity or weight, for the purpo e of Uniformity of taxation, like the kindred concept of
reducing or avoiding payment of prescribed taxes, duties and equal protection, merely requires that alll subjects or objects of
other charges. taxation, similarly situated, are to be treated alike both in
privileges and liabilities. Uniformity doc not forfend
2017 IX Upon his retirement, Alfredo transferred his classification as long as: (1) the standards that are used
savings derived from his salary as a marketing assistant to a therefor are substantial and not arbitrary, (2) the categorization
time deposit with AAB Bank. The bank regularly deducted 20% is germane to achieve the legislative purpose, (3) the law
final withholding tax on the interest income from the time applies, all things being equal, to both present and future
deposit. conditions, and (4) the classification applies equally well to all
those belonging to the same class [Rufino R. Tan v. Ramon R.
Alfredo contends that the 20% final tax on the Del Rosario, Jr., G.R. Nos. 109289 (1994)]. All of the
interest income constituted double taxation because his salary foregoing requirements of a valid classification having been
had been already subjected to withholding tax. Is Alfredo's met and those which are singled out are a class in themselves,
contention correct? Explain your answer. (3%) there 1s no violation of the "Equal Protection Clause" of the
Constitution.
No. Double taxation means taxing for the same tax
period the same thing or activity twice, when it should be taxed b. Distinguish compromise from abatement
but once, for the same purpose and with the same kind of of taxes.
characterof tax [CIR v. Citytrust Investment G.R. Nos. 139786,
140857 (2006)]. The 20% final tax is imposed on the interest A compromise of tax is a remedy which is available
income, while the tax earlier withheld is on the salary or when there is a reasonable doubt as to the validity of the claim
compensation income. Thus, though both pertain to income against the taxpayer exits, or when the financial position of the
tax, they do not pertain to the same thing or activity and taxpayer demonstrates a clear inability to pay the assessed
consequently, no double taxation exists. tax.
2017 VI Heeding the pronouncement of the Abatement of tax, on the other hand, is available as
President that the worsening traffic condition in the metropolis a remedy when the tax or any portion thereof appears to be
was a sign of economic progress, the Congress enacted unjustly or excessively assessed, or when the administration
Republic Act No. 10701, also known as An Act Imposing a and collection costs involved do not justify the collection of the
Transport Tax on the Purchase of Private Vehicles. amount due [Section 204, NIRC).
Under RA 10701, buyers of private vehicles are 2016 I Briefly explain the following doctrines:
required to pay a transport tax equivalent to 5% of the total lifeblood doctrine; necessity theory; benefits received principle;
purchase price per vehicle purchased. RA 10701 provides that and, doctrine of symbiotic relationship.
the Land Transportation Office (LTO) shall not accept for
registration any new vehicles without proof of payment of the Lifebfood doctrine – Without revenue raised from
5% transport tax. RA 10701. further provide that existing taxation, the government will not survive, resulting in detriment
owners of private vehicles shall be required to pay a tax to society. Without taxes, the government would be paralyzed
equivalent to 5% of the current fair market value of every for lack of motive power to activate and operate it (CIR v. Algue,
vehicle registered with the LTO. However, RA 10701 exempts Inc., G.R. No. L-28896, February 17,1988,158 SCRA9).
owners of public utility vehicles and the Government from the
coverage of the 5% transport tax. Necessity theory – The exercise of the power to tax
emanates from necessity, because without taxes, government
A group of private vehicle owners sue on the ground cannot fulfill its mandate of promoting the general welfare and
that the law is unconstitutional for contravening the Equal well-being of the people (CIR v. Bank of Philippine islands,
Protection Clause of the Constitution. G.R. No. 134062, April M, 2007,521SCRA 373).


Benefits received principle – Taxpayers receive (C) is employed by a corporation, the
benefits from taxes through the protection the State affords to organization of which is prompted more on the mitigation of
them. For the protection they get arises their obligation to tax liabilities than for legitimate business purpose.
support the government through payment of taxes (CIR v.
(D) is any form of tax deduction scheme,
Algae, Inc., G.R. No. L-28896, February M, 1988,158SCRA9).
regardless if the same is legal or not.
Doctrine of symbiotic relationship – Taxation arises Page | 152
because of the reciprocal relation of protection and support (B) is a tax saving device within the means
between the state and taxpayers. The state gives protection sanctioned by law. (Philip Manufacturing Corp vs CIR (1968)
and for it to continue giving protection, it must be supported by
2014 XXII Choose the correct answer. Double
the taxpayers in the form of taxes (CIR v. Algue, Inc., G.R. No.
Taxation
L-28896, February 1938,158 SCRA 9).
(A) is one of direct duplicate taxations wherein
2015 I Explain the principles of a sound tax system.
two (2) taxes must be imposed on the same
(3%)
subject matter, by the same taxing
authority, within the same jurisdiction,
The principles of a sound tax system are the
during the same period, with the same kind
following:
or character of tax, even if the purposes of
a.Fiscal adequacy which means that the sources of imposing the same are different.
revenue should be sufficient to meet the demands of public
(B) is forbidden by law; and therefore, it is a
expenditures;
valid defense against the validity of a tax
b.Equality or theoretical justice which means that measure.
the tax burden should be proportionate to the taxpayer’s ability
(C) means taxing the same property twice when
to pay (this is the so- called ability to pay principle); and
it should be taxed only once; it is tantamount
c. Administrative feasibility which means that the to taxing the same person twice by the same
tax law should be capable of convenience, just and jurisdiction for the same thing.
effective administration
(D) exists when a corporation is assessed with
2015 VI. Differentiate between double taxation in local business tax as a manufacturer, and at
the strict sense and in a broad sense and give an example of the same time, value-added tax as a person
each. (4%) selling goods in the course of trade or
business.
Double taxation in the strict sense pertains to the
direct double taxation. This means that the taxpayer is taxed (C) means taxing the same property twice when it
twice by the same taxing authority, within the same taxing should be taxed only once; it is tantamount to taxing the same
jurisdiction, for the same property and same purpose. person twice by the same jurisdiction for the same thing.
(Victoria’s Milling Co vs Municipality of Victorias, Negros
On the other hand, double taxation in broad sense Occidental (1968)
pertains to indirect double taxation. This extends to all cases in
which there is a burden of two or more impositions. It is the 2014 XXVIII. Choose the correct answer. Tax laws
double taxation other than those covered by direct double - (1%)
taxation.
(A)may be enacted for the promotion of private
2014 XXII. Choose the correct answer. Tax enterprise or business for as long as it gives incidental
Avoidance ‒ (1%) advantage to the public or the State
(A) is a scheme used outside of those (B) are inherently legislative; therefore, may not be
lawful means and, when availed of, it usually subjects the delegated
taxpayer to further or additional civil or criminal liabilities.
(C) are territorial in nature; hence, they do not
(B) is a tax saving device within the means recognize the generally-accepted tenets of international law
sanctioned by law.


(D) adhere to uniformity and equality when all 2010 IIC. What is the "rational basis" test? Explain
taxable articles or kinds of property of the same class are briefly. (2%)
taxable at the same rate
The “rational basis test” is applied to gauge the
(D) adhere to uniformity and equality when all constitutionality of an assailed law in the face of an equal
taxable articles or kinds of property of the same class are protection challenge. It has been held that “in areas of social
taxable at the same rate (City of Baguio vs de Leon, 25 SCRA and economic policy, a statutory classification that neither Page | 153
938) proceeds along suspect lines nor infringes constitutional rights
must be upheld against equal protection challenge if there is
2013 III Mr. Alas sells shoes in Makati through a any reasonably conceivable state of facts that could provide a
retail store. He pays the VAT on his gross sales to the BIR and rational basis for the classification.” Under the rational basis
the municipal license tax based on the same gross sales to the test, it is sufficient that the legislative classification is rationally
City of Makati. He comes to you for advice because he thinks related to achieving some legitimate State interest (British
he is being subjected to double taxation. American Tobacco v. Camacho and Parayno, G.R. No.
163583, April 5, 2009).
What advice will you give him? (1%)
2009 IA. True or False. Explain your answer in not
(A) Yes, there is double taxation and it is
more than two (2) sentences.
oppressive.
A law that allows taxes to be paid either in cash or
(B) The City of Makati does not have this power.
in kind is valid. (5%)
(C) Yes, there is double taxation and this is illegal
m the Philippines. True. There is no law which requires payment of
taxes in cash only. However, a law allowing payment of taxes
(D) Double taxation is allowed where one tax is in kind, although valid, may pose problems of valuation, hence,
imposed by the national government and the will violate the principle of administrative feasibility.
other by the local government.
2009X(B) ABCD Corporation (ABCD) is a
(D) CIR v. Solidbank Corp., G.R. No. 148191, Nov. domestic corporation with individual and corporate
25, 2003 shareholders who are residents of the United States. For the
2nd quarter of 1983, these U.S.-based individual and
2013 VIII. A tax is generally a pecuniary burden. corporate stockholders received cash dividends from the
corporation. The corresponding withholding tax on dividend
2013 IV. Congress passed a sin tax law that income --- 30% for individual and 35% for corporate non-
increased the tax rates on cigarettes by 1,000%. The law was resident stockholders --- was deducted at source and remitted
thought to be sufficient to drive many cigarette companies out to the BIR.
of business, and was questioned in court by a cigarette
company that would go out of business because it would not On May 15, 1984, ABCD filed with the Commissioner of
be able to pay the increased tax. The cigarette company is Internal Revenue a formal claim for refund, alleging that under
the RP-US Tax Treaty, the deduction withheld at source as tax
(A) wrong because taxes are the lifeblood on dividends earned was fixed at 25% of said income. Thus,
of the government ABCD asserted that it overpaid the withholding tax due on the
cash dividends given to its non-resident stockholders in the
(B) wrong because the law recognizes that U.S. The Commissioner denied the claim. On January 17,
the power to tax is the power to destroy 1985, ABCD filed a petition with the Court of Tax Appeals
(CTA) reiterating its demand for refund. Is the contention of
(C) correct because no government can ABCD Corporation correct? Why or why not? (3%)
deprive a person of his livelihood
Yes. The provision of a treaty must take precedence
(D) correct because Congress, in this case, over and above the provisions of the local taxing statute
exceeded its power to tax consonant with the principle of international comity. Tax
treaties are accepted limitations to the power of taxation. Thus,
(B) McCulloch v. Maryland, 17 U.S. 4 Wheat 316 the CTA should apply the treaty provision so that the claim for
(1819) refund representing the difference between the amount
actually withheld and paid to the BIR and the amount due and
payable under the treaty, should be granted (Hawaiian-


Philippine Company v. CIR, CTA Case No. 3887, May 31, A law imposing a tax on income of religious
1988). institutions derived from the sale of religious articles is valid.
(5%)
ANOTHER SUGGESTED ANSWER
False. Congress can pass a law taxing income of
The contention of ABCD Corporation that it religious institutions from its property or activities used for profit
overpaid the withholding tax is correct provided it can but not for their income from exercise of religious activities. The Page | 154
establish: imposition of a tax on income of a religious institution from sale
of religious articles is an infringement of religious freedom
1. The existence of RP-US Tax Treaty imposing which is not allowed under the fundamental law (American
a lower rate of tax of 25%; Bible Society v. City of Manila, 101 Phil. 385 (1957)).
2. The said tax treaty is applicable to its case;
and 2009 IC True or False. Explain your answer in not
3. Its payment with the BIR of a tax based on a more than two (2) sentences.
higher rate of 30% and 35%, respectively.
The doctrine of equitable recoupment allows a
2009 Enumerate the four (4) inherent taxpayer whose claim for refund has prescribed to offset tax
limitations on taxation. Explain each item briefly. liabilities with his claim of overpayment. (5%)
The inherent limitations on the power to tax are: True. The doctrine arose from common law allowing
offsetting of a prescribed claim for refund against a tax liability
1. Taxation is for public purpose. – The arising from the same transaction on which an overpayment is
proceeds of the tax must be used (a) for the support of made and underpayment is due. The doctrine finds no
the State or (b) for some recognized objective of the application to cases where the taxes involved are totally
government or to directly promote the welfare of the unrelated, and although it seems equitable, it is not allowed in
community. our jurisdiction (CIR v. UST, 104 Phil 1062 (1958))
2. Taxation is inherently legislative - Only The Doctrine of Equitable Recoupment (otherwise

the legislature has the full discretion as to the known as Doctrine of Set-off) refers to a situation wherein the
persons, property, occupation or business to be tax payer has a claim for refund but was unable able to file a
axed provided these are all within the State’s claim within the prescriptive period. The taxpayer in this case
territorial jurisdiction. It can also finally determine is allowed to credit such refund to his existing tax liability.
the amount or rate of tax, the kind of tax to be imposed Although allowed in common law countries, this doctrine is not
and the method of collection (1 Cooley176-184). applicable in the Philippines.
3. Taxation is territorial - Taxation may be 2006 BAR What is tax pyramiding? What is its
exercised only within the territorial jurisdiction, the basis in law? (5%)
taxing authority (61 Am. Jur. 88). Within theterritorial
jurisdiction,thetaxing authority may determine the Tax Pyramiding is the imposition of a tax upon
“place of taxation” or “tax situs”. another tax. It has no basis in fact or in law (People v.
Sandiganbayan, G.R. No. 152532, August 16, 2005). There is
4. Taxation is subject to international comity. – This also tax pyramiding when sales taxes are incorrectly applied to
is a limitation which is founded on reciprocity designed to goods several times from production to final sale, thus, shifting
maintain harmonious and productive relationships among the the tax burden to the ultimate consumer.
various state. Under international comity, a state must
recognize the generally- accepted tenets of international law, 2006 BAR Distinguish "direct taxes" from "indirect
among which are the principles of sovereign equality among taxes." Give examples.
states and of their freedom from suit without their consent, that
limits that authority of a government to effectively impose taxes Direct taxes are demanded from the very person
in a sovereign state and its instrumentalities, as well as in its who should pay the tax and which he cannot shift to another.
property held, and activities undertaken in that An indirect tax is demanded from one person with the
capacity. expectation that he can shift the burden to someone else, not
as a tax but as part of the purchase price. Examples of direct
(2009) I (D) True or False. Explain your answer in taxes are the income tax, the estate tax and the donor's tax.
not more than two (2) sentences.


Examples of indirect taxes are the value-added tax, the The action of the parties constitutes tax evasion and
percentage tax and the excise tax on excisable articles. exposes Josel to:
2006 BAR Enumerate the 3 stages or aspects of (1) DEFICIENCY FINAL INCOME TAX on the sale
taxation. Explain each. of real property in the Philippines classified as a capital asset.
Under Sec. 24(D) of the NIRC, the final tax of six percent (6%)
The aspects of taxation are: shall be based on the gross selling price of P2.5 Million or zonal Page | 155
value of P2.0 Million, whichever is higher, i.e., P2.5 Million;
(1) LEVYING — the act of the legislature in
choosing the persons, properties, rights or privileges to be (2) FRAUD PENALTY amounting to 50% surcharge
subjected to taxation. on the amount evaded (Sec. 248[B] NIRC); and
(2) ASSESSMENT and COLLECTION — This is (3) DEFICIENCY INTEREST of 20% per annum on
the act of executing the law through the administrative the deficiency. (Sec. 249[A][B], NIRC)
agencies of government.
ALTERNATIVE ANSWER:
(3) PAYMENT — the act of the taxpayer in settling
his tax obligations. There is tax evasion because of the concurrence of
the following factors:
2006 V2 The Constitution provides "charitable
institutions, churches, personages or convents appurtenant 1) The payment of less than that known by
thereto, mosques, and non-profit cemeteries and all lands, the taxpayer to be legally due, or the non-payment of tax when
buildings, and improvements actually directly and exclusively it is shown that a tax is due. It is evident that the parties that
used for religious, charitable or educational purposes shall be the tax due should be computed based on the valuation of P2.5
exempt from taxation." This provision exempts charitable million and not P2.0 million;
institutions and religious institutions from what kind of taxes?
Choose the best answer. Explain. (5%) 2) An accompanying state of mind which is
described as being "evil" on "bad faith," "willful," or "deliberate
a. from all kinds of taxes, i.e., income, VAT, and not accidental." Despite the above knowledge, the parties
customs duties, local taxes and real property tax deliberately misrepresented the true basis of the sale; and
b. from local tax only 3) A course of action or failure of action

which is unlawful. This is shown by the preparation of the two
c. from value-added tax deeds of sale which showed different values. (Commissioner
of Internal Revenue v. The Estate of Benigno P, Tbda, Jr., G.R.
d. from real property tax only
No. 147188, September 14, 2004)
e. from capital gains tax only
The tax evasion committed should result to the
The provision exemptions charitable institutions and imposition of a 50% fraud surcharge on the amount evaded
religious institutions from (d) REAL PROPERTY TAXES only. (Sec. 248[B], NIRC) payment of the Deficiency Tax, and
The exemption is only for taxes assessed as property taxes, as interest of 20% per annum on the deficiency. (Sec. 249[A][B],
distinguished from excise taxes (CIR v. CA, CTA & YMCA, NIRC) The parties may likewise be subjected to criminal
G.R. No. 124043, October 14, 1998; prosecution for willfully failing to pay the tax, as well as for filing
a false and fraudulent return. (Sees. 254, 255 and 257, NIRC)
2005 XIII. Josel agreed to sell his condominium unit
to Jess for P2.5 Million. At the time of the sale, the property had 2005 BAR May taxes be the subject of set-off or
a zonal value of P2.0 Million. Upon the advice of a tax compensation? Explain.
consultant, the parties agreed to execute two deeds of sale,
No, taxes cannot be the subject of set-off or
one indicating the zonal value of P2.0 Million as the selling
compensation for the following reasons:
price and the other showing the true selling price of P2.5
Million. The tax consultant filed the capital gains tax return 1) The lifeblood theory requires that there should
using the deed of sale showing the zonal value of P2.0 Million be no unnecessary impediments to the collection of taxes to
as the selling price. Discuss the tax implications and make available to the government the wherewithal to meet its
consequences of the action. (5%) legitimate objectives; and


2) The payment of taxes is not a contractual Yes, the legislative body may enact laws even in the
obligation but arises out of a duty to pay, and in respect of the absence of a constitutional provision because the power to tax
positive acts of government, regarding the making and is inherent in the government and not merely a constitutional
enforcing of taxes, the personal consent of the individual grant. The power of taxation is an essential and inherent
taxpayer is not required. (Republic v. Mambulao Lumber Co., attribute of sovereignty belonging as a matter of right to every
G.R. No. L-17725, February 28, 1962; Caltex v. Commission independent government without being expressly granted by
on Audit, G.R. No. 92585, May 8, 1992; and Philex v. the people. (Pepsi-Cola Bottling Company of the Philippines, Page | 156
Commissioner of Internal Revenue, G.R. No. 125704, August Inc. v. Municipality of Tanauan, Leyte, G.R. No. L-31156,
28, 1998) February 27,1976)
However, there is a possibility that set-off may Taxation is the inherent power of a State to collect
arise, if the claims against the government have been enforced proportional contribution to support the expenses of
recognized and an amount has already been appropriated for government. Taxation is the power vested in the legislature to
that purpose. Where both claims have already become impose burdens or charges upon persons and property in order
overdue and demandable as well as fully liquidated. to raise revenue for public purposes.
Compensation takes place by operation of law under Art.
1200 in relation to Articles 1279 and 1290 of the New Civil The power to tax is so unlimited in force and so
Code. (Domingo v. Garlitos, G.R. No. L-18994, June 29, searching in extent that courts scarcely venture to declare it is
1963) subject to any restrictions whatever, except such as rest in the
discretion of the authority which exercises it. (Tio v. Videogram
THIS IS THE EXCEPTION TO THE RULE Regulatory Board, G.R. No. L-75697, June 18, 1987) So potent
is the power to tax that it was once opined that "the power to
2005 BAR Can an assessment for a local tax be the tax involves the power to destroy." (C.J. Marshall in McCulloch
subject of set-off or compensation against a final judgment for v. Maryland, 4 Wheat, 316 4 L. Ed. 579, 607)
a sum of money obtained by the taxpayer against the local
government that made the assessment? Explain. 2004 BAR Which of the following propositions may
now be untenable:
No, taxes cannot be the subject of set-off even
when there is a final judgment for a sum of money against the 1) The court should construe a law granting tax
local government making the assessment. The government exemption strictly against the taxpayer.
and the taxpayer are not the "mutual creditors and debtors" of
2) The court should construe a law granting a
each other who can avail of the remedy of compensation which
municipal corporation the power to tax most strictly.
Art. 1278 (Civil Code) is referring to Republic of the
Philippines v. Mambulao Lumber Co., G.R. No. L-17725, 3) The Court of Tax Appeals has jurisdiction over
February 28, 1962; and Francia v. Intermediate Appellate decisions of the Customs Commissioner in cases
Court, G.R. No. L-67649, June 28,1998. involving liability for customs duties.
There is, however, legal basis to state that an 4) The Court of Appeals has jurisdiction to review
assessment for a local tax may be the subject of set-off or decisions of the Court of Tax Appeals.
compensation against a final judgment for a sum of money
obtained by the taxpayer against the local government by 5) The Supreme Court has jurisdiction to review
operation of law where the local government and the taxpayer decisions of the Court of Appeals.
are in their own right reciprocally debtors and creditors of each
other, and that the debts are both due and demandable. This Justify your answer or choice briefly. (5%)
is consistent with the ruling in Domingo v. Garlitos, G.R. No. L-
No. 2. The court should construe a law granting a
18994, June 29,1963, relying upon Arts. 1278 and 1279 of the
municipal corporation the power to tax most strictly.
Civil Code, where these provisions were applied in relation to
the national tax, and should therefore be applicable to a local This proposition is now untenable. The basic
tax. rationale for the grant of tax power to local government units is
to safeguard their viability and self-sufficiency by directly
2005 BAR May a legislative body enact laws to
granting them general and broad tax powers (Manila Electric
raise revenues in the absence of a constitutional provision
Company v. Province of Laguna et. al., 306 SCRA 750 [1999]).
granting said body the power to tax? Explain.
Considering that inasmuch as the power to tax may be
exercised by local legislative bodies, no longer by valid


congressional delegation but by direct authority conferred by occupants, excluding the driver. Is the ordinance valid?
the Constitution, in interpreting statutory provisions on Explain. (8%)
municipal fiscal powers, doubts will, therefore, have to be
resolved in favor of municipal corporations (City Government The ordinance is in violation of the Rule of
of San Pablo, Laguna v. Reyes, 305 SCRA 353 [1999]). This Uniformity and Equality, which requires that all subjects or
means that the court must adopt a liberal construction of a law objects of taxation, similarly situated must be treated alike in
granting a municipal corporation the power to tax. equal footing and must not classify the subjects in an arbitrary Page | 157
manner. In the case at bar, the ordinance exempts cars
Also, no. 4 proposition is now untenable. If the carrying more than two occupants from coverage of the said
examinee chose proposition no. 4 as his answer, it should be ordinance. Furthermore, the ordinance only imposes the tax on
given full credit considering that the present CTA Act (R.A. No. private cars and exempts public vehicles from the imposition of
9282) has made the CTA a coequal judicial body of the Court the tax, although both contribute to the traffic problem. There
of Appeals. The question "Which of the following propositions exists no substantial standard used in the classification by the
may now be untenable" may lead the examinee to choose a City of Makati.
proposition which is untenable on the basis of the new law
despite the cut-off date adopted by the Bar Examination Another issue is the fact that the tax is imposed on
Committee. R.A. No. 9282 was passed on March 30, 2004. the driver of the vehicle and not on the registered owner of the
same. The tax does not only violate the requirement of
2004 BAR Taxes are assessed for the purpose of uniformity, but the same is also unjust because it places the
generating revenue to be used for public needs. Taxation itself burden on someone who has no control over the route of the
is the power by which the State raises revenue to defray the vehicle. The ordinance is, therefore, invalid for violating the rule
expenses of government. A jurist said that a tax is what we pay of uniformity and equality as well as for being unjust.
for civilization. In our jurisdiction, which of the following
statements may be erroneous: 2003 BAR Why is the power to tax considered
inherent in a sovereign State?
1) Taxes are pecuniary in nature.
It is considered inherent in a sovereign State
2) Taxes are enforced charges and contributions. because it is a necessary attribute of sovereignty. Without this
power no sovereign State can exist or endure. The power to
3) Taxes are imposed on persons and property
tax proceeds upon the theory that the existence of a
within the territorial jurisdiction of a State.
government is a necessity and this power is an essential and
4) Taxes are levied by the executive branch of the inherent attribute of sovereignty, belonging as a matter of right
government. to every independent state or government. No sovereign state
can continue to exist without the means to pay its expenses;
5)Taxes are assessed according to a reasonable and that for those means, it has the right to compel all citizens
rule of apportionment. and property within its limits to contribute, hence, the
emergence of the power to tax. (51 Am. Jur. Taxation 40).
Justify your answer or choice briefly. (5%)
2003 BAR May Congress, under the 1987
A. 4. Taxes are levied by the executive branch of
Constitution, abolish the power to tax of local governments?
government.
No. Congress cannot abolish what is expressly
This statement is erroneous because levy refers to
granted by the fundamental law. The only authority conferred
the act of imposition by the legislature which is done through
to Congress is to provide the guidelines and limitations on the
the enactment of a tax law. Levy is an exercise of the power to
local government's exercise of the power to tax (Sec. 5, Art. X,
tax which is exclusively legislative in nature and character.
1987 Constitution).
Clearly, taxes are not levied by the executive branch of
government. (JVPC v. Albay, 186 SCRA 198 [1990]). 2002 VIIIB. On December 06, 2001, LVN
Corporation donated a piece of vacant lot situated in
2003 XII The City of Makati, in order to solve the
Mandaluyong City to an accredited and duly registered non-
traffic problem in its business districts, decided to impose a tax,
stock, non-profit educational institution to be used by the latter
to be paid by the driver, on all private cars entering the city
in building a sports complex for students.
during peak hours from 8:00 a.m. to 9:00 a.m. from Mondays
to Fridays, but exempts those cars carrying more than two


A. May the donor claim in full as deduction from its the burden of the tax to another person. Indirect taxes, on the
gross income for the taxable year 2001 the amount of the other hand, are taxes wherein the incidence of or the liability
donated lot equivalent to its fair market value/zonal value at the for the payment of the tax falls on one person but the burden
time of the donation? Explain your answer. (2%) thereof can be shifted or passed on to another person.
Example of this tax is the value-added tax.
No. Donations and/or contributions made to
qualified donee institutions consisting of property other than ALTERNATIVE ANSWER Page | 158
money shall be based on the acquisition cost of the property.
The donor is not entitled to claim as full deduction the fair A direct tax is a tax which is demanded from the
market value/zonal value of the lot donated. (Sec. 34(H), person who also shoulders the burden of the tax. Example:
NIRC). corporate and individual income tax. An indirect tax is a tax
which is demanded from one person in the expectation and
B. In order that donations to non-stock, non-profit intention that he shall indemnify himself at the expense of
educational institution may be exempt from the donor's gift tax, another, and the burden finally resting on the ultimate
what conditions must be met by the donee? (3%) purchaser or consumer. Example: value added tax.
In order that donations to non-stock, non-profit 2001 BAR May the courts enjoin the collection of
educational institution may be exempt from the donor's gift tax, revenue taxes? Explain your answer.
it is required that not more than 30% of the said gifts shall be
used by the donee-institution for administration purposes. (Sec. As a general rule, the courts have no authority to
101(A)(3), NIRC). enjoin the collection of revenue taxes. (Sec. 218, NIRC).
However, the Court of Tax Appeals is empowered to enjoin the
2001 BAR May a taxpayer who has pending collection of taxes through administrative remedies when
claims for VAT input credit or refund, set-off said claims collection could jeopardize the interest of the government or
against his other tax liabilities? Explain your answer. (5%) taxpayer. (Section 11, RA 1125).
No. Set-off is available only if both obligations are 2001 BAR May the collection of taxes be barred by
liquidated and demandable. Liquidated debts are those where prescription? Explain your answer.
the exact amounts have already been determined. In the
instant case, the claim of the taxpayer for VAT refund is still Yes. The collection of taxes may be barred by
pending and the amount has still to be determined. A fortiori, prescription. The prescriptive periods for collection of taxes are
the liquidated obligation of the taxpayer to the government governed by the tax law imposing the tax. However, if the tax
cannot, therefore, be set-off against the unliquidated claim law does not provide for prescription, the right of the
which the taxpayer conceived to exist in his favor. (Philex government to collect taxes becomes imprescriptible.
Mining Corp. v. CIR, GR No. 125704, August 29, 1998).
2001 BAR Congress, after much public hearing and
ALTERNATIVE ANSWER: consultations with various sectors of society, came to the
conclusion that it will be good for the country to have only one
No. Taxes and claims for refund cannot be the system of taxation by centralizing the imposition and collection
subject of set-off for the simple reason that the government and of all taxes in the national government. Accordingly, it is
the taxpayer are not creditors and debtors of each other. There thinking of passing a law that would abolish the taxing power of
is a material distinction between a tax and a claim for refund. all local government units. In your opinion, would such a law be
Claims for refunds just like debts are due from the government valid under the present Constitution? Explain your answer.
in its corporate capacity, while taxes are due to the government (5%)
in its sovereign capacity. (Philex Mining Corp. v. CIR, GR No.
125704, August 29, 1998). No. The law centralizing the imposition and
collection of all taxes in the national government would
2001 BAR Distinguish direct taxes from indirect contravene the Constitution which mandates that: . . . "Each
taxes, and give an example for each one. local government unit shall have the power to create their own
sources of revenue and to levy taxes, fees, and charges
Direct taxes are taxes wherein both the incidence subject to such guidelines and limitations as Congress may
(or liability for the payment of the tax) as well as the impact or provide consistent with the basic policy of local autonomy." It is
burden of the tax falls on the same person. An example of this clear that Congress can only give the guidelines and limitations
tax is income tax where the person subject to tax cannot shift on the exercise by the local governments of the power to tax


but what was granted by the fundamental law cannot be and improvements actually, directly and exclusively used for
withdrawn by Congress. religious, charitable and educational purposes. (Commissioner
of Internal Revenue v. Court of Appeals, et al, G.R. No.
2001 IIA Distinguish a tax amnesty from a tax 124043, October 14, 1998).
exemption. (3%)
Is proof of actual use necessary for tax exemption
Tax amnesty is an immunity from all criminal, civil purposes under the Constitution? (3%) Page | 159
and administrative liabilities arising from nonpayment of taxes.
It is a general pardon given to all taxpayers. It applies only to Yes, because tax exemptions are strictly construed
past tax periods, hence of retroactive application. (People v. against the taxpayer. There must be evidence to show that the
Costonedo, G.R. No. L-46881, 1988). taxpayer has complied with the requirements for exemption.
Furthermore, real property taxation is based on use and not on
Tax exemption is an immunity from the civil liability ownership, hence the same rule must also be applied for real
only. It is an immunity or privilege, a freedom from a charge or property tax exemptions.
burden to which others are subjected. (Florer v. Sheridan, 137
Ind. 28, 36 ME 365). It is generally prospective in application. 2000 BAR Justice Holmes once said “The power
to tax is not the power to destroy while this Court (the
2000 BAR An Executive Order was issued pursuant Supreme Court) sits." Describe the power to tax and its
to law, granting tax and duty incentives only to businesses and limitations. (5%)
residents within the "secured area" of the Subic Economic
Special Zone, and denying said incentives to those who live The power to tax is an inherent power of the
within the Zone but outside such "secured area". Is the sovereign which is exercised through the legislature, to impose
constitutional right to equal protection of the law violated by the burdens upon subjects and objects within its Jurisdiction for the
Executive Order? Explain. (3%) purpose of raising revenues to carry out the legitimate objects
of government. The underlying basis for its exercise is
No. Equal protection of the law clause is subject to governmental necessity for without it no government can exist
reasonable classification. Classification, to be valid, must (1) nor endure. Accordingly, it has the broadest scope of all the
rest on substantial distinctions, (2) be germane to the purpose powers of government because in the absence of limitations, it
of the law, (3) not be limited to existing conditions only, (4) is considered as unlimited, plenary, comprehensive and
apply equally to all members of the same class. supreme. The two limitations on the power of taxation are the
inherent and constitutional limitations which are intended to
There are substantial differences between big
prevent abuse on the exercise of the otherwise plenary and
investors being enticed to the "secured area" and the business
unlimited power. It is the Court's role to see to it that the
operators outside that are in accord with the equal protection
exercise of the power does not transgress these limitations.
clause that does not require territorial uniformity of laws. The
classification applies equally to all the resident individuals and
2000 BAR Among the taxes imposed by the Bureau
businesses within the "secured area". The residents, being in
of Internal Revenue are income tax, estate and donor's tax,
like circumstances to contributing directly to the achievement
value- added tax, excise tax, other percentage taxes, and
of the end purpose of the law, are not categorized further.
documentary stamp tax. Classify these taxes into direct and
Instead, they are similarly treated, both in privileges granted
indirect taxes, and differentiate direct from indirect taxes.
and obligations required. (Tiu, et al, v. Court of 4npeals, et al,
G.R. No. 127410, January 20, 1999) Income tax, estate and donor's tax are considered
as direct taxes. On the other hand, value-added tax, excise
2000 IIIA. Article VI, Section 28 (3) of the 1987
tax, other percentage taxes, and documentary stamp tax are
Philippine Constitution provides that charitable institutions,
indirect taxes. Direct taxes are demanded from the very
churches and personages or covenants appurtenant thereto,
person who, as intended, should pay the tax which he cannot
mosques, non-profit cemeteries and all lands, buildings and
shift to another; while an INDIRECT TAX is demanded in the
improvements actually, directly and exclusively used for
first instance from one person with the expectation that he can
religious, charitable or educational purposes shall be exempt
shift the burden to someone else, not as a tax but as a part of
from taxation. To what kind of tax does this exemption apply?
the purchase price.
(2%)
1998 I Explain the requirement of uniformity as a
This exemption applies only to property taxes. What
limitation in the imposition and/or collection of taxes. (5%|
is exempted is not the institution itself but the lands, buildings


Uniformity in the imposition and/or collection of No. The withdrawal of the tax exemption amounts
taxes means that all taxable articles, or kinds of property of the to a deprivation of property without due process of law, hence
same class shall be taxed at the same rate. The requirement unconstitutional.
of uniformity is complied with when the tax operates with the
same force and effect in every place where the subject of it is 1997 BAR Taxes were generally imprescriptible;
found (Churchill & Tail v. Conception, 34 Phil. 969). It does not statutes, however, may provide otherwise. State the rules that
mean that lands, chattels, securities, income, occupations, have been adopted on this score by - Page | 160
franchises, privileges, necessities and luxuries shall be
(a) The National Internal Revenue Code;
assessed at the same rate. Different articles maybe taxed at
different amounts provided that the rate is uniform on the same (b) The Tariff and Customs Code; and
class everywhere with all people at all times. Accordingly,
singling out one particular class for taxation purposes does not (c) The Local Government Code Answer:
infringe the requirement of uniformity.
The rules that have been adopted on prescription
FIRST ALTERNATIVE ANSWER: are as follows:
The criteria are met when the tax laws operate (a) National Internal Revenue Code - The statute of
equally and uniformly on all persons under similar limitation for assessment of tax if a return is filed is within three
circumstances. All persons are treated in the same manner, the (3) years from the last day prescribed by law for the filing of the
conditions not being different, both in privileges conferred and return or if filed after the last day, within three years from date
liabilities imposed. Uniformity in taxation also refers to of actual filing. If no return is filed or the return filed is false or
geographical uniformity. Favoritism and preference is not fraudulent, the period to assess is within TEN YEARS from
allowed. discovery of the omission, fraud or falsity.
SECOND ALTERNATIVE ANSWER: The period to collect the tax is within THREE
YEARS from date of assessment. In the case, however, of
A tax is deemed to have satisfied the uniformity omission to file or if the return filed is false or fraudulent, the
rule when it operates with the same force and effect in every period to collect is within TEN YEARS from discovery without
place where the subject maybe found. (Phil. Trust & Co. v. need of an assessment.
Yatco, 69 Phil. 420).
(b) Tariff and Customs Code - It does not express
1997 BAR "X" Corporation was the recipient in 1990 any general statute of limitation; it provided, however, that
of two tax exemptions both from Congress, one law exempting "when articles have entered and passed free of duty or final
the company's bond issues from taxes and the other exempting adjustment of duties made, with subsequent delivery, such
the company from taxes in the operation of its public utilities. entry and passage free of duty or settlement of duties will, after
The two laws extending the tax exemptions were revoked by the expiration of ONE (1) YEAR, from the date of the final
Congress before their expiry dates. Were the revocations payment of duties, in the absence of fraud or protest, be final
constitutional? and conclusive upon all parties, unless the liquidation of Import
entry was merely tentative" (Sec 1603, TCC).
Yes. The exempting statutes are both granted
unilaterally by Congress in the exercise of taxing powers. Since (c) Local Government Code - Local taxes, fees, or
taxation is the rule and tax exemption, the exception, any tax charges shall be assessed within FIVE (5) YEARS from the
exemption unilaterally granted can be withdrawn at the date they became due. In case of fraud or intent to evade the
pleasure of the taxing authority without violating the payment of taxes, fees or charges the same maybe assessed
Constitution (Mactan Cebu International Airport Authority v, within TEN YEARS from discovery of the fraud or intent to
Marcos, G.R No. 120082, September 11, 1996). evade payment. They shall also be collected either by
administrative or judicial action within FIVE (5) YEARS from
Neither of these were issued by the taxing date of assessment (Sec. 194, LGC).
authority in a contract lawfully entered by it so that their
revocation would not constitute an impairment of the 1997 BAR When an item of income is taxed in the
obligations of contracts. Philippines and the same income is taxed in another country,
is there a case of double taxation?
ALTERNATIVE ANSWER:


Yes, but it is only a case of indirect duplicate power to propose or concur with amendments. This follows
taxation which is not legally prohibited because the taxes are from the co-equality of the two chambers of Congress
imposed by different taxing authorities. (Tolentino v. Secretary of Finance, GR No. 115455, Oct. 30,
1995).
1997 BAR What are the usual methods of avoiding
the occurrence of double taxation? 1997 BAR The House of Representatives
introduced HB 7000 which envisioned to levy a tax on various Page | 161
The usual methods of avoiding the occurrence of double transactions. After the bill was approved by the House, the bill
taxation are: was sent to the Senate as so required by the Constitution. In
the upper house, instead of a deliberation on the House Bill,
 Allowing reciprocal exemption either by law or by the Senate introduced SB 8000 which was its own version of
treaty; the same tax. The Senate deliberated on this Senate Bill and
 Allowance of tax credit for foreign taxes paid; approved the same. The House Bill and the Senate Bill were
 Allowance of deduction for foreign taxes paid; and then consolidated in the Bicameral Committee. Eventually, the
 Reduction of the Philippine tax rate. consolidated bill was approved and sent to the President who
signed the same. The private sectors affected by the new law
1997 BAR Is double taxation a valid defense questioned the validity of the enactment on the ground that the
against the legality of a tax measure? constitutional provision requiring that all revenue bills should
originate from the House of Representatives had been violated.
No, double taxation standing alone and not being Resolve the issue.
forbidden by our fundamental law is not a valid defense against
the legality of a tax measure (Pepsi Cola v. Tanawan, 69 SCRA There is no violation of the constitutional
460). However, double taxation amounts to a direct duplicate requirement that all revenue bills should originate from the
taxation when in that the same subject is taxed twice when it House of Representatives. What is prohibited is for the Senate
should be taxed but once, in a fashion that both taxes are to enact revenue measures on its own without a bill originating
imposed for the same purpose, by the same taxing authority, from the House. But once the revenue bill was passed by the
within the same jurisdiction or taxing district, for the same House and sent to the Senate, the latter can pass its own
taxable period and for the same kind or character of a tax, then version on the same subject matter consonant with the latter's
it becomes legally objectionable for being oppressive and power to propose or concur with amendments. This follows
inequitable. from the co-equality of the two chambers of Congress
(Tolentino v. Secretary of Finance, GR No. 115455, Oct. 30,
1997 BAR The House of Representatives 1995).
introduced HB 7000 which envisioned to levy a tax on various
transactions. After the bill was approved by the House, the bill 1996 BAR When may a taxpayer's suit be
was sent to the Senate as so required by the Constitution. In allowed?
the upper house, instead of a deliberation on the House Bill,
the Senate introduced SB 8000 which was its own version of A taxpayer's suit may only be allowed when an act
the same tax. The Senate deliberated on this Senate Bill and complained of, which may include a legislative enactment,
approved the same. The House Bill and the Senate Bill were directly involves the illegal disbursement of public funds
then consolidated in the Bicameral Committee. Eventually, the derived from taxation (Pascual vs. Secretary of Public Works,
consolidated bill was approved and sent to the President who 110 Phil. 331).
signed the same. The private sectors affected by the new law
questioned the validity of the enactment on the ground that the 1996 BAR X is the owner of a residential lot situated
constitutional provision requiring that all revenue bills should at Quirino Avenue, Pasay City. The lot has an area of 300
originate from the House of Representatives had been violated. square meters. On June 1, 1994, 100 square meters of said lot
Resolve the issue. owned by X was expropriated by the government to be used in
the widening of Quirino Avenue for P300,000.00 representing
There is no violation of the constitutional the estimated assessed value of said portion. From 1991 to
requirement that all revenue bills should originate from the 1995, X, who is a businessman, has not been paying his
House of Representatives. What is prohibited is for the Senate income taxes. X is now being assessed for the unpaid income
to enact revenue measures on its own without a bill originating taxes in the total amount of P150,000.00. X claims his income
from the House. But once the revenue bill was passed by the tax liability has already been compensated by the amount of
House and sent to the Senate, the latter can pass its own P300,000.00 which the government owes him for the
version on the same subject matter consonant with the latter's expropriation of his property. Decide.


The income tax liability of X cannot be compensated (c) It has retained more schedular than global
with the amount owed by the Government as compensation for features with respect to individual taxpayers but has
his property expropriated, taxes are of distinct kind, essence maintained a more global treatment on corporations.
and nature than ordinary obligations. Taxes and debts cannot
be the subject of compensation because the Government and ALTERNATIVE ANSWER
X are not mutually creditors and debtors of each other and a
(a) Individual compensation income earners are Page | 162
claim for taxes is not a debt, demand, contract, or Judgment as
taxed on modified Gross Income (Gross compensation income
is allowable to be set off. (Francia vs. IAC. G.R 76749, June
less personal exemptions). Self-employed and professionals
28. 1988)
are taxed on net income with deductions limited to seven items
1996 BAR Distinguish tax evasion from tax or in lieu thereof the forty percent (40%) maximum deduction
avoidance. plus the personal exemptions. Corporations are generally
taxed on net income except for non-resident foreign
Tax evasion is a scheme used outside of those corporations which are taxed on gross income.
lawful means to escape tax liability and, when availed of, it
(b) The income tax is generally imposed via the
usually subjects the taxpayer to further or additional civil or
self- assessment system or pay-as-you-file concept of
criminal liabilities. Tax avoidance, on the other hand, is a tax
imposing the tax although certain incomes. Including income
saving device within the means sanctioned by law, hence legal.
of non-residents, are taxed on the pay-as- you-earn concept
1996 BAR X, a lessor of a property, pays real estate or the so called withholding tax.
tax on the premises, a real estate dealer's tax based on rental
(c) The corporate income tax is a one-layer tax in
receipts and income tax on the rentals. X claims that this is
that distribution of profits to stockholders (except to non-
double taxation? Decide.
residents) are not subject to income tax.
There is no double taxation. Double taxation means
1996 BAR What is the nature of the power of
taxing for the same tax period the same thing or activity twice,
taxation?
when it should be taxed but once, by the same taxing authority
for the same purpose and with the same kind or character of The power to tax is an attribute of sovereignty and
tax. The real estate tax is a tax on property; the real estate is inherent in the state. It is a power emanating from necessity
dealer's tax is a tax on the privilege to engage in business; because it imposes a necessary burden to preserve the state's
while the income tax is a tax on the privilege to earn an income. sovereignty (Phil Guarantee Co. vs. Commissioner, l-22074,
These taxes are imposed by different taxing authorities and are April 30, 1965). It is inherently legislative in nature and
essentially of different kind and character (Villanueva vs. City character in that the power of taxation can only be exercised
of Iloilo, 26 SCRA 578). through the enactment of law.
1996 BAR What are the basic features of the ALTERNATIVE ANSWER:
present income tax system?
The nature of the power of taxation refers to its own
Our present income tax system can be said to have limitations such as the requirement that it should be for a public
the following basic features: purpose, that it be legislative, that it is territorial and that it
should be subject to international comity.
(a) It has adopted a COMPREHENSIVE TAX
SITUS by using the nationality, residence, and source rules.
1994 BAR Distinguish a direct from an indirect tax.
This makes citizens and resident aliens taxable on their income
derived from all sources while non-resident aliens are taxed A DIRECT TAX is one in which the taxpayer who
only on their income derived from within the Philippines. pays the tax is directly liable therefor, that is, the burden of
Domestic corporations are also taxed on universal income paying the tax falls directly on the person paying the tax.
while foreign corporations are taxed only on income from Whereas, an INDIRECT TAX is one paid by a person who is
within. not directly liable therefor, and who may therefore shift or pass
on the tax to another person or entity, which ultimately
(b)The individual income tax system is mainly
assumes the tax burden. (Maceda v. Macaraig, 197 SCRA 771)
PROGRESSIVE IN NATURE in that it provides a graduated
rates of income tax. Corporations in general are taxed at a flat
1994 BAR The Secretary of Finance, upon
rate of thirty five percent (35%) of net income.
recommendation of the Commissioner of Internal Revenue,


issued a Revenue Regulation using gross income as the tax Estate taxation is governed by the statute
base for corporations doing business in the Philippines. Is the in force at the time of the death of the decedent. The
Revenue Regulation valid? tax rates and procedures prescribed by R. A. No.
10963, otherwise known as the Tax Reform for
The regulation establishing gross income as the tax Acceleration and Inclusion Law and R.R. No. 12-2018
base for corporations doing business in the Philippines shall govern the estate of decedent who died on or
(domestic as well as resident foreign) is not valid. This is no after the effectivity date of the TRAIN Law which is Page | 163
longer implementation of the law but actually it constitutes January 1, 2018. Since the decedent died on
legislation because among the powers that are exclusively December 2018, the operative law in force at this time
within the legislative authority to tax is the power to determine is the TRAIN Lawn. The said law removed funeral
the amount of the tax. (See 1 Cooley 176-184). Certainly, if the expenses from the list of deductible items for
tax is limited to gross income without deductions of these purposes of estate taxation.
corporations, this is changing the amount of the tax as said
amount ultimately depends on the taxable base. The conditions for the deductibility of
family home from the gross estate of the decedent
-------------xxx------------- are as follows:
1. The family home must be the actual

PART 4 residential home of the decedent and his family at
the time of his death, as certified by the barangay
ESTATE & DONOR’S captain of the locality where the family home is
situated;
TAXES 2. The total value of the family home must

be included as part of the gross estate of the
FOURTH MOST ASKED TOPIC FROM decedent; and
1990 – 2019 TAX BAR EXAMINATION
3. Allowable deduction must be an amount
equivalent to the current fair market value of the
ESTATE TAX decedent‘s family home as declared or included in
the gross estate; or the extent of the decedent‘s
2019 A5 A, a resident Filipino citizen, died in interest (whether conjugal/community, or exclusive
December 2018. A‘s only assets consist of a property, whichever is lower, but not exceeding 10,
house and lot in Alabang, where his heirs currently 000,000.00 pesos. (R.R. No. 12-2018, Sec 6(7) (7.2)).
reside, as well as a house in Los Angeles,
Considering that all the said requisites
California, USA. In computing A‘s taxable net
are complied with, the Php 10,000,000.00 pesos,
estate, his heirs only deducted:
the amount pertaining to the value of the decedent‘s
(1) 10, 000,000.00 Pesos family home is deductible from the gross estate of
constituting the value of their house in Alabang A.
as their family home, and; (2) 200,000.00 in
B. May a standard deduction be
funeral expenses because no other expenses
count be substantiated. claimed by A‘s heirs? If so, how much and
what proof needs to be presented for the same
A. Are both deductions claimed by A‘s heirs to be validly made? (2%)
correct? Explain. (2%)
Yes, the heirs can claim a standard
No, only the amount pertaining to the value deduction in the amount of 5,000,000.00. As provided
of the decedent’s family home is deductible from the under R.R. No. 12-2018, the value of the net estate of
gross estate, provided that the conditions for the a citizen or resident alien of the Philippines shall be
deductibility of a family home are complied with. subject to a standard deduction. A deduction in the
Funeral expenses are not considered deductible items amount of five million pesos shall be allowed without
under R. A. No. 10963. need of a substantiation. The full amount of the five
million pesos shall be allowed as deduction for the
benefit of the decedent. Since A is a resident Filipino


citizen, the heirs of the said decedent can claim a The Commissioner may require the executor, or
standard deduction in the amount of 5,000,000.00. administrator, or the beneficiary to furnish a bond in an amount
not more than double the amount of estate tax due (Sec 91,
NIRC).
C. In determining the gross estate of A, (2008) (XV(a)) What are the properties and
should the heirs include A‘s house in Los Angeles, interests that should be included in the computation of the Page | 164
California, USA? Explain. (2%) gross estate of the decedent? Explain. (2.5%)
All the properties and interests enumerated in the

Yes, for estate tax purposes, the problem should be included in the gross estate if the decedent.
heirs should include the value of the A‘s house The composition of a gross estate of a decedent who is a
in Los Angeles California, USA. As provided citizen of the Philippines includes all properties, tangible or
under the TRAIN Law and R.R. No. 12-2018, for intangible, wherever situated and to the extent of the interest
purposes of computing the estate tax of a that he has thereon at the time of his death (Sec 85, NIRC).
resident or a Filipino citizen, all properties, real
or personal, tangible or intangible, wherever (2005) Is the approval of the court, sitting as
situated shall be included in determining the probate or estate settlement court, required in the enforcement
gross estate. Since A was a resident Filipino and collection of estate tax? Explain.
citizen, the properties of A within and outside
the Philippines should be included in No, the approval of the court, sitting in probate, or
determining his or her gross estate. Hence, the as a settlement tribunal over the deceased is not a mandatory
heirs of A should include A‘s house in Los requirement in the collection of estate taxes. There is nothing
Angeles, California, USA in determining the in the Tax Code, and in the pertinent remedial laws that implies
latter‘s gross estate. the necessity of the probate or estate settlement court's
approval of the state's claim for estate taxes, before the same
Take Note: Estate taxation is governed by the
can be enforced and collected. (Marcos v. Court of Appeals,
statute in force at the time of the death of the decedent.
G.R. No. 120880, June 5, 1997)
The tax rates and procedures prescribed by R. A. No.
10963, otherwise known as the Tax Reform for (2000) Discuss the rule on situs of taxation with
Acceleration and Inclusion Law and R.R. No. 12-2018 respect to the imposition of the estate tax on property left
shall govern the estate of decedent who died on or after behind by a non-resident decedent. (2%)
the effectivity date of the TRAIN Law which is January 1,
2018. Assume that in the succeeding questions, the The value of the gross estate of a non-resident
decedent died after January 1, 2018. Answer them.The decedent who is a Filipino citizen at the time of his death shall
examineer may just pick one ot two questions from them. be determined by including the value at the time of his death of
all property, real or personal, tangible or intangible, wherever
(2010) (XV)(c) When is the due date for filing and
situated to the extent of the interest therein of the decedent at
payment of the applicable tax return and tax? Are these dates
the time of his death [Sec. 85 (A), NIRC of 1997). These
extendible? If so, under what conditions or requirements?
properties shall have a situs of taxation in the Philippines hence
(2.5%)
subject to Philippine estate taxes.
The filing of the return and payment of the tax is On the other hand, in the case of a non-resident
within 6 months from date of death following the pay-as-you- decedent who at the time of his death was not a citizen of the
file concept. The period to file return is extendible for a Philippines, only that part of the entire gross estate which is
maximum of 30 days under meritorious cases as maybe situated in the Philippines to the extent of the interest therein of
determined by the Commissioner. The payment of the estate the decedent at the time of his death shall be included in his
tax may also be extended when the Commissioner finds that taxable estate. Provided, that, with respect to intangible
the payment of the tax on the due date would impose undue personal property, we apply the rule of reciprocity. (Ibid)
hardship on the estate or any of the heirs. The period of
extension to pay shall not exceed 5 years if the estate is settled (2000) Mr. Felix de la Cruz, a bachelor resident
through the courts, or shall not exceed 2 years if settled citizen, suffered from a heart attack while on a business trip to
extrajudicially. the USA. He died intestate on June 15, 2000 in New York City,
leaving behind real properties situated in New York; his family


home in Valle Verde, Pasig City; an office condominium in shall have authority to grant in meritorious cases, a reasonable
Makati City; shares of stocks in San Miguel Corporation; cash extension not exceeding thirty (30) days for filing the return
in bank; and personal belongings. The decedent is heavily (Sec. 90 (c), Ibid]
insured with Insular Life. He had no known debts at the time of
his death. As the sole heir and appointed Administrator, how Except in cases where the Commissioner of Internal
would you determine the gross estate of the decedent? What Revenue otherwise permits, the estate tax return shall be filed
deductions may be claimed by the estate and when and where with an authorized agent bank, or Revenue District Officer, Page | 165
shall the return be filed and estate tax paid? (3%) Collection Officer, or duly authorized Treasurer of Pasig City,
the City in which the decedent Mr. de la Cruz was domiciled at
The gross estate shall be determined by including the time of his death. [Sec. 90 (D). NIRC of 1997]
the value at the time of his death all of the properties
mentioned, to the extent of the interest he had at the time of his (1994) Are donations inter vivos and donations
death because he is a Filipino citizen. [Sec. 85 (A), NIRC of mortis causa subject to estate taxes?
1997]
Donations inter vivos are subject to donor's gift tax
With respect to the life insurance proceeds, the (Sec. 91 (a). Tax Code) while donations mortis causa are
amount includible in the gross estate for Philippine tax subject to estate tax (Sec. 77, Tax Code). However, donations
purposes would be to the extent of the amount receivable by inter vivos, actually constituting taxable lifetime like transfers in
the estate of the deceased, his executor, or administrator, contemplation of death or revocable transfers (Sec. 78 (b) and
under policies taken out by decedent upon his own life, (c), Tax Code) may be taxed for estate tax purposes, the theory
irrespective of whether or not the insured retained the power of being that the transferor's control thereon extends up to the
revocation, or to the extent of the amount receivable by any time of his death.
beneficiary designated in the policy of insurance, except when
it is expressly stipulated that the designation of the beneficiary ALTERNATIVE ANSWER:
is irrevocable. [Sec. 85 (E) NIRC of 1997]
Donations inter vivos are not subject to estate taxes
The DEDUCTIONS that may be claimed by the because the transfer of the property take effect during the
estate are: lifetime of the donor. The transfer is therefore subject to the
donor's tax.
1) The actual funeral expenses or in an
amount equal to five percent (5%) of the gross estate, On the other hand, donations mortis causa are
whichever is lower, but in no case to exceed two hundred subject to estate taxes since the transfer of the properties takes
thousand pesos (P200.000.00). [Sec. 86 (A) (1) (a). NIRC of effect after the death of the decedent. Such donated properties,
1997] real or personal, tangible or intangible, shall form part of the
gross estate.
2) The judicial expenses in the testate or
intestate proceedings.(Sec. 86(A)(1) (1994) Vanishing deductions in estate-taxation?
3) The value of the decedent's family home Vanishing deductions or property previously taxed
located in Valle Verde, Pasig City in an amount not exceeding in estate taxation refers to the diminishing deducibility/
one million pesos (P1,000,000.00), and upon presentation of a exemption, at the rate of 20% over a period of five (5) years
certification of the barangay captain of the locality that the until it is lost after the fifth year, of any property (situated in the
same have been the decedent's family home. [Sec. 86 (A) (4), Philippines) forming part of the gross estate, acquired by the
Ibid] decedent from a prior decedent who died within a period of five
(5) years from the decedent's death.
4) The standard deduction of P1,000,000.
(Sec. 86(A)(5)
DONOR’S TAX
5) Medical expenses incurred within one
year from death in an amount not exceeding P500,000.(Sec. 2019 A4 Due to rising liquidity problems and
86(A)(6) pressure from its concerned suppliers, P. Corp.
instituted a flash auction sale of its shares of stock.
The ESTATE TAX RETURN shall be filed within six P. Corp. was then able to sell its treasury shares
(6) months from the decedent's death (Sec. 90 (B), NIRC of to Z, Inc., an unrelated corporation, for P1, 000,
1997], provided that the Commissioner of Internal Revenue 000.00, which was only a little below the valuation


of P Corp.‘s shares based on its latest audited Payments:
financial statements. In connection therewith, P
Corp. sought a Bureau of Internal Revenue ruling (1) Salaries of office staff
to confirm that, notwithstanding the price
(2) Rentals for office space
difference between the selling price of the shares
and their book value, the said transaction falls (3) Representation expenses incurred in meetings with
under one of the recognized exemptions to donor‘s clients Page | 166
tax under the Tax Code.
(A) What are the items in the above
(a) Cite the instances under the Tax Code mentioned earnings which should be included in the
where gifts made are exempt from computation of ABC Law Firm’s gross income? Explain.
donor‘s tax.
(B) What are the items in the above-
mentioned payments which may be considered as deductions
The following are the instances where gifts from the gross income of ABC Law Firm? Explain.
made are exempt from donor‘s tax: (1)Gifts made
(C) If ABC Law Firm earns net income in
to or for the use of the National Government or any
2012, what, if any, is the tax consequence on the part of ABC
entity created by any of its agencies which is not
Law Firm insofar as the payment of income tax is concerned?
conducted for profit, or to any political subdivision of
the said Government; and, (2) Gifts in favor of an What, if any, is the tax consequence on the part of
educational and/or charitable, religious, cultural or A, B, and C as individual partners, insofar as the payment of
social welfare corporation, institution, accredited income tax is concerned?
nongovernment organization, trust or philanthropic
organization or research institution or organization, not (A) The three (3) items of earnings should
more than 30% of said gifts shall be used by such be included in the computation of ABC Law Firm’s gross
donee for administration purposes. income. The professional/legal fees from various clients is
included as part of gross income being in the nature of
Does the above transaction fall under any compensation for services (Section 32 (A)(1), NIRC). The cash
of the exemption? Explain. prize from a religious society in recognition of its exemplary
services is also included there being no law providing for its
No, the transaction does not fall under exclusion. This is not a prize in recognition of any of the
any of the exemption. However, the transaction may achievements enumerated under the law hence, should form
still be exempt from donor‘s tax even when the part of gross income (Section 32 (B)(7)(C), NIRC). The gains
shares of stock were sold on a selling price that is from sale of excess computers and laptops should also be
less than the fair market value of the shares included as part of the firm’s gross income because the term
provided that the sale is made in the ordinary course gross income specifically includes gains derived from dealings
of business, in a transaction which is a bona fide, in property (Section 32 (A)(3), NIRC)
at arm‘s length, and free from any donative intent.
2014 XIVAB A, B, and C, all lawyers, formed a

partnership called ABC Law Firm so that they can practice their (B) The law firm being formed as a general
profession as lawyers. For the year 2012, ABC Law Firm professional partnership is entitled to the same deductions as
received earnings and paid expenses, among which are as allowed to corporations (Section 26, NIRC). Hence, the three
follows: (6%) (3) items of deductions mentioned in the problem are all
deductible, they being in the nature of ordinary and necessary
Earnings:
expenses incurred in the practice of profession (Section 34 (A),
(1) Professional/legal fees from various clients NIRC).
(2) Cash prize received from a religious society in ALTERNATIVE ANSWER

recognition of the exemplary service of ABC Law Firm
The law firm being formed as a general professional
(3) Gains derived from sale of excess computers and partnership is entitled to the same deductions as allowed to
laptops corporations (Section 26, NIRC). Hence, the three (3) items of
deductions mentioned in the problem are all deductible, they


being in the nature of ordinary and necessary expenses (2000) What conditions must occur in order that all
incurred in the practice of profession (Section 34 (A), NIRC). grants, donations and contributions to non-stock, non-profit
However, the amount deductible for representation expenses private educational institutions may be exempt from the donor's
incurred by a taxpayer engaged in sale of services, including a tax under Section 101 (a) of the Tax Code? (3%)
law firm, is subject to a ceiling of 1% of net revenue (RR No.
10-2002). The following are the conditions:
Page | 167
1. Not more than thirty percent (30%) of
said gifts shall be used by such donee for administration
(C) The net income having been earned by purposes;
the law firm, which is formed and qualifies as a general
2. The educational institution is
professional partnership, is not subject to income tax because
incorporated as a non- stock entity,
the earner is devoid of any income tax personality. Each
partner shall report as gross income his distributive share, 3. paying no dividends,
actually or constructively received, in the net income of the
partnership. The partnership is merely treated for income tax 4. governed by trustees who receive no
purposes as a pass- through entity so that its net income is not compensation, and
taxable at the level of the partnership but said net income
should be attributed to the partners. 5. devoting all its income, whether
students' fees or gifts, donations, subsidies or other forms of
(2010) (XV)(d) If X, one of the compulsory heirs, philanthropy, to the accomplishment and promotion of the
renounces his share in the inheritance in favor of the other co- purposes enumerated in its Articles of Incorporation. (Sec. 101
heirs, is there any tax implication of X‟s renunciation? What (A) (3), NIRC of 1997]
about the other co-heirs? (2.5%)
(1998) Are contributions to a candidate in an
If the renunciation is a general renunciation such election subject to donor's tax? On the part of the contributor,
that the share of the heir who waives his right to the inheritance is it allowable as a deduction from gross income?
goes to the other co-heirs in accordance with their respective
interest in the inheritance, the law on accretion applies and the 1) No, provided the recipient candidate had
property waived is considered to pass through the other co- complied with the requirement for filing of returns of
heirs by inheritance; hence, it has no tax implication. contributions with the Commission on Elections as required
Undoubtedly, when the compulsory heir renounced his share under the Omnibus Election Code.
in the inheritance, he did not donate the property which did not
2) The contributor is not allowed to deduct
become his. Such being the case, the renunciation is not
the contributions because the said expense is not directly
subject to the donor’s tax. If it is not a general renunciation in
attributable to, the development, management, operation
favor of the other co-heirs, the heir renouncing his right is
and/or conduct of a trade, business or profession {Sec.
considered to have made a donation and the renunciation is
34[AJ(l)(a), NIRC). Furthermore, if the candidate is an
subject to donor’s tax. In both cases, however, the
incumbent government official or employee, it may even be
renunciation has no tax implication to the other co-heirs (BIR
considered as a bribe or a kickback (Sec. 34[AJ(l)(c), NIRC).
Ruling No. DA (DT-039) 396-09, dated July 23, 2009).
COMMENT: It is suggested that full credit should be
(2000) When the donee or beneficiary is a stranger,
given for any answer to the first question because the answer
the tax payable by the donor shall be 30% of the net gifts. For
requires an interpretation of the Election Code. Pursuant to the
purposes of this tax, who is a stranger? (2%)
provisions of Section 99(C) of the NIRC, the taxability of this
type of contributions/donations is governed by the Election
A STRANGER is a person who is not a:
Code.
A. Brother, sister (whether by whole or half-
(1997) An insolvent company had an
blood), spouse, ancestor and lineal descendant; or
outstanding obligation of P l00,000.00 from a creditor. Since it
B. Relative by consanguinity in the could not pay the debt, the creditor agreed to accept payment
collateral line within the fourth degree of relationship." [Sec. 98 through dacion en pago a property which had a market value
(B), NIRC of 1997] of P30.000.00. In the dacion en pago document, the balance of
the debt was condoned.


A. What is the tax effect on the discharge of The par value or stated value of the shares issued
the unpaid balance of the obligation on the debtor corporation? also constitutes deductible expense to the corporation provided
it is subjected to withholding tax on wages.
B. Insofar as the creditor is concerned, how
is he effected tax-wise as a consequence of the transaction? (1994) In 1991, Imelda gave her parents a
Christmas gift of P 100,000.00 and a donation of P50,000.00
(a) The condonation of the unpaid balance to her parish church. She also donated a parcel of land for the Page | 168
of the obligation has the effect of a donation made on the part construction of a building to the PUP Alumni Association, a
of the creditor. It is obvious that the creditor merely desires to non-stock, non-profit organization. Portions of the building shall
benefit the debtor and without any consideration therefore be leased to generate income for the association.
cancels the debt, the amount of the debt cancelled is a gift from
the creditor to the debtor and need not be included in the latter's 1) Is the Christmas gift of P 100,000.00 to Imelda's
gross income (Sec. 50, RR No. 2); parents subject to tax?
(b) For the difference of P70,000 the 2) How about the donation to the parish church?
creditor shall be subject to donor's tax at the applicable rates
provided for under the National Internal Revenue Code. 3) How about the donation to the P.U.P, Alumni
Association?
ALTERNATIVE ANSWER:
1) The Christmas gift of P100,000.00 given by Imelda
(a) If the discharge was prompted by the to her parents is taxable up to P50,000.00 because under the
insolvency of the debtor company, then it is a clear case of a law (Sec. 92 (a) of the Tax Code), net gifts not exceeding
write-off of a bad debt which has no tax consequence to the P50,000.00 are exempt.
debtor.
2) The donation of P50,000.00 to the parish church
(b) The write-off of the bad debt will entitle even assuming that it is exclusively for religious purposes is not
the creditor to claim the same as a deduction from its gross tax-exempt because the exemption granted under Article VI,
income. Sec. 28(3) of the Constitution applies only to real estate taxes
(Lladoc v. Commissioner, 14SCRA292).
(1996) X, a multinational corporation doing
business in the Philippines donated 100 shares of stock of said 3) The donation to the P.U.P. Alumni Association does
corporation to Mr. Y, its resident manager in the Philippines. not also qualify for exemption both under the Constitution and
the aforecited law because it is not an educational or research
1) What is the tax liability, if any, of X corporation? organization, corporation, institution, foundation or trust.
Foreign corporations effecting a donation are ALTERNATIVE ANSWER:

subject to donor's tax only if the property donated is located in
the Philippines. Accordingly, donation of a foreign corporation Donation to the P.U.P. Alumni Association is
of its own shares of stocks in favor of resident employee is not exempt from donor's tax if it is proven that the association is a
subject to donor's tax (BIR Ruling No. 018-87, January 26, nonstock, non-profit charitable association, paying no
1987). However, if 85% of the business of the foreign dividends, governed by trustees who receive no compensation,
corporation is located in the Philippines or the shares donated and devoting all its income to the accomplishment and
have acquired business situs in the Philippines, the donation promotion of the purposes enumerated in its articles of
may be taxed in the Philippines subject to the rule of reciprocity. incorporation. Not more than 30% of the gift should be used for
administration purposes by the donee.
2) Assuming the shares of stocks were given to Mr. Y
in consideration of his services to the corporation, what are the ------------xxx----------
tax implications? Explain.
PART 5
If the shares of stocks were given to Mr. Y in
consideration of his services to the corporation, the same shall
constitute taxable compensation income to the recipient
BUSINESS TAXES
because it is a compensation for services rendered under an THE MOST ASKED TOPIC FROM
employer-employee relationship, hence, subject to income tax. 2010 - 2019


ABC Village Homeowners‘ Association elected
1994 – 2019 TAX BAR EXAMINATION a new set of members of the Board of Trustees
for the Association effective January 2019. The
VALUE ADDED TAX first thing that the Board looked into is the need
2019 A2 For purposes of value-added tax, to increase the prevailing association dues. Mr.
define explain or distinguish the following terms: X, one of the trustees, proposed an increase of
100% to account for the payment of the 12% Page | 169
Input tax and output tax (3%) value-added tax (VAT) on the association dues
Input tax is the VAT that is added to the which were being collected for services allegedly
price on the purchase of goods and services, and rendered in the course of trade or business by
on the importation of goods or services; while an ABC Village Homeowners’ Association.
Output tax is the VAT that is calculated and charged
on the sale of goods and services, and on the lease (a) What constitutes transactions done ―in
of property from a VAT- registered person. Input tax the course of trade or business‖ for
may either be a regular 12% input VAT, a 2% purposes of applying VAT? (2%)
transitional input VAT, or a 4% presumptive input
VAT; while Output tax may either be a regular 12% Transactions done ―in the course of
VAT or 0% VAT. trade or business refer to the sale, barter, exchange,
lease of goods or properties, service by persons,
Zero-rated and effectively zero-rated and the importation of goods in the regular conduct
transactions (3%) or pursuit of a commercial or an economic activity,
including transactions incidental thereto.
Zero-rated transactions generally refer
to the export sale of good and supply of services.
The tax rate is set at zero. The seller of such
transactions charges no output tax, but can claim a
(b) Is Mr. X correct in stating that the
association dues are subject to VAT?
refund of or a tax credit certificate for the VAT
Explain. (3%)
previously charged by suppliers.
Effectively zero-rated transactions,

Yes, Mr. X is correct in stating that the
however, refer to the sale of goods or supply of
association dues are subject to VAT. Association dues,
services to persons or entities whose exemption
membership fees, and other assessments and charges
under special laws or international agreements to
are exempt from VAT but only to the extent of those
which the Philippines is a signatory effectively
collected on a purely reimbursement basis by
subjects such transactions to zero rate. The seller
can also claim a refund of a tax credit certificate for homeowners‘ associations. In this case, the association
the VAT previously charged to customers. dues were being collected for services allegedly rendered
in the course of trade or business. Thus, the association
A zero-rated transaction benefits the dues collected by ABC Village Homeowners’
seller, while an effectively zero-rated transactions Association are subject to VAT.
benefits the purchaser.
2016 IX Explain the procedure for claiming refunds
Destination principle (2%) or tax credits of input Value Added Tax (VAT) for zero-rated or
The destination principle provides that the effectively zero-rated sales under Sec. 112 of the National
destination of the goods determines taxation or Internal Revenue Code (N1RC) from the filing of an application
exemption from tax. Export sales of goods are subject with the CIR up to the CTA. (2.5%)
to 0% rate (or zero-rated), while importations of
goods are subject to the 12% VAT. Exports are zero- (A) In order to be entitled to a refund/tax credit of
rated because the consumption of such goods will be excess input VAT attributable to zero-rated or effectively zero-
made outside the Philippines, while imports of goods rated sales, the following requisites must be complied with:
are subject to 12% VAT because they are for
1. The claim for refund must be filed with the
consumption within the Philippines.
Commissioner within counted from the last day of the quarter
2019 A3 All the homeowners belonging to when the zerorated sale was made (Sec. 112, NIRC);


2. The claim for refund must be accompanied by a (B) Importation of personal and household
statement under oath that all documents to support the claim effects belonging to residents of the Philippines returning from
has been submitted at the time of filing of the claim for refund abroad subject to custom duties under the Tariff and Customs
(RMC 54-14); Code (exempt from VAT only if exempt from customs duties,
Section 109 (1)(C), NIRC)
3. The Commissioner must decide on the claim
within 120 days from date of filing and the adverse decision is (2010) (XI) Are the following transactions subject to Page | 170
appealable to the CTA within 30 days from receiot (Sec. 112, VAT? If yes, what is the applicable rate for each transaction?
NIRC; CIR v. Aichi Forging of Asia Inc., G.R. No. 184823, State the relevant authority/ies for your answer.
October 6,2010,632 SCRA 422);
a) Construction by XYZ Construction Co. of
4. If no decision is made within the 120-day period, concrete barriers for the Asian Development Bank in Ortigas
there is a deemed denial or adverse decision which is Center to prevent car bombs from ramming the ADB gates
appealabie to the CTA within 30 days from the lapse of the 120- along ADB Avenue in Mandaluyong City. (3%)
day period (Sec. 112, N1RC; Sec. 7(a)(1) of RA1125, as
amended by RA 9282). The transaction is subject to VAT at the rate of zero
percent (0%). ADB is exempt from direct and indirect taxes
(B) Explain the procedure for claiming refunds of tax under a special law, thereby making the sale of services to it
erroneously or illegally collected under Sec. 229 of the NIRC by a VAT-registered construction company, effectively zero-
from the filing of the claim for refunds with the CIR up to the rated (Sec 108 (B)(3), NIRC).
CTA. (2.5%)
b) Call Center operated by a domestic enterprise in
The procedure for claiming refunds of tax Makati that handles exclusively the reservations of a hotel
erroneously or illegally collected are the following: chain which are all located in North America. The services are
paid for in US$ and duly accounted for with the Bangko Sentral
1. A written claim for refund must be filed with the
ng Pilipinas. (3%)
Commissioner within two years from date of payment of the tax
(Sec. 204, MIRC); The transaction is subject to VAT at the rate of zero
percent (0%). Zero-rated sale of services includes services
2. A decision of the Commissioner denying the
rendered to a person engaged in business outside the
claim, is appealable to the CTA within 30 days from receipt
Philippines and the consideration is paid in acceptable foreign
thereof or within two years from date of payment, whichever
currency duly accounted for by the Bangko Sentral ng Pilipinas
comes first (Sec. 229, NJRC; Sec. 7(a)(1) of RA1125. As
(Sec 108 (B)(2), NIRC).
amended by Ra 9282);
3. If no decision is made by the Commissioner, the c) Sale of orchids by a flower shop which raises its
aggrieved taxpayer must consider the inaction as a denial and flowers in Tagaytay. (3%)
appeal to the CIA must be filed before the lapse of two years
The sale of orchids is subject to VAT at 12%. This
counted from date of payment (Sec. 229, NIRC).
is a sale of agricultural non- food product in its original state
2014 XXV Which of the following transactions is which is no longer one of the exempt transactions (Sec 109,
subject to Value-Added Tax (VAT)? (1%) NIRC, as amended by RA 9337).
(A) Sale of shares of stock-listed and traded through the (2008) IV. JKL Corporation is a domestic
local stock exchange corporation engaged in the importation and sale of motor
vehicles in the Philippines and is duly registered with the Subic
(B) Importation of personal and household effects Bay Metropolitan Authority (SBMA). In December 2007, it
belonging to residents of the Philippines returning from abroad imported several second- hand motor vehicles from Japan and
subject to custom duties under the Tariff and Customs Code Korea, which it stores in a warehouse in Subic Bay. It sold
these motor vehicles in April 2008, to persons residing in the
(C) Services rendered by individuals pursuant to an customs territory.
employeremployee relationship
(A) Are the importations of motor vehicles from abroad
(D) Gross receipts from lending activities by credit or subject to customs duties and value added taxes? Explain.
multi-purpose cooperatives duly registered with the (4%)
Cooperative Development Authority


No. because domestic corporations importing used (1996) Give at least three (3) real estate
vehicles that are “stored, used or traded” within the Subic transactions which are not subject to the Value-Added Tax.
Naval Base Area enjoy an exemption from customs duties and
VAT, provided they are registered with the SBMA (R.A. 7096; Real estate transactions which are exempt from the
Executive Secretary v. Southwing Heavy Industries, G.R. No. value added tax are:
164171, 20 February 2006).
(a) Sale of real property not primarily held
Page | 171
for sale or lease in the ordinary course of trade or business;
(B) If they are taxable, when must the duties and taxes
be paid? What are the bases for and purposes of computing (b) Sale of real property utilized for
customs duties and VAT? To whom must the duties and VAT socialized housing under RA. No. 7279;
be paid? Explain. (3%)
(c) Sale of real property utilized under the
Duties and taxes must be paid upon release of the low-cost housing under BP Big. 220.
vehicle from Customs’ custody. Custom duties for motor
vehicles are based on the value being used by the Bureau for Note: The other real estate transactions which are
assessing customs duties. VAT is also based on the value exempt from the value-added tax which may be cited by the bar
being used by the Bureau for motor vehicles (Sec. 107[A] candidates are as follows:
NIRC). Duties must be paid to the Bureau of Customs. VAT
(a) Transfer of real property to a trustee if
must be paid to the Bureau of Internal Revenue.
the property is to be held merely in trust for the trustor.
(1996) What is the basis of the Value-Added Tax on
(b) Transfer of real property to a corporation
taxable sales of real property?
in exchange for its shares of stock under Section 34(c)(2) and
The basis of the Value-Added Tax on taxable sale (6)(2) of the Tax Code.
of real property is "GROSS SELLING PRICE" which is either (c) Advance payment by the lessee in a
selling price stated in the sale document or the "Zonal Value", lease contract, when the same is actually a loan to the lessor
whichever is higher. In the absence of zonal values, the gross from the lessee.
selling price shall refer to the market value as shown in the
latest tax declaration or the consideration, whichever is higher. (d) Security deposits for lease
arrangements to insure the faithful performance of certain
(1996) What are the characteristics of the Value- obligations of the lessee to the lessor.
Added Tax?
(e) Lease of residential units, boarding
The value-added tax is an indirect tax and the houses, dormitories, rooms and bed spaces offered for rent by
amount of tax may be shifted or passed on to the buyer, their owners at a monthly rental not exceeding P3,950.00 per
transferee or lessee of the goods, properties or services. unit.
ALTERNATIVE ANSWER: Who are liable for the payment of Value-Added

Tax?
The value-added tax has the following
characteristics: The persons liable for the value-added tax are:
1) It is an indirect tax where tax shifting is a. Sellers of goods and properties in the
always presumed: course of trade or business;
2) It is consumption-based; b. Sellers of services in the course of trade

or business, including lessors of goods and properties;
3) It is imposed on the value-added in each
stage of distribution; c. Importers of taxable goods, whether in
the course of business or not
4) It is a credit-invoice method value-added
tax; and (1997) Under the Value Added tax (VAT), the tax is
imposed on sales, barter, or exchange of goods and services.
5) It is not a cascading tax.
The VAT is also imposed on certain transactions "deemed-
sales". What are these so-called transactions "deemed sales'?


The following transactions shall be deemed sale: include all tangible objects which are capable of pecuniary
estimation (Sec. 106[A1(1), NIRC, the sales of which are
a) Transfer, use, or consumption not in the course of subject to VAT at 10%.
business of goods originally intended for sale or for use in the
course of business; 4) This is subject to VAT at 10%. This
transaction also falls under the definition of goods which
b) Distribution or transfer to: include all tangible objects which are capable of pecuniary Page | 172
estimation (Sec. 106[A1(1), NIRC, the sales of which are
(1) Shareholders or investors as share in
subject to VAT at 10%.
the profits of VAT-registered persons; or
5) VAT Exempt. The monthly fee paid by
(2) Creditors in payment of debt;
each student falls under the lease of residential units with a
c) Consignment of goods if actual sale is not made monthly rental per unit not exceeding Php 8,000, which Is
within 60 days following the date such goods were consigned; exempt from VAT regardless of the amount of aggregate
and rentals received by the lessor during the year. (Sec. 109(x),
NIRC). The term unit shall mean per person in the case of
d) Retirement from or cessation of business, with dormitories, boarding houses and bed spaces (Sec. 4.103-1,
respect to inventories of taxable goods existing as of such RRNo. 7-95).
retirement or cessation.
A nth time bar challenger needs this material, share it.
(1998) State whether the following transactions are
a) VAT Exempt, b) subject to VAT at 10%; or c) subject to VAT
at 0%:
1) Sale of fresh vegetables by Aling Ining at

BAR QUESTIONS AND ANSWERS 1997-2019
the Pamilihang Bayan ng Trece Martirez. [1%] REMEDIAL CORPORATION AND TAXATION LAW
FIRST EDITION
2) Services rendered by Jake's
NOVEMBER 10, 2020
Construction Company, a contractor to the World Health
MANILA, PHILIPPINES
Organization in the renovation of its offices in Manila. [1%] ALL RIGHTS RESERVED
3) Sale of tractors and other agricultural
implements by Bungkal Incorporated to local farmers. [1%]
----------xxx---------
4) Sale of RTW by Cely's Boutique, a
Filipino dress designer, in her dress shop and other outlets.
[1%]
5) Fees for lodging paid by students to

Bahay-Bahayan Dormitory, a private entity operating a student
dormitory (monthly fee PI,500). [1%]
1) VAT exempt. Sale of agricultural

products, such as fresh vegetables, in their original state, of a
kind generally used as, or producing foods for human
consumption is exempt from VAT. (Section 109(c), NIRC).
2) VAT at 0%. Since Jake's Construction

Company has rendered services to the World Health
Organization, which is an entity exempted from taxation under
international agreements to which the Philippines is a
signatory, the supply of services is subject to zero percent (0%)
rate. (Sec. 108[B1(3), NIRC).
3) VAT at 10%. Tractors and other

agricultural implements fall under the definition of goods which

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From Nth Time BAR CHALLENGER TO ATTORNEY

REMEDIAL, CORPORATION & TAXATION LAW

PROGRAM namely: Obligation and Contracts, Special

5. Support Tool No. 2 – Objective Type Bar Questions and

There is no problem with undergoing review centers, but

SUPREME COURT No. The procedure is governed by Sec. 11 of R. A.

A purchased a lot from B for Pl,500,000.00. He gave

When the claim in a pending action is purely ALTERNATIVE ANSWER:

RULE 9: EFFECT OF FAILURE TO PLEAD

A counterclaim is distinguished from a CROSS-

After finality of judgment? [2%]

In appeal by certiorari under Rule 45, the petitioner

WARRANT OF DISTRAINT AND LEVY- is remedy

(2001) May a writ of preliminary attachment be

(2006) Distinguish between injunction as an

Injunction as an ancillary remedy refers to the

SPECIAL CIVIL ACTION FOR CERTIORARI is

RULE 71: CONTEMPT (2001) The rules on special proceedings ordinarily

If a will is found in the course of intestate

After Major Amor had a filed a return alleging the Page | 37

(3) then, the airline companyshould be requested to

(2000) CX is charged with estafa in court for failure

RULE 113: ARREST

RULE 114: BAIL When Bail is a matter of right:

RULE 115: RIGHTS OF THE ACCUSED

ALTERNATIVE ANSWER: Yes. An application for bail is an appropriate

f) That the criminal action or liability has been

[2014] IV. An order of the court requiring a

Comment on a proposal to amend Rule 122,

(2012) No.VI. A PDEA asset/informant tipped the -versus-

(2005) Explain briefly whether the RTC may, motu

(1997) In prosecutions involving narcotics and other illegal

The failure to establish, through convincing proof,

(1997) When A loaned a sum of money to B. A typed a

The copy that was signed and lost is the only

(2007) No.II. (a) The surviving parties rule bars

(2004) Distinguish Competency of the witness and

A writ of amparo is a remedy available to any person

[b] What is the writ of continuing mandamus? (2.5%)

Should the objections of Mr. M's counsel in both cases be

Article 215 FC. No descendant shall be compelled, in a GENERAL PRINCIPLES

(2002) You have been asked to incorporate a new company to

(2004) Distinguish clearly a private corporation from a public

A PRIVATE CORPORATION is one formed for some private

Yeh, Yah, and Yo filed several charges against Yashtag

Under Sec. 34 of the Corporation Code where a director, by Alternative answer

1) additional subscription to shares of stock MERGER OF CORPORATIONS

Take this as a lecture. QUORUM

INTRA-CORPORATE To determine if a case involves an intra-corporate controversy,

The veil of corporate fiction may be pierced by proving in court

Explain "amotion" and the procedure in removing a director.

2. If the conditions relating to the quorum and required

( 2015) Trust fund doctrine (2%)

Corporation X is guilty of violating Section 43 of the Corp Code.

Appraisal right is a statutory right. It cannot be denied to the

(1999) ABC Corporation has an authorized capital stock of

(2019) A.2. In May 2018, ABC Corp. entered into a

3) No. WATERED SHARES are those sold by the

CORPORATION SOLE 1. the corporation;

DEFINITION Under Section 45 of the Corporation Code, no corporation shall

A BIR ruling of first impression to be valid must not

(B) Estate and donor’s taxes; ANOTHER ALTERNATIVE ANSWER:

(A) What are BIR rulings?