(B) a majority vote of the Board of Directors and

COMMERCIAL LAW (2014) authorized by the vote of the stockholders

representing at least two-thirds of the outstanding
capital stock
I.
Carlo and Bianca met in the La Boracay festivities. (C) two-thirds vote of the Board of Directors and
Immediately, they fell in love with each other and authorized by the vote of the stockholders
got married soon after. They have been cohabiting representing at least a majority of the outstanding
blissfully as husband and wife, but they did not capital stock
have any offspring. As the years passed by, Carlo
decided to take out an insurance on Bianca’s life (D) two-thirds vote of the Board of Directors and
for P1,000,000.00 with him (Carlo) as sole authorized by the vote of the stockholders
beneficiary, given that he did not have a steady representing at least two-thirds of the outstanding
source of income and he always depended on capital stock
Bianca both emotionally and financially. During the
term of the insurance, Bianca died of what
appeared to be a mysterious cause so that Carlo IV.
immediately requested for an autopsy to be DC is a unit owner of Medici Condominium located
conducted. It was established that Bianca died of a in Pasig City. On September 7, 2011, Medici
natural cause. More than that, it was also Condominium Corp. (Medici) demanded from DC
established that Bianca was a transgender all along payment for alleged unpaid association dues and
– a fact unknown to Carlo. Can Carlo claim the assessments amounting to P195,000.00. DC
insurance benefit? (5%) disputed the claim, saying that he paid all dues as
shown by the fact that he was previously elected
as Director and President of Medici. Medici, on the
II. other hand, claimed that DC’s obligation was a
Bong bought 300 bags of rice from Ben carry-over of his obligations to the condominium
for P300,000.00. As payment, Bong indorsed to developer, Medici Construction Corporation.
Bena Bank of the Philippine Islands (BPI) check Consequently, DC was prevented from exercising
issued by Baby in the amount of P300,000.00. his right to vote and be voted for during the 2011
Upon presentment for payment, the BPI check was election of Medici’s Board of Directors. This
dishonored because Baby’s account from which it prompted DC to file a complaint for damages
was drawn has been closed. To replace the before the Special Commercial Court of Pasig City.
dishonored check, Bong indorsed a crossed Medici filed a motion to dismiss on the ground
Development Bank of the Philippines (DBP) check that the court has no jurisdiction over the intra-
issued also by Baby for P300,000.00. Again, the corporate dispute which the Housing and Land Use
check was dishonored because of insufficient Regulatory Board (HLURB) has exclusive
funds. Ben sued Bong and Baby on the dishonored jurisdiction over. Is Medici correct? (4%)
BPI check. Bong interposed the defense that the
BPI check was discharged by novation when Ben
accepted the crossed DBP check as replacement V.
for the BPI check. Bong cited Section 119 of the A corporation organized under the Corporation
Negotiable Instruments Law which provides that a Code commences to have corporate existence and
negotiable instrument is discharged "by any other juridical personality and is deemed incorporated:
act which will discharge a simple contract for the (1%)
payment of money." Is Bong correct? (4%)
(A) from the date the application for incorporation
is filed with the Securities and Exchange
III. Commission (SEC)
Under the Financial Rehabilitation and Insolvency
Act (FRIA), the filing of a petition for voluntary (B) from the date the SEC issues a certificate of
rehabilitation must be approved by: (1%) incorporation under its official seal

(A) a majority vote of the Board of Directors and (C) thirty (30) days after the date the application
authorized by the vote of the stockholders for incorporation is filed with the SEC
representing at least a majority of the outstanding
capital stock (D) thirty (30) days after the date
the SEC issues a certificate of incorporation under Company (Matino) involving a motor vehicle. The
its official seal policy obligates Matino to pay Barrack the amount
of Six Hundred Thousand Pesos (P600,000.00) in
case of loss or damage to said vehicle during the
VI. period covered, which is from February 26, 2013 to
On May 26, 2014, Jess insured with Jack Insurance February 26, 2014.
(Jack) his 2014 Toyota Corolla sedan under a
comprehensive motor vehicle insurance policy for On April 16, 2013, at about 9:00 a.m., Barrack
one year. On July 1, 2014, Jess’ car was unlawfully instructed his driver, JJ, to bring the motor vehicle
taken. Hence, he immediately reported the theft to a nearby auto shop for tune-up. However, JJno
to the Traffic Management Command (TMC) of the longer returned and despite diligent efforts to
Philippine National Police (PNP), which made Jess locate the said vehicle, the efforts proved futile.
accomplish a complaint sheet as part of its Resultantly, Barrack promptly notified Matino of
procedure. In the complaint sheet, Jess alleged the said loss and demanded payment of the
that a certain Ric Silat(Silat) took possession of the insurance proceeds of P600,000.00.
subject vehicle to add accessories and
improvements thereon. However, Silat failed to In a letter dated July 5, 2013. Matino denied the
return the subject vehicle within the agreed 3-day claim, reasoning as stated in the contract that "the
period. As a result, Jess notified Jack of his claim company shall not be liable for any malicious
for reimbursement of the value of the lost vehicle damage caused by the insured, any member of his
under the insurance policy. Jack refused to pay family or by a person in the insured’s service. Is
claiming that there is no theft as Jess gave Silat Matino correct in denying the claim? (4%)
lawful possession of the car. Is Jack correct? (4%)

X.
VII. A person is said to have an insurable interest in the
Jinggy went to Kluwer University (KU) in Germany subject matter insured where he has a relation or
for his doctorate degree (Ph.D.). He completed his connection with, or concern in it that he will derive
degree with the highest honors in the shortest pecuniary benefit or advantage from its
time. When he came back, he decided to set-up his preservation. Which among the following subject
own graduate school in his hometown in matters is not considered insurable? (1%)
Zamboanga. After seeking free legal advice from (A) A partner in a firm on its future profits
his high-flying lawyer-friends, he learned that the (B) A general creditor on debtor’s property
Philippines follows the territoriality principle in (C) A judgment creditor on debtor’s property
trademark law, i.e., trademark rights are acquired (D) A mortgage creditor on debtor’s mortgaged
through valid registration in accordance with the property
law. Forth with, Jinggy named his school the
Kluwer Graduate School of Business of Mindanao
and immediately secured registration with the XI.
Bureau of Trademarks. KU did not like the PA Assurance (PA) was incorporated in 1980 to
unauthorized use of its name by its top alumnus engage in the sale of pre-need educational plans. It
no less. KU sought your help. What advice can you sold open-ended educational plans which
give KU? (4%) guaranteed the payment of tuition and other fees
to plan holders irrespective of the cost at the time
of availment. It also engaged in the sale of fixed
VIII. value plans which guaranteed the payment of a
As a rule, an insurance contract is consensual and pre-determined amount to planholders. In 1982,
voluntary. The exception is in the case of: (1%) PA was among the country’s top corporations.
(A) Inland Marine Insurance However, it subsequently suffered financial
(B) Industrial Life Insurance difficulties.
(C) Motor Vehicle Liability Insurance
(D) Life Insurance On September 8, 2005, PA filed a Petition for
Corporate Rehabilitation before the Regional Trial
Court (RTC) of Makati City. On October 17, 2005,
IX. ten (10) plan holders filed an Opposition and
On February 21, 2013, Barrack entered into a Motion to Exclude Planholders from Stay Order on
contract of insurance with Matino Insurance the ground that planholders are not creditors as
they (planholders) have a trust relationship with Is RN correct? Will your answer be the same if the
PA. Are the planholders correct? (4%) check is dated October 15, 2013? (4%)

XII. XV.
To constitute a quorum for the transaction of A, B, C, D, and E were members of the 2003-2004
corporate business, only a majority of the number Board of Directors of FLP Corporation. At the
of Board of Directors is required: (1%) election for the 2004-2005 Board of Directors, not
(A) as fixed by the corporate by-laws one of them was elected. They filed in court a
(B) as fixed in the articles of incorporation derivative suit on behalf of FLP Corporation against
(C) actually serving in the board the newly-elected members of the Board of
(D) actually serving in the board but constituting a Directors. They questioned the validity of the
quorum election as it was allegedly marred by lack of
quorum, and prayed for the nullification of the said
election. The 2004-2005 Board of Directors moved
XIII. to dismiss the complaint because the derivative
Pursuant to its By-Laws, Soei Corporation’s Board suit is not proper. Decide. (4%)
of Directors created an Executive Committee to
manage the affairs of the corporation in between
board meetings. The Board of Directors appointed XVI.
the following members of the Executive In intellectual property cases, fraudulent intent is
Committee: the President, Sarah L; the Vice not an element of the cause of action except in
President, Jane L; and, a third member from the cases involving: (1%)
board, Juan Riles. On December 1, 2013, the (A) trademark infringement
Executive Committee, with Sarah L and Jane L (B) copyright infringement
present, met and decided on the following (C) patent infringement
matters: (D) unfair competition

1. Purchase of a delivery van for use in the

corporation’s retail business; XVII.
On December 1, 2010, Kore A Corporation shipped
2. Declaration and approval of the 13th month from South Korea to LT Corporation in Manila
bonus; some 300,000 sheets of high-grade special steel.
The shipment was insured against all risks by NA
3. Purchase of an office condominium unit at the Insurance(NA). The carrying vessel arrived at the
Fort; and Port of Manila on January 10, 2011. When the
shipment was discharged, it was noted that 25,000
4. Declaration of P10.00 per share cash dividend. sheets were damaged and in bad order. The entire
Are the actions of the Executive Committee valid? shipment was turned over to the custody of ATI,
(4%) the arrastre operator, on January 21, 2011 for
storage and safekeeping, pending its withdrawal
by the consignee’s authorized customs broker,
XIV. RVM.
On September 25, 2013, Danny Marcial (Danny) On January 26 and 29, 2011, the subject shipment
procured an insurance on his life with a face value was withdrawn by RVM from the custody of ATI.
of P5,000,000.00 from RN Insurance Company On January 29, 2011, prior to the withdrawal of
(RN), with his wife Tina Marcial(Tina) as sole the last batch of the shipment, a joint inspection of
beneficiary. On the same day, Danny issued an the cargo was conducted per the Request for Bad
undated check to RN for the full amount of the Order Survey (RBO) dated January 28, 2011. The
premium. On October 1, 2013, RN issued the examination report showed that 30,000 sheets of
policy covering Danny’s life insurance. On October steel were damaged and in bad order.
5, 2013, Danny met a tragic accident and died. Tina
claimed the insurance benefit, but RN was quick to NA Insurance paid LT Corporation the amount
deny the claim because at the time of Danny’s of P30,000,000.00 for the 30,000 sheets that were
death, the check was not yet encashed and damaged, as shown in the Subrogation Receipt
therefore the premium remained unpaid. dated January 13, 2013. Thereafter, NA Insurance
demanded reparation against ATI for the goods
damaged in its custody, in the amount Binondo, Manila. He asked his wife and three (3)
of P5,000,00.00. ATI refused to pay claiming that children to act as incorporators with one (1) share
the claim was already barred by the statute of of stock each, while he owned 999,996 shares of
limitations. ATI alleged that the Carriage of Goods the 1,000,000 shares of the capital stock. (6%)
by Sea Act (COGSA) applies in this case since the
goods were shipped from a foreign port to the (A) Assuming all other requirements are met,
Philippines. NA Insurance claims that the COGSA should the Securities and Exchange Commission
does not apply, since ATI is not a shipper or carrier. (SEC) accept or reject the Articles of
Who is correct? (5%) Incorporation? Why?

(B) Being the control freak and micro-manager that

XVIII. he is, Guetze asked you – his astute legal adviser –
Skechers Corporation sued Inter-Pacific for if he can serve as Chairman of the Board of
trademark infringement, claiming that Inter-Pacific Directors, as President, and as General Manager of
used Skechers’ registered "S" logo mark on Inter- the corporation, all at the same time. Please advise
Pacific’s shoe products without its consent. Guetze.
Skechers has registered the trademark
"SKECHERS" and the trademark "S" (with an oval (C) Assuming the corporation has been properly
design) with the Intellectual Property Office (IPO). registered, may the Articles of Incorporation now
be amended to reduce the number of directors to
In its complaint, Skechers points out the following two (2) – Guetze and his wife– to reflect the real
similarities: the color scheme of the blue, white owners of the shares of stock?
and gray utilized by Skechers. Even the design and
"wave-like" pattern of the mid-sole and outer sole
of Inter Pacific’s shoes are very similar to Skechers’ XX.
shoes, if not exact patterns thereof. On the side of On May 13, 1996, PAM, Inc. obtained
Inter-Pacific’s shoes, near the upper part, appears a P15,000,000.00 fire insurance policy from
the stylized "S" placed in the exact location as that Ilocano Insurance covering its machineries and
of the stylized "S" the Skechers shoes. On top of equipment effective for one (1) year or until May
the "tongue" of both shoes, appears the stylized 14, 1997. The policy expressly stated that the
"S" in practically the same location and size. insured properties were located at "Sanyo
Precision Phils. Building, Phase III, Lots 4 and 6,
In its defense, Inter-Pacific claims that under the Block 15, PEZA, Rosario, Cavite." Before its
Holistic Test, the following dissimilarities are expiration, the policy was renewed on "as is" basis
present: the mark "S" found in Strong shoes is not for another year or until May 13, 1998. The subject
enclosed in an "oval design"; the word "Strong" is properties were later transferred to Pace Factory
conspicuously placed at the backside and insoles; also in PEZA. On October 12, 1997, during the
the hang tags labels attached to the shoes bear the effectivity of the renewed policy, a fire broke out
word "Strong" for Inter-Pacific and "Skechers at the Pace Factory which totally burned the
U.S.A." for Skechers; and, Strong shoes are insured properties.
modestly priced compared to the costs of Skechers The policy forbade the removal of the insured
shoes. properties unless sanctioned by Ilocano. Condition
9(c) of the policy provides that "the insurance
Under the foregoing circumstances, which is the ceases to attach as regards the property affected
proper test to be applied – Holistic or Dominancy unless the insured, before the occurrence of any
Test? Decide. (4%) loss or damage, obtains the sanction of the
company signified by endorsement upon the policy
x x x (c) if the property insured is removed to any
XIX. building or place other than in that which is herein
Guetze and his wife have three (3) children: stated to be insured." PAM claims that it has
Neymar, 25, who is now based in Rio de Janeiro, substantially complied with notifying Ilocano
Brazil; Muelter, 23, who has migrated to Munich, through its sister company, the RBC, which, in fact,
Germany; and James, 21, who resides in Bogota, referred PAM to Ilocano for the insurance
Colombia. Neymar and Muelter have since coverage. Is Ilocano liable under the policy? (4%)
renounced their Philippine citizenship in favor of
their country of residence. Nearing 70 years old,
Guetze decided to incorporate his business in XXI.
On July 3, 1993, Delia Sotero (Sotero) took out a copies of the 17 checks issued by Caroline in 1988
life insurance policy from Ilocos Bankers Life and the check issued in 1996, Manila trust Check
Insurance Corporation (Ilocos Life) designating No. 750. The Spouses James, on the other hand,
Creencia Aban(Aban), her niece, as her beneficiary. completely denied the existence of the debt
Ilocos Life issued Policy No. 747, with a face value asserting that they had never approached Pua to
of P100,000.00, in Sotero’s favor on August 30, borrow money in 1988 or in 1996. They assert,
1993, after the requisite medical examination and instead, that Pua is simply acting at the instance of
payment of the premium. his sister, Lilian, to file a false charge against them
using a check left to fund a gambling business
On April 10, 1996, Sotero died. Aban filed a claim previously operated by Lilian and Caroline. Decide.
for the insurance proceeds on July 9, 1996. Ilocos (5%)
Life conducted an investigation into the claim and
came out with the following findings:
XXIII.
1. Sotero did not personally apply for insurance What vote is needed to consider every decision to
coverage, as she was illiterate. be a valid corporate act? (1%)
2. Sotero was sickly since 1990. (A) a majority of the directors present at the
3. Sotero did not have the financial capability to meeting
pay the premium on the policy. (B) two-thirds of the directors present at the
4. Sotero did not sign the application for insurance. meeting
5. Aban was the one who filed the insurance (C) a majority of the directors present at the
application and designated herself as the meeting at which there is a quorum
beneficiary. (D) two-thirds of the directors present at the
meeting at which there is a quorum
For the above reasons and claiming fraud, Ilocos
Life denied Aban’s claim on April 16, 1997, but
refunded the premium paid on the policy. (6%) XXIV.
A criminal complaint for violation of B.P. 22 was
(A) May Sotero validly designate her niece as filed by Foton Motors (Foton), an entity engaged in
beneficiary? the business of car dealership, against Pura Felipe
(Pura) with the Office of the City Prosecutor of
(B) May the incontestability period set in even in Quezon City. The Office found probable cause to
cases of fraud as alleged in this case? indict Pura and filed an information before the
Metropolitan Trial Court (MeTC) of Quezon City,
(C) Is Aban entitled to claim the proceeds under for her issuance of a postdated check in the
the policy? amount of P1,020,000.00 which was subsequently
dishonored upon presentment due to "Stop
Payment."
XXII.
Paul George Pua (Pua) filed a complaint for a sum Pura issued the check because her son, Freddie,
of money against the spouses Benito and Caroline attracted by a huge discount of P220,000.00,
James (Spouses James). In the complaint, Pua purchased a Foton Blizzard 4x2 from Foton. The
prayed that the defendants pay Pua the amount term of the transaction was Cash-on-Delivery and
of P8,500,000.00, covered by a check. Pua asserts no downpayment was required. The car was
that defendants owed him a sum of money way delivered on May 14, 1997, but Freddie failed to
back in 1988 for which the Spouses James gave pay upon delivery. Despite non-payment, Freddie
him several checks. These checks, however, had all took possession of the vehicle.
been dishonored and Pua has not been paid the
amount of the loan plus the agreed interest. In Pura was eventually acquitted of the charge of
1996, the Spouses James approached Pua to get violating B.P. 22 but was found civilly liable for the
the computation of their liability including the 2% amount of the check plus legal interest. Pura
compounded interest. After bargaining to lower appealed the decision as regards the civil liability,
the amount of their liability, the Spouses James claiming that there was no privity of contract
gave Puaa postdated check bearing the discounted between Foton and Pura. No civil liability could be
amount of P8,500,000.00. Like the 1988 checks, adjudged against her because of her acquittal from
the drawee bank likewise dishonored this check. the criminal charge. It was Freddie who was civilly
To prove his allegations, Pua submitted the original liable to Foton, Pura claimed. Pura added that she
could not be an accommodation party either the highest bidder. That same day, the Sheriff
because she only came in after Freddie failed to executed a Certificate of Sale in favor of NB.
pay the purchase price, or six (6) months after the On October 21, 2003, DMP filed a Petition for
execution of the contract between Foton and Rehabilitation before the Regional Trial Court
Freddie. Her liability was limited to her act of (RTC). Pursuant to this, a Stay Order was issued by
issuing a worthless check, but by her acquittal in the RTC on October 27, 2003.
the criminal charge, there was no more basis for
her to be held civilly liable to Foton. Pura’s act of On the other hand, NB caused the recording of the
issuing the subject check did not, by itself, assume Sheriff’s Certificate of Sale on December 3, 2003
the obligation of Freddie to Foton or automatically with the Register of Deeds of Cabanatuan City. NB
make her a party to the contract. Is Pura liable? executed an Affidavit of Consolidation of
(5%) Ownership and had the same annotated on the
title of DMP. Consequently, the Register of Deeds
cancelled DMP’s title and issued a new title in the
XXV. name of NB on December 10, 2003.
In an action for collection of a sum of money, the
Regional Trial Court (RTC) of Makati City issued a NB also filed on March 17, 2004 an Ex-Parte
decision finding D-Securities, Inc. liable to Rehouse Petition for Issuance of Writ of Possession before
Corporation for P10,000,000.00. Subsequently, the the RTC of Cabanatuan City. After hearing, the RTC
writ of execution was issued but returned issued on September 6, 2004 an Order directing
unsatisfied because D-Securities had no more the Issuance of the Writ of Possession, which was
assets to satisfy the judgment. Rehouse moved for issued on October 4, 2004.
an Alias Writ of Execution against Fairfield Bank
(FB), the parent company of D-Securities. FB DMP claims that all subsequent actions pertaining
opposed the motion on the grounds that it is a to the Cabanatuan property should have been held
separate entity and that it was never made a party in abeyance after the Stay Order was issued by the
to the case. The RTC granted the motion and rehabilitation court. Is DMP correct? (4%)
issued the Alias Writ of Execution. In its
Resolution, the RTC relied on the following facts:
499,995 out of the 500,000 outstanding shares of XXVII.
stocks of D-Securities are owned by FB; FB had ELP Insurance, Inc. issued Marine Policy No. 888 in
actual knowledge of the subject matter of litigation favor of FCL Corp. to insure the shipment of 132
as the lawyers who represented D-Securities are bundles of electric copper cathodes against all
also the lawyers of FB. As an alter ego, there is no risks. Subsequently, the cargoes were shipped on
need for a finding of fraud or illegality before the board the vessel "M/V Menchu" from Leyte to Pier
doctrine of piercing the veil of corporate fiction 10, North Harbor, Manila.
can be applied. The RTC ratiocinated that being
one and the same entity in the eyes of the law, the Upon arrival, FCL Corp. engaged the services of
service of summons upon D-Securities has CGM, Inc. for the release and withdrawal of the
bestowed jurisdiction over both the parent and cargoes from the pier and the subsequent delivery
wholly-owned subsidiary. to its warehouses/plants in Valenzuela City. The
goods were loaded on board twelve (12) trucks
Is the RTC correct? (4%) owned by CGM, Inc., driven by its employed
drivers and accompanied by its employed truck
helpers. Of the twelve (12) trucks en route to
XXVI. Valenzuela City, only eleven (11) reached the
DMP Corporation (DMP) obtained a loan of P20 destination. One (1) truck, loaded with eleven (11)
million from National Bank (NB) secured by a real bundles of copper cathodes, failed to deliver its
estate mortgage over a 63,380-square-meter land cargo.
situated in Cabanatuan City. Due to the Asian
Economic Crisis, DMP experienced liquidity Because of this incident, FCL Corp. filed with ELP
problems disenabling it from paying its loan on Insurance, Inc. a claim for insurance indemnity in
time. For that reason, NB sought the extra judicial the amount of P1,500,000.00. After the requisite
foreclosure of the said mortgage by filing a investigation and adjustment, ELP Insurance, Inc.
petition for sale on June 30, 2003. On September paid FCL Corp. the amount of P1,350,000.00 as
4, 2003, the mortgaged property was sold at public insurance indemnity.
auction, which was eventually awarded to NB as
ELP Insurance, Inc., thereafter, filed a complaint
for damages against CGM, Inc. before the Regional
Trial Court (RTC), seeking reimbursement of the
amount it had paid to FCL Corp. for the loss of the
subject cargo. CGM, Inc. denied the claim on the
basis that it is not privy to the contract entered
into by and between FCL Corp. and ELP Insurance,
Inc., and hence, it is not liable therefor. If you are
the judge, how will you decide the case? (4%)

XXVIII.
Which of the following instruments is negotiable if
all the other requirements of negotiability are
met? (1%)

(A) A promissory note with promise to pay out of

the U.S. Dollar account of the maker in XYZ Bank

(B) A promissory note which designates the U.S.

Dollar currency in which payment is to be made

(C) A promissory note which contains in addition a

promise to paint the portrait of the bearer

(D) A promissory note made payable to the order

of Jose Cruz or Josefa Cruz

XXIX.
KK is from Bangkok, Thailand. She studies medicine
in the Pontifical University of Santo Tomas (UST).
She learned that the same foreign books
prescribed in UST are 40-50% cheaper in Bangkok.
So she ordered 50 copies of each book for herself
and her classmates and sold the books at 20% less
than the price in the Philippines. XX, the exclusive
licensed publisher of the books in the Philippines,
sued KK for copyright infringement. Decide. (4%)
 One important provision in his will reads as
follows:
"Ang lupa at bahay sa Lungsod ng Maynila ay
ililipat at ilalagay sa pangalan nila Alex at Rene
CIVIL LAW (2014) hindi bilang pamana ko sa kanila kundi upang
pamahalaan at pangalagaan lamang nila at nang
ang sinuman sa aking mga anak, sampu ng aking
I. mga apo at kaapuapuhan ko sa habang panahon,
Ariz and Paz were officemates at Perlas ng Silangan ay may tutuluyan kung magnanais na mag-aral sa
Bank (PSB). They fell in love with each other and Maynila o sa kalapit na mga lungsod."
had a civil and church wedding. Meanwhile, Paz
rapidly climbed the corporate ladder of PSB and Is the provision valid? (4%)
eventually became its Vice President, while Ariz
remained one of its bank supervisors, although he
was short of 12 units to finish his Masters of III.
Business Administration (MBA) degree. The Roman Catholic Church accepted a donation
of a real property located in Lipa City. A deed of
Ariz became envious of the success of his wife. He donation was executed, signed by the donor, Don
started to drink alcohol until he became a Mariano, and the donee, the Church, as
drunkard. He preferred to join his "barkadas"; represented by Fr. Damian. Before the deed could
became a wifebeater; would hurt his children be notarized, Don Mariano died. Is the donation
without any reason; and failed to contribute to the valid? (4%)
needs of the family. Despite rehabilitation and
consultation with a psychiatrist, his ways did not
change. IV.
Nante, a registered owner of a parcel of land in
After 19 years of marriage, Paz, a devout Catholic, Quezon City, sold the property to Monica under a
decided to have their marriage annulled by the deed of sale which reads as follows:
church. Through the testimony of Paz and a "That for and in consideration of the sum of
psychiatrist, it was found that Ariz was a spoiled P500,000.00, value to be paid and delivered to me,
brat in his youth and was sometimes involved in and receipt of which shall be acknowledged by me
brawls. In his teens, he was once referred to a to the full satisfaction of Monica, referred to as
psychiatrist for treatment due to his violent Vendee, I hereby sell, transfer, cede, convey, and
tendencies. In due time, the National Appellate assign, as by these presents, I do have sold,
Matrimonial Tribunal (NAMT) annulled the union transferred, ceded, conveyed and assigned a
of Ariz and Paz due to the failure of Ariz to perform parcel of land covered by TCT No. 2468 in favor of
and fulfill his duties as a husband and as a father to the Vendee."
their children. The NAMT concluded that it is for
the best interest of Paz, Ariz and their children to After delivery of the initial payment of
have the marriage annulled. P100,000.00, Monica immediately took possession
of the property. Five (5) months after, Monica
In view of the NAMT decision, Paz decided to file a failed to pay the remaining balance of the
Petition for Declaration of Nullity of Marriage of purchase price. Nante filed an action for the
their civil wedding before the Regional Trial Court recovery of possession of the property. Nante
(RTC) of Makati City using the NAMT decision and alleged that the agreement was one to sell, which
the same evidence adduced in the church was not consummated as the full contract price
annulment proceedings as basis. was not paid. Is the contention of Nante tenable?
Why? (4%)
If you are the judge, will you grant the petition?
Explain. (5%)
V.
What is the effect of preterition ? (1%)
II. (A) It annuls the devise and legacy
Crispin died testate and was survived by Alex and (B) It annuls the institution of heir
Josine, his children from his first wife; Rene and (C) It reduces the devise and legacy
Ruby, his children from his second wife; and Allan, (D) It partially annuls the institution of heir
Bea, and Cheska, his children from his third wife.
VI. On March 19, 2011, Tess sent a letter to Ruth, part
Miko and Dinah started to live together as of which reads as follows:
husband and wife without the benefit of marriage "I am offering you to buy the property you are
in 1984. Ten (10) years after, they separated. In presently leasing at P5,000.00 per sq. m. or for a
1996, they decided to live together again, and in total of P7,500,000.00. You can pay the contract
1998, they got married. price by installment for two (2) years without
interest.
On February 17, 2001, Dinah filed a complaint for
declaration of nullity of her marriage with Miko on I will give you a period of one (1) year from receipt
the ground of psychological incapacity under of this letter to decide whether you will buy the
Article 36 of the Family Code. The court rendered property."
the following decision:
After the expiration of the lease contract, Tess sold
"1. Declaring the marriage null and void; the property to her niece for a total consideration
2. Dissolving the regime of absolute community of of P4 million.
property; and
3. Declaring that a decree of absolute nullity of Ruth filed a complaint for the annulment of the
marriage shall only be issued after liquidation, sale, reconveyance and damages against Tess and
partition and distribution of the parties’ properties her niece. Ruth alleged that the sale of the leased
under Article 147 of the Family Code." property violated her right to buy under the
principle of right of first refusal.
Dinah filed a motion for partial reconsideration
questioning the portion of the decision on the Is the allegation of Ruth tenable? (4%)
issuance of a decree of nullity of marriage only
after the liquidation, partition and distribution of
properties under Article 147 of the Code. IX.
Spouses Macario and Bonifacia Dakila entered into
If you are the judge, how will you decide a contract to sell with Honorio Cruz over a parcel
petitioner’s motion for partial reconsideration? of industrial land in Valenzuela, Bulacan for a price
Why? (4%) of Three Million Five Hundred Thousand Pesos
(P3,500,000.00). The spouses would give a
downpayment of Five Hundred Thousand Pesos
VII. (P500,000.00) upon the signing of the contract,
Due to the continuous heavy rainfall, the major while the balance would be paid for the next three
streets in Manila became flooded. This compelled (3) consecutive months in the amount of One
Cris to check-in at Square One Hotel. As soon as Million Pesos (P1,000,000.00) per month. The
Cris got off from his Toyota Altis, the Hotel’s spouses paid the first two (2) installments but not
parking attendant got the key of his car and gave the last installment. After one (1) year, the spouses
him a valet parking customer’s claim stub. The offered to pay the unpaid balance which Honorio
attendant parked his car at the basement of the refused to accept.
hotel. Early in the morning, Cris was informed by The spouses filed a complaint for specific
the hotel manager that his car was carnapped. performance against Honorio invoking the
(4%) application of the Maceda Law. If you are the
judge, how will you decide the case? (4%)
(A) What contract, if any, was perfected between
Cris and the Hotel when Cris surrendered the key
of his car to the Hotel’s parking attendant? X.
Dorotea leased portions of her 2,000 sq. m. lot to
(B) What is the liability, if any, of the Hotel for the Monet, Kathy, Celia, and Ruth for five (5) years.
loss of Cris’ car? Two (2) years before the expiration of the lease
contract, Dorotea sold the property to PM Realty
and Development Corporation. The following
VIII. month, Dorotea and PM Realty stopped accepting
Tess leased her 1,500 sq. m. lot in Antipolo City to rental payments from all the lessees because they
Ruth for a period of three (3) years, from January wanted to terminate the lease contracts.
2010 to February 2013.
Due to the refusal of Dorotea to accept rental
payments, the lessees, Ruth, et al., filed a XIV.
complaint for consignation of the rentals before A pedestrian, who was four (4) months pregnant,
the Regional Trial Court (RTC) of Manila without was hit by a bus driver while crossing the street.
notifying Dorotea. Although the pedestrian survived, the fetus inside
her womb was aborted. Can the pedestrian
Is the consignation valid? (4%) recover damages on account of the death of the
XI. fetus? (1%)
An easement that can be acquired by prescription: (A) Yes, because of Article 2206 of the Civil Code
(1%) which allows the surviving heirs to demand
(A) Right of way damages for mental anguish by reason of the
(B) Watering of an animal death of the deceased.
(C) Lateral and subjacent support
(D) Light and view (B) Yes, for as long as the pedestrian can prove
that she was not at fault and the bus driver was
the one negligent.
XII.
J.C. Construction (J.C.) bought steel bars from (C) No, because a fetus is not a natural person.
Matibay Steel Industries (MSI) which is owned by
Buddy Batungbacal. J.C. failed to pay the (D) No, if the fetus did not comply with the
purchased materials worth P500,000.00 on due requirements under Article 41 of the Civil Code.
date. J.C. persuaded its client Amoroso with whom
it had receivables to pay its obligation to MSI.
Amoroso agreed and paid MSI the amount of XV.
P50,000.00. After two (2) other payments, Mr. Bong owns several properties in Pasig City. He
Amoroso stopped making further payments. decided to build a condominium named Flores de
Manila in one of his lots. To fund the project, he
Buddy filed a complaint for collection of the obtained a loan from the National Bank (NB)
balance of the obligation and damages against J.C. secured by a real estate mortgage over the
J.C. denied any liability claiming that its obligation adjoining property which he also owned.
was extinguished by reason of novation which took
place when MSI accepted partial payments from During construction, he built three (3) pumps on
Amoroso on its behalf. the mortgaged property to supply water to the
condominium. After one (1) year, the project was
Was the obligation of J.C. Construction to MSI completed and the condominium was turned over
extinguished by novation? Why? (4%) to the buyers. However, Mr. Bong failed to pay his
loan obligation to NB. Thus, NB foreclosed the
mortgaged property where the pumps were
XIII. installed. During the sale on public auction of the
Esteban and Martha had four (4) children: mortgaged property, Mr. Simon won in the
Rolando, Jun, Mark, and Hector. Rolando had a bidding. When Mr. Simon attempted to take
daughter, Edith, while Mark had a son, Philip. After possession of the property, the condominium
the death of Esteban and Martha, their three (3) owners, who in the meantime constituted
parcels of land were adjudicated to Jun. After the themselves into Flores de Manila Inc. (FMI),
death of Jun, the properties passed to his surviving claimed that they have earlier filed a case for the
spouse Anita, and son Cesar. When Anita died, her declaration of the existence of an easement before
share went to her son Cesar. Ten (10) years after, the Regional Trial Court (RTC) of Pasig City and
Cesar died intestate without any issue. Peachy, prayed that the easement be annotated in the title
Anita’s sister, adjudicated to herself the properties of the property foreclosed by NB. FMI further
as the only surviving heir of Anita and Cesar. Edith claimed that when Mr. Bong installed the pumps in
and Philip would like to recover the properties his adjoining property, a voluntary easement was
claiming that they should have been reserved by constituted in favor of FMI.
Peachy in their behalf and must now revert back to
them. Will the action prosper? (4%)

Is the contention of Edith and Philip valid? (4%)

XVI.
A congregation for religious women, by way of (A) Depositary until full payment of what may be
commodatum, is using the real property owned due him in deposit.
and registered in the name of Spouses Manuel as a (B) Lessee if he advances the expenses for the
retreat house. repair of the leased premises.
(C) Bailee if bailor owes him something.
Maria, a helper of the congregation discovered a (D) Builder in bad faith for the recovery of
chest in the backyard. When she opened the chest, necessary and useful expenses.
it contained several pieces of jewelry and money.
(4%)
XX.
(A) Can the chest containing the pieces of jewelry Mabuhay Elementary School organized a field trip
and money be considered as hidden treasure? for its Grade VI students in Fort Santiago, Manila
Zoo, and Star City. To be able to join, the parents
(B) Who has the right to claim ownership of it? of the students had to sign a piece of paper that
reads as follows:

"I allow my child (name of student), Grade –

XVII. Section, to join the school’s field trip on February
On March 30, 2000, Mariano died intestate and 14, 2014.
was survived by his wife, Leonora, and children, I will not file any claim against the school,
Danilo and Carlito. One of the properties he left administrator or teacher in case something
was a piece of land in Alabang where he built his happens to my child during the trip."
residential house.
Joey, a 7-year-old student of Mabuhay Elementary
After his burial, Leonora and Mariano’s children School was bitten by a snake while the group was
extrajudicially settled his estate. Thereafter, touring Manila Zoo. The parents of Joey sued the
Leonora and Danilo advised Carlito of their school for damages. The school, as a defense,
intention to partition the property. Carlito presented the waiver signed by Joey’s parents.
opposed invoking Article 159 of the Family Code.
Carlito alleged that since his minor child Lucas still Was there a valid waiver of right to sue the
resides in the premises, the family home continues school? Why? (4%)
until that minor beneficiary becomes of age.

Is the contention of Carlito tenable? (4%) XXI.

A delayed accession is: (1%)
(A) formation of an island
XVIII. (B) avulsion
Spouses Magtanggol managed and operated a (C) alluvium
gasoline station on a 1,000 sq.m. lot which they (D) change in the course of the riverbed
leased from Francisco Bigla-awa. The contract was
for a period of three (3) years. When the contract
expired, Francisco asked the spouses to peacefully XXII.
vacate the premises. The spouses ignored the On March 27, 1980, Cornelio filed an application
demand and continued with the operation of the for land registration involving a parcel of
gasoline station. agricultural land that he had bought from Isaac
identified as Lot No. 2716 with an area of one (1)
One month after, Francisco, with the aid of a group hectare. During the trial, Cornelio claimed that he
of armed men, caused the closure of the gasoline and his predecessors-in-interest had been in open,
station by constructing fences around it. continuous, uninterrupted, public and adverse
possession and occupation of the land for more
Was the act of Francisco and his men lawful? than thirty (30) years. He likewise introduced in
Why? (4%) evidence a certification dated February 12, 1981
citing a presidential declaration to the effect that
on June 14, 1980, agricultural lands of the public
XIX. domain, including the subject matter of the
Who enjoys the Right of Retention? (1%) application, were declared alienable and
disposable agricultural land. (4%)
 Mario executed his last will and testament where
(A) If you are the judge, will you grant the he acknowledges the child being conceived by his
application for land registration of Cornelio? live-in partner Josie as his own child; and that his
house and lot in Baguio City be given to his unborn
(B) Can Cornelio acquire said agricultural land conceived child.
through acquisitive prescription, whether ordinary
or extraordinary? Are the acknowledgment and the donation mortis
causa valid? Why? (4%)

XXIII.
After undergoing sex reassignment in a foreign XXVI.
country, Jose, who is now using the name of Isaac leased the apartment of Dorotea for two (2)
"Josie," married his partner Ador. Is the marriage years. Six (6) months after, Isaac subleased a
valid? (1%) portion of the apartment due to financial difficulty.
Is the sublease contract valid? (1%)
(A) Yes, the marriage is valid for as long as it is
valid in the place where it is celebrated following (A) Yes, it is valid for as long as all the elements of
Article 17 of the Civil Code. a valid sublease contract are present.

(B) Yes, the marriage is valid if all the essential and (B) Yes, it is valid if there is no express prohibition
formal elements of marriage under the Family for subleasing in the lease contract.
Code are present.
(C) No, it is void if there is no written consent on
(C) No, the marriage is not valid because one the part of the lessor.
essential element of marriage is absent.
(D) No, it is void because of breach of the lease
(D) No, the marriage is not valid but is voidable contract.
because "Josie" concealed her real identity.

XXVII.
XXIV. Fe, Esperanza, and Caridad inherited from their
Ted, married to Annie, went to Canada to work. parents a 500 sq. m. lot which they leased to Maria
Five (5) years later, Ted became a naturalized for three (3) years. One year after, Fe, claiming to
Canadian citizen. He returned to the Philippines to have the authority to represent her siblings
convince Annie to settle in Canada. Unfortunately, Esperanza and Caridad, offered to sell the leased
Ted discovered that Annie and his friend Louie property to Maria which the latter accepted. The
were having an affair. Deeply hurt, Ted returned to sale was not reduced into writing, but Maria
Canada and filed a petition for divorce which was started to make partial payments to Fe, which the
granted. In December 2013, Ted decided to marry latter received and acknowledged. After giving the
his childhood friend Corazon in the Philippines. In full payment, Maria demanded for the execution
preparation for the wedding, Ted went to the Local of a deed of absolute sale which Esperanza and
Civil Registry of Quezon City where his marriage Caridad refused to do. Worst, Maria learned that
contract with Annie was registered. He asked the the siblings sold the same property to Manuel. This
Civil Register to annotate the decree of divorce on compelled Maria to file a complaint for the
his marriage contract with Annie. However, he was annulment of the sale with specific performance
advised by the National Statistics Office (NSO) to and damages.
file a petition for judicial recognition of the decree
of divorce in the Philippines. If you are the judge, how will you decide the case?
(4%)
Is it necessary for Ted to file a petition for judicial
recognition of the decree of divorce he obtained in
Canada before he can contract a second marriage XXVIII.
in the Philippines? (4%) Spouses Esteban and Maria decided to raise their
two (2) nieces, Faith and Hope, both minors, as
their own children after the parents of the minors
XXV. died in a vehicular accident.
Ten (10) years after, Esteban died. Maria later on (SPA) appointing his nephew, John Paul, as his
married her boss Daniel, a British national who had attorney-infact. John Paul was given the power to
been living in the Philippines for two (2) years. deal with treasure-hunting activities on Joe
Miguel’s land and to file charges against those who
With the permission of Daniel, Maria filed a may enter it without the latter’s authority. Joe
petition for the adoption of Faith and Hope. She Miguel agreed to give John Paul forty percent
did not include Daniel as her co-petitioner because (40%) of the treasure that may be found on the
for Maria, it was her former husband Esteban who land.
raised the kids.
If you are the judge, how will you resolve the Thereafter, John Paul filed a case for damages and
petition? (4%) injunction against Lilo for illegally entering Joe
Miguel’s land. Subsequently, he hired the legal
services of Atty. Audrey agreeing to give the latter
XXIX. thirty percent (30%) of Joe Miguel’s share in
Timothy executed a Memorandum of Agreement whatever treasure that may be found in the land.
(MOA) with Kristopher setting up a business
venture covering three (3) fastfood stores known Dissatified however with the strategies
as "Hungry Toppings" that will be established at implemented by John Paul, Joe Miguel unilaterally
Mall Uno, Mall Dos, and Mall Tres. revoked the SPA granted to John Paul.

The pertinent provisions of the MOA provides: Is the revocation proper? (4%)

1. Timothy shall be considered a partner with

thirty percent (30%) share in all of the stores to be
set up by Kristopher;

2. The proceeds of the business, after deducting

expenses, shall be used to pay the principal
amount of P500,000.00 and the interest therein
which is to be computed based on the bank rate,
representing the bank loan secured by Timothy;

3. The net profits, if any, after deducting the

expenses and payments of the principal and
interest shall be divided as follows: seventy
percent (70%) for Kristopher and thirty percent
(30%) for Timothy;

4. Kristopher shall have a free hand in running the

business without any interference from Timothy,
his agents, representatives, or assigns , and should
such interference happen, Kristopher has the right
to buy back the share of Timothy less the amounts
already paid on the principal and to dissolve the
MOA; and

5. Kristopher shall submit his monthly sales report

in connection with the business to Timothy.

What is the contractual relationship between

Timothy and Kristopher? (4%)

XXX.
Joe Miguel, a well-known treasure hunter in
Mindanao, executed a Special Power of Attorney
 III.
Dr. Taimtim is an alumnus of the College of
Medicine of Universal University (UU), a privately-
owned center for learning which grants yearly
dividends to its stockholders.

UU has a famous chapel located within the campus

where the old folks used to say that anyone who
wanted to pass the medical board examinations
should offer a dozen roses on all the Sundays of
TAXATION LAW (2014) October. This was what Dr. Taimtim did when he
was still reviewing for the board examinations. In
his case, the folk saying proved to be true because
I. he is now a successful cardiologist. Wanting to give
On March 27, 2012, the Bureau of Internal back to the chapel and help defray the costs of its
Revenue (BIR) issued a notice of assessment maintenance, Dr. Taimtim donated P50,000.00 to
against Blue Water Industries Inc. (BWI), a the caretakers of the chapel which was evidenced
domestic corporation, informing the latter of its by an acknowledgment receipt.
alleged deficiency corporate income tax for the
year 2009. On April 20, 2012, BWI filed a letter In computing his net taxable income, can
protest before the BIR contesting said assessment Dr.Taimtim use his donation to the chapel as an
and demanding that the same be cancelled or set allowable deduction from his gross income under
aside. the National Internal Revenue Code (NIRC)? (4%)

However, on May 19, 2013, that is, after more

than a year from the filing of the letter protest, the IV.
BIR informed BWI that the latter’s letter protest Gangwam Corporation (GC) filed its quarterly tax
was denied on the ground that the assessment had returns for the calendar year 2012 as follows:
already become final, executory and demandable. First quarter - April 25, 2012
The BIR reasoned that its failure to decide the case Second quarter - July 23, 2012
within 180 days from filing of the letter protest Third quarter - October 25, 2012
should have prompted BWI to seek recourse Fourth quarter - January 27, 2013
before the Court of Tax Appeals (CTA) by filing a
petition for review within thirty (30) days after the On December 22, 2013, GC filed with the Bureau
expiration of the 180-day period as mandated by of Internal Revenue (BIR) an administrative claim
the provisions of the last paragraph of Section 228 for refund of its unutilized input Value-Added Tax
of the National Internal Revenue Code (NIRC). (VAT) for the calendar year 2012. After several
Accordingly, BWI’s failure to file a petition for months of inaction by the BIR on its claim for
review before the CTA rendered the assessment refund, GC decided to elevate its claim directly to
final, executory and demandable. Is the contention the Court of Tax Appeals (CTA) on April 22, 2014.
of the BIR correct? Explain. (5%)
In due time, the CTA denied the tax refund relative
to the input VAT of GC for the first quarter of 2012,
II. reasoning that the claim was filed beyond the two-
Mr. De Sarapen is a candidate in the upcoming year period prescribed under Section 112(A) of the
Senatorial elections. Mr. De Almacen, believing in National Internal Revenue Code (NIRC).
the sincerity and ability of Mr. De Sarapen to
introduce much needed reforms in the country, (A) Is the CTA correct? (3%)
contributed P500,000.00 in cash to the campaign
chest of Mr. De Sarapen. In addition, Mr. De (B) Assuming that GC filed its claim before the CTA
Almacen purchased tarpaulins, t-shirts, umbrellas, on February 22, 2014, would your answer be the
caps and other campaign materials that he also same? (3%)
donated to Mr. De Sarapen for use in his
campaign. Is the contribution of cash and
campaign materials subject to donor’s tax? (4%) V.
The City of Liwliwa assessed local business taxes attractions. (D) is punishable by administrative
against Talin Company. Claiming that there is penalty only.
double taxation, Talin Company filed a Complaint
for Refund or Recovery of Illegally and/or Claiming the tax to be unjust, Baguio Travellers
Erroneously-collected Local Business Tax; Association (BTA), an association of travel agencies
Prohibition with Prayer to Issue Temporary in Baguio City, filed a petition for declaratory relief
Restraining Order and Writ of Preliminary before the Regional Trial Court (RTC) because BTA
Injunction with the Regional Trial Court (RTC). The was apprehensive that tourists might cancel their
RTC denied the application for a Writ of bookings with BTA’s member agencies. BTA also
Preliminary Injunction. Since its motion for prayed for the issuance of a Temporary Restraining
reconsideration was denied, Talin Company filed a Order (TRO) to enjoin Baguio City from enforcing
special civil action for certiorari with the Court of the local tax on their customers and on all tourists
Appeals (CA). The government lawyer representing going to Baguio City.
the City of Liwliwa prayed for the dismissal of the The RTC issued a TRO enjoining Baguio City from
petition on the ground that the same should have imposing the local tax. Aggrieved, Baguio City filed
been filed with the Court of Tax Appeals (CTA). a petition for certiorari before the Supreme Court
Talin Company, through its lawyer, Atty. Frank, (SC) seeking to set aside the TRO issued by the RTC
countered that the CTA cannot entertain a petition on the ground that collection of taxes cannot be
for certiorari since it is not one of its powers and enjoined. Will the petition prosper? (5%)
authorities under existing laws and rules. Decide.
(5%)
VIII.
Masarap Kumain, Inc. (MKI) is a Value-Added Tax
VI. (VAT)-registered company which has been
Choose the correct answer. Smuggling - (1%) engaged in the catering business for the past 10
years. It has invested a substantial portion of its
(A) does not extend to the entry of imported or capital on flat wares, table linens, plates, chairs,
exported articles by means of any false or catering equipment, and delivery vans. MKI sold its
fraudulent invoice, statement or practices; the first delivery van, already 10 years old and idle, to
entry of goods at less than the true weight or Magpapala Gravel and Sand Corp. (MGSC), a
measure; or the filing of any false or fraudulent corporation engaged in the business of buying and
entry for the payment of drawback or refund of selling gravel and sand. The selling price of the
duties. delivery van was way below its acquisition cost. Is
the sale of the delivery van by MKI to MGSC
(B) is limited to the import of contraband or highly subject to VAT? (4%)
dutiable cargo beyond the reach of customs
authorities.
IX.
(C) is committed by any person who shall Mr. Gipit borrowed from Mr. Maunawain
fraudulently import or bring into the Philippines, P100,000.00, payable in five (5) equal monthly
or assist in so doing, any article, contrary to law, or installments. Before the first installment became
shall receive, conceal, buy, sell or any manner due, Mr. Gipit rendered general cleaning services
facilitate the transportation, concealment or sale in the entire office building of Mr. Maunawain, and
of such article after importation, knowing the as compensation therefor, Mr. Maunawain
same to have been imported contrary to law. cancelled the indebtedness of Mr. Gipit up to the
amount of P75,000.00. Mr. Gipit claims that the
cancellation of his indebtedness cannot be
VII. considered as gain on his part which must be
In accordance with the Local Government Code subject to income tax, because according to him,
(LGC), the Sangguniang Panglungsod (SP) of Baguio he did not actually receive payment from Mr.
City enacted Tax Ordinance No. 19, Series of 2014, Maunawain for the general cleaning services. Is
imposing a P50.00 tax on all the tourists and Mr. Gipit correct? Explain. (4%)
travellers going to Baguio City. In imposing the
local tax, the SP reasoned that the tax collected
will be used to maintain the cleanliness of Baguio X.
City and for the beautification of its tourist Which of the following is an exclusion from gross
income? (1%)
(A) Salaries and wages (3) Proceeds of health insurance from Take Care, a
(B) Cash dividends health maintenance organization in the
(C) Liquidating dividends after dissolution of a Philippines; and
corporation (4) Land in Alabama, U.S.A.
(D) De minimis benefits
(E) Embezzled money The following expenses were paid:
(1) Funeral expenses;
(2) Medical expenses; and
XI. (3) Judicial expenses in the testate proceedings.
Triple Star, a domestic corporation, entered into a
Management Service Contract with Single Star, a (A) What are the items that must be considered as
non-resident foreign corporation with no property part of the gross estate income of Mr. X?
in the Philippines. Under the contract, Single Star
shall provide managerial services for Triple Star’s (B) What are the items that may be considered as
Hongkong branch. All said services shall be deductions from the gross estate?
performed in Hongkong.

Is the compensation for the services of Single Star XV.

taxable as income from sources within the When is a pre-assessment notice required under
Philippines? Explain. (4%) the following cases? (1%)

(A) When the finding for any deficiency tax is the

XII. result of mathematical error in the computation of
Which of the following should not be claimed as the tax as appearing on the face of the return.
deductions from gross income? (1%)
(B) When a discrepancy has been determined
(A) discounts given to senior citizens on certain between the tax withheld and the amount actually
goods and services. remitted by the withholding agent.
(B) advertising expense to maintain some form of
goodwill for the taxpayer’s business. (C) When the excise tax due on excisable articles
(C) salaries and bonuses paid to employees. has been paid.
(D) interest payment on loans for the purchase of
machinery and equipment used in business. (D) When an article locally purchased or imported
by an exempt person, such as, but not limited to
vehicles, capital equipment, machineries and spare
XIII. parts, has been sold, traded or transferred to non-
Hopeful Corporation obtained a loan from exempt persons.
Generous Bank and executed a mortgage on its
real property to secure the loan. When Hopeful
Corporation failed to pay the loan, Generous Bank XVI.
extrajudicially foreclosed the mortgage on the Mr. Tiaga has been a law-abiding citizen diligently
property and acquired the same as the highest paying his income taxes. On May 5, 2014, he was
bidder. A month after the foreclosure, Hopeful surprised to receive an assessment notice from the
Corporation exercised its right of redemption and Bureau of Internal Revenue (BIR) informing him of
was able to redeem the property. Is Generous a deficiency tax assessment as a result of a
Bank liable to pay capital gains tax as a result of mathematical error in the computation of his
the foreclosure sale? Explain. (4%) income tax, as appearing on the face of his income
tax return for the year 2011, which he filed on
April 15, 2012. Mr. Tiaga believes that there was
XIV. no such error in the computation of his income tax
Mr. X, a Filipino residing in Alabama, U.S.A., died for the year 2011.
on January 2, 2013 after undergoing a major heart
surgery. He left behind to his wife and two (2) kids Based on the assessment received by Mr. Tiaga,
several properties, to wit: (4%) may he already file a protest thereon? (4%)
(1) Family home in Makati City;
(2) Condominium unit in Las Piñas City;
XVII.
In a civil case for Annulment of Contract of Sale,
plaintiff Ma. Reklamo presented in evidence the
Contract of Sale which she sought to be annulled. XX.
No documentary stamp tax on the Contract of Sale During his lifetime, Mr. Sakitin obtained a loan
was paid because according to plaintiff Ma. amounting to P10 million from Bangko Uno for the
Reklamo, there was no need to pay the same since purchase of a parcel of land located in Makati City,
the sale was not registered with the Register of using such property as collateral for the loan. The
Deeds. Plaintiff Ma. Reklamo is now offering the loan was evidenced by a duly notarized promissory
Contract of Sale as her evidence. note. Subsequently, Mr. Sakitin died. At the time
of his death, the unpaid balance of the loan
Is the Contract of Sale admissible? (4%) amounted to P2 million. The heirs of Mr. Sakitin
deducted the amount of P2 million from the gross
estate, as part of the "Claims against the Estate."
XVIII. Such deduction was disallowed by the Bureau of
Madam X owns real property in Caloocan City. On Internal Revenue (BIR) Examiner, claiming that the
July 1, 2014, she received a notice of assessment mortgaged property was not included in the
from the City Assessor, informing her of a computation of the gross estate. Do you agree
deficiency tax on her property. She wants to with the BIR? Explain. (4%)
contest the assessment. (4%)

(A) What are the administrative remedies available XXI.

to Madam X in order to contest the assessment On August 31, 2014, Haelton Corporation (HC),
and their respective prescriptive periods? thru its authorized representative Ms. Pares, sold a
16-storey commercial building known as Haeltown
(B) May Madam X refuse to pay the deficiency tax Building to Mr. Belly for P100 million. Mr. Belly, in
assessment during the pendency of her appeal? turn, sold the same property on the same day to
Bell Gates, Inc. (BGI) for P200 million. These two
(2) transactions were evidenced by two (2)
XIX. separate Deeds of Absolute Sale notarized on the
The Bureau of Internal Revenue (BIR) issued same day by the same notary public.
Revenue Memorandum Circular (RMC) No. 65-
2012 imposing Value-Added Tax (VAT) on Investigations by the Bureau of Internal Revenue
association dues and membership fees collected (BIR) showed that:
by condominium corporations from its member (1) the Deed of Absolute Sale between Mr. Belly
condominium-unit owners. The RMC’s validity is and BGI was notarized ahead of the sale between
challenged before the Supreme Court (SC) by the HC and Mr. Belly; (2) as early as May 17, 2014, HC
condominium corporations. received P40 million from BGI, and not from Mr.
Belly; (3) the said payment of P40 million was
The Solicitor General, counsel for BIR, claims that recorded by BGI in its books as of June 30, 2014 as
association dues, membership fees, and other investment in Haeltown Building; and (4) the
assessment/charges collected by a condominium substantial portion of P40 million was withdrawn
corporation are subject to VAT since they by Ms. Pares through the declaration of cash
constitute income payments or compensation for dividends to all its stockholders.
the beneficial services it provides to its members
and tenants. Based on the foregoing, the BIR sent Haeltown
Corporation a Notice of Assessment for deficiency
On the other hand, the lawyer of the condominium income tax arising from an alleged simulated sale
corporations argues that such dues and fees are of the aforesaid commercial building to escape the
merely held in trust by the condominium higher corporate income tax rate of thirty percent
corporations exclusively for their members and (30%).
used solely for administrative expenses in
implementing the condominium corporations’ What is the liability of Haeltown Corporation, if
purposes. Accordingly, the condominium any? (4%)
corporations do not actually render services for a
fee subject to VAT.
XXII.
Whose argument is correct? Decide. (5%) Choose the correct answer. Double Taxation - (1%)
 (1) Salaries of office staff
(A) is one of direct duplicate taxations wherein two (2) Rentals for office space
(2) taxes must be imposed on the same subject (3) Representation expenses incurred in meetings
matter, by the same taxing authority, within the with clients
same jurisdiction, during the same period, with the
same kind or character of tax, even if the purposes (A) What are the items in the above mentioned
of imposing the same are different. earnings which should be included in the
computation of ABC Law Firm’s gross income?
(B) is forbidden by law; and therefore, it is a valid Explain.
defense against the validity of a tax measure.
(B) What are the items in the above-mentioned
(C) means taxing the same property twice when it payments which may be considered as deductions
should be taxed only once; it is tantamount to from the gross income of ABC Law Firm? Explain.
taxing the same person twice by the same
jurisdiction for the same thing. (C) If ABC Law Firm earns net income in 2012,
what, if any, is the tax consequence on the part of
(D) exists when a corporation is assessed with local ABC Law Firm insofar as the payment of income
business tax as a manufacturer, and at the same tax is concerned? What, if any, is the tax
time, value-added tax as a person selling goods in consequence on the part of A, B, and C as
the course of trade or business. individual partners, insofar as the payment of
income tax is concerned?

XXIII.
Choose the correct answer. Tax Avoidance ‒ (1%) XXV.
Which of the following transactions is subject to
(A) is a scheme used outside of those lawful means Value-Added Tax (VAT)? (1%)
and, when availed of, it usually subjects the
taxpayer to further or additional civil or criminal (A) Sale of shares of stock-listed and traded
liabilities. through the local stock exchange

(B) is a tax saving device within the means (B) Importation of personal and household effects
sanctioned by law. belonging to residents of the Philippines returning
from abroad subject to custom duties under the
(C) is employed by a corporation, the organization Tariff and Customs Code
of which is prompted more on the mitigation of tax
liabilities than for legitimate business purpose. (C) Services rendered by individuals pursuant to an
employer-employee relationship
(D) is any form of tax deduction scheme,
regardless if the same is legal or not. (D) Gross receipts from lending activities by credit
or multi-purpose cooperatives duly registered with
the Cooperative Development Authority
XXIV.
A, B, and C, all lawyers, formed a partnership
called ABC Law Firm so that they can practice their XXVI.
profession as lawyers. For the year 2012, ABC Law Freezy Corporation, a domestic corporation
Firm received earnings and paid expenses, among engaged in the manufacture and sale of ice cream,
which are as follows: (6%) made payments to an officer of Frosty
Corporation, a competitor in the ice cream
Earnings: business, in exchange for said officer’s revelation
(1) Professional/legal fees from various clients of Frosty Corporation’s trade secrets.
(2) Cash prize received from a religious society in
recognition of the exemplary service of ABC Law May Freezy Corporation claim the payment to the
Firm officer as deduction from its gross income?
(3) Gains derived from sale of excess computers Explain. (4%)
and laptops

Payments: XXVII.
In January 2013, your friend got his first job as an of double taxation. On appeal, the Court of Tax
office clerk. He is single and lives with his family Appeals (CTA) affirmed the decision of the RTC. No
who depends upon him for financial support. His motion for reconsideration was filed and the
parents have long retired from their work, and his decision became final and executory. (4%)
two (2) siblings are still minors and studying in
grade school. In February 2014, he consulted you (A) If you are Atty. ELP, what advice will you give
as he wanted to comply with all the rules Doña Evelina so that she can recover the subject
pertaining to the preparation and filing of his local business taxes?
income tax return. He now asks you the following:
(B) If Doña Evelina eventually recovers the local
(A) Is he entitled to personal exemptions? If so, business taxes, must the same be considered as
how much? (1%) income taxable by the national government?

(B) Is he entitled to additional exemptions? If so,

how much? (1%)

(C) What is the effect of the taxes withheld from

his salaries on his taxable income? (2%)

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

(A) may be enacted for the promotion of private

enterprise or business for as long as it gives
incidental advantage to the public or the State

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

delegated

(C) are territorial in nature; hence, they do not

recognize the generally-accepted tenets of
international law

(D) adhere to uniformity and equality when all

taxable articles or kinds of property of the same
class are taxable at the same rate

XXIX.
Doña Evelina, a rich widow engaged in the
business of currency exchange, was assessed a
considerable amount of local business taxes by the
City Government of Bagnet by virtue of Tax
Ordinance No. 24. Despite her objections thereto,
Doña Evelina paid the taxes. Nevertheless,
unsatisfied with said Tax Ordinance, Doña Evelina,
through her counsel Atty. ELP, filed a written claim
for recovery of said local business taxes and
contested the assessment. Her claim was denied,
and so Atty. ELP elevated her case to the Regional
Trial Court (RTC).
The RTC declared Tax Ordinance No. 24 null and
void and without legal effect for having been
enacted in violation of the publication requirement
of tax ordinances and revenue measures under the
Local Government Code (LGC) and on the ground
 (A) Yes, because it is suffering losses for the first
time.

(B) Yes, because this is a management prerogative

which is not due to any legal or contractual
obligation.

(C) No, because this amounts to a diminution of

benefits which is prohibited by the Labor Code.

(D) No, because it is a fringe benefit that has

already ripened into a demandable right.

IV.
LABOR LAW (2014) I. Linis Manpower, Inc. (LMI) had provided janitorial
services to the Philippine Overseas Employment
Linda was employed by Sectarian University (SU) Administration (POEA) since March 2009. Its
to cook for the members of a religious order who service contract was renewed every three months.
teach and live inside the campus. While However, in the bidding held in June 2012, LMI
performing her assigned task, Linda accidentally was disqualified and excluded. In 2013, six janitors
burned herself. Because of the extent of her of LMI formerly assigned at POEA filed a complaint
injuries, she went on medical leave. Meanwhile, for underpayment of wages. Both LMI and POEA
SU engaged a replacement cook. Linda filed a were impleaded as respondents. Should POEA, a
complaint for illegal dismissal, but her employer government agency subject to budgetary
SU contended that Linda was not a regular appropriations from Congress, be held liable
employee but a domestic househelp. Decide. (4%) solidarily with LMI for the payment of salary
differentials due to the complainant? Cite the legal
basis of your answer. (4%)
II.
Lucy was one of approximately 500 call center
agents at Hamberg is, Inc. She was hired as a V.
contractual employee four years ago. Her Liwayway Glass had 600 rank-and-file employees.
contracts would be for a duration of five (5) Three rival unions – A, B, and C ‒ participated in
months at a time, usually after a one month the certification elections ordered by the Med-
interval. Her re-hiring was contingent on her Arbiter. 500 employees voted. The unions
performance for the immediately preceding obtained the following votes: A-200; B-150; C-50;
contract. Six (6) months after the expiration of her 90 employees voted "no union"; and 10 were
last contract, Lucy went to Hamberg is personnel segregated votes. Out of the segregated votes,
department to inquire why she was not yet being four (4) were cast by probationary employees and
recalled to work. She was told that her six (6) were cast by dismissed employees whose
performance during her last contract was "below respective cases are still on appeal. (10%)
average." Lucy seeks your legal advice about her
chances of getting her job back. What will your (A) Should the votes of the probationary and
advice be? (4%) dismissed employees be counted in the total votes
cast for the purpose of determining the winning
labor union?
III.
Lolong Law Firm (LLF), which employs around 50 (B) Was there a valid election?
lawyers and 100 regular staff, suffered losses for
the first time in its history. The management (C) Should Union A be declared the winner?
informed its employees that it could no longer
afford to provide them free lunch. Consequently, it (D) Suppose the election is declared invalid, which
announced that a nominal fee would henceforth of the contending unions should represent the
be charged. Was LLF justified in withdrawing this rank-and-file employees?
benefit which it had unilaterally been providing to
its employees? (1%)
(E) Suppose that in the election, the unions (C) If due to prolonged strike, Lazo Corporation
obtained the following votes: A-250; B-150; C-50; hired replacements, can it refuse to admit the
40 voted "no union"; and 10 were segregated replaced strikers?
votes. Should Union A be certified as the
bargaining representative?
IX.
Luisa Court is a popular chain of motels. It employs
VI. over 30 chambermaids who, among others, help
Lina has been working as a steward with a Miami, clean and maintain the rooms. These
U.S.A.-based Loyal Cruise Lines for the past 15 chambermaids are part of the union rank-and-file
years. She was recruited by a local manning employees which has an existing collective
agency, Macapagal Shipping, and was made to sign bargaining agreement (CBA) with the company.
a 10-month employment contract everytime she While the CBA was in force, Luisa Court decided to
left for Miami. Macapagal Shipping paid for Lina’s abolish the position of chambermaids and
round-trip travel expenses from Manila to Miami. outsource the cleaning of the rooms to Malinis
Because of a food poisoning incident which Janitorial Services, a bona fide independent
happened during her last cruise assignment, Lina contractor which has invested in substantial
was not re-hired. Lina claims she has been illegally equipment and sufficient manpower. The
terminated and seeks separation pay. chambermaids filed a case of illegal dismissal
against Luisa Court. In response, the company
If you were the Labor Arbiter handling the case, argued that the decision to outsource resulted
how would you decide? (4%) from the new management’s directive to
streamline operations and save on costs.

VII. If you were the Labor Arbiter assigned to the case,

Non-lawyers can appear before the Labor Arbiter how would you decide? (4%)
if: (1%)

(A) they represent themselves X.

Luisa was hired as a secretary by the Asian
(B) they are properly authorized to represent their Development Bank (ADB) in Manila. Luisa’s first
legitimate labor organization or member thereof boss was a Japanese national whom she got along
with. But after two years, the latter was replaced
(C) they are duly-accredited members of the legal by an arrogant Indian national who did not believe
aid office recognized by the DOJ or IBP her work output was in accordance with
international standards. One day, Luisa submitted
(D) they appear in cases involving an amount of a draft report filled with typographical errors to
less than Php5,000 her boss. The latter scolded her, but Luisa verbally
fought back. The Indian boss decided to terminate
her services right then and there. Luisa filed a case
VIII. for illegal dismissal with the Labor Arbiter claiming
As a result of a bargaining deadlock between Lazo arbitrariness and denial of due process.
Corporation and Lazo Employees Union, the latter
staged a strike. During the strike, several If you were the Labor Arbiter, how would you
employees committed illegal acts. Eventually, its decide the case? (4%)
members informed the company of their intention
to return to work. (6%)
XI.
(A) Can Lazo Corporation refuse to admit the Lionel, an American citizen whose parents
strikers? migrated to the U.S. from the Philippines, was
hired by JP Morgan in New York as a call center
(B) Assuming the company admits the strikers, can specialist. Hearing about the phenomenal growth
it later on dismiss those employees who of the call center industry in his parents’ native
committed illegal acts? land, Lionel sought and was granted a transfer as a
call center manager for JP Morgan’s operations in
Taguig City. Lionel’s employment contract did not
specify a period for his stay in the Philippines.
After three years of working in the Philippines, Service Insurance System (GSIS). What would you
Lionel was advised that he was being recalled to advice? (4%)
New York and being promoted to the position of
director of international call center operations.
However, because of certain "family reasons," XV.
Lionel advised the company of his preference to Our Lady of Peace Catholic School Teachers and
stay in the Philippines. He was dismissed by the Employees Labor Union (OLPCS-TELU) is a
company. Lionel now seeks your legal advice on: legitimate labor organization composed of vice
(6%) principals, department heads, coordinators,
teachers, and non-teaching personnel of Our Lady
(A) whether he has a cause of action of Peace Catholic School (OLPCS).
OLPCS-TELU subsequently filed a petition for
(B) whether he can file a case in the Philippines certification election among the teaching and non-
teaching personnel of OLPCS before the Bureau of
(C) what are his chances of winning Labor Relations (BLR) of the Department of Labor
and Employment (DOLE). The Med-Arbiter
subsequently granted the petition and ordered the
XII. conduct of a joint certification election for the
Which of the following groups does not enjoy the teaching and non-teaching personnel of OLPCS.
right to self organization? (1%)
May OLPCS-TELU be considered a legitimate labor
(A) those who work in a non-profit charitable organization? (5%)
institution

(B) those who are paid on a piece-rate basis XVI.

Samahang East Gate Enterprises (SEGE) is a labor
(C) those who work in a corporation with less than organization composed of the rank-and-file
10 employees employees of East Gate Enterprises (EGE), the
leading manufacturer of all types of gloves and
(D) those who work as legal secretaries aprons.

EGE was later requested by SEGE to bargain

XIII. collectively for better terms and conditions of
Don Luis, a widower, lived alone in a house with a employment of all the rank -and-file employees of
large garden. One day, he noticed that the plants EGE. Consequently, EGE filed a petition for
in his garden needed trimming. He remembered certification election before the Bureau of Labor
that Lando, a 17-year old out-of-school youth, had Relations (BLR).
contacted him in church the other day looking for
work. He contacted Lando who immediately During the proceedings, EGE insisted that it should
attended to Don Luis’s garden and finished the job participate in the certification process. EGE
in three days. (4%) reasoned that since it was the one who filed the
petition and considering that the employees
(A) Is there an employer-employee relationship concerned were its own rank and-file employees, it
between Don Luis and Lando? should be allowed to take an active part in the
certification process.
(B) Does Don Luis need to register Lando with the
Social Security System (SSS)? Is the contention of EGE proper? Explain. (5%)

XIV. XVII.
Luisito has been working with Lima Land for 20 Philhealth is a government-owned and controlled
years. Wanting to work in the public sector, Luisito corporation employing thousands of Filipinos.
applied with and was offered a job at Livecor. Because of the desire of the employees of
Before accepting the offer, he wanted to consult Philhealth to obtain better terms and conditions of
you whether the payments that he and Lima Land employment from the government, they formed
had made to the Social Security System (SSS) can the Philhealth Employees Association (PEA) and
be transferred or credited to the Government demanded Philhealth to enter into negotiations
with PEA regarding terms and conditions of controversy which was within the jurisdiction of
employment which are not fixed by law. (4%) the Regional Trial Court (RTC).
(A) Are the employees of Philhealth allowed to
self-organize and form PEA and thereafter demand If you were the Labor Arbiter assigned to the case,
Philhealth to enter into negotiations with PEA for how would you rule on the company’s motion to
better terms and conditions of employment? dismiss? (5%)
(B) In case of unresolved grievances, can PEA
resort to strikes, walkouts, and other temporary
work stoppages to pressure the government to XX.
accede to their demands? Lito was anticipating the bonus he would receive
for 2013. Aside from the 13th month pay, the
company has been awarding him and his other co-
XVIII. employees a two to three months bonus for the
The procedural requirements of a valid strike last 10 years. However, because of poor over-all
include: (1%) sales performance for the year, the company
unilaterally decided to pay only a one month
(A) a claim of either unfair labor practice or bonus in 2013. Is Lito’s employer legally allowed to
deadlock in collective bargaining reduce the bonus? (4%)

(B) notice of strike filed at least 15 days before a

ULP-grounded strike or at least 30 days prior to XXI.
the deadlock in a bargaining grounded strike An accidental fire gutted the JKL factory in
Caloocan. JKL decided to suspend operations and
(C) majority of the union membership must have requested its employees to stop reporting for
voted to stage the strike with notice thereon work. After six (6) months, JKL resumed operations
furnished to the National Conciliation and but hired a new set of employees. The old set of
Mediation Board (NCMB) at least 24 hours before employees filed a case for illegal dismissal.
the strike vote is taken
If you were the Labor Arbiter, how would you
(D) strike vote results must be furnished to the decide the case? (4%)
NCMB at least seven (7) days before the intended
strike
XXII.
Despite a reinstatement order, an employer may
XIX. choose not to reinstate an employee if: (1%)
Lincoln was in the business of trading broadcast
equipment used by television and radio networks. (A) there is a strained employer-employee
He employed Lionel as his agent. Subsequently, relationship
Lincoln set up Liberty Communications to formally
engage in the same business. He requested Lionel (B) the position of the employee no longer exists
to be one of the incorporators and assigned to him
100 Liberty shares. Lionel was also given the title (C) the employer’s business has been closed
Assistant Vice-President for Sales and Head of
Technical Coordination. After several months, (D) the employee does not wish to be reinstated.
there were allegations that Lionel was engaged in
"under the table dealings" and received
"confidential commissions" from Liberty’s clients XXIII.
and suppliers. He was, therefore, charged with Luningning Foods engaged the services of Lamitan
serious misconduct and willful breach of trust, and Manpower, Inc., a bona fide independent
was given 48 hours to present his explanation on contractor, to provide "tasters" that will check on
the charges. Lionel was unable to comply with the food quality. Subsequently, these "tasters" joined
48 -hour deadline and was subsequently barred the union of rank -and-file employees of
from entering company premises. Lionel then filed Luningning and demanded that they be made
a complaint with the Labor Arbiter claiming regular employees of the latter as they are
constructive dismissal. Among others, the performing functions necessary and desirable to
company sought the dismissal of the complaint operate the company’s business. Luningning
alleging that the case involved an intra-corporate rejected the demand for regularization. On behalf
of the "tasters", the union then filed a notice of union decided to stage a strike. The management
strike with the Department of Labor and sought the assistance of the Secretary of Labor and
Employment (DOLE). In response, Luningning Employment, who assumed jurisdiction over the
sought a restraining order from the Regional Trial strike and issued a return-to-work order. The
Court (RTC) arguing that the DOLE does not have union defied the latter and continued the strike.
jurisdiction over the case since it does not have an Without providing any notice, Liwanag Corporation
employer-employee relationship with the declared everyone who participated in the strike
employees of an independent contractor. as having lost their employment. (4%)

If you were the RTC judge, would you issue a (A) Was Liwanag Corporation’s action valid?
restraining order against the union? (4%)
(B) If, before the DOLE Secretary assumed
jurisdiction, the striking union members
XXIV. communicated in writing their desire to return to
Lanz was a strict and unpopular Vice-President for work, which offer Liwanag Corporation refused to
Sales of Lobinsons Land. One day, Lanz shouted accept, what remedy, if any, does the union have?
invectives against Lee, a poor performing sales
associate, calling him, among others, a "brown
monkey." Hurt, Lee decided to file a criminal XXVII.
complaint for grave defamation against Lanz. The The jurisdiction of the National Labor Relations
prosecutor found probable cause and filed an Commission does not include: (1%)
information in court. Lobinsons decided to
terminate Lanz for committing a potential crime (A) exclusive appellate jurisdiction over all cases
and other illegal acts prejudicial to business. decided by the Labor Arbiter

Can Lanz be legally terminated by the company on (B) exclusive appellate jurisdiction over all cases
these grounds? (4%) decided by Regional Directors or hearing officers
involving the recovery of wages and other
monetary claims and benefits arising from
XXV. employer-employee relations where the aggregate
Lizzy Lu is a sales associate for Luna Properties. money claim of each does not exceed five
The latter is looking to retrench Lizzy and five thousand pesos (Php5,000)
other sales associates due to financial losses. Aside
from a basic monthly salary, Lizzy and her (C) original jurisdiction to act as a compulsory
colleagues receive commissions on the sales they arbitration body over labor disputes certified to it
make as well as cost of living and representation by the Regional Directors
allowances. In computing Lizzy’s separation pay,
Luna Properties should consider her: (1%) (D) power to issue a labor injunction

(A) monthly salary only

(B) monthly salary plus sales commissions

(C) monthly salary plus sales commissions, plus

cost of living allowance

(D) monthly salary plus sales commissions, plus

cost of living allowance and representation
allowance

XXVI.
Liwanag Corporation is engaged in the power
generation business. A stalemate was reached
during the collective bargaining negotiations
between its management and the union. After
following all the requisites provided by law, the