Explain the application of the Indeterminate. Sentence Law (ISL).

(5%)
SUGGESTED ANSWER
The court shall sentence the accused to an indeterminate sentence the maximum term of which
shall be that which, in view of the attending circumstances, could be properly imposed under the
rules of the Revised Penal Code, and the minimum of which shall be within the range of the
penalty next lower to that prescribed by the Code for the offense; and if the offense is punished
by any other law (special law); the court shall sentence the accused to an indeterminate sentence,
the maximum term of which shall not exceed the maximum. fixed by said law and the minimum
shall not be less than the minimum term prescribed by the same (Section 1, ISL, Act No. 4103 as
amended by Act No. 4225). The court must, instead of a single fixed penalty, except where the
imposable penalty is one (1) year or less, determine two penalties, referred to in the
indeterminate Sentence Law as the “maximum” and “minimum” terms.

II.
(A) Define maifeasance, misfeasance and nonfeasance. (2.5%)
(B) Differentiate wheel conspiracy and chain conspiracy. (2.5%)

SUGGESTED ANSWER
(A) “Malfeasance” is the doing of an act which a person ought not to do at all.
“Misfeasance” is the improper doing of an act which a person mayor might lawfully do.
“Nonfeasance” is the omission of an act which a person ought to do. — (Black’s Dictionary, 6th
Edition, West Publishing 1990)
(B) There are two structures of multiple conspiracies, namely: wheel or circle conspiracy and
chain conspiracy. A “wheel conspiracy” occurs when there is a single person or group (the hub)
dealing individually with two or more other persons or groups (the spokes). The spoke typically
interacts with the hub rather than with another spoke, in the event that the spoke shares a
common purpose to succeed; there is a single conspiracy. However, in the instances when each
spoke is unconcerned with the success of the other spokes, there are multiple conspiracies. A
“chain conspiracy”, on the other hand, exists when there is successive communication and
cooperation in much the same way as with legitimate business operations between manufacturer
and wholesaler, then wholesaler and retailer, and then retailer and consumer (Estrada V.
Sandiganbayan, G.R. No. 148965, February 26, 2002).
III.

Pedro is married to Tessie. Juan is the first cousin of Tessie, while in the market, Pedro saw a
man stabbing Juan. Seeing the attack on Juan, Pedro picked up a spade nearby and hit the
attacker on his head which caused the latter’s death.
Can Pedro be absolved of the killing on the ground that it is in defense of a relative? Explain.
(5%)
SUGGESTED ANSWER
No. The relatives of the accused for purpose of defense of relative under Article 11 (2) of the
Revised Penal Code are his spouse, ascendants, descendants, or legitimate, natural or adopted
brothers or sisters, or of his relatives by affinity in the same degrees, and those by consanguinity
within the fourth civil degree.

Relative by affinity within the same degree includes the ascendant, descendant, brother or sister
of the spouse of the accused. In this case, Juan is not the ascendant, descendant, brother or sister
of Tessie, the spouse of Pedro. Relative by consanguinity within the fourth civil degree includes
first cousin. But in this case Juan is the cousin of Pedro by affinity but not by consanguinity,
Juan, therefore, is not a relative of Pedro for purpose of applying the provision on defense of
relative. Pedro, however, can invoke defense of a stranger. Under the revised Penal Code, a
person who defends a person who is.not his relative may invoke the defense of a stranger
provided that all its elements exist, to wit: (a) unlawful aggression, (b) reasonable necessity of
the means employed to prevent or repel the attack; and (c) the person defending be not induced
by revenge, resentment, or other evil motive.

IV

Jojo and Felipa are husband and wife. Believing that his work as a lawyer is sufficient to provide
for the needs of their family, Jojo convinced: Felipa to be a stay-at-home mom and care for their
children. One day, Jojo arrived home earlier than usual and caught Felipa in the act of having
sexual inter course with their female nanny, Alma, in their matrimonial bed. In a fit of rage, Jojo
retrieved his revolver from inside the bedroom cabinet and shot Alma, immediately killing her.

(A) Is Art. 247 (death or physical injuries infiicted under exceptional

circumstances) of the Revised Penal Code (RPC) applicable in this case given that the paramour
was of the same gender as the erring
spouse? (2.5%)

(B) Is Felipa liable for adultery for having sexual relations with Alma? (2.5%)

SUGGESTED ANSWER

(A) No. Art. 247 of the Revised Penal Code is not applicable.
Under the Revised Penal Code, for Art. 247 to apply, the offender must catch his or her spouse in
the act of committing sexual intercourse with another person. In People of the Philippines v.
Marciano Gonzales (G.R. No. 46310, October 31, 1939), the Supreme Court held that to avail of
the privilege under Art. 247, the accused should surprise his wife in the “very act if sexual
intercourse”. Sexual intercourse gener ally presupposes the penetration of the man’s sexual organ
into that of a woman’s. In this case, the paramour was of the same gender as the erring spouse.
As such, there is legally, no sexual intercourse to speak of, hence, Art. 247 is not applicable.

ALTERNATIVE ANSWER

(A) Yes, Art. 247 (death or physical injuries inflicted under exceptional circumstances) of the
Revised Penal Code is applicable.
The requisites of Art. 247 are: (1) a legally married person surprises his spouse in the act of
committing sexual intercourse with another person; (2) he or she kills any or both of them or
inflicts upon any or both of them any serious physical injury “while in the act” or immediately
thereafter; and (3) he has not promoted or facilitated the prostitution of his wife or that he or she
has not consented to the infidelity of the other spouse. All the foregoing requisites are present in
the case at hand. It is a given in the problem that Jojo caught Felipa and Alma in the “act of
sexual intercourse.” The law did not qualify that the other person with whom the spouse be
caught committing sexual intercourse be “male or female.” Hence, the gender of the paramour,
Alma, being of the same gender as the erring spouse, Felipa, is immaterial, The answer given
presupposes that Jojo and Felipa are legally married.
(B) No. Under Article 333 of the Revised Penal Code, adultery is
committed by any married woman who shall have sexual intercourse with a “man” not her
husband. Thus, Felipa in having homosexual intercourse with Alma, a “woman,” is not
committing adultery.
V.
Governor A was given the amount of P10 million by the Department of Agriculture for the
purpose of buying seedlings to be distributed to the farmers. Supposedly intending to modernize
the farming industry in his . province, Governor A bought farm equipment through direct
purchase from XY Enterprise, owned by his kumpare B, the alleged exclusive distributor of the
said equipment. Upon inquiry, the Ombudsman discovered that Bhas a pending patent
application of the said farm equipment. Moreover, the equipment purchased turned out to be
overpriced.
What crime or crimes, if any, were committed by Governor A? Explain. (5%)

SUGGESTED ANSWER

Governor A committed the crimes of: (1) Technical Malversation; and (2) Violation of Sections
3 (e) and (g) of Republic Act No. 3019. Governor A committed the crime of illegal use of public
funds or property punishable under Art. 220 of the Revised Penal Code. This offense is also
known as technical malversation.
The crime has three elements: a) that the offender is an accountable public officer; b) that he
applies public funds or property under his administration to some public use; and c) that the
public use for which such funds or property had been applied is different from the purpose for
which they were originally appropriated by law or ordinance (Ysidoro v. People, G.R. No.
192330; November 14, 2012).

The amount of P 10 M granted by the Department of Agriculture to Governor A, an accountable

public officer, is specifically appropriated for the purpose of buying seedlings to be distributed to
the farmers. Instead, Governor A applied the amount to acquire modern farm equipment through
direct purchase from XY Enterprise owned by his kumpare. The law punishes the act of diverting
public funds earmarked by law or ordinance for a specific public purpose to another public
purpose, hence, the liability for technical malversation.

Governor A can also be held liable for Violation of Section 3 (e) of Republic Act No. 3019 or the
Anti-Graft and Corrupt Practices Act; which has the following elements: (1) the accused is a
public officer discharging administrative, judicial or official functions; (2) he must have acted
with manifest partiality; evident bad faith or gross inexcusable negligence; and (3) his action
caused any undue injury to any party, including the government, or gave any private party
unwarranted benefits, advantage or preference in the discharge of his functions. The facts show
that the first element is present. The second element is likewise present because, “through
manifest partiality” in favoring his kumpare, Governor A did not hold a public bidding and
directly purchased the farm equipment from the latter. With respect to the third element,
Governor A’s actions caused undue injury to the government as well as the farmers who were
deprived of the seedlings. His acts likewise gave his kumpare, a private party, the unwarranted
benefit, advantage or preference, to the exclusion of other interested suppliers.

The act committed by the Governor is also in violation of Section 3 (g) of RA No. 3019 for
entering a contract on behalf of the government which is . manifestly and grossly
disadvantageous to the same.

VI.

Ofelia; engaged in the purchase and sale of jewelry, was charged with violation of PD 1612,
otherwise known as the Anti-Fencing Law, for having been found in possession of recently
stolen jewelry valued at P100,000.00 at her jewelry shop. Her defense is that she merely bought
the same from Antonia and produced a receipt covering the sale. She presented other receipts
given to her by Antonia representing previous transactions. Convicted of the charge, Ofelia
appealed, arguing that her acquisition of the jewelries resulted from a legal transaction and that
the prosecution failed to prove that she knew or should have known that the pieces of jewelry
which she bought from Antonia were proceeds of the crime of theft.

(A) What is a “fence” under PD 1612? (2.5%)

(B) is Ofelia liable under the Anti-Fencing Law? Explain. (2.5%)
SUGGESTED ANSWER

(A) Fencing is the act of any person who, with intent to gain for himself or for another, shall.buy,
receive, possess, keep, acquire, conceal, sell or dispose of, or shall buy and sell, or in any other
manner deal in any article, item, object or anything of value which he knows, or should be
known to him, to have been derived from the proceeds of the crime of robbery or theft (Section 2
of PD 1612).

(B) No. Ofelia is not liable under the Anti-Fencing Law. While under the said law mere
possession of any good, article, item, object, or anything of value which has been the subject of
robbery or thievery shall be prima facie evidence of fencing, such evidence when sufficiently
overturned constitutes a defense.

In this case, Ofelia’s defense that she merely acquired the jewelries through a legitimate
transaction is sufficient. Further, there is no other circumstance as regards the jewelries which
would indicate to Ofelia, an innocent purchaser, that the jewelries were the subject of theft.
There was even a receipt produced by Ofelia for the transaction.
ALTERNATIVE ANSWER
(B) Yes. Under Section 5 of PD No. 1612, mere possession of any good, article, item, object, or
anything of value which has been the subject of robbery or thievery shall be prima facie evidence
of fencing. Failure to prove that Ofelia knows; or should have known that the jewelry is stolen,
therefore, is not a defense since this element is presumed to be present under Section 5 because
Ofelia is in possession of this stolen property. Moreover, there is no showing that Ofelia secured
a permit or clearance from the PNP station commander of the place of sale required in Section 6
of PD No. 1612 (Suggested Answer by UP Law Center to a 1995 Bar question).

ALTERNATIVE ANSWER

(B) No. Although Ofelia as a possessor of a stolen property is presumed to have committed the
crime of fencing such presumption is overcome by presentation of the receipts showing that her
transaction is legitimate. The logical inference follows that Ofelia had no reason to suspect that
the jewelry was stolen. Admittedly, there is no jurisprudence to the effect that a receipt is a
sufficient defense against charges of fencing, but logically and for all practical purposes, such
receipt is proof-although disputable-that the transaction in question is above-board and
legitimate. Absent other evidence, the presumption of innocence remains (D.M. Consunji, Inc. v.
Esguerra, G.R. No. 118590, July 30, 1996).

VII,

Val, a Nigerian, set up a perfume business in the Philippines. The investors would buy the raw
materials at a low price from Val. The raw materials consisted of powders, which the investors
would mix with water and let stand until a gel was formed. Vai made a written commitment to
the investors that he would buy back the gel at a higher price, thus assuring, the investors of a
neat profit. When the amounts to be paid by Val to the investors reached millions of pesos, he
sold all the equipment of his perfume business, absconded with the money, and is nowhere to be
found.
What crime or crimes were committed, if any? Explain. (5%)
SUGGESTED ANSWER.
The crime committed is estafa through false pretenses (Art. 315 par. 2(a)). Val defrauded the
investors by falsely pretending to possess business or imaginary transactions. The fact that he
sold all the equipment of his perfume business, and absconded with the money when the amounts
to be paid by him to the investors reached millions of pesos shows that the transaction or his
business is imaginary, and he defrauded the victims.
VIII

Charges d’affairės Volvik of Latvia suffers from a psychotic disorder after he was almost
assassinated in his previous assignment. One day, while shopping in a mall, he saw a group of
shoppers whom he thought were the assassins who were out to kill him. He asked for the gun of
his escort and shot ten (10) people and wounded five (5) others before he was subdued. The
wounded persons required more than thirty (30) days of medical treatment.

What crime or crimes, if any, did he commit? Explain. (5%)

.
SUGGESTED ANSWER
Volvik committed five frustrated murders for the unwounded victims and five frustrated murders
for the wounded victims. Treachery is present since the sudden attack rendered the victims
defenseless. The nature of the weapon used in attacking the victims and extent of the wounds
sustained.by the five victims showed intent to kill. His psychotic condition is not an exempting
circumstance of insanity in the absence of showing that there is a complete deprivation of
intelligence in accordance with the cognition test. However, he is immune from criminal
prosecution. Since the position of Volvik as charges de affaires is diplomatic, he is vested with
blanket diplomatic immunity from criminal suit (Minucher v. Hon. CA, G.R. No. 142396,
February 11, 2003).

IX

A is the driver of B’s Mercedes Benz car. When B was on a trip to Paris, A used the car for a joy
ride with C whom he is courting. Unfortunately, A met an accident. Upon his return, B came to
know about the unauthorized use of the car and sued À for qualified theft. B alleged that A took
and used the car with intent to gain as he derived some benefit or satisfaction from its use. On the
other hand, A argued that he has no intent of making himself the owner of the car as he in fact
returned it to the garage after the joy ride. What crime or crimes, if any, were committed?
Explain. (5%)
SUGGESTED ANSWER

The crime committed by A is carnapping. The unlawful taking of motor vehicles is now covered
by the Anti-Carnapping Law (R.A. 6539 as amended), and not by the provisions on qualified
theft or robbery (People v. Bustinera, G.R. No. 148233, June 8, 2004). The concept of
carnapping is the same as that of robbery and theft. Hence, rules applicable to theft or robbery
are also applicable to carnapping (People v. Asamuddin, G.R. No. 213913, September 2, 2015).
In theft, unlawful taking should be understood within the Spanish concept of apoderamiento. In
order to constitute apoderamiento, the physical taking must be coupled with the intent to
appropriate the object, which means intent deprive the lawful owner of the thing, whether
permanently or temporarily (People v. Valenzuela, G. R. No. 160188, June 21, 2007). In this
case, A took the car without consent of B with intent io temporarily deprive him of the car.
Although the taking was “temporary” and for a “joy ride”, the Supreme Court in People v.
Bustinera, (supra), sustains as the better view that which holds that when a person, either with
the object of going to a certain place, or learning how to drive, or enjoying a free ride, takes
possession of a vehicle belonging to another, without the consent of its owner, he is guilty of
theft because by taking possession of the personal property belonging to another and using it, his
intent to gain is evident since he derives therefrom utility; satisfaction, enjoyment and pleasure.

X.
The Royal S.S. Maru, a vessel registered in Panama, was 300 nautical miles from Aparri,
Cagayan when its engines malfunctioned, The Captain ordered his men to drop anchor and repair
the ship. While the officers and crew were asleep, armed men boarded the vessel and took away
several crates containing yaluable items and loaded them in their own motorboat. Before the
band left, they planted an explosive which they detonated from a safe distance. The explosion
damaged the hull of the ship, killed ten (10) crewmen, and injured fifteen (15) others.
What crime or crimes, if any, were committed? Explain. (5%)

SUGGESTED ANSWER
The crime of Qualified Piracy under Article 123 of the Revised Penal Code has been committed,
the elements of piracy being present, namely, (1) that the vessel is on the high seas; (2) that the
offenders are not members of its complement or passenger of the vessel; and (3) that the
offenders (a) attack or seize that vessel or (b) seize the whole or part of the cargo of said vessel,
its equipment or personal belongings of its complement or passengers. The latter act is
committed when the offenders took away several crates containing valuable items and loaded
them in their own motorboat.

The crime of piracy is qualified because: (1) the offenders have seized the vessel by boarding;
and (2) the crime of piracy was accompanied by murder and physical injuries. The facts show
that the offenders planted an explosive in the vessel which they detonated from a safe distance
and the explosion killed ten (10) crewmen and injured fifteen (15) others. The number of persons
killed on the occasion of piracy is not material. The law considers qualified piracy as a special
complex crime regardless of the number of victims (People v. Siyoh, G.R. No. L-57292,
February 18, 1986).

XI

Angelino, a Filipino, is a transgender who underwent gender reassignment and had implants in
different parts of her body. She changed her name to Angelina and was a finalist in the Miss Gay
International. She came back to the Philippines and while she was walking outside her home, she
was abducted by Max and Razzy who took her to a house in the province. She was then placed in
a room and Razzy forced her to have sex with him at knife’s point. After the act, it dawned upon
Razzy that Angelina is actually a male. Incensed, Razzy called Max to help him beat Angelina.
The beatings that Angelina received eventually caused her death.
What crime or crimes, if any, were committed? Explain. (5%)
SUGGESTED ANSWER

Razzy is liable for kidnapping with homicide. Abducting Angelino is not forcible abduction
since the victim in this crime must be a woman. Gender. reassignment will not make him a
woman within the meaning of Article 342 of the Revised Penal Code. There is no showing,
moreover, that at the time abduction is committed with lewd design; hence, his abduction
constitutes illegal detention. Since Angelino was killed in the course of the detention, the crime
constitutes kidnapping and serious illegal detention with homicide under Article 267. Having
sexual intercourse with Angelino is not rape through sexual inter course since the victim in this
crime must be a woman. This act is not rape through sexual assault, either, Razzy did not insert
his penis into the anal orifice or mouth of Angelino or an instrument or object into anal orifice or
genital orifice, hence, this act constitutes acts of lasciviousness under Article 336. Since the acts
of lasciviousness is committed by reason or occasion of kidnapping, it will be integrated into one
and indivisible felony of kidnapping with homicide (People v. De Leon, G.R. No. 179943, June
26, 2009; People v. Jugueta, G.R. No. 202124, April 05, 2016; People v. Laog, G.R. No. 178321,
October 5, 2011; People v. Larronaga, G.R. Nos. 138874-75, February 3, 2004).
Max is liable for kidnapping with homicide as an accomplice since he concurred in the criminal
design of Razzy in depriving Angelino his liberty and supplied the former material aid in an
efficacious way by helping him beat the latter.

XII

Arnold, 25 years of age, was sitting on a bench in Luneta Park watching the statue of Jose Rizal
when, without his permission, Leilani, 17 years of age, sat beside him and asked for financial
assistance, allegedly for payment of her tuition fee, in exchange for sex. While they were
conversing, police operatives arrested and charged him with violation of Section 10 of RA 7610
(Special Protection of Children against Child Abuse, Exploitation and Discrimination Act),
accusing him of having in his company a minor, who is not related to him, in a public place. It
was established that Arnold was not in the performance of a sociai, moral and legal duty at that
time.
Is Arnold liable for the charge? Explain. (5%).

SUGGESTED ANSWER

No, Arnold is not liable. Under Section 10 of RA No. 7610, any person who shall keep or have
in his company a minor, twelve (12) years or under or who in ten (10) years or more his junior in
any public or private place, hotel, motel, beer joint, discotheque, cabaret, pension house, sauna or
massage parlor, beach and/or other tourist resort or similar places is liable for child abuse.

Arnold is not liable for the charge. To be held liable under Section 10 (6) of RA No. 7610, it is
indispensable that the child in the company of the offender must be 12 years or under or who in
10 years or more his junior in a public place. In this case, Leilani is 17 years of age, and only 8
years younger than Arnold.

Moreover, Leilani sat beside Arnold without his permission, hence, he is not in the company of a
child in a public place.

Lastly, applying the episdem generis principle, Arnold is not liable for child abuse because
Luneta is not a place similar to hotel, motel, beer joint, discotheque, cabaret, pension house,
sauna or massage parlor, beach and/or other tourist resort.

XIII

Domingo is the caretaker of two (2) cows and two (2) horses owned by Hannibal. Hannibal told
Domingo to lend the cows to Tristan on the condition that the latter will give a goat to the former
when the cows are returned. Instead, Tristan sold the cows and pocketed the money. Due to the
neglect of Domingo, one of the horses was stolen. Knowing that he will be blamed for the loss,
Domingo slaughtered the other horse, got the meat, and sold it to Pastor. He later reported to
Hannibal that the two horses were stolen.
(A) What crime or crimes, if any, did Tristan commit? Explain. (2.5%)

(B) What crime or crimes, if any, were committed by Domingo? Explain. (2.5%)

SUGGESTED ANSWER

(A) Tristan is liable for Estafa through Misappropriation under Article 315 of the Revised Penal
Code. He received the cows under obligation involving the duty to return the same thing
deposited, and acquired legal or juridical possession in so doing, since their transaction is a
commodatum. Selling the cows as if he owned it constitutes misappropriation or conversion
within the contemplation of Article 315.
(B) Domingo is liable for qualified theft under Article 308 of the Revised Penal Code. Although
Tristan received the horse with the consent of the owner, Hannibal, his possession is merely
physical or de facto since the former is an employee of the latter. Slaughtering the horse, which
he physically possessed, and selling its meat to Pastor shall be considered as taking without
consent of the owner with intent to gain, which constitutes theft (Balerta v. People, G.R. No.
205144, November 26, 2014), Since the horse is accessible to him, the theft is qualified by the
circumstance of abuse of confidence (Yongco v. People, G.R. No. 209373, July 30, 2014);
Further, Domingo.committed the crime of violation of the Anti-Cattle Rustling Law of 1974
(P.D. No. 533). Cattle rustling is the taking away by any means, method or scheme, without the
consent of the owner/ raiser, of large cattle, which includes cows and horses, whether or not for
profit or gain, or whether committed with or without violence against or intimidation of any
person or force upon things. It includes the killing of large cattle, or taking its meat or hide
without the consent of the owner/raiser.

XIV

Dimas was arrested after a valid buy-bust operation. Macario, the policeman who acted as
poseur-buyer, inventoried and photographed ten (10) sachets of shabu in the presence of a
barangay tanod. The inventory was signed by Macario and the tanod, but Dimas refused to sign.
Aş Macario was stricken with flu the day after, he was able to surrender the sachets to the PNP
Crime Laboratory only after four (4) days. During pre-trial, the counsel de oficio of Dimas
stipulated that the substance contained in the sachets examined by the forensic chemist is in fact
methamphetamine hydrochloride or shabu. Dimas was convicted of violating Section 5 of RA
9165. On appeal, Dimas questioned the admissibility of the evidence because Macario failed to
observe the requisite “chain of custody” of the alleged “shabu” seized from him. On behalf of the
State, the Solicitor General claimed that despite non-compliance with some requirements, the
prosecution was able to show that the integrity of the substance was preserved. Moreover, even
with some deviations from the requirements, the counsel of Dimas stipulated that the substance
seized from Dimas was shabu so that the conviction should be affirmed.
(A) What is the “chain of custody” requirement in drug offenses? (2.5%)
(B) Rule on the contention of the State. (2.5%)
SUGGESTED ANSWER
(A) To establish the chain of custody, the prosecution must show the movements of the
dangerous drugs from its confiscation up to its presentation in court. The purpose of establishing
the chain of custody is to ensure the integrity of the corpus delicti (People v. Magat, G.R. No.
179939, September 29, 2008). The following links that must be established in the chain of
custody in a buy-bust situation are: first, the seizure and marking, if practicable, of the illegal
drug recovered from the accused by the apprehending officer; second, the turnover of the illegal
drug seized by the apprehending officer to the investigating officer; third, the turnover by the
investigating officer of the illegal drug to the forensic chemist for laboratory examination; and
fourth, the turnover and submission of the marked illegal drug seized from the forensic chemist
to the court (People v. Kamad, G.R. No. 174198, January 29, 2010)
To establish the first link in the chain of custody, and that is the seizure of the drug from the
accused, the prosecution must comply with Section 21 of RA No. 9165, which requires that the
apprehending officer after the confiscation of drug must immediately physically inventory and
photograph the same in the presence of the accused or the person from whom such items were
confiscated, or his representative or counsel, a representative from the media and the Department
of Justice (DOJ), and any elected public official who shall be required to sign the copies of the
inventory and be given a copy thereof and within twenty-four (24) hours upon such confiscation,
the drug shall be submitted to the.PDEA Forensic Laboratory for examination.
(B) The contention of the State is meritorious. Macario, the policeman failed to comply with
Section 21 of RA NO 9165 since the inventory and photograph of the drugs was only made in
the presence of barangay tanod and the same was not submitted to the PNP Crime Laboratory
within 24 hours. The rule is settled that failure to strictly comply with Section 21(1), Article il of
R.A. No. 9165 does not necessarily render an accused’s arrest illegal or the items seized or
confiscated from him inadmissible. The most important factor is the preservation of the integrity
and evidentiary value of the seized item. Moreover, the issue of non-compliance with Section 21
of RA No. 9165 cannot be raised for the first time on appeal (People v. Badilla, G.R. No.
218578, August 31, 2016).

XV
Pedro, Pablito, Juan and Julio, all armed with bolos, robbed the house where Antonio, his wife,
and three (3) daughters were residing. While the four were ransacking Antonio’s house, Julio
noticed that one of Antonio’s daughters was trying to escape. He chased and caught up with her
at a thicket somewhat distant from the house, but before bringing her back, raped her.

(A) What crime or crimes, if any, did Pedro, Pablito, Juan and Julio
commit? Explain. (2.5%)
(B) Suppose, after the robbery, the four took turns in raping the three
daughters inside the house, and, to prevent identification, killed the whole family just before they
left. What crime or crimes, if any, did the four malefactors commit? (2.5%)
SUGGESTED ANSWER

(A) julio is liable for special complex crime of robbery with rape since he raped the daughter of
Antonio on occasion or by reason of robbery. Even if the place of robbery is different from that
of rape, the crime is still robbery with rape since what is important is the direct connection
between the two crimes (People v. Conastre, G.R. No. L-2055, December 24, 1948). Rape was
not separate by distance and time from the robbery.

Pedro, Pablito and Juan are liable for robbery by band. There is band in this case since more than
three armed malefactors take part in the commission of a robbery. Under Article 296 of the
Revised Penal Code, any member of a band, who is present at the commission of a robbery by
the band, shall be punished as principal of any of the assaults committed by the band, unless it be
shown that he attempted to prevent the same. The assault mentioned in Article 296 includes rape
(People v. Hamiana, G.R. Nos. L-3491-94, May 30, 1971). They are not liable, however, for rape
under Article 296 since they were not present when the victim was raped and thus, they had no
opportunity to prevent the same. They are only liable for robbery by band (People v.
Anticamaray, G.R. No. 178771, June 8, 2011).

(B) They are liable for a special complex crime of robbery with homicide.
In this special complex crime, it is immaterial that several persons are killed. It is also immaterial
that aside from the homicides, rapes are committed by reason or on the occasion of the crime.
Since homicides are committed by or on the occasion of the robbery, the multiple rapes shall be
integrated into one and indivisible felony of robbery with homicide (People v. Diu, G.R. No.
201449, April 3, 2013).

XVI

A is the president of the corporate publisher of the daily tabloid, Bulgar; B is the managing
editor, and C is the author/writer. In his column, Direct Hit, Cwrote about X, the head examiner
of the BIR-RDO Manila as follows:

“Itong si-X ay talagang BUWAYA kaya ang logo ng Lacoste T shirt niya ay napaka suwapang
na buwaya. Ang nickname niya ay si Atty. Buwaya. Ang PR niya ay 90% sa bayad ng taxpayer
at ang para sa RP ay 10% lang. Kaya ang baba ng collection ng RDO niya. Masyadong
magnanakaw si X at dapat tanggalin itong bundat na bundat na buwaya na ito at napakalaki na
ng kurakot.”
A, Band C were charged with libel before the RTC of Manila. The three (3) defendants argued
that the article is within the ambit of qualified privileged communication; that there is no malice
in law and in fact; and, that – defamatory comments on the acts of public officials which are
related to the discharge of their official duties do not constitute libel.
Was the crime of libel committed? If so, are A, B, and Cail liable for the crime? Explain. (5%)

SUGGESTED ANSWER
Yes. The crime of libel is committed. Fair comment on acts of public officers related to the
discharge of their duties is a qualified privileged communication, hence, the accused can still be
held liable for libel if actual malice is shown. In fair comment, actual malice can be established
by showing that comment was made with knowledge that it was false or with reckless disregard
of whether it was false or not (Guingguing v. the Honorable Court of Appeals, G.R. No. 128959,
September 30, 2005). Journalists bear the burden of writing responsibly when practicing their
profession, even when
· writing about public figures or matters of public interest. The report made by C describing a
lawyer in the Bureau of Customs as corrupt cannot be considered as “fair” and “true” since he
did not do research before making his allegations, and it has been shown that these allegations
were baseless. The articles are not “fair and true reports,” but merely wild accusations. He has
written and published the subject articles with reckless disregard of whether the same were false
or not (Erwin Tulfo v. People, G.R. No. 161032, September 16, 2008). A, president of the
publishing company, B, managing editor, and C, writer of the defamatory articles, are all liable
for libel. Under Article 360 of the Revised Penal Code, the publisher, and editor of newspaper,
shall be responsible for the defamations contained therein to the same extent. The law makes the
publisher and editor liable for libel as if they were the author (Tulfo v. People, supra).

XVII
Braulio invited lulu, his I l-year old stepdaughter; inside the master. bedroom. He pulled out a
knife and threatened her with harm unless she submitted to his desires. He was touching her
chest and sex organ when his wife caught him in the act. The prosecutor is unsure whether to
charge Braulio for acts of lasciviousness under Art. 336 of the RPC; for lasciv ious conduct
under RA 7610 (Special Protection against Child Abuse, Exploitation and Discrimination Act);
or for rape under Art. 266-A of the RPC. What is the crime committed? Explain. (5%)

SUGGESTED ANSWER
The acts of Braulio of touching the chest and sex organ of Lulu, who is under 12 years of age,
are merely acts of lasciviousness and not attempted rape because intent to have sexual
intercourse is not clearly shown (People v. Banzuela, G.R. No. 202060, December 11, 2013). To
be held liable of attempted rape, it must be shown that the erectile penis is in the position to
penetrate (Cruz v. People, G.R. No. 166441, October 8, 2014) or the offender actually
commenced to force his penis into the victim’s sexual organ (People v. Banzuela, supra).
The same acts of touching the chest and sex organ of Lulu under psychological coercion or
influence of her stepfather, Braulio, constitutes sexual abuse under Section 5 (b) of RA No. 7610
(People v. Opiana, G.R. No. 133922, February 12, 2001),

Since the requisites for acts of lasciviousness under Article 336 of the Revised Penal Code are
met, in addition to the requisites for sexual abuse under Section 5 of RA No. 7610, and the
victim is under 12 years of age, Braulio shall be prosecuted for acts of lasciviousness under
Revised Penal Code but the penalty imposable is that prescribed by RA No. 7610 (Amployo v.
People, G.R. No. 157718, April 26, 2005). Under Section 5 (6) of RA No: 7610, when the victim
(child subjected to sexual abuse) is under 12 years of age, the perpetrators shall be prosecuted
(for acts of lascivi ousness) under Article 336 of the Revised Penal Code: Provided, That the
penalty for lascivious conduct when the victim is under 12 years of age shall be reclusion
temporal in its medium period.
XVIII

Lina worked as a housemaid and yaya of the one week old son of the spouses John and Joana.
When Lina learned that her 70-year old mother was seriously ill, she asked John fora cash
advance of P20,000.00, but the latter refused. In anger, Lina gagged the mouth of the child with
stockings, placed him in a box sealed it with masking tape, and placed the box in the attic. Lina
then left the house and asked her friend Fely to demand a “P20,000.00 ransom for the release of
the spouses’ child to be paid within twenty-four hours. The spouses did not pay the ransom.
After a couple. of days, John discovered the box in the attic with his child already dead.
According to the autopsy report, the child died of asphyxiation barely minutes after the box was
sealed.

What crime or crimes, if any, did Lina and Fely commit? Explain. (5%)
SUGGESTED ANSWER

Lina is liable for murder. Gagging the mouth of the child with stockings, placing him in a box,
sealing it with masking tape, and placed the box in the attic were only methods employed by the
defendant in committing : murder qualified by the circumstance of treachery (People v. Lora,
G.R. No. L-49430, March 30, 1982). Taking advantage of the defenseless condition of the victim
by reason of his tender age in killing him is treachery (People v. . Fallorina, G.R. No. 137347,
March 4, 2004). She is not liable for kidnapping with murder, the essence of which is the actual
confinement or restraint of the victim or the deprivation of his liberty. In this case, the victim
was not deprived of liberty since he immediately died. The demand for ransom did not convert
the offense into kidnapping with murder. The defendant was well aware that the child would be
suffocated to death in a few moments after she left: The demand for ransom is only a part of the
diabolic scheme of the defendant to murder the child, to conceal his body and then demand
money before the discovery of the cadaver (People v.Lora; supra). Fely is not liable for murder
as principal or accomplice. Since Fely did not participate in the actual killing of the child, she
can only be held liable for murder as principal or accomplice on the basis of conspiracy or
community of design. But in this case, there is neither conspiracy nor community of design to
commit murder since her criminal intention pertains to kidnapping for ransom. Moreover, her
participation of demanding ransom for the release of the child is not connected to murder Neither
is Fely liable for kidnapping for ransom. Her criminal mind to assist Lina in committing
kidnapping for ransom is not constitutive of a felony. Mens rea without actus reus is not a crime.

XIX

Romeo and Julia have been married for twelve (12) years and had two (2) children. The first few
years of their marriage went along smoothly. However, on the fifth year onwards, they would
often quarrel when Romeo comes home drunk. The quarrels became increasingly violent,
marked by quiet periods when Júlla would leave the conjugal dwelling. During these times of
quiet, Romeo would “court” Julia with flowers and chocolate and convince her to return home,
telling her that he could not live without her; or Romeo would ask Julia to forgive him, which
she did, believing that it she humbled herself, Romeo would change: After a month of marital
bliss, Romeo would return to his drinking habit and the quarrel would start 7 again; verbally at
first, until it would escalate to physical violence. One night, Romeo came home drunk and went
straight to bed. Fearing the onset of another violent fight, Julia stabbed Romeo while he was
asleep. A week later, their neighbors discovered Romeo’s rotting corpse on the marital bed. Julia
and the children were nowhere to be found. Julia was charged with parricide. She asserted
“battered woman’s syndrome” as her defense.

(A) Explain the “cycle of violence.” (2.5%)

(B) is Julia’s “battered woman’s syndrome” defense meritorious? Explain. (2.5%)

SUGGESTED ANSWER
(A) The battered woman syndrome is characterized by the so-called
“cycle of violence,” which has three phases: (1) the tension-building phase; (2) the acute
battering incident; and (3) the tranquil, loving (or, at least, nonviolent) phase. During the tension-
building phase, minor battering occurs-it could be verbal or slight physical abuse or another form
of hostile behavior. The woman tries to pacify the batterer through a kind, nurturing behavior; or
by simply staying out of his way. The acute battering incident is characterized by brutality,
destructiveness and, sometimes, death. The battered woman deems this incident as unpredictable,
yet also inevitable. During this phase, she has no control; only the batterer may put an end to the
violence. The final phase of the cycle of violence begins when the acute battering incident ends.
During this tranquil period, the couple experience profound relief.
(B) Yes. Under Section 3 (c) of RA NO. 9262, “Battered Woman Syndrome” refers to a
scientifically defined pattern of psychological and behavioral symptoms found in women living
in battering relationships as a result of “cumulative abuse”. Under Section 3 (b), “Battery” refers
to an act of inflicting physical harm upon the woman or her child resulting in physical and
psychological or emotional distress (Section 3). In sum, the defense of Battered Woman
Syndrome can be invoked if the woman in marital relationship with the victim is subjected to
cumulative abuse or battery involving the infliction of physical harm resulting to the physical
and psychological or emotional distress. Cumulative means resulting from successive addition.
In sum, there must be “at least two battering episodes” between the accused and her intimate
partner and such final episode produced in the battered person’s mind an actual fear of an
imminent harm from her batterer and an honest belief that she needed to use force in order to
save her life (People v. Genosa, G.R. No. 135981, January 15, 2004). In this case, because of the
battering episodes, Julia, feared the onset of another violent fight and honestly believed the need
to defend herself even if Romeo had not commenced an unlawful aggression. Even in the
absence of unlawful aggression, however, Battered Woman Syndrome is a defense. Under
Section 27 of RA No. 9262, Battered Woman Syndrome is a defense notwithstanding the
absence of any of the elements for justifying circumstances of self-defense under the Revised
Penal Code such as unlawful aggression (Section 26 of RA No. 9262).

XX

A, an OFW, worked in Kuwait for several years as a chief accountant, religiously sending to his
wife, B, 80% of all his earnings. After his stint abroad, he was shocked to know that B became
the paramour of a married man, C, and that all the monies he sent to B were given by her to C.
To avenge his honor, A hired X, Y and Z and told them to kidnap C and his wife, D, so that he
can inflict injuries on C to make him suffer, and humiliate him in front of his wife, X, Y and Z
were paid P20,000. Each and were promised a reward of P50,000.00 each once the job is done.
At midnight, A, with the fully armed X, Y and Z, forcibiy opened the door and gained entrance
to the house of C and D. C put up a struggle before he was subdued by A’s group. They boarded
C and D in a van and brought the two to a small hut in a farm outside Metro Manila. Both hands
of C and D were tied. With the help of X, Y and Z, A raped D in front of C. X, Y and Z then
took turns in raping D, and subjected C to torture until he was black and blue and bleeding
profusely from several stab wounds. A and his group set the hut on fire before leaving, killing
both C and D. X, Y and Z were paid their reward. Bothered by his conscience, A surrendered the
next day to the police, admitting the crimes he committed.

As the RTC judge, decide what crime or crimes were committed by A, X, Y and Z, and what
mitigating and aggravating circumstances will be applied in imposing the penalty. Explain. (5%)
SUGGESTED ANSWER

A, X, Y and Z are liable for two counts of kidnapping with murder qualified by means of fire,
since C and D were killed in the course of the detention. In a special complex crime of
kidnapping with murder, it is immaterial that other crimes were committed such as multiple
rapes and arson.

Since multiple rapes and arson are committed by reason or on occasion of kidnapping, they shall
be integrated into one and indivisible felony of kidnapping with murder (People v. Larranaga,
G.R. Nos. 138874-75, January 31, 2004).
The mitigating circumstances of passion and voluntary surrender can be appreciated in favor of
A. The aggravating circumstances of unlawful entry, by means of fire, and treachery can be
appreciated against A, X, Y and Z.

What does doing business in the Philippines under the Foreign Investment Act of 1991 mean?
(5%)

SUGGESTED ANSWER

The phrase “doing business in the Philippines“ under the Foreign Investments Act of 1991
include soliciting orders; service contracts; opening offices, whether called liaison offices or
branches; appointing representatives or distributors domiciled in the Philippines or who in any
calendar year stay in the country for a period or periods totaling 1802 days or more; participating
in the management, supervision or control of any domestic business, firm, entity or corporation
in the Philippines; and any other act or acts that imply continuity of commercial dealings or
arrangements, and contemplate to that extent the performance of acts or works; or the exercise of
some of the functions normally incident to and in progressive prosecution of commercial gain or
of the purpose or object of the business organization; provided that passive equity investment
shall not be construed as doing business.

II.

Jason is the proud owner of a newly-built house worth P5 Million. As a protection against any
possible loss or damage to his house, Jason applied for a fire insurance policy thereon with Shure
Insurance Corporation (Shure) on October 11, 2016 and paid the premium in cash. It took the
company a week to approve Jason’s application. On October 18, 2016, Shure mailed the
approved policy to Jason which the latter received five (5) days later, however, Jason’s house
had been razed by fire which transpired a day before his receipt of the approved policy. Jason
filed a written claim, with Shure under the insurance policy. Shure prays for the denial of the
claim on the ground that the theory of cognition applies to contracts of insurance.

Decide Jason’s claim with reason (5%)

SUGGESTED ANSWER

No. What governs insurance contract is the cognition theory whereby the insurance contract is
perfected only from the time the applicant came to know of the acceptance of the offer by the
insurer. In this case, the loss occurred a day prior to Jason’s knowledge of the acceptance by
Shure of Jason’s application. There being no perfected insurance contract, Jason is not entitled to
recover from Shure.

ALTERNATIVE ANSWER

The insurance contract may be deemed perfected allowing Jason to recover from Shure if there is
a binding note or cover receipt duly issued by Shure to Jason.

III.

ABC Appliances Corporation (ABC) is a domestic corporation engaged in the production and
sale of televisions and other appliances. YYY Engineers, a Taiwanese company, is the
manufacturer of television and other appliances from whom ABC actually purchases appliances.
From 2000, when ABC started doing business with YYY, it has been using the mark “TTubes”
in the Philippines for the television units that were bought from YYY. In 2015, YYY filed a
trademark application for “ITubes”. Later, ABC also filed its application. Both claim the right
over the trademark “TTubes” for television products. YYY relies on the principle of “first to
file” while ABC involves the “doctrine of prior use”

(A) Does the fact that YYY filed its application ahead of ABC mean that YYY has the prior right
over the trademark? Explain briefly. (2.5%).

(B) Does the prior registration also mean a conclusive assumption that YYY Engineers is in fact
the owner of the trademark “TTubes” Briefly explain your answer. (2.5%)

SUGGESTED ANSWER

(A) No. Since YYY is not the owner of the trademark, it has no right to apply for registration.
Registration of trademark, by itself, is not a mode of acquiring ownership. It is the ownership of
a trademark that confers the right to register the same (Birkenstock Orthopaedia GMBH v.
Philippine Shoe Expo Marketing Corporation, G.R. No. 194307, November 20, 2013).

(B) No. Registration merely creates a prima facie presumption of the validity of the registration
of the registrant’s ownership of the trade mark and the exclusive right to the use thereof. The
presumption of ownership accorded to a registrant is rebuttable and must yield to evidence to the
contrary.

IV

X’s “MINI-ME” burgers are bestsellers in the country. Its “MINI-ME” Logo, which bears the
color blue, is a registered mark and has been so since the year 2010. Y, a competitor of X, has
her own burger which she named “ME-TOO” and her logo thereon is printed in bluish-green.
When X sued Y for trademark infringement, the trial court ruled in favor of the plaintiff by
applying the Holistic Test. The court held that Y infringed on X’s mark since the dissimilarities
between the two marks are too trifling and frivolous such that Y’s “ME-TOO,” when compared
to X’s “MINI-ME,” will likely cause confusion among consumers.

Is the application of the Holistic Test correct? (5%)

SUGGESTED ANSWER

The application of the Holistic Test is not correct. In cases involving burger products, the
Supreme Court has consistently applied the dominancy test. Under the dominancy test, the focus
is on the dominant feature of the competing trademarks. Big Mak has been held to be
confusingly similar with Big Mac and so with McDo and Mcjoy both under the dominancy test.
Accordingly, MINI-ME trademark is confusingly similar with the ME-TOO mark (McDonald’s
Corporation v. LC Big Mak Burger, Inc., G.R. No. 143993, August 18, 2004).

V.

MS Brewery Corporation (MS) is a manufacturer and distributor of the popular beer “MS Lite.”
It faces stiff competition from BA Brewery Corporation (BA) whose sales of its own beer
product, “BA Lighter,” has soared to new heights. Meanwhile, sales of the “MS Lite” decreased
considerably. The distribution and marketing personnel of MS later discovered that BA has
stored thousands of empty bottles of “MS Lite” manufactured by MS in one of its
warehouses. MS filed a suit for unfair competition against BA before the Regional Trial Court
(RTC). Finding a connection between the dwindling sales of MS and the increased sales of BA,
the RTC rules that BA resorted to acts of unfair competition to the detriment of MS. Is the RTC
correct? Explain. (5%)

SUGGESTED ANSWER

The RTC is not correct. Hoarding, or the act of accumulating empty bottles to impede circulation
of the bottled product, does not amount to unfair competition. BA did not fraudulently “pass off
” its product as that of MS Lite. There was no representation or misrepresentation on the part of
BA that would confuse or tend to confuse its goods with those of MS Lite (Coca Cola Bottlers
Philippines v. GOMEZ, G.R. No. 154491, November 14, 2008).

VI.

Nautica Shipping Lines (Nautica) bought a second hand passenger ship from Japan. It modified
the design of the bulkhead of the deck of the ship to accommodate more passengers. The ship
sunk with its passengers in Tablas Strait due to heavy rains brought by the monsoon. The heirs of
the passengers sued Nautica for its liability as a common carrier based on the reconfiguration of
the bulkhead which may have compromised the stability of the ship. Nautica raised the defense
that the monsoon is a fortuitous event and, at most, its liability is prescribed by the Limited
Liability Rule. Decide the reasons. (5%)

SUGGESTED ANSWER

The limited liability rule will not apply in this case because there was contributory negligence on
the part of the ship owner. The reconfiguration of the bulkhead of the deck of the ship to
accommodate more passengers made the vessel unseaworthy (Philippine American General
Insurance Company v. Court of Appeals, G.R. No. 116940, June 11, 1997, 273 SCRA 262).

ALTERNATIVE ANSWER

Monsoon rain have been jurisprudentially considered as force majeure. It being the cause of the
accident, the ship owner should not be liable. Reconfiguration of the bulk head to accommodate
more passengers per se does not amount to contributory negligence which will bar the ship
owner to claim the defense of force majeure provided that it exercised due diligence before,
during and after the incident to prevent loss or injury.

VII

A railroad tract of the Philippine National Railway (PNR) is located near a busy intersection of
Puyat Avenue and Osmeña Highway. One afternoon, the intersection was heavily congested, as
usual. Juan, the driver of a public utility jeepney (PUJ), drove onto the railroad tracts but could
go no farther because of the heavy traffic as the intersection. After the jeepney stopped right on
the railroad tract, it was hit and overturned by a PNR train, resulting in the death of Kim, a
passenger of the PUJ, and injuries to Juan and his other passengers. Juan, the injured passengers
and Kim’s family sued the PNR for damages for its negligence. It was established that the steel
pole barrier before the track was broken, and that the PNR had the last clear chance of avoiding
the accident. On the other hand, the PNR raised the defense that the track is for the exclusive use
of the train and that motorists are aware that it is negligence per se to stop their vehicles on the
tracks. Decide the case and explain. (5%)

SUGGESTED ANSWER

PNR should be held liable. PNR had the last clear chance of avoiding the injury but did not
exercise the diligence expected of it under the circumstances.

ALTERNATIVE ANSWER

Since the PUJ was guilty of contributory, negligence, it should be held solidarily liable with PNR
consistent with jurisprudence that the tortfeasor and the common carrier are solidarily liable in
case of death or injury to passengers of the carrier.

VIII

In 2015, Total Bank (Total) proposed to sell to Royal Bank (Royal) its banking business for P10
billion consisting of specified assets and liabilities. The parties reached an eventual agreement,
which they termed as “Purchase and Assumption (P&A) Agreement,” in which Royal would
acquire Total’s specified assets and liabilities, excluding contingent claims, with the further
stipulation that it should be approved by the Bangko Sentral ng Pilipinas (BSP), BSP imposed
the condition that Total should place in escrow P1 Billion to cover for contingent claims against
it. Total complied. After securing the approval of the BSP, the two bank signed the agreement.
BSP thereafter issued a circular advising all banks and non-bank intermediaries that effective
January 1, 2016, “the banking activities of Total Bank and Royal Bank have been consolidated
and the latter has carried out their operations since then.”
(A) Was there a merger and consolidation of the two banks in point of the Corporation Code?
Explain. (2.5%)

(B) What is meant by a de facto merger? Discuss. (2.5%)

SUGGESTED ANSWER

(A) There was no merger or consolidation of the two banks from the viewpoint of the
Corporation Code. The Supreme Court ruled in Bank of Commerce v. Radio Philippine Network,
Inc. (G.R. No. 195615, April 21, 2014), that there can be no merger if the requirements and
procedure for merger were not observed and no certificate of merger was issued by the SEC.

(B) De facto merger means that a corporation called the Acquiring

Corporation acquired the assets and liabilities of another corporation in exchange for equivalent
value of shares of stock of the Acquiring Corporation.

IX

X insured his life for P20 million. X, plays golf and regularly exercises everyday, hence is
considered in good health. He did not know, however, that his frequent headaches is really
caused by his being hypertensive. In his application for a life insurance for himself, he did not
put a check to the question if he is suffering from hypertension, believing that because of his
active lifestyle, being hypertensive is remote possibility. While playing golf one day, X collapsed
at the fairway and was declared dead on arrival at the hospital. His death certificate stated that X
suffered a massive heart attack.

A) Will the beneficiary of X be entitled to the proceeds of the life insurance under the
circumstances, despite the non-disclosure that he is hypertensive at the time of application?
(2.5%)

(B) If X died in an accident instead of a heart attack, would the fact of X’s failure to disclose that
he is hypertensive be considered as material information? (2.5%)

SUGGESTED ANSWER

(A) No, the beneficiary of X is not entitled to the proceeds of the life insurance. The
hypertension of X is a material fact that should have been disclosed to the insurer. The
concealment of such material fact entitles the insurer to rescind the insurance policy.

ALTERNATIVE ANSWER

(A) X’s beneficiary should be entitled to the proceeds of the life insurance as there was good
faith on the part of the insured for the non disclosure since the insured was not aware of his
hypertension.

SUGGESTED ANSWER

(B) It is still a material information. It is settled that the insured cannot recover even though the
material fact not disclosed is not the cause of the loss.

After securing a P1 million loan from B, A drew in B’s favor a bill of exchange with C as
drawee. The bill reads:
October 1, 2016.

Pay to the order of B the sum of P1 million.

To: C (drawee). Signed, A.

A then delivered the bill to B who, however, lost it. It turned out that it was stolen by D, B’s
brother. D lost no time in forging B’s signature and negotiated it to E who acquired it for value
and in good faith:

May E recover on the bill from C, the drawee? Explain. (5%)

SUGGESTED ANSWER

E cannot recover from C, the drawee. The forged endorsement of B did not result in transfer of
title in favor of E as no right can be acquired under such forged endorsement.

ALTERNATIVE ANSWER

The drawee is not liable because it did not accept the instrument. Under Section 62 of the
Negotiable Instruments law, the drawee can only be liable if he accepts the instrument.

XI

Royal Links Golf Club obtained a loan from a bank which is secured by a mortgage on a titled
lot where holes 1, 2, 3 and 4 are located. The bank informed the Board of Directors that if the
arrearages are not paid within thirty (30) days, it will extra-judicially foreclose the mortgage. The
Board decided to offer to the members 200 proprietary membership shares, which are treasury
shares, at the price of P175,000.00 per share even when the current market value is P200,000.00.

In behalf and for the benefit of the corporation, Peter, a stockholder, filed a derivative suit
against the members of the Board for breach of trust for selling the shares at P25,000.00, lower
that its market value, and asked for the nullification of the sales and the removal of the board
members. Peter claims the Club incurred a loss of P5 million. The Board represented the defense
that in its honest belief any delay in the payment of the arrearages will be prejudicial to the club
as the mortgage on its assets will be foreclosed and the sale at the lower price is the best solution
to the problem. Decide the suit and explain. (5%)

SUGGESTED ANSWER

The derivative suit will not prosper, because while it was filed by a stockholder on behalf of the
corporation, the complaint did not allege the other elements of derivative suit namely; a)
exhaustion of intra-corporate remedies available under the articles of incorporation, by-laws
and rules and regulations governing the corporation to obtain the relief the stockholder desires;
b) it is not a nuisance suit; and c) appraisal right is not available (Ching v. Subic Bay Golf and
Country Club, G.R. No. 174353, September 10, 2014).

ALTERNATIVE ANSWER

The derivative suit will not prosper, because there was no wrongful act on the part of the board
of directors. In accordance with the business judgment rule since the board of directors passed
the resolution in good faith to prevent the foreclosure on the mortgage on the assets of the
corporation, the court cannot review the decision of the board of directors even if the selling
price is less than the market value of the shares (Montelibano v. Bacolod Murcia Milling
Company, G.R. No. L-15092, May 18, 1962).
XII

X owns 10,000 shares in Z Telecoms Corp. As he is in immediate need of money, he offered to

sell all his shares to his friend, Y, at a bargain price, Upon receipt of the purchase price from Y,
X proceeded to indorse in blank the certificates of shares and delivered these to Y. The latter
then went to the corporate secretary of Z Telecoms Corp. and requested the transfer of the shares
in his name. The corporate secretary refused since X merely indorsed the certificates in blank
to Y. According to the corporate secretary, the certificates should have been specifically indorsed
to the purchaser, Y. Was the corporate secretary justified in declining Y’s request? Discuss. (5%)

SUGGESTED ANSWER

The Corporate Secretary is not justified in declining Y’s request. Under Section 63 of the
Corporation Code, shares of stock covered by a stock certificate may be transferred by the
delivery of the certificate endorsed by the stockholder-owner or his authorized representative or
other person legally authorized to make the transfer. The endorsement need not be specifically in
favor of the purchaser.

XIII

C Corp. is the direct holder of 10% of the shareholdings in U Corp., a non-listed (not public)
firm, which in turn owns 62% of the shareholdings in H. Corp., a publicly listed company. The
other principal stockholder in H Corp. is C Corp. which owns 18% of its shares. Meanwhile, the
majority stocks in U Corp. are owned by B Corp. and V Corp: at 22% and 30% respectively. B
Corp. and V Corp. later sold their respective shares in U Corp. to C Corp., thereby resulting in
the increase of C Corp’s. interest in U Corp., whether direct or indirect, to more than 50%.

(A) Explain the Tender Offer Rule under the Securities Regulation Code. (2.5%)

(B) Does the Tender Offer Rule apply in this case where there has been an indirect acquisition of
the shareholdings in H Corp. by C Corp? Discuss. (2.5%)

SUGGESTED ANSWER

(A) A Tender Offer Rule means a publicly announced intention by a

person acting alone or in concert with other persons to acquire the outstanding equity securities
of a public company or outstanding equity securities of an associate or related company of such
public company which controls said public company (Section 19.1.8 of the SRC implementing
Rules and Regulations).

(B) Yes, the mandatory Tender Offer Rule is still applicable even if the acquisition, direct or
indirect, is less than 35% when the purchase would result in direct or indirect ownership of over
50% of the total outstanding equity securities of a public company (Cemco Holdings v. National
Life Insurance Company of the Philippines, G.R. No. 171815, August 7, 2007).

XIV

X, a government official, has a number of bank accounts in T Bank containing millions of pesos.
He also opened several trust accounts in the same bank which specifically covered the placement
and/or investment of funds. X was later charged with graft and corruption before the
Sandiganbayam (SB) by the Ombudsman. The Special Prosecutor filed a motion praying for a
court order authorizing it to look into the savings and trust accounts of X in T Bank. X opposed
the motion arguing that the trust accounts are not “deposits” under the Law on Secrecy of Bank
Deposits (Rep. Act No. 1405). Is the contention of X correct? Explain. (5%)

SUGGESTED ANSWER
The contention of X is not correct. Deposits in the context of the Secrecy of Philippine currency
deposits include deposits of whatever nature and kind. They include funds deposited in the bank
giving rise to creditor-debtor relationship, as well as funds invested in the bank like trust
accounts (Ejercito v. Sandiganbayan, G.R. Nos. 157294-95, November 30, 2006).

XV

ABC Corp. is engaged in the pawnshop business involving cellphones, laptops and other gadgets
of value. In order to expand its business and attract investors, it offered to any person who
invests at least P100,000.00 a “promissory Note” where it obligated itself to pay the holder a
50% return on investment within one month. Due to the attractive offer, many individuals
invested in the company but not one of them was able to realize any profit after one month.

Has ABC Corp. violated any law with its scheme? Explain. (5%)

SUGGESTED ANSWER

Yes, ABC Corporation violated the provisions of the Securities Regulation Code that prohibits
sale of securities to the public, like promissory notes, without a registration statement filed with
and approved by the Securities and Exchange Commission.

XVI

Henry is a board director in XYZ Corporation. For being the “fiscalizer” in the Board, the
majority of the board directors want him removed and his shares sold at auction, so he can no
longer participate even in the stockholders’ meetings. Henry approaches you for advice on
whether he can be removed as board director and stockholder even without cause. What is your
advice? Explain “amotion” and the procedure in removing a director. (5%)

SUGGESTED ANSWER

Henry cannot be removed by his fellow directors. The power to remove belongs to the
stockholders. He can only be removed by the stockholders representing at least 2/3 of the
outstanding capital stock in a meeting called for that purpose. The removal may be with or
without cause except that in this case, the removal has to be with cause because it is intended to
deprive minority stockholders of the right of representation. Amotion is the premature ousting of
a director or officer from his post in the corporation.

[NB: The committee recommends that the examinees be given outright credit for the question on
amotion regardless of the answer as this concept is hardly taken up in law school. It is also
requested that the examiner be liberal in checking the answers given the relative difficulty of the
questions]

XVII

PJ Corporation (PJ) obtained a loan from ABC Bank (ABC) in the amount of P10 million for the
purchase of 100 pieces of ecodoors. Thereafter, a Letter of Credit was obtained by PJ against
such loan. The beneficiary of the Letter of Credit is Scrap Metal Corp. (Scrap Metal) in Beijing,
China. Upon arrival of 100 pieces of ecodoors, PJ executed a Trust Receipt in favor of ABC to
cover for the value of the ecodoors for its release to PJ. The terms of the Trust Receipt is that any
proceeds from the sale of the ecodoors will be delivered to ABC as payment. After the ecodoors
were sold, PJ, instead of paying ABC, used the proceeds of the sale to order from Scrap Metal
another 100 pieces of ecodoors but using another bank to issue a new Letter of Credit fully
covered by such proceeds. PJ refused to pay the proceeds of the sale of the first set of ecodoors
to ABC, claiming that the ecododors that were delivered were defective. It then instructed ABC
not to negotiate the Letter of Credit that was issued in favor of Scrap Metal.
(A) Explain what is a “Letter of Credit” as a financial device and a “Trust Receipt” as a security
to the Letter of Credit. (2.5%).’

(B) As counsel of ABC, you are asked for advice on whether or not to grant the instruction of PJ.
What will be you advice? (2.5%)

SUGGESTED ANSWER

(A) A letter of credit is any arrangement however named or described whereby a bank acting
upon the request of its client or on its behalf agrees to pay another against stipulated documents
provided that the terms of the credit are complied with (Section 2 of the Uniform Customs and
Practices for Documentary Credit).

A trust receipt is an arrangement whereby the issuing bank (referred to as the entruster under the
trust receipt) releases the imported goods to the importer (referred to as the entrustee) but that the
latter in case of sale must deliver the proceeds thereof to the entruster up to the extent of the
amount owing to the entruster or to return the goods in case of non-sale.

ALTERNATIVE ANSWER

(A) Under the Code of Commerce, letters of credit are those issued by one merchant to another
for the purpose of attending to a commercial transaction. The letter of credit should be issued in
favor of a definite person and not to order and be limited to a fixed and specified amount, or to
one or more determined amounts but within a maximum the … limits of which has to be stated
exactly (Articles 567 and 568 of the Code of Commerce).

SUGGESTED ANSWER

(B) I will not grant the instruction of PJ. Under the independence principle,

the obligation of the bank to pay the Scrap Metal Corporation is not dependent upon the
fulfillment or non-fulfillment of the main contract underlying the letter of credit but conditioned
only on its submission of the stipulated documents to ABC Bank.

XVIII

B Bank, a large universal bank, regularly extends revolving credit lines to business
establishments under what it terms as socially responsible banking and private business
partnership relations. All loans that are extended to client have a common “Escalation Clause,”
to wit: “B Bank hereby reserves its right to make successive increases in interest rates in
accordance with the bank’s adopted policies as approved by the Monetary Board; provided that
each successive increase shall be with the written assent of the depositor.”

(A) X, a regular client of the bank, contends that the “Escalation Clause” is unfair,
unconscionable and contrary to law, morals, public policy and customs. Rule on the issue and
explain. (2.5%)

(B) Suppose that the “Escalation Clause” instead reads: “B Bank hereby reserves the right to
make reasonable increases in interest rates in accordance with bank policies as approved by the
Monetary Board; Provided, there shall be corresponding reasonable decreases in interest rates as
approved by the Monetary Board.” Would this be valid? Explain. (2.5%)

SUGGESTED ANSWER

(A) The “escalation clause” is valid because each successive increase shall be with the written
assent of the depositor. This stipulation does not violate the principle of mutuality of contracts.
The stipulation would have been void if the supposed consent is given prior to the increase in
interest rate.

(B) An escalation clause with a de-escalation clause is valid provided that the client’s consent is
still secured prior to any increase in interest rate otherwise, the escalation clause is void.

XIX

In 2015, R Corp., a domestic company that is wholly owned by Filipinos – files its opposition to
the applications for Mineral Production Sharing Agreements (MPSA) of O Corp., P Corp., and Q
Corp. which were pending before the Panel of Arbitrators (POA) of the Department of
Environmental and Natural Resources (DENR). The three corporations ” * wanted to undertake
exploration and mining activities in the province of Isabela. The oppositor alleged that at least
60% of the capital share holdings of the applicants are owned by B Corp., a 100% Chinese
corporation, in violation of Sec. 2, Art. Xll of the Constitution. The applicants countered that
they are qualified corporations as defined under the Philippine Mining Act of 1995 and the
Foreign Investments Act of 1991 since B Corp. holds only 40% of the capital stocks in each of
them and not 60% as alleged by R Corp.

The summary of Significant Accounting policies statement of B Corp. reveals that the joint
venture agreement of B Corp. with Sigma Corp. and Delta Corp. involve the O Corp., P Corp.,
and Q Corp. The ownership of the layered corporations and joint venture agreements show that B
Corp. practically exercises control over the O, P and Q corporations contend that the control test
should be applied and its MPSA applicants granted. On the other hand, R Corp, argues that the
“grandfather rule” should be applied. Decide with reasons. (5%)

SUGGESTED ANSWER

The grandfather rule should apply. The Supreme Court held in a similar case that even though on
paper the capital shareholding in a mining company is 60% owned by Filipinos and 40% by
foreigners, if there is a doubt as to the locus of the beneficial ownership and control, the
grandfather rule should apply. Based on the facts, B Corporation, a Chinese corporation,
practically exercises control over O, P and Q Corporations. Such circumstance creates a doubt as
to where control and beneficial ownership reside that warrants application of the grandfather
rule (Narra Nickel Mining and Development Corporation v. Redmont Consolidated Mines Corp.,
G.R. No. 195580, April 21, 2014).

XX

Company X issues a Bank A Check No. 12345 in the amount of P500,000.00 payable to the
Bureau of Internal Revenue (BIR) for the company’s taxes for the third quarter of 1997. The
check was deposited with Bank B, the collecting bank with which the BIR has an account. The
check was subsequently cleared and the amount of P500,000.00 was deducted from the
company’s balance. Thereafter, Company X was notified by the BIR of its non-payment of its
unpaid taxes despite the P500,000.00 debit from its account. This prompted the company to seek
assistance from the proper authorities to investigate on the matter.

The results of the investigation disclosed that unknown then to Company X, its chief accountant
Bonifacio Santos is part of a syndicate that devised a scheme to siphon its funds. It was
discovered that though deposited, the check was never paid to the BIR but was passed on by
Santos to Winston Reyes, Banks B’s branch manager and Santos’ co-conspirator. Instead of
bringing the check to the clearing house, Reyes replaced Check No. 12345 with a worthless
check bearing the same amount, and tempered documents to cover his tracks. No amount was
then credited to the BIR. Meanwhile, check No. 12345 was subsequently cleared and the amount
therein credited into the account of fictitious persons, to be later withdrawn by Santos and Reyes.

Company X then sued Bank B for the amount of P500,000.00 representing the amount deducted
from its account. Bank B interposed the defense that Company X was guilty of contributory
negligence since its confidential employee Santos was an integral part of the scheme to divert the
proceeds of Check No. 12345. Is Company X entitled to reimbursement from Bank B, the
collecting bank? Explain. (5%)

SUGGESTED ANSWER

Yes, Company X is entitled to reimbursement from the collecting bank. – In a similar case, the
Supreme Court ruled that the drawer could recover the amount deducted from its account
because it failed to ensure that the check be paid to the designated payee, while the collecting
bank should share 1/2 of the loss because its branch manager conspired in the fraud (Philippine
Commercial International Bank v. Court of Appeals, G.R. No. 121413, January 29, 2001, 350
SCRA 446).