Political Law

1. Can Marine Mammals be given legal standing in an action enforcing our environmental laws?

Yes, provided that the Filipino citizens acting as stewards of nature are joined as real parties in
the petition and not just in representation of the named species (Resident Marine Mammals v. Reyes).

2. Can the Samahan ng mga Progresibong Kabataan bring an action in court to impugn the
curfew ordinances enacted by certain cities?

No. An unincorporated association, such as Samahan ng mga Progresibong Kabataan (SPARK),

has no legal personality to bring an action in court (Samahan ng mga Progresibong Kabataan v. Quezon
City).

3. Are foundlings natural-born citizens?

Yes. Natural-born citizens are those who are citizens of the Philippines from birth without
having to perform any act to acquire or perfect their Philippine citizenship (Section 2, Article IV, 1987
Constitution). “Having to perform an act” means that the act must be personally done by the citizen. In
the case of foundlings, the determination of foundling status is done not by the child but by the
authorities (Poe v. Commission on Elections).

4. Does the Court have jurisdiction over the US respondents responsible for the grounding of the
USS Guardian in Tubbataha Reef, despite not having submitted any pleading or
manifestation?

No, because of the doctrine of State immunity.

The rule is that if the judgment against officials acting in the discharge of the duties will require
the State itself to perform an affirmative act to satisfy the same, the suit must be regarded as against
the State itself although it has not been lawfully impleaded.

In this case, the US respondents were sued in their official capacity as commanding officers of
the US Navy who had control and supervision over the USS Guardian and its crew. The alleged act or
omission was committed while they were performing official military duties. Considering that the
satisfaction of a judgment against said officials will require remedial actions and appropriation of funds
by the US Government, the suit is deemed to be one against the US itself. The principle of State
immunity therefore bars the exercise of jurisdiction by the Supreme Court over the US respondents
(Arigo v. Swift).

5. Is a petition for a writ of amparo the proper recourse for obtaining parental authority and
custody of a minor child from the DSWD?

No.

The privilege of the writ of amparo is a remedy available to victims of extra-judicial killings and
enforced disappearances or threats of a similar nature.

What is involved in this case is the issue of child custody and the exercise of parental rights over
a child. Certainly, the Amparo Rule cannot be properly applied since neither is there extra-judicial killing
nor is there enforced disappearance (Infant Yusay Caram v. Segui).

6. Is the issuance of a writ of amparo on the ground of enforced disappearances the proper to
effect the release of the person detained by the Immigration Bureau?

No.

“Enforced disappearances,” as understood under the Rules of the Writ of Amparo and further
defined in Republic Act No. 9851, means the arrest, detention, or abduction of persons by, or with the
authorization or acquiescence of a State or a political organization followed by a refusal to acknowledge
that deprivation of freedom or to give information on the fate or whereabouts of those persons, with
the intention of removing from the protection of the law for a prolonged period of time. Hence, the
elements under RA 9851 are:

a. That there be arrest, detention, abduction, or any form of deprivation of liberty;

b. That it be carried out by or with the authorization, support, or acquiescence of the State or a
political organization;
c. That it be followed by the State’s or political organization’s refusal to acknowledge or give
information on the fate or whereabouts of the person subject of the amparo petition; and
d. That the intention of such refusal is to remove subject person from the protection of the law
for a prolonged period of time.

In this case, there is neither enforced disappearance nor threat thereof. While there is
detention carried out by the State through the Bureau of Immigration, the 3rd and 4th elements are not
present. There is no refusal to acknowledge the deprivation of freedom or refusal to give information
on the whereabouts of Parker because he is detained in the Immigration Detention Facility. Similarly,
there is no intention to remove Parker from the protection of law for a prolonged period of time (Callo
v. Commissioner Morente).
 7. Masses were being conducted in the QC Hall of Justice during noon breaks and were found not
to be disruptive of public services. However, can the holding of religious rituals of any of the
world’s religions in the QC Hall of Justice or any halls of justice all over the country be
prohibited in view of the constitutional prohibition against the appropriation of public money
or property for the benefit of a sect, church, denomination, or any other system of religion?

No. It should be noted that the basement of the QC Hall of Justice was not appropriated,
applied or employed for the sole purpose of supporting the Roman Catholics. Furthermore, it has not
been converted into a Roman Catholic chapel for the exclusive use of its faithful. As reported by the
Executive Judge of QC, the basement is also being used as a public waiting area for most of the day and
a meeting place for different employee organizations. The use of the area for holding masses is limited
to lunch break period from 12 o’clock to 1 o’clock in the afternoon. It is therefore clear that no undue
religious bias is being committed when the subject basement is allowed to be temporarily used by the
Catholics to celebrate mass, as the same area can be used by other groups of people and for other
purposes. Thus, the basement of QC Hall of Justice has remained to be a public property devoted for
public use because the holding of Catholic masses therein is a mere incidental consequence of its
primary purpose (Re: Letter of Tony Q. Valenciano, Holding of Religious Rituals at the Halls of Justice
Building in Quezon City).

8. Should Enrile be admitted into bail considering his advanced age and health?

Yes.

The purpose of bail is to guarantee the appearance of the accused at the trial or whenever so
required by the trial court. Hence, bail for the provisional liberty of the accused, regardless of the crime
charged, should be allowed independently of the merits of the charge, provided it is clearly shown that
his continued incarceration is injurious to his health or dangerous to his life.

In this case, it was not disputed that Enrile’s advanced age and ill health required special medical
attention. Guided by the principal purpose of bail therefore, Enrile should be granted provisional liberty
in order that he may properly address his medical attention and hence guarantee his appearance in
court for the trial (Enrile v. Sandiganbayan)/

9. Does the presence of a constabulary officer in a “violation-of-contract” inspection by a public

utility corporation convert the search as one made by an agent of the State to which the
provisions on unreasonable search and seizure may be invoked?

No.
 The constitutional guaranty against unlawful searches and seizures is intended as a restraint
against the Government and its agents tasked with law enforcement.

In this case, the constabulary officer’s presence and participation in the entry did not make the
inspection a search by an agent of the State within the ambit of the guaranty. He was part of the team
by virtue of his mission order authorizing him to assist and escort the team during its routine inspection
(Sesbreño v. CA).

10. Define the impeachment ground of betrayal of public trust.

It refers to acts which are just short of being criminal, but constitute gross faithlessness against
public trust, tyrannical abuse of power, inexcusable negligence of duty, favoritism, and gross exercise of
discretionary power. In other words, acts that should constitute betrayal of public trust as to warrant
removal from office may be less than criminal but must be attended by bad faith and of such gravity and
seriousness as the grounds of impeachment (Gonzales III v. Office of the President of the Philippines).

11. How is the term “human rights” understood in the context of the 1987 Constitution?

The framers of the Constitution made it clear that the term “human rights” referred to the civil
and political rights embodied in the International Covenant on Civil and Political Rights (Dissenting
Opinion of Justice Carpio in MVRS Pub. Inc. v. Islamic Daw’ah Council).

12. What are the requirements insofar as service contracts with respect to the exploration,
development, and utilization of minerals, petroleum and other mineral oils?

Such service contracts require:

a. The service contract shall be crafted in accordance with a general law that will set standard
or uniform terms, conditions and requirements, presumably to attain a certain uniformity in
provisions and avoid the possible insertion of terms disadvantageous to the country;
b. The President shall be the signatory for the government because, supposedly before an
agreement is presented to the President for signature, it will have been vetted several times
over at different levels to ensure that it conforms to law and can withstand public scrutiny;
and
c. Within 30 days of the executed agreement, the President shall report to the Congress to
give that branch of government an opportunity to look over the agreement and interpose
timely objections, if any (Resident Marine Mammals v. Reyes).
 13. What is capital?

The term “capital” in Section 11, Article XII of the Constitution refers only to shares of stock that
can vote in the election of directors (Gamboa v. Teves).

14. Is mere legal title sufficient to meet the 60% Filipino-owned “capital” required in the
Constitution?

No. Under the auspices of the Foreign Investments Act and the ruling of the Court in Gamboa v.
Teves, mere legal title is insufficient to meet the 60% Filipino-owned “capital” required in the
Constitution. Full beneficial ownership of 60% of the outstanding capital stock coupled with 60% of the
voting rights, is required (Roy III v. Herbosa).

15. What are the safeguards found in Section 11, Article XII of the 1987 Constitution?

The constitutional provision mandates three safeguards:

a. 60% of its capital must be owned by Filipino citizens;

b. Participation of foreign investors in its board of directors is limited to their proportionate
share in its capital; and
c. All its executive and managing officers must be citizens of the Philippines (Roy III v.
Herbosa).

16. Is respondent entitled to backwages during the time he was placed under preventive
suspension pending investigation for the charge of grave misconduct?

No.

Backwages corresponding to the period of suspension of a civil service employee who was
subsequently reinstated is proper only if he is found innocent of the charges and the suspension is found
to be unjustified.

In this case, the fact that the charge against the respondent was declared to lack factual and
legal bases did not ipso facto render the preventive suspension without legal basis. Under Civil Service
Resolution No. 030502, an employee may be placed under preventive suspension where the formal
charge involves dishonesty, oppression, grave misconduct, neglect in the performance of duty, or if
there are reasons to believe that the respondent is guilty of the charge/s, which would warrant his
removal from the office. Clearly, the formal charge of grave misconduct justified the imposition of the
preventive suspension of respondent. Considering that the respondent’s preventive suspension had
legal basis, he is not entitled to backwages (Garcia v. Molina).
 17. Differentiate a petition for disqualification from a petition to deny due course or cancel a
certificate of candidacy.

A petition for disqualification, on the one hand, can be premised on Section 12 or 68 of the
Omnibus Election Code, or Section 40 of the Local Government Code. On the other hand, a petition to
deny due course to or cancel a certificate of candidacy can only be grounded on a statement of a
material representation in the said certificate that is false (Fermin v. COMELEC).

A person who is disqualified is merely prohibited to continue as a candidate while the person
whose certificate is cancelled or denied due course is not treated as a candidate at all (Fermin v.
COMELEC).

A candidate who is disqualified can be validly substituted pursuant to Section 77 because he

remains a candidate until disqualified. However, a person whose certificate of candidacy has been
denied due course or cancelled cannot be substituted because he is not considered a candidate
(Miranda v. Abaya).

18. Is Section 3(b) of PD 198 which grants the provincial governor the power to appoint members
of the Board of Directors of a LWD (provided that 75% active water service connections
threshold be not met), valid insofar as highly urbanized cities and independent component
cities are concerned?

Section 3(b) of PD 198 should be partially struck down for being repugnant to the local
autonomy granted by the Constitution to LGUs and for being inconsistent with RA 7160.

Section 29 of RA 7160 provides that highly urbanized cities and independent component cities
shall be independent of the province. In this case, the highly urbanized city of Cebu accounted for a
majority of the total active water service connections while the province accounted for only 16.92%.
Hence, to allow the provincial government to be the appointing authority violates the policy of local
autonomy as insofar as highly urbanized cities and independent component cities are concerned (Rama
v. Moises).

19. What elements should the requesting state (Hong Kong) establish for purposes of extradition?

It should establish the following:

a. That there must be an extradition treaty in force between HKSAR and the Philippines;
b. That the criminal charges are pending in the HKSAR against the person to be extradited;
c. That the crimes for which the person to be extradited is charged are extraditable within the
terms of the treaty;
 d. That the individual before the court is the same person charged in the HKSAR;
e. That the evidence submitted establishes probable cause to believe that the person to be
extradited committed the offense charged; and
f. That the offenses are criminal in both the HKSAR and the Philippines (Government of HKSAR
v. Munoz).

20. What is the double criminality rule for purposes of extradition? Does the crime of accepting
an advantage as an agent, which is punishable in HKSAR but not in the Philippines, comply
with the double criminality rule?

Under the double criminality rule, the extraditable offense must be criminal under the laws of
both the requesting and the requested states. This means that the requested state comes under no
obligation to surrender the person if its laws do not regard the conduct covered by the request for
extradition as criminal.

The crime of accepting an advantage as an agent did not have an equivalent in this jurisdiction
considering that when the unauthorized giving and receiving of benefits happened in the private sector,
the same was not a crime because there was no law that defined and punished such act as criminal in
this jurisdiction. Since the offense of accepting an advantage as an agent charged against him in the
HKSAR is one that deals with private sector bribery, the conditions for the application of the double
criminality rule are obviously not met (Government of HKSAR v. Munoz).

Labor Law

21. Is the change in the corporate name considered a bona fide closure and hence a valid ground
for termination of employees?

No.

The amendments of the Articles of Incorporation to change the corporate name do not produce
the dissolution of the former as a corporation. In this case, the change of name of Zeta to Zuellig Freight
and Cargo Systems did not cause the cessation of business by Zeta. As a result, it did not give the
petitioner the license to terminate employees without just or authorized cause (Zuellig Freight v. NLRC).

22. Which has jurisdiction over termination disputes of “corporate” officers whose offices owe
their creation to modes other than the Corporation Code and corporation’s by-laws: LA or
RTC?
 It is the LA.

A corporate officer is one whose office owes its creation to the Corporation Code and to the
corporation’s by-laws pursuant to Section 25 of the Corporation Code. In other words, the criteria for
distinguishing between corporate officers who may be ousted from office at will, on one hand, and
ordinary corporate employees who may only be terminated for just or authorized cause, on the other
hand, do not depend on the nature of the services performed, but on the manner of creation of the
office.

In this case, the Office of the VP for Finance and Administration is found neither in the
Corporation Code nor in Matling Corporation’s By-Laws. Moreover, the fact that the OVPFA owed its
creation to the power of Matling’s President to create new offices, such power being vested to him by
the By-Laws, is inconsequential since only the Board of Directors can create new corporate offices by
amending its By-Laws. Not being a corporate officer in purview of the law, the RTC has no jurisdiction
over his termination dispute (Matling Industrial and Commercial Corporation v. Coros).

Civil Law

23. What are the rules relative to the disposition of public land or lands of the public domain?

These rules are:

a. As a rule, all lands of the public domain belong to the State and are inalienable. Lands that
are not clearly under private ownership are also presumed to belong to the State and,
therefore, may not be alienated or disposed.
b. The following are excepted from the general rule, to wit:
i. Agricultural lands of the public domain are rendered alienable and disposable
through any of the exclusive modes enumerated under Section 11 of the Public Land
Act.
If the mode is judicial confirmation of imperfect title under Section 48(b) of the
Public Land Act, the agricultural land subject of the application needs only to be
classified as alienable and disposable as of the time of the application, provided the
applicant’s possession and occupation of the land dated back to June 12, 1945 or
earlier. Thereby, a conclusive presumption that the applicant has performed all the
conditions essential to a government grant arises, and the applicant becomes the
owner of the land by virtue of an imperfect or incompetent title. By legal fiction,
the land has already ceased to be part of the public domain and has become private
property.
ii. Lands of the public domain subsequently classified or declared as no longer
intended for public use or for the development of national wealth are removed
 from the sphere of public dominion and are considered converted into patrimonial
lands or lands of private ownership that may be alienated or disposed through any
of the modes of acquiring ownership under the Civil Code.
If the mode of acquisition is prescription, whether ordinary or extraordinary, proof
that the land has been already converted to private ownership prior to the requisite
acquisitive prescriptive period is a condition sine qua non in observance of the law
that the property of the State not patrimonial in character shall not be the object of
prescription (Heirs of Malabanan v. Republic).

24. Discuss the rule on award of interest in the concept of actual and compensatory damages, as
modified BSP-MB Circular No. 799.

The guidelines are as follows:

a. When an obligation is breached, and it consists in the payment of a sum of money (i.e., loan
or forbearance of money), the interest due should be that which may have been stipulated
in writing. Furthermore, the interest due shall itself earn legal interest from the time it is
judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per
annum to be computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
b. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court
at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated
claims of damages, except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or extrajudicially, but
when such certainty cannot be so reasonably established at the time the demand is made,
the interest shall begin to run only from the date the judgment of the court is made (at
which time the qualification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any case, be on
the amount finally adjudged.
c. When the judgment of the court awarding a sum of money becomes final and executory,
the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2 above,
shall be 6% per annum from such finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of credit (Nacar v. Gallery Frames).

25. What are the rules in the award of civil indemnity for deaths caused by a crime?

First, the mandatory character of civil indemnity in case of death from crime or quasi-delict
derives from the legal obligation of the accused or the defendant to fully compensate the heirs of the
deceased for his death as the natural consequence of the criminal or quasi-delictual act or omission in
accordance with Article 2202 of the Civil Code.

Second, the civil indemnity for death, being compensatory in nature, must attune to
contemporaneous economic realities; otherwise, the desire to justly indemnify would be thwarted or
rendered meaningless.

Pursuant to People v. Jugueta, in the case of murder where the appropriate penalty is reclusion
perpetua, the Court has thereby fixed P75,000.00 for moral damages even without allegation and proof,
P75,000.00 for exemplary damages if at least one aggravating circumstance attended the commission of
the crime, and P75,000.00 for civil indemnity as the essential liabilities – in addition to others as the
records of each case will substantiate such as temperate damages considering that the heirs were
presumed to have spent for the interment of the deceased (People v. Oandasan).

Taxation Law

26. Discuss the rule on tax exemption granted to non-stock, non-profit education institutions in
light of the last paragraph of Section 30 of the Tax Code providing that income of whatever
kind and character from any of their properties or from any of their activities conducted for
profit regardless of the disposition made of such income shall be subject to income tax.

The requisites for availing the tax exemption under Article XIV, Section 4 (3) of the Constitution
are: (1) that the taxpayer falls under the classification non-stock, non-profit educational institution; and
(2) that the income it seeks to exempted from taxation is used actually, directly and exclusively for
educational purposes. Hence, the last paragraph of Section 30 of the Tax Code is without force and
effect with respect to non-stock, non-profit educational institutions, provided, that the non-stock, non-
profit educational institutions prove that its assets and revenues are used actually, directly and
exclusively for educational purposes. Moreover, the tax exemption constitutionally-granted to non-
stock, non-profit educational institutions, is not subject to limitations imposed by law (CIR v. De La Salle
University).

27. Is it indispensable in a claim for refund or tax credit to produce evidence showing it had zero-
rated sales insofar as the sale of electricity by power generation to the NAPOCOR? Can the
EPIRA Law serve as substitute for this requirement?

It is indispensable.

As the CTA En Banc precisely found, the petitioner did not reflect any zero-rated sales from its
power generation in its four quarterly VAT returns, which indicated that it had not made any sale of
electricity. Indeed, it carried the burden not only that it was entitled under the substantive law to the
allowance of its claim for refund or tax credit but also that it met all the requirements for evidentiary
substantiation of its claim before the administrative official concerned, or in the de novo litigation
before the CTA in Division.

Although the petitioner has correctly contended here that the sale of electricity by a power
generation company like it should be subject to zero-rated VAT under the EPIRA Law, its assertion that it
need not prove its having actually made zero-rated sales of electricity by presenting VAT official receipts
and VAT returns cannot be upheld. It could not be permitted to substitute such vital and material
documents with secondary evidence (Luzon Hydro v. CIR).

28. Did the Court of Tax Appeals acquire jurisdiction over a judicial claim for refund filed 184 days
after the last day of filing?

No.

The Court underscored in Mindanao II Geothermal Partnership v. CIR that a judicial claim must
be filed with the CTA within 30 days from the receipt of the CIR’s decision denying the administrative
claim for refund of excess input value-added tax or from the expiration of the 120-day period without
any action from the CIR. This is jurisdictional.

In this case, the petitioner timely filed its administrative claim on April 11, 2003, within the two-
year prescriptive period after the close of the taxable quarter when the zero-rated sales were made.
The respondent had 120 days, or until August 9, 2003, to decide the petitioner’s claim. Considering that
the respondent did not act on the petitioner’s claim on or before August 9, 2003, the latter had until
September 8, 2003, the last day of the 30-day period, within which to file its judicial claim. However, it
brought its petition for review in the CTA only on March 10, 2004 or 184 days after the last day for the
filing.

Clearly, the CTA did not acquire jurisdiction over the petitioner’s appeal (Takenaka Corporation
v. CIR).

29. What are the mechanisms and remedies afforded to a corporate taxpayer in claiming for the
overpaid income tax? What are its limitations?

Section 76 of the NIRC provides that a corporate taxpayer may choose to carry over the excess
credit or be credited or refunded with the excess amount paid.

The two options are alternative and not cumulative in nature. Accordingly, the last sentence of
Section 76 of the NIRC provides that once the option to carry-over and apply the excess quarterly
income tax against income tax due for the taxable quarters of the succeeding taxable years has been
made, such option shall be considered irrevocable for that taxable period and no application for tax
refund or issuance of a tax credit certificate shall be allowed therefor. The phrase “for that taxable
period” merely identifies the excess income tax, subject to the option, by referring to the taxable period
when it was acquired by the taxpayer. Hence, the controlling factor for the operation of the
irrevocability rule is that the taxpayer chose an option; and once it had already done so, it could no
longer make another one (Republic v. Team [Phils.] Energy Corporation).

30. What are the requirements for entitlement of a corporate taxpayer for a refund or the
issuance of a tax credit certificate?

These requirements are:

a. That the claim for refund was filed within the two-year reglementary period pursuant to
Section 229 of the NIRC;
b. When it is shown on the ITR that the income payment received is being declared part of the
taxpayer’s gross income; and
c. When the fact of withholding is established by a copy of the withholding tax statement, duly
issued by the payor to the payee, showing the amount paid and income tax withheld from
that amount (Republic v. Team [Phils.] Energy Corporation).

Mercantile Law

31. Explain the “beneficial owner” or “beneficial ownership” rule and its relevance/importance.

The Securities Regulation Code defines a beneficial owner as any person who, directly or
indirectly, through any contract, agreement, understanding, relationship or otherwise, has or shares
voting power and/or investment returns or power. The definition is understood only in determining the
respective nationalities of the outstanding capital stock of a public utility corporation in order to
determine its compliance with the percentage of Filipino ownership required by the Constitution (Roy III
v. Herbosa).

32. Define insolvent. Is liquidity an issue in a petition for rehabilitation?

Insolvent is defined under the FRIA as the financial condition of a debtor that is generally unable
to pay its or his liabilities as they fall due in the ordinary course of business or has liabilities that are
greater than his or its assets.
 Liquidity however is not an issue in rehabilitation proceedings. Instead, the basic issues in such
proceedings are the viability and desirability of continuing business operations of the petitioning
corporation to be determined by the rehabilitation receiver (PBCOM v. Basic Polyprinters).

33. What is the Grandfather rule?

The Grandfather rule is the method by which the percentage of Filipino equity in a corporation
engaged in nationalized and/or partly nationalized areas of activities provided for under the Constitution
and other nationalization laws, is computed in cases where corporate stockholders are present, by
attributing the nationality of the second or even subsequent tier of ownership to determine the
nationality of the corporate stockholder (Narra Nickel v. Redmont Consolidated Mines).

34. What is the role of the Grandfather Rule in determining compliance with the minimum Filipino
equity requirement vis-à-vis the Control Test?

The control test can be applied jointly with the Grandfather Rule to determine the observance
of foreign ownership restriction in nationalized economic activities. The control test and the
Grandfather rule are not incompatible ownership-determinant methods that can only be applied
alternative to each other; rather, these methods can, if appropriate be used cumulatively in the
determination of the ownership and control of corporations engaged in fully or partly nationalized
activities, such as the mining operation or the operation of public utilities.

The Grandfather rule, standing alone, should not be used to determine the Filipino ownership
and control in a corporation, as it could result in an otherwise foreign corporation rendered qualified to
perform nationalized or partly nationalized activities. Hence, it is only when the control test is first
complied with that the Grandfather rule may be applied. On the other hand, a corporation that
complies with 60-40 Filipino-foreign equity requirement can be considered a Filipino corporation if there
is no “doubt” as to who has the beneficial ownership and control of the corporation. In that instance,
there is no need for a dissection or further inquiry on the ownership of the corporate shareholders in
both the investing and investee corporations, or the application of the Grandfather rule.

The “doubt” that demands the application of the Grandfather rule in addition to or in tandem
with the control test is not confined to, or more bluntly, does not refer to the fact that the apparent
Filipino ownership of the corporation’s equity falls below the 60% threshold. Rather, “doubt” refers to
various indicia that the beneficial ownership and control of the corporation do not in fact reside in
Filipino shareholders but in foreign stakeholders (Narra Nickel v. Redmont Consolidated Mines).

35. What are some of the indicators which raise “doubt” and hence demands the application of
the Grandfather rule?
 Some of these indicators are:

a. That the foreign investors provide practically all the funds for the joint investment
undertaken by these Filipino businessmen and their foreign partner;
b. That the foreign investors undertake to provide practically all the technological support for
the joint venture; and
c. That the foreign investors, while being minority stockholders, manage the company and
prepare all economic viability studies (Narra Nickel v. Redmont Consolidated Mines).

36. Apply the Grandfather rule in this case. Tesoro Mines’ capital structure is composed of Sara
Marie (Filipino corporation) with 5, 997 shares; MBMI (Canadian corporation) with 3,998
shares); and others consisting of 5 shares, three of which are owned by Filipinos. In turn, Sara
Marie’s capital structure is composed of Olympic Mines, a Filipino corporation, with 6, 663
shares (but it should be noted that it did not pay any amount for its shares); MBMI, a
Canadian corporation with 3, 331 shares (and paid 99% of the paid-up capital of Sara Mines);
and others consisting of 6 shares, four of which are owned by Filipinos.

For Filipino participation in Tesoro Mines: 66.671 (Filipino equity in Sara Marie) x 59.972 (Sara
Marie’s share in Tesoro) = 39.98% + 0.37% (shares of individual Filipinos in Tesoro Mines) = 40.01%.

For foreign participation in Tesoro Mines: 33.33 (foreign equity in Sara Marie) x 59.973 (Sara
Marie’s share in Tesoro) = 19.99% + 39.98% (MBMI’s direct participation in Tesoro Mines) + 0.02%
(foreign individuals’ shares in Tesoro) = 59.99%. (Taken from Narra Nickel v. Redmont Consolidated).

37. Discuss the rule on payment of premiums vis-à-vis the validity of the insurance policy. Can the
delivery and acceptance of a check after the loss took place constitute payment of the
premium? How about the notice of the availability of the check on the day of the loss?

The general rule in insurance laws is that unless the premium is paid, the insurance policy is not
valid and binding. Section 77 of the Insurance Code provides that an insurer is entitled to payment of
the premium as soon as the thing is exposed to the peril insured against. Notwithstanding any
agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid

1
6,663 shares + 3,331 shares + 6 shares = 10,000 shares in Sara Marie. Hence, 6,663 shares + 4 shares is equal to
6, 667 shares. Divide it by 10,000. Hence, 66.67%.

2
Represents % ownership of Sara Mines in Tesoro Mines’ capital structure
.
3
Note that MBMI paid 99% of Sara Maria’s paid-up capital. Please note that the Grandfather rule is applied when
doubt exists. In this case, the doubt is indicated by the fact that the foreign investors provided practically all the
funds for Sara Marie.
and binding unless and until the premium thereof has been paid, except in case of a life or an industrial
life policy whenever the grace period provision applies.

There is no dispute that the check was delivered to and was accepted by respondent’s agent,
Trans-Pacific, on September 28, 1996. No payment of premium had thus been made at the time of the
loss of the vehicle on September 27, 1996. While petitioner claims that Trans-Pacific was informed that
the check was ready for pick-up on September 27, the notice of the availability of the check, by itself,
does not produce the effect of payment of the premium. Thus, at the time of loss, there was no
payment of premium yet to make the insurance policy effective (Gaisano v. Development Insurance and
Surety Corporation).

38. What are the exceptions to the general rule that no insurance contract takes effect unless
premium is paid? Are the exceptions obtaining in this case of Gaisano? What are the
consequences therefore?

The exceptions are:

a. In case of life or industrial life policy whenever the grace period provision applies, as
expressly provided by Section 77 of the Insurance Code;
b. Where the insurer acknowledged in the policy or contract of insurance itself the receipt of
the premium, even if the premium has not been actually paid, as expressly provided by
Section 78 of the Insurance Code;
c. Where the parties agreed that premium payment shall be in installments and partial
payment has been made at the time of loss, as held in Makati Tuscany v. CA;
d. Where the insurer granted the insured a credit term for the payment of the premium, and
loss occurs before the expiration of the term, as held in Makati Tuscany v. CA; and
e. Where the insurer is in estoppels as when it has consistently granted a 60- to 90-day credit
term for the payment of premium (UCPB General Insurance Co., Inc. v. Masagana Telamart,
Inc).

The insurance policy in question does not fall under any of the exceptions. Hence, petitioner is
not entitled to the insurance proceeds because no insurance policy became effective for lack of
premium payment. The consequence of this declaration is that petitioner is entitled to a return of the
premium paid for the vehicle under the principle of unjust enrichment (Gaisano v. Development
Insurance and Surety Corporation).

39. What is a material financial commitment and how significant is it in a rehabilitation plan?
Bearing this in mind, can a (a) written-off insurance claim or (b) the conversion of all deposits
for future stocks into common stock be considered as a material financial commitment?
 A material financial commitment refers to voluntary undertakings of the debtor-corporation, its
stockholders, or the would-be investors indicating their readiness, willingness, and ability to contribute
funds or property to guarantee the continued successful operation of the debtor-corporation during the
period of rehabilitation. It becomes significant in gauging the resolve, determination, earnestness, and
good faith of the distress corporation in financing the proposed rehabilitation plan. Insufficient financial
commitments indicate therefore a failure to exert a conscious effort in formulating a rehabilitation plan,
which is considered as an indispensable requirement in corporate rehabilitation proceedings. In other
words, an insufficient rehabilitation plan or one devoid of genuineness and good faith warrants the
dismissal of the petition for rehabilitation.

An insurance claim that has been written-off is considered a bad debt or a worthless asset and
hence cannot be deemed a material financial commitment for purposes of rehabilitation. Moreover, the
conversion of all deposits for future subscriptions to common stock and the treatment of all payables to
officers and stockholders as trade payables hardly constitutes material financial commitments. Such
“conversion” of cash advances to trade payables is a mere re-classification of the liability entry and had
no effect on the shareholder’s deficit (PBCOM v. Basic Polyprinters).

Criminal Law

40. Can an accused raise as a defense in a crime of homicide that the target of his assault was
another person?

No.

Under Article 4 of the Revised Penal Code, criminal liability is incurred by any person committing
a felony although the wrongful act done be different from that which he intended.

Hence, the fact that the target of Talampas’ assault was Eduardo, not Ernesto, did not excuse his
hitting and killing of Ernesto. The fatal hitting of Ernesto was the natural and direct consequence of
Talampas’ feloniously deadly assault against Eduardo. Talampas’ poor aim amounted to abberatio ictus
or mistake in the blow, a circumstance that neither exempted him from criminal responsibility nor
mitigated his criminal liability (Talampas v. People).

41. Differentiate instigation from entrapment.

The difference between the two lies in the origin of the criminal intent – in entrapment, the
mens rea originates from the mind of the criminal, but in instigation, the law officer conceives the
commission of the crime and suggests it to the accused who adopts the idea and carries it into execution
(People v. Tapere).
 42. Differentiate the felonies attempted rape and acts of lasciviousness.

The fundamental difference between attempted rape and acts of lasciviousness is the offender’s
intent to lie with the female. In rape, intent to lie with the female is indispensable, but this element is
not required in acts of lasciviousness. Attempted rape is committed when the “touching” of the vagina
by the penis is coupled with intent to penetrate and this is manifest only through the showing of the
penis capable of consummating the sexual act (Cruz v. People).

43. Is the accused’s argument that the findings of old healed vaginal lacerations during the
physical examinations disproved the charges against him correct?

The arguments are unwarranted.

The essence of rape is the carnal knowledge of a female either against her will (through force or
intimidation) or without her consent (where the female is deprived of reason, or otherwise unconscious,
or is under 12 years of age, or is demented). The presence or absence of injury or laceration in the
genitalia of the victim is not decisive of whether rape has been committed or not. Such injury or
laceration is material only if force or intimidation is an element of the rape charged; otherwise, it is
merely circumstantial evidence of the commission of the rape. Verily, a medical examination and a
medical certificate, albeit corroborative of the commission of rape, are not indispensable to a successful
prosecution for rape (People v. Buado).

44. What is the presumption of knowledge of insufficiency of funds or credit at the time of
issuance of a check? How relevant is it in the prosecution of BP Blg. 22 cases? How is this
presumption established?

The presumption of knowledge refers to Section 22 of BP Blg. 22. With this presumption, the
second element of a BP Blg. 22 is established.

To establish this presumption, the prosecution must prove the following:

a. The check is presented within 90 days from the date of the check;
b. The drawer or maker of the check receives notice that such check has not been paid by the
drawee; and
c. The drawer or maker of the check fails to pay the holder of the check the amount due
thereon, or make arrangements for payment in full within 5 banking days after receiving
notice that such check has not been paid by the drawee (Resterio v. People).
 45. What is “international simple resale?” Can it be considered a criminal act of theft in our
jurisdiction?

“International simple resale” is a method of routing and completing international long distance
calls, using lines, cables, antennae, and/or air wave frequency which connect directly to the local or
domestic exchange facilities of the country where the call is destined (Laurel v. Abrogar).

An “international simple resale” activity is an act of subtraction covered by the provisions on

theft and that the business of providing telecommunication or telephone service is personal property,
which can be the object of theft under Article 308 of the Revised Penal Code. The acts of subtraction
include: (a) tampering with any wire, meter, or other apparatus installed or used for generating,
containing, conducting, or measuring electricity, telegraph, or telephone service; (b) tapping or
otherwise wrongfully deflecting or taking any electric current from such wire, meter, or other apparatus;
and (c) using or enjoying the benefits of any device by means of which one may fraudulently obtain any
current of electricity or any telegraph or telephone service (HPS Software and Communication
Corporation v. PLDT).

46. What are the elements of the crime of plunder? What is its corpus delicti and the effect of
failure to establish the corpus delicti?

The elements of plunder are:

a. That the offender is a public officer who acts by himself/herself or in connivance with
members of his/her family, relatives by affinity or consanguinity, business associates,
subordinates, or other persons;
b. That the offender amasses, accumulates, or acquires ill-gotten wealth through a
combination or series of predicate acts; and
c. That the aggregate amount or total value of the ill-gotten wealth amassed, accumulated, or
acquired is at least P50 million.

The corpus delicti of plunder is the amassment, accumulation, or acquisition of ill-gotten wealth
valued not less than P50 million. The failure to establish the corpus delicti, such as the Prosecution’s
main witness’ lack of knowledge of the amassing, accumulating, or acquiring of ill-gotten wealth of at
least P50 million, should lead to the dismissal of the criminal prosecution (Arroyo v. People).

47. Is the handwritten unqualified “OK” an overt act of plunder?

It does not.

An overt act or external act is defined as some physical activity or deed, indicating the intention
to commit a particular crime and will logically and necessarily ripen into a concrete offense (People v.
Lizada). Therefore, the handwritten unqualified “OK” is not an overt act of plunder because such act is a
common legal and valid practice of signifying approval of a fund release by the President (Arroyo v.
People).

48. Define conspiracy, its two forms, and the two nuances of appreciating conspiracy as a means
of committing a crime. What is its relevance in the criminal prosecution for plunder?

Conspiracy exists when two or more persons come to an agreement concerning the commission
of a felony and decide to commit it. As a rule, it is not a crime unless the law considers it a crime and
prescribes a penalty for it.

In proving its existence, conspiracy takes two forms. The first is the express form, which
requires proof of an actual agreement among all the co-conspirators to commit the crime. The second
form is implied conspiracy, where an express agreement cannot be shown. An implied conspiracy exists
when two or more persons are shown to have aimed by their acts towards the accomplishment of the
same unlawful object, each doing a part so that their combined acts, though apparently independent,
were in fact connected and cooperative, indicating closeness of personal association and a concurrence
of sentiment.

There are two nuances of appreciating conspiracy as a means to commit a crime – the wheel
conspiracy and the chain conspiracy. The wheel conspiracy occurs when there is a single person or
group (the hub) dealing individually with two or more 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. Meanwhile, the chain conspiracy 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. This involves individuals linked together in a vertical chain to achieve a criminal objective.

Bearing in mind the elements of the crime of plunder, the law requires in the criminal charge for
plunder against several individuals that there must be a main plunderer and her co-conspirators, who
may be members of her family, relatives by affinity or consanguinity, business associates, subordinates,
or other persons. In other words, the allegation of the wheel conspiracy or express conspiracy in the
information was appropriate because the main plunderer would then be identified in either manner.
Implied conspiracy could also identify the main plunderer, but that fact must be properly alleged and
duly proven by the Prosecution (Arroyo v. People).

Remedial Law
 49. Can the failure to implead a third person whose lots were affected in action for legal
redemption be considered extrinsic fraud and hence and hence a ground for a petition to
annul a final judgment?

No.

Extrinsic fraud as a ground for the annulment of a final judgment refers to any fraudulent act of
the prevailing party in the litigation which is committed outside of the trial of the case, whereby the
unsuccessful party has been prevented from exhibiting fully his case.

In this case, there was no extrinsic fraud because respondent was not an indispensable party in
the legal redemption case since he is neither a redeeming co-owner nor the buyer. In other words, he
had no legal standing to participate or intervene in said action and consequently does not entitle him to
the right to ask for the annulment of the judgment under Rule 47 (Gochan v. Mancao).

50. Can a petition for certiorari or a writ of mandatory injunction be filed or issued against the
Executive Department to espouse the claim of Filipina women for an official apology, legal
compensation, and other forms of reparation from the Japanese government?

No. Whether or not to espouse petitioners’ claim against the Japanese Government is left to
the exclusive determination and judgment of the Executive Department. The Court cannot interfere
with or question the wisdom of the conduct of foreign relations by the Executive Department (Vinuya v.
Romulo).

51. Is the respondent in a preliminary investigation entitled to be furnished with copies of the
affidavits of his co-respondents?

No. There is no law or rule which requires the Ombudsman to furnish a respondent with copies
of the affidavits of his co-respondents. Both the Revised Rules of Criminal Procedure and the Rules of
Procedure of the Office of the Ombudsman require the investigating officer to furnish the respondent
with copies of the affidavits of the complainant and affidavits of his supporting witnesses only.
Moreover, the right of the respondent is only to examine the evidence submitted by the complainant
(Senator Estrada v. Office of the Ombudsman).

52. In cases of pre-trial detainees whose cases are under preliminary investigation, or whose
cases have been dismissed on inquest/preliminary investigation pending appeal/motion for
reconsideration or reinvestigation/automatic review, does the waiver of Article 125 of the
Revised Penal Code give the State the right to detain a person indefinitely?

No.
 The waiver of Article 125 of the Revised Penal Code does not vest upon the DOJ, Prosecutor’s
Office, BJMP, and PNP the unbridled right to indefinitely incarcerate an arrested person. The waiver of a
detainee’s right to be delivered to proper judicial authorities as prescribed by Article 125 of the RPC
does not trump his constitutional right in cases where probable cause was initially found wanting by
reason of the dismissal of the complaint filed before the prosecutor’s office even if such dismissal is on
appeal, reconsideration, reinvestigation, or on automatic review. Every person’s basic right to liberty is
not to be construed as waived by mere operation of Rule 112 of the Rules of Court. The fundamental
law provides limits and this must be all the more followed especially so that detention is proscribed
absent probable cause.

Hence, a detainee under such circumstances must be promptly released to avoid violation of the
constitutional right to liberty, despite a waiver of Article 125 of the RPC, if the 15-day period (or the 30-
day period in cases of violation of RA 9165 pursuant to Section 90 thereof) for the conduct of the
preliminary investigation lapses (IBP Pangasinan Legal Aid v. DOJ).

53. Are the documents collected by the PCGG in the course of its investigation, public records
which warrant the application of the third exception to the Best Evidence Rule?

No.

Section 7 of Rule 130 of the Rules of Court provides that when the original of the document is in
the custody of a public officer or is recorded in a public office, its contents may be proved by a certified
copy issued by the public officer in custody thereof.

However, the fact that these documents were collected by the PCGG in the course of its
investigation does not make them per se public records referred to in the quoted rule. As a
consequence, the original copy of the documents should have been submitted (Republic v. Marcos-
Manotoc).

54. Can a child of tender age be a competent witness?

Yes.

Under the Rules of Court, a child may be a competent witness, unless the trial court determines
upon proper showing that the child’s mental maturity is such as to render him incapable of perceiving
the facts respecting which he is to be examined and of relating the facts truthfully. The testimony of the
child of sound mind with the capacity to perceive and make known the perception can be believed in
the absence of any showing of an improper motive to testify. Once it is established that the child fully
understands the character and nature of an oath, the testimony is given full credence.
 In the case of CCC, the Defense did not persuasively discredit his worthiness and competence as
a witness. As such, the Court considers the reliance by the trial court on his recollection fully justified
(People v. Magbitang).

55. Can the accused’s contention that the victim recanted her testimony be given credit even
though the records show that she was impelled by the need for financial support of the
accused?

No.

As a rule, recantation is viewed with disfavor firstly because the recantation of her testimony by
a vital witness of the State is exceedingly unreliable, and secondly, because there is always the
possibility that such recantation may later be repudiated. Hence, before allowing the recantation, the
court must not be too willing to accept it, but must test its value in a public trial with sufficient
opportunity given to the party adversely affected to cross-examine the recanting witness both upon the
substance of the recantation and the motivations for it. The recantation, like any other testimony, is
subject to the test of credibility based on the relevant circumstances, including the demeanor of the
recanting witness on the stand.

In this case, both the RTC and the CA rejected the recantation for being dictated by AAA’s
family’s financial difficulties. Moreover, even during her intended recantation, she cried most of the
time. This did not conceal her impelling motive which is the material support from the accused (People
v. Teodoro).

56. Can the letter of Wagas establish that he was the person who had conversed with Ligaray by
telephone although said letter was admitted exclusively as the State’s rebuttal evidence to
controvert or impeach Wagas’ denial of entering into any transaction with Ligaray?

No.

Under the law of evidence, the court shall consider the evidence solely for the purpose for
which it was offered, not for any purpose.

In this case, the letter was admitted exclusively to impeach or controvert the denial of Wagas of
entering into a transaction with Ligaray. As a result, it cannot be used to establish any other purpose
since fairness to the adverse party demands such exclusivity (People v. Wagas).