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I.

(a) As the lawyer of AMLAC, I would counter that a pending case against the alleged
drug pusher is not required in order for AMLAC to inquire about Tulaks bank
account.

The Anti-Money Laundering Act does not require that the owner of the deposit
account have a pending case before his account be subject of investigation by the
AMLAC. It is sufficient that there is probable cause as to the activities and
transactions of the owner of the account in relation to his bank account. Covered and
suspicious transactions are subject to AMLACs regulation and finding of probable
cause as to the use of the account opens said account to AMLACs scrutiny.

Here, the AMLAC has found probable cause to subject the account of Tulak to
investigation because they have found that proceeds of the drug transactions may
have been deposited in those accounts.

Thus, AMLAC may proceed to look into Tulaks accounts upon finding of probable
cause.

(b) The AMLA can obtain the order of the court authorizing them to make inquiries
from any competent court.

The law provides that the AMLAC must first obtain a court order from any competent
court to authorize them to make inquiries. What the law requires to be obtained from
the Court of Appeals is a Freeze Order to freeze a bank account subject of the
money laundering investigation.

Here, such authority to look into Tulaks accounts may be obtained from any
competent court, not just the Court of Appeals.

Thus, an application for authority to inquire about Tulaks accounts can be obtained
from any competent court.

(c) No, Tulaks dollar deposit account can still be inquired into even without his
written consent.

As a general rule, a foreign deposit account can only be inquired into upon the
written consent of the depositor. However, the Anti Money Laundering Law provided
for an exceptionthat the bank account be subject of an inquiry under the Anti-
Money Laundering Act.

Here, the AMLAC is conducting the inquiry of the dollar deposit account of Tulak due
to the existence of a probable cause that such account is being used as an
instrument of a crime.
Thus, such inquiry being made by AMLAC on Tulaks dollar deposit account is
regular in nature.

II. (a) The court should sustain the objection of Daking.

The Bank Secrecy Law and the Foreign Currency Deposit Act was written precisely
as a way to attract investors and depositors to do business with banks. A feature of
both laws is the protection and high regard for the confidential nature to which
customers transact with the bank. These laws promote the high level of protection
afforded to the banking community. Any violation of such secrecy is against public
policy.

The deposit slip of the dollar account of Daking is still covered under the Bank
Secrecy Law as well as the Foreign Currency Deposit Act and any offer of such
evidence, being the fruit of the poisonous tree should be objected to for its
inadmissibility.

Thus, the court should sustain on Dakings objection because the deposit slip is
inadmissible in evidence.

(b) The exceptions to the secrecy of bank deposits are: a) those where the written
consent of the depositor or owner of the bank account is obtained, and b) where the
AMLAC and the BSP conduct inquiries into those bank deposits in aid of their
investigation.

Jurisprudence also provides that a foreign deposit account can also be subject to
garnishment as payment for the damages that the foreign owner-accused owes his
rape victim.

III. Yes, Atty. De Guia had the power to revoke the agreement.

Under the law, when a bank is under conservatorship, the power of the board of
directors ceases and the power is then transferred to a conservator who is tasked to
maintain or improve the current condition of a bank under distress. The power of the
board of directors to enter into contracts that may prove to be more prejudicial than
beneficial to the distressed bank should be curtailed. A bank under conservatorship
can continue conducting its business but only to a limited capacity.

Atty. De Guias act of revoking the contract of security and maintenance services
despite it being approved even before the bank entered conservatorship is valid. As
conservator, she had the duty to improve the current status of the bank and to make
sure that only essential contracts or agreements are entered into.
Therefore, Atty. De Guia is correct in revoking the said contract.

IV. No. The defense of Y Corp. that X Corp. is a separate juridical entity is not
appropriate in this case.

As a general rule, a corporation has a juridical personality separate and distinct from
the directors, officers, and members therein. However, piercing the veil of corporate
fiction can be done and the separate juridical personality may be disregarded which
would consider the members and the corporation itself as one. As such, the officers,
directors, and members therein become personally liable for the acts done in the
corporate name. Piercing the veil of corporate fiction is proper in cases where the
corporate vehicle is used by the board of directors, corporate officers, or affiliate
corporations as a means to perpetrate fraud or aid in the commission of a crime.

In this case, X Corp committed an unfair labor practice of illegally dismissing the
workers. Y Corp using X Corp as an adjunct of their pizza business should be held
liable because they share the same set of corporate officers. X Corp employs the
services of Y Corp as an incident to their pizza business, and as such, under the
doctrine of piercing the veil of corporate fiction, the corporate officers and X Corp is
liable to the illegally dismissed workers.

Thus, the doctrine of piercing the veil of corporate fiction can be used in this case.

V.

VI. Yes, the complaining stockholders can compel Petronius to declare dividends.

Generally, the corporation is not mandated to declare dividends to its stockholders.


However, when the unrestricted retained earnings of a corporation have exceeded
100% of its paid-up capital, the stockholders can compel a corporation to declare
dividends provided that such unrestricted retained earnings are to be used for
expansion of the corporation, or is subject to a provision of a loan agreement, among
others. The purpose is for stockholders to be able to share in the profits of the
corporation where they invested their money in.

Here, the stockholders of Petronius can compel Petronius to declare dividends


because the unrestricted retained earnings have exceeded 100% of the paid-in
capital of P100 Million. Unless the company decided to expand business, there
should be no reason not to declare dividends to the stockholders.

Thus, Petronius can be compelled to declare dividends.

VII. (a) Mr. Dineros committed the crime of insider trading.


Under the Securities and Regulations Code, the crime of insider trading is committed
when a director, officer, employee or even an associate of the first three obtains
material and non-public information and uses that information to be able to sell or
manipulate the price of the securities he or she intends to sell.

Here, Mr. Dineros is presumed to be in possession of material and non-public


information due to his position as a director of Philex Mining Corp. He made use of
the information he gathered and unknown to the public to be able to sell his ten
million shares for double the price immediately after he obtained such material and
non-public information.

Mr. Dineros is liable for the crime of insider trading.

(b) No, Philex Mining may not recover the P10 Million profit that Mr. Dineros made.

The buyer of the ten million shares for double the price should be able to recover the
excess he paid for the shares under the quasi-contract of negotiorum gestio.

VIII. As lawyer for AppsLex, I would advise them to make the proper negotiable
instruments in the form of promissory notes to make the plan legal.

The Negotiable Instruments Law provides that for a promissory note to be


negotiable, it must conform to the following requirements: a) It must be in writing and
signed by the maker; b) It must be an unconditional promise to pay a sum certain in
money; c) It must be payable on demand or at a fixed or determinable future time;
and d) It must be payable to order or to bearer.

Once AppsLex conforms to the requirements to make a promissory note, the payees,
herein the 25 former classmates and law professors can negotiate the promissory
notes and when the due date arrives, they may demand payment from the 5 young
lawyers who issued the promissory notes.

Thus, to make the plan to borrow money for AppsLex legal, AppsLex, Inc. should
issue the proper promissory notes conforming to the requisites under the Negotiable
Instruments Law.

IX. Yes, James Hurt is liable for infringement of copyright.

Under the Intellectual Property Code, a copyright is infringed when the material that
is made by the author is reproduced without his consent. An exception to this rule is
the Fair Use policy wherein the material or excerpts of the same is used for
academic purposes and is not used for public consumption.

Here, despite warning from Prof. Charles Queensfield not to reproduce or


disseminate his handout without his consent, Atty. James Hurt violated the copyright
of the said handouts by uploading the same to a open source website. Even though
the materials where used in an academic discussion, Atty. Hurt exceeded the
allowable limits by making the handouts accessible to all thus making him liable to
copyright infringement.

Thus, Atty. James Hurt is liable for infringement of copyright and damages.

X. Yes. The denial of the trademark application is proper.

Under the Intellectual Property Code, when a generic or descriptive term is used as a
trademark, the registration for the trademark can be denied. However, under the
doctrine of secondary meaning, generic or descriptive terms may be used as part of
the trademark when the use of such generic or descriptive term has been attached to
the good or the service it seeks to describe.

Here, the term Jurists can eventually be used registered as a trademark of the bar
review center but only if the same has been in continuous use for at least 5 years. It
is also important to note that Jurists Bar Review Center is a trade name which need
not be registered in order to be subject to protection.

Thus, the denial of the trademark application is justified.

XI. (a) No. It is not patentable.

The Intellectual Property law provides that for a thing to be patentable, the following
must concur: a) there must be an inventive step; b) it must be novel; c) it must be a
technical solution to a problem and d) there must be industrial applicability.

The gas-saving device cannot be patented because it does not conform to all the
requisites for it to become patentable. It is not a novel idea because it cannot be said
that there had been no idea for a gas-saving device as of yet. It does not have an
inventive step because a gas-saving device might have already been thought of and
available in the market. At the very least, it is a utility model which may be
considered to be an improvement of an existing product.

Thus, due to the non-compliance with the requisites for an item to be patentable, the
gas-saving device cannot be patented.

(b) Francis is entitled to the patent.

The rule is that the first to register for a patent has priority in right over the said
patent. If there is a question as to the true owner of the patent, it should be disproved
with evidence.
Here, Francis was able to register the patent earlier than Cezar who originally
thought of the idea. Thus, such fact of first registration gives Francis priority over the
said patent. However, Cezar is not without remedy for he can present evidence to
the contrary with the Bureau of Patents.

Thus, Francis is entitled to the patent but Cezar can rebut such entitlement.

(c) No, Joabs claim will not prevail over those of Francis and Cezar.

The law on Intellectual Property protects the one who conjured the idea of the
patentable invention. The right to the patent belongs to the inventor and his heirs.

Here, Joab was merely to provider of the materials but the inventor is Francis and
Cezar. The law protects their right over the patent. This is not commissioned work
because Joab did not commission either Francis or Cezar to invent such device.

Thus, Joab has no right over the patent.

XII. a) Under the Negotiable Instruments Law, a holder in due course is a holder who
taken the instrument under the following conditions: a) it is complete and regular on
its face; b) he became holder of it before it was overdue; c) he took it for good faith
and for value; and d) when it was negotiated to him, he had no notice of any infirmity
in the instrument or defect in the title of the person negotiating the same.

b) Yes. Mario is the maker and is primarily liable on the instrument. As maker of the
instrument, Mario warrants that he will pay the value of the instrument according to
its tenor and admits to the existence of the payee and his then capacity to endorse.
Thus, Charles may be able to enforce the said note against Mario.

c) No. Charles cannot enforce the note against Bart because the former is not a
holder in due course.

Under the Negotiable Instruments Law, a holder in due course is a holder who taken
the instrument under the following conditions: a) it is complete and regular on its
face; b) he became holder of it before it was overdue; c) he took it for good faith and
for value; and d) when it was negotiated to him, he had no notice of any infirmity in
the instrument or defect in the title of the person negotiating the same.

Charles can no longer enforce the instrument against Bart because the former
became holder of it after it was overdue. Also, as a holder not in due course, he is
vulnerable personal and real defenses. A personal defense of lack of consideration is
present in this case due to the object of the contract being a fake ring.
Thus, Charles can no longer enforce the instrument against Bart.

XIII. a) Bethany may enforce the note against Mickey for the amount of P 200, 000. 00.

Under the Negotiable Instruments Law, a holder in due course is a holder who taken
the instrument under the following conditions: a) it is complete and regular on its
face; b) he became holder of it before it was overdue; c) he took it for good faith and
for value; and d) when it was negotiated to him, he had no notice of any infirmity in
the instrument or defect in the title of the person negotiating the same.

Bethany is a holder in due course, having complied with all the requisites stated
above. As a holder in due course, she can enforce the note against Mickey
regardless of the fact that Pilita wrote down P 200, 000. 00 on the note against the
authority vested upon her. But because Bethany is a holder in due course, she can
enforce the whole amount from Mickey.

Thus, Mickey is liable to Bethany for P 200, 000. 00.

b) Yes, Cathy may still enforce the note against Mickey for the amount of
P200,000.00.

The rule is when a holder acquires title from a holder in due course, the holder
acquires the rights of the holder in due course from whom she got her title from.

Here, Cathy acquired the note from Bethany who is a holder in due course. Even
despite the fact that Cathy knew of the breach of trust, she is still a holder in due
course and as such, she can enforce the instrument against Mickey for the amount
of P200,000.00.

Thus, Mickey is also liable to Cathy for P200,000.00.

XIV. a) Yes, Cindy can enforce payment of the check against Nilda.

When an instrument is complete in all its terms coupled with the act and intention of
delivery of the same, the same is valid. When it is delivered to a holder in due course
the latter may enforce payment of the same against the maker or drawer. A holder in
due course is a holder who is a holder who taken the instrument under the following
conditions: a) it is complete and regular on its face; b) he became holder of it before
it was overdue; c) he took it for good faith and for value; and d) when it was
negotiated to him, he had no notice of any infirmity in the instrument or defect in the
title of the person negotiating the same.
Cindy is a holder in due course for she has complied with all the requisites of being
one. Thus, as a holder in due course, Cindy can enforce payment of the check
against Nilda because Cindy was not aware that there was any irregularity in the
negotiation of the instrument.

b) No. My answer will not be the same.

Jurisprudence provides that a check must be deposited or encashed within 6 months


from the date of its issue or last negotiation. Otherwise, the check loses its efficacy
and becomes stale. The check can no longer serve its purpose.

Here, the check was dated January 2, 2008 but it was paid to Cindy on August 8,
2008 or 7 months from the issuance of the check. Even if the check was subject of a
stop payment order, it was deposited on August 8, 2008. It means that it had already
lost its efficacy because it was not deposited nor encashed within a reasonable time.

Thus, Cindy cannot enforce the payment of the check against Nilda anymore.

XV. No, Robin Sun cannot hold Andy Lim liable on the note.

Under the Negotiable Instruments Law, when a signature is forged or made without
the authority of the person whose signature it purports to be, it is wholly inoperative
and no right to retain the instrument, or give a discharge therefore or enforce
payment thereon against any party thereto can be acquired through and under such
signature unless the party against whom it is sought to enforce such right is
precluded from setting up the forgery or want of authority.

Here, the signature of the payee is forged and as such the signature is inoperative.
Robin Sun enforce payment thereon against Bob Uy, the party whose signature is
forged and all prior parties to Bob Uy as well for they were not party to the forgery.

Thus, Andy Lim cannot be held liable to Robin Sun on the note.

XVI. No. The insurer may not be made to answer for the damage to the cargo and the
ship.

The law on insurance provides that perils of the sea cannot be made to include man-
made causes to the destruction of the ship. When the law talks of perils of the sea,
only those that can be attributed to fortuitous events naturally occurring can be
considered.

Here, the cause of the destruction of the MV Dona Priscilla is due to the leakage
coming from the engine pipes and such leak seeping into the cargo compartment.
This is attributed to the extensive mileage that the shipped accumulated. This is not
a peril of the sea, but rather a man-made cause that could have been avoided by
proper maintenance of the ship.

Hence, T Shipping Co. cannot collect from R Insurance Co.

XVII. a) Yes, CIP is a common carrier.

As a rule, a common carrier is one that holds itself out to the public to transport
goods and people by land, air, or sea, for compensation. It is not required that the
common carrier have vehicles of their own for the conveyance of goods and people
but the important thing is that they hold themselves out to the public for the transport
of goods and passengers.

CIP is a common carrier even with the lack of vehicles used for conveyance of goods
and passengers. Their business as a freight forwarder naturally involves the
transportation of goods and people and as such, that would make them a common
carrier whose services are open to the public.

Hence, CIP is a common carrier.

b) Yes, the court may hold CIP liable for damages by way of lost profit.

As a general rule, whenever goods being transported by a common carrier is lost or


damaged, a presumption of lack of diligence of a good father of a family exists. The
presumption is rebuttable by evidence to the contrary that the common carrier took
the necessary precaution in ensuring the safety and security of the goods and
exercised the required degree of diligence of common carriers.

Here, Likha was able to prove that the goods were not able to reach their destination.
Thus, the presumption of negligence arises. CIP on the other hand did not present
evidence to the contrary in order to rebut the presumption. Thus, the presumption of
negligence on the part of CIP stands.

Thus, CIP is liable for damages by way of lost profit.

XVIII. AXLE Fabrics contention is not tenable.

In jurisprudence on Letters of Credit, it has been acknowledge that in such


transactions, there exists three separate contractsthe contract of sale between the
buyer and the seller, the contract between the buyer and the issuing bank and the
contract between the seller and the bank. This is called the independence principle
where the three contracts have not relation with each other.

The correspondent bank BA cannot be held liable by AXLE Fabric because as far as
BA is concerned, it does not have anything to do with the loading of the shipment
which should be the role of Dyes R Us. AXLE Fabric should go directly to the seller,
Dyes R Us for breach of contract of sale for not shipping the correct items.

Thus, AXLE cannot run after Bank of America.

XIX. No. The insurers refusal to pay the proceeds of the policy is not justified.

Under the law on insurance, an incontestability clause is one where the insurer, after
the lapse of the incontestability period of 2 years can no longer question the material
information in the policy. The said 2-year period begins to run from the time the
policy was issued or when it was reinstated.

Here, the incontestability period has already set in because Sisa died 2 years from
the issuance of the policy. The insurer can no longer question even the breach of
Sisas warranty to attend tegular medical check-ups. Also, the cause of death is not
material to a life insurance because under the law, even suicide does not avoid an
insurance policy.

Thus, the insurer must pay the proceeds to Sisas beneficiary, Sposo.

XX. a) Bansa cannot claim from the insurer.

The law on insurance provides that any material concealment of any fact that might
affect the risk or the computation of the premium that must be paid of the proceeds
of the insurance that must be paid avoids the insurance policy.

Here, Bansa did not reveal that the vessel used is registered in Iran which would
affect the risk it is exposed to, more so that its route is a battle-torn area. Such
concealment is a breach of the insurance contract.

Thus, Bansa will not be able to claim from the insurer even though it is destroyed
due to a storm.

b) Bansa cannot claim from the insurer.

Misrepresentation, under the law on insurance is a ground for non-payment of the


proceeds to the insured. Misrepresentation is when the insured provides information
that does not truly represent the truth or the facts.

Here, the insurer specifically asked the question about the nationality of the vessel
which Bansa categorically lied about. Such act is misrepresentation of the facts and
as such, the insurer is not liable to pay Bansa for the loss of the insured vessel.

Thus, Bansas claim from the insurer will fail.