窗体顶端

1. 1Ariel Sebastian subscribed to 100,000 shares of stock of LM Development

Corporation, which has a par value of P1 per share.  He paid P50,000 and promised to
pay the balance before December 31, 2023.  On June 1, 2023, LM Development
Corporation declared cash dividends, payable on December 1, 2023.  

For how many shares is Ariel entitled to be paid cash dividends? Explain.

2. Stella contracted the services of Starlight Travel and Tours International Inc. to
arrange and facilitate her booking, ticket and accommodation in a tour dubbed as
“EuroTrip”. Pursuant to the contract, the travel agent gave Stella her travel documents
and plane tickets and reminded her that her flight leaves in 2 days.  But when she
went to the airport for her flight, Stella realized that the flight she was supposed to
take had already departed the previous day.  She filed a case against Starlight Travel
and Tours for breach of contract and failure to observe the standard of case required
of a common carried when it wrongly informed her of the flight schedule. 

Accordingly to Stella, Starlight Travel and Tours is required by law to exercise

extraordinary diligence in the fulfillment of its obligation. 

Was there a contract of carriage from this transaction?  Why or why not?

3. The Anti Money Laundering Council initiated a discreet investigation of the

financial transactions of Walter White, a suspected drug trafficker based in Makati.
AMLC, PDEA and NBI worked together and were able to gather more than enough
evidence to prosecute Walter for his drug activities.  AMLC had probable cause that
Walter’s deposits and investments in various banks, including Hermanos Bank, were
related to money laundering.  So AMLC sent Hermanos Bank a formal demand letter
to allow its agents to examine Walter’s banking transactions, but Hermanos Bank
refused the demand. 

Is Hermanos Bank’s refusal correct? Please explain. 

4. To secure a loan of P10 Million, Leoncio mortgaged his building to Eduardo.  In
accordance with the loan agreement, Leoncio had the building insured by SFU
Insurance Company for P10 Million, designating Eduardo as the beneficiary. 
Eduardo also took an insurance on the building upon his own interest with Another
Insurance Company for P5 Million. 

The building was totally destroyed by fire, a peril insured against under both
insurance policies.  It was subsequently determined that the fire had been intentionally
started by Leoncio and that, in violation of the loan agreement, he had been storing
flammable materials in the building. 

Is there double insurance?

5. To prevent the entry of Fernando, whom it considered as one antagonistic to its

interests, into the Board of Directors, Fisher and Sons Inc. amended its Articles of
Incorporation and By Laws to add certain qualifications of stockholders to be elected
as members of its Board of Directors.  The By Laws prohibited the election of
stockholder to the Board when that stockholder is employed with, connected to or has
invested in rival companies. The same ground was likewise introduced as a ground for
removing a member of the Board. When presented for approval at a meeting of its
stockholders duly called for the purpose, the amendments were overwhelmingly
ratified.  Fernando brought a suit against Fisher and Sons Inc. to question the
amendments. He alleged, among others, that as a stockholder, he had acquired rights
inherent in stock ownership such as the right to vote and be voted upon in the election
of directors.  Would the action prosper?
6. CG Inc. was incorporated in Delaware, USA and has no resident agent in the
Philippines.  It contracted with Southen Luzon Inc., a local corporation, for the
purchase and importation of sugar.  Southern Luzon promised to deliver 24,000
metric tons of sugar and CG Inc to pay $44.50 per metric ton.  The contract required
Southern Luzon to put up a performance bond with Excalibur Insurance to guarantee
the delivery of the molasses during the prescribed shipment.  When Southern Luzon
failed to deliver the molasses, CG Inc. claims payment from Excalibur Insurance who,
in turn, raised the defense that CG Inc. was doing business in the Philippines without
the required license, and thus, it has no personality to sue in our court.  Is Excalibur’s
contention tenable?
7. What is the Safe Harbor Provision in the Anti-Money Laundering Act?
8. Pedro is a Filipino immigrant residing in Sydney, Australia. Mario is a Filipino
residing in Antipolo City, Philippines. Pablo is a resident alien residing in Pasig City.
CTS Corporation is a domestic corporation - 40% owned by foreigners and 60%
owned by Filipinos, with Roberto as authorized representative. TLC Corporation is a
foreign corporation registered with the Philippine Securities and Exchange
Commission. 390 Corporation is a domestic corporation (100%) Filipino owned. Sisa
is a Filipino, 16 years of age, arid the daughter of Mario.  They all want to set up a
corporation in the Philippines.

1.      Who can be incorporators?  Who can be subscribers?

2.      Who are qualified to become members of the board of

directors of the corporation?

3.      What is an independent director? Are all corporations

required to have an independent director?

4.      Who are qualified to be Treasurer of the company?

9. Which activities may not organize as a One Person Corporation?

10. Businessmen from Sweden called you to discuss the possibilities of investing in
various projects in the Philippines and wanted your thoughts on certain issues
regarding foreign investments in the Philippines.  One of the burning questions asked
was: Aside from Filipino citizens, which other entities would be considered
“Philippine National” under the Foreign Investments Act?

11. Explain the concept of watered stock and the liability arising from its issuance.
12. Mr. Kermit D. Frug is the President and Director of Piggy Bank, a commercial
bank holding its main office along Sesame Street.  His brother, Robin D. Frug, owned
a big tadpole breeding business based in Lake Ness.  Robin applied for a P50M loan
with Piggy Bank.  Robin followed the ordinary banking procedures in all the stages of
the processing of his application.  When required, he made the necessary
arrangements to guarantee the loan.  Thus, in addition to the real estate mortgage,
Robin executed a joint and solidary suretyship, issued post dated checks and
submitted all other requirements prescribed by Piggy Bank.
When the loan was about to be approved and the proceeds released, Jim Henson,
known to be Robin’s competitor, wrote to the Piggy Bank’s Management and Board
of Directors questioning the loan on the ground of conflict of interest due to Kermit
and Robin being brothers, citing the legal restriction against bank exposure of
directors, officers, stockholders or their related interests (DOSRI).

What are the three restrictions imposed by law on DOSRI transactions?

13. The Anti Money Laundering Council initiated a discreet investigation of the
financial transactions of Walter White, a suspected drug trafficker based in Makati.
AMLC, PDEA and NBI worked together and were able to gather more than enough
evidence to prosecute Walter for his drug activities.  AMLC had probable cause that
Walter’s deposits and investments in various banks, including Hermanos Bank, were
related to money laundering.  So AMLC sent Hermanos Bank a formal demand letter
to allow its agents to examine Walter’s banking transactions, but Hermanos Bank
refused the demand. 

Is Hermanos Bank’s refusal correct? Please explain

14. Rommelito obtained from El Seguro Insurance Company a comprehensive motor

vehicle insurance to cover his Mercedes Benz GLE.  The policy was issued on 30
April 2021 and, on even date, Rommelito paid the premium with a personal check
post dated 6 May 2021.  On 5 May 2021, the car was involved in an accident that
resulted in its total loss. On 10 May 10 2021, the drawee bank returned Rommelito’s
check with the notation ―Insufficient Funds. Upon notification, Rommelito
immediately deposited additional funds with the bank and asked the insurer to
redeposit the check. Enrique thereupon claimed indemnity from the insurer. 

Is the insurer liable under the insurance coverage? Why or why not?

15. What are the general principles of data privacy?

16. Ferdie is the patent owner of a certain invention.  He discovered that his invention
is being infringed by Johann. What are the remedies available to Ferdie against
Johann?
17. What is appraisal right and when may the same be exercised?
18. What is the distinction between infringement and unfair competition?
19. Fly Juan Fly Flight 143 was on a scheduled passenger flight from Manila when it
crashed as it landed on the Cebu International Airport; the pilot miscalculated the
plane’s approach and undershoot the runway.  Of the 150 people on board, 10
passengers died at the crash scene. Of the 10 who died, on was a passenger who
managed to leave the plane but was run over by an ambulance coming to the rescue. 
Another was an airline employee who hitched a free ride to Cebu and who was not in
the passenger manifest. 

It appears that the co-pilot who had control of the plane’s landing had less than the
required flying and landing time experience, and should not have been in control of
the plane at the time.  He was allowed to fly as a co-pilot because of the scarcity of
pilots.  The main pilot, on the other hand, had a very high level of blood alcohol at the
time of the crash.  

You are a part of the team that the victims hired to handle the case for them as a
group.  You were asked to explain the causes of action legally possible under the
given facts against the airline and the pilots and whom you need to implead in these
causes of action. 

What is/are your advice/s?

20. Hello Philippines (HP) is a public utility company registered with the SEC.  Its
authorized capital stock consist of voting common shares and non-voting preferred
shares, with equal par values of P100/share.  Currently, the issued and outstanding
capital stock of HP only consists of the common shares of Maria dela Cruz, a Filipino
(60%) and John Snow, an Australian national (40%). 

To raise additional funding for its operations, HP issued preferred shares to John
Snow, equivalent to the currently outstanding common shares.  A suit was filed
questioning the corporation action on the ground that the foreign equity holdings in
the company would now exceed the 40% foreign equity  limit allowed under the
Constitution for public utilities.  Rule on the legality of John Snow’s current holdings.

21. Mat is a Filipino Citizen, who is a seafarer receiving  compensation as seafarer. In

addition, he has farm for fighting cocks. He has also generate income from the said
farm. 
You were hired by him to help prepare his income tax return for 2022. Previously,
Mat had been  imposed deficiency tax by the BIR. So in order to avoid what
happened, he hired you. How would you prepare his income tax return ?

Explain and justify your answer.

22. Princess and Chin are illegitimate children of Quenie who was then a common
law wife of a Taiwanese. After the birth of Princess and Chin, Quenie died  without a
will due to a vehicular accident.

In order to avail of the benefit of the Tax amnesty on the  estate of Quenie, Princess
and Chin hired you to help them prepare the necessary document needed to the
settlement of the properties left by their mother consisting of 2-hectares of parcel of
land situated at Puerto Princessa. To expedite the settlement of the parcel of land you
recommended that a deed of extra-judicial settlement will be executed, instead of a
judicial settlement before a court which they readily agreed.

Is an execution of a deed of extra-judicial settlement in order? Justify.

How would you apportion/divide the said property when at the time of Quenie’s death
her father was still alive up to the present and Queenie’s siblings were also alive.

23. Clay Clarkson is an NBA player. In 2022, from the USA where he is a resident
and citizen. Clarkson stayed in the Philippines from Nov. 29, 2022 to December 5,
2022 to watch the 2022 FIBA World Qualifying tournament held in MOA, Paranaque,
Philippines.

During his stay, he bought equity investment from Alpha and Delta investment
company (domestic Corporation). 

He likewise invested in a mutual fund of Banko de Pilipinas, a local bank.

For purpose of filing an income tax return, is Mr Clarkson considered as resident alien
or non-resident alien ?. Explain briefly your answer.

24. On October 2021, Mr. Roy an American basketball Coach was hired as a team
consultant by the Gilas Pilipinas Team, in the Philippine Basketball Association for
the FIBA Elimination rounds for a period of more than three (3) months from
October  to December 2021. His coming  to the Philippines was for a definite
purpose. But he was  subsequently  selected to coach the Philippine Mens Basketball 
Team for a period of 2 years. The American coach intends to leave the Philippines as
soon as his job is completed  in 2022  Is Mr. Roy 

Classified as resident alien or non-resident alien. What would be your answer. Justify.

25. The board of Director of the Northview I Homeowner Association held a meeting
last January 1, 2022. In the said meeting the looked on the necessity to increase the
existing association dues.

One of the Board of Directors proposed an increase of 50% to cover the payment of
the 12% value added Tax (VAT) on the association dues which is being collected for
services rendered in connection with trade and business of the said association.
However, another member of the board opposed the proposal to increase because the
association is not empowered to impose additional dues on  the account of covering
the value added tax. Decide with reason.

26. Mr. Lorenzo is a partner in general professional partnership.

In his share in the profit he received the following receipt below which is considered
received by him and thus taxable although not yet distributed.

His accountant told him to report all of these receipt as listed  below as part of his
share from the partnership.
a. A security deposit to ensure the faithful performance of a certain obligation.
b. b. Deposit in banks which made available to the partnership as the seller of services
without restriction.
c. c. Issuance of the debtor of notice to offset any debt or obligation and acceptance
thereof by the partnership as seller as payment of services.

d. Deposit for rentals to answer damages, restricted as to be used

e. Interest coupon that have matured and are payable but not been cashed.

Mr. Lorenzo has certain reservation regarding the position of his accountant, so he
asked you to help him in the computation his share for income tax purposes. State
your position with reason.

27. X hired you as the tax consultant of XYZ  company with substantial amount of
compensation.

During a board meeting of the Directors, you have been invited to explain the
following for their information:

1. Input tax and out put tax

2. 2. Zero-rated and effectively zero-rated transaction

3. Destination principle

What would be your explanation on the above-items.

28. As a law student of PUP College of Law you are required to provide legal and tax
assistance to those who are in need of such assistance in your barangay.

One taxpayer consulted you, on what would be the requirements and/ conditions to be
qualified under the substituted filing of the income tax returns.

What would be the advised you can give to the concern of  the taxpayer.

29. For the purpose of determining a person who is self employed and/or professional
a barangay Kagawad asked you , who are these persons for tax purposes.
30. Conrad sold his real properties consisting of land and building.
For this purpose, he executed a deed of sale covering the land and
building. When the buyer, Delfin, was to register the Deed of Sale
with the Registry of Deed in order to request for an issuance of New
Certificate (TCT), the Registry of Deed notice that Documentary Stamp
Tax was not paid. So, he requested that the DST should be paid.
Conrad and Delfin refused to pay the said DST. The Registry of Deed
refused to register the said Deed of Sale. They consulted you on
this. What would be your advice. Explain.

31. A, B,C are friends. They intend to form a general professional Partnership as a
platform for them to exercise their profession.

They consulted you what would be the tax liability of the partnership and A, B, C as
partners. A is a general and capitalist partner. B is a limited partner and C as industrial
partner. They also asked the allowable  deduction to the partners of a GPP.

32. Mr. X asked you what are the administrative remedies that the government will be
available as remedies relative to the collection of internal revenue taxes, fees, or
changes resulting from delinquency. What would be your answer? What is the
distinction between actual and constructive distraint. Briefly explain.
33. X is a construction company, owned by  Xerox. Y is also a construction company
engaged in construction of big construction projects of the government and those in
the private sector. Yahoo is the owner of Y Construction. Yahoo would like to
undertake a big project to be implemented by the DPWH. This project is financed by
international funds under a bilateral agreement entered by and between the Philippine
government and a foreign financing institution. 

X and Y decided to undertake the said big construction project. They hired you to
help them on how they would be able to form a commercial undertaking particularly a
big construction project similar to the above mentioned project to be implemented by
DPWH.

What would you advise particularly on the income tax liability of X and Y. Explain.

34. Last 2021, Lorenzo received from the Bureau of Internal Revenue (BIR) Final
Assessment Notice (FAN) stating that after its audit pursuant to a letter of Authority
duly issued by the said agency, Lorenzo has deficiency on his Value Added and
Withholding Taxes.

A warrant of distraint and/or levy was issued against Lorenzo particularly his personal
and real properties. 

He hired you as his lawyer and upon knowing from him that he did not receive a
Preliminary Assessment Notice (PAN) after the BIR conducted its investigation,
immediately you interposed your objection in the deficiency tax assessment of
Lorenzo. The allegation of Lorenzo that he didn’t receive a PAN was readily admitted
by the BIR.

Are the deficiency tax assessment and warrant distrain and/or levy issued against
Lorenzo valid? Explain.

35. Explain the nature and concept of a Preliminary Assessment Notice (PAN) and
Final Assessment Notice (FAN).
36. Bravo Corporation is a duly registered with the Philippine Economic Zone
Authority (PEZA) under RA. 7916. Its profit for 2022 is being subject to Improperly
Accumulated Earning Tax (IAET).
Roy Bravo the President of the aforesaid corporation disagrees with the imposition of
IAET on its profit.

He requested you to represent the company regarding his opposition on the imposition
of IAET. What is your position? Explain briefly.

37. Mr. X is interested to create a trust relative to his properties. He consulted you to
give him pointers for the creation of trust agreement.. Discuss the concept of trust.
38. The President of a Corporation hired you as legal and tax consultant. During one
of the board meetings, he invited you to discuss the Minimum Corporate Income Tax
(MCIT). Many of the members of the Board of Directors are confused on the possible
effect of the MCIT due to the passage of the Create Law.

How would you explain to the board the various concerns relative to MCIT and
Create Law?

39. Saliente School of Nursing is a Proprietary Education Institution. In its operation

it generated income classified by the BIR Examiner as unrelated trade, business or
other activity exceeding 50% of the total gross income derived by the said school
from all sources. Therefore, the school is being imposed 25% corporate income tax in
all the taxable income.

The director of the school is worried on how he would explain this to the board. He
asked you to join him. What would be your explanation?

40. Princess and Chinka wanted to know from you as student of law when is a co-
ownership created. What is the tax liability of co-ownership? Discuss.