Bar Examination Questions

TRANSPORTATION LAW
Question no. 1:
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Topic: Liability of common carrier in overland transportation and air
transportation for failure to inspect passenger’s baggage (1992)
Marino was a passenger on a train. Another passenger, Juancho, had taken a
gallon of gasoline placed in a plastic bag into the same coach where Marino was
riding. The gasoline ignited and exploded causing injury to Marino who filed a civil
suit for damages against the railway company claiming that Juancho should have
been subjected to inspection by its conductor. The railway company disclaimed liability
resulting from the explosion contending that it was unaware of the contents of the
plastic bag invoking the right of Juancho to privacy.
a.) Should the railway company be liable for damages?
b.) If it were an airline company involved, would your answer be the same?
Answers:
A. No, the railway company cannot be held liable for damages. Under the Code of
Commerce, a carrier may only inquire on the nature of the passenger’s baggage
but not search or inspect its contents, particularly those carried by the passengers.
In this case, the railway company has no obligation to inspect Juancho‟s baggage.
Hence, it cannot be held liable for damages.
B. No, my answer will not be the same. The exception to the general stated above is with
regard to aircrafts. Under R.A. No. 6235, aircraft companies which operate as public
utilities or operators which are for hire are authorized to open and investigate
suspicious packages and cargoes in the presence of the owner or shipper or his
authorized representatives if present.
Therefore, if it was an airline company, it can be held liable for damages by Marino.
Question no. 2:
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Topic: Baggage not in the custody of the carrier (1998)
X took a plane from Manila bound for Davao via Cebu City where there was a
change of planes. X arrived in Davao safely but to his dismay, his two suitcases were left
behind in Cebu. The airline company assured X that the suitcases would come in the next
flight but they never did. X claimedP2, 000.00 for the loss of both suitcases, but the airline
was willing to pay only P500.00 because the airline ticket stipulated that unless a higher
value was declared, any claim for loss cannot exceed P250.00 for each piece of luggage.
X however reasoned out that he did not sign the stipulation and in fact had not even read
it. X did not declare a greater value despite the fact that the clerk had called his attention
to the stipulation in the ticket. Decide the case.
Answers:
X is only entitled to P500.00 or P250.00 for each of the two suitcases that were
lost by the airline.
Arts. 1733 to 1753 of the New Civil Code shall apply to the passengers baggage
is not in his personal custody or in that of his employees. Thus, under Art. 1749 of
the same, a stipulation that the common carrier’s liability is limited to the value of the
goods appearing in the bill of lading, unless the shipper or owner declares a greater
value, is binding. Further, the contract of carriage is a real contract where consent is of
the contracting parties are manifested by the fact that the passenger boards the ship and
the shipper consents or accepts him in the ship for transportation (Filipina Peralta de
Guerrero vs. Madrigal Shipping Co., Inc., GR No. L-12951, November 17, 1959). Lastly,
bills of lading are contracts of adhesion which are not entirely prohibited. One who
adheres to the contract is in reality free to reject it in its entirety, if he adheres; he gives
his consent (Maersk Line vs. Court of Appeals, GR No. 94761, May 17, 1993).
In this case, X‟s act of boarding the plane and the airline’s concurrent act of
accepting him as a passenger already perfected the contract of carriage between them
even if X did not sign the ticket evidencing the contract. Further, the fact that the clerk
already called X‟s attention as to the extent of the airline’s liability on each luggage
already gave X the opportunity to reject the same, but he did not do so and still
proceeded in boarding the plane. Since X did not declare a higher value for his luggage,
he is thus bound by the ticket stipulation that the airline is only liable to the extent of
P250.00 for each luggage.
Therefore, X is only entitled to P500.00 or P250.00 for each of the two
suitcases that were lost by the airline due to absence of any declaration of a higher value
for the suitcases.
Question no. 3
Topic: Loss of hand-carried luggages (1989)
X boarded an air-conditioned Pantranco Bus bound for Baguio. X was given notice
that the carrier is not liable for baggage brought in by passengers. X kept in his custody
his attaché case containing $10,000.00. In Tarlac, all the passengers, including X, were
told to get off and take their lunch, the cost of which is included in the ticket. X left his
attaché case on his seat as the door of the bus was locked. After lunch and when X
returned to the bus, he discovered that his attaché case was missing. A vendor said that
a man picked the lock of the door, entered the bus and ran away with the attache case.
What, if any, is the liability of the carrier?
Answers:
The carrier is liable to X for the loss of his attaché case. Under Article 1754 of the New
Civil Code, hand-carried luggages of passengers are governed by the rules on
necessary deposit. Under Article 2000 of the same code, the responsibility of the
depositary shall, among other cases, include the loss of property of the guest
caused by strangers but not that which may proceed from force majeure. Article
2001 considers an act of theft not one of force majeure unless done with the use of arms
or through an irresistible force. Given such circumstances, since X lost his baggage
through theft without the use of arms and irresistible force. Thus, the carrier can be
held liable.
Question no. 4:
Limited Liability
Topic: Limited liability of the ship owner (1978)
Pablo Esparadon, a duly-licensed ship captain of the M/V Don Jose was drunk
while he was on duty as such, and while M/V Don Jose was sailing from Manila
to the Visayas. As a consequence thereof, the M/V Don Jose rammed another vessel
near Corregidor, causing both vessels to sink completely and thus become total losses.
The cargo owners of both sunken vessels sued the owner of the M/V Don Jose for their
losses. Is the ship owner of M/V Don Jose liable? Explain your answer.
Answers:
No, the ship owner of M/V Don Jose is not liable. Failure on the part of the
carrier to provide competent captain and crew should be distinguished from the
negligence of the said captain and crew, because the latter is covered by the Limited
Liability Rule. As held in the case of Urrutia & Co. v. Baco River Plantation Co., (G.R.
No. 7675. March 25, 1913) if the negligence of the captain and crew can be traced to the
fact that they are really incompetent, the Limited Liability Rule cannot be invoked because
the ship-owner may be deemed negligent. The civil liability of the ship-owner of a
vessel, in maritime collision which is caused by the fault of the captain, as in this
problem because he is being drunk, is merely co-existent with his interest in the vessel,
M/V Don Jose, such that the total loss thereof, results in the extinction of such liability.
Thus, the total loss of M/V Don Jose resulted in the extinction of the liability of the shipowner.
Question no. 5:
Topic: Limited Liability Rule (1982)
Explain the limited liability rule or the so called real or hypothecary nature
of maritime law.
Answers:
In the case of Aboitiz Shipping Corp v. General Fire and Life Assurance Corp.,
(G.R No. 100446, January 21, 1993) the real and hypothecary, nature of maritime law
simply means that the liability of the carrier in connection with the losses related to
maritime contracts is confined to the vessel, which stands as guaranty for their settlement.

AMLA – ANTI-MONEY LAUNDERING ACT
Question no.1:
There being probable cause to believe that certain deposits and investments in a
bank are related to an unlawful activity of smuggling by Alessandro as defined under
Republic Act (RA) No. 9160, as amended (Anti-Money Laundering Act) an application for
an order to allow inquiry into his deposit was filed with the Regional Trial Court.
After hearing the application, the court granted the application and issued a freeze
order.
Pass upon the correctness of the court’s order. Explain. (3%)
Question no. 2:
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Define Money Laundering. What are the three (3) stages in money laundering?
(3%)
What is the doctrine of pro reo? How does it relate to Article 48 of the Revised
Penal Code? (3%)
Question no. 3:
Paul lives with his long-time girlfriend Joan in a ondominium in Makati. For more
than a year, he has been secretly saving money in an envelope under their bed to buy
her an engagement ring. One day, while Joan was cleaning their room, she found the
envelope, took the money, and left Paul. As prosecutor, what crime, if any, would you
charge Joan? Explain. (3%)
Question no. 4:
From his first term in 2007, Congressman Abner has been endorsing his pork
barrel allocations to Twin Rivers in exchange for a commission of 40% of the face value
of the allocation. Twin Rivers is a non-governmental organization whose supporting
papers, after audit, were found by the Commission on Audit to be fictitious. Other than to
prepare and submit falsifies papers to support the encashment of the pork barrel checks,
Twin Rivers does not appear to have done anything on the endorsed projects and
Congressman Abner likewise does not appear to have bothered to monitor the progress
of the project he endorsed. The congressmen converted most of the commissions he
generated into US dollars, and deposited these in a foreign currency account with Banco
de Plata (BDP).
Based on amply supported tips given by a congressman from another political
party, the Anti-Money Laundering Council sent B DP an order: (1) to confirm Cong.
Abner’s deposits with the bank and to provide details of these deposits; and (2) to hold
all withdrawals and other transactions involving the congressman’s bank accounts. As
counsel for BDP, would you advise the bank to comply with the order? (8%)
Question no. 5:
Under the Anti-Money Laundering Act, a depositor’s bank account may be frozen.
(1%)
(A) By the bank when the account is the subject of a suspicious or covered transaction
report
(B) By the Anti-Money Laundering Council (AMLC) when the account belongs to a person
already convicted of money laundering
(C) By the Regional Trial Court, upon ex parte motion by the AMLC, in a criminal
prosecution for money laundering pending before it. (
D) By the Court of Appeals motu proprio in an appeal from a judgment of conviction of a
criminal charge for money laundering.
(E) In none of the above.
Question no. 6:
For purposes of determining violation of the prov1s1ons of Anti-Money Laundering
Law, a transaction is considered as a "Suspicious Transaction" with "Covered Institutions"
regardless of the amount involved, where which the following circumstances exist/s?
(A) The amount involved is not commensurate with the client's business or financial
capacity;
(B) There is no underlying legal or trade obligation, purpose or economic justification;
(C) Client is not properly identified;
(D) All of the above.

E-commerce
Question no. 1:
In 2005, W Hotels, Inc., a multinational corporation engaged in the hospitality
business, applied for and was able to register its trademark "W" with the Intellectual
Property Office of the Philippines (IPO) in connection with its hotels found in different
parts of the world.
In 2009, a Filipino corporation, RST Corp., filed before the IPO a petition for
cancellation of W Hotels, Inc.'s "W" trademark on the ground of non-use, claiming that W
Hotels, Inc. failed to use its mark in the Philippines because it is not operating any hotel
in the country, which bears the "W" trademark.
In its defense, W Hotels, Inc. maintained that it has used its "W" trademark in
Philippine commerce, pointing out that while it did not have any hotel establishment in the
Philippines, it should still be considered as conducting its business herein because its
hotel reservation services, albeit for its hotels abroad, are made accessible to Philippine
residents through its interactive websites prominently displaying the "W" trademark. W
Hotels, Inc. also presented proof of actual booking transactions made by Philippine
residents through such websites.
Is W Hotels, Inc.'s defense against the petition for cancellation of trademark
tenable? Explain. (5%)
Question no. 2:
Ms. J offered to sell her car to Ms. K, an interested buyer. Consequently, Ms. J
emailed Ms. K a copy of the proposed Deed of Sale covering the same. After agreeing to
its terms, Ms. K printed and then signed the emailed copy of the Deed of Sale. She then
faxed it to Ms. J who signed the faxed copy.
Is the copy of the Deed of Sale faxed by Ms. K to Ms. J considered an electronic
document under the Electronic Commerce Act? Explain. (2%)
Question no. 3:
W Medical, Inc. operated a full-service hospital named WMed. Using its
stockholders' advances and a mortgage loan from Bank X, W Medical, Inc. commenced
the construction of a new 11-storey WMed Annex Building. Unfortunately, due to
financial constraints, only seven (7) floors were constructed and the WMed Annex
Building remained unfinished.
Despite the non-completion of the WMed Annex Building, W Medical, Inc.
continued its operations and earned modest revenues. While W Medical, Inc.'s assets
are more than its liabilities and it is able to turn a monthly profit, it could not pay its loan
installments to Bank X as they fall due.
(a) What is the concept of "insolvency" under the Financial Rehabilitation and
Insolvency Act (FRIA)? May W Medical, Inc. be considered "insolvent" under the
FRIA? Explain. (3%)
(b) Assuming that W Medical, Inc. is considered "insolvent", may it file a petition
for suspension of payments under the FRIA? Explain. (2%)
(c) Assuming that W Medical, Inc. is considered "insolvent", what are the legally
recognized modes of rehabilitation it may opt to avail of? (3%)
(d) If W Medical, Inc. files a petition for rehabilitation before the court, is it
possible for the rehabilitation proceedings to be converted into one for
liquidation? Explain. (2%)
Question no. 4:
Mr. P, the President of JKL, Inc. which shares are listed in the Philippine Stock
Exchange, was notified that the corporation has just been awarded a ₱5,000,000,000.00
construction contract by a reputable private company. Before this information could be
disclosed to the public, Mr. P called his stockbroker to purchase 20,000 shares of JKL,
Inc. He also mentioned the transaction to his brother, Mr. B. Mr. B, who was not involved
at all in the business of JKL, Inc., also bought 50,000 shares of JKL, Inc. because of the
tip disclosed to him by Mr. P.
(a) Is the information disclosed by Mr. P to Mr. B considered as material
nonpublic information for purposes of insider trading? Explain. (2%)
(b) Should Mr. P and Mr. B be held liable for insider trading? Explain. (3%)
Question no.5:
Mrs. T maintained a checking account with Bank U. While Mrs. T was abroad, she left her
checkbook inside her office drawer, which she kept under lock and key. However, Mrs.
T's long-time secretary, Ms. S, knew where the checkbook was hidden. Ms. S then broke
the lock on the office drawer, took one of Mrs. T's blank checks, and succeeded to encash
₱200,000.00 from Bank U by imitating Mrs. T's signature. As soon as Mrs. T returned
from abroad and discovered the incident, she immediately reported the matter to Bank U,
seeking that the transaction be reversed. However, the bank refused, contending that
Mrs. T should bear the loss arising from the forgery.
(a) Is the imitation of Mrs. T's signature considered as a material alteration under
the Negotiable Instruments Law? Explain. (2.5%)
(b) Is Bank U's contention tenable? Explain. (2.5%)

FRIA - Financial Rehabilitation and Insolvency Act of 2010
Question no. 1:
ABC Company filed a Petition for Rehabilitation with the Court. An Order was
issued by the Court, (1) staying enforcement of all claims, whether money or otherwise
against ABC Company, its guarantors and sureties not solidarily liable with the company;
and (2) prohibiting ABC Company from making payments of its liabilities, outstanding as
of the date of the filing of the Petition. XYC Company is a holder of an irrevocable Standby
Letter of Credit, which was previously procured by ABC Company in favor of XYC
Company to secure performance of certain obligations. In the light of the Order issued by
the Court.
(A) Can XYC Company still be able to draw on their irrevocable Standby Letter of
Credit when due? Explain your answer. (5%)
Question no. 2:
DMP Corporation (DMP) obtained a loan of P20 million from National Bank (NB)
secured by a real estate mortgage over a 63,380-square-meter land situated in
Cabanatuan City. Due to the Asian Economic Crisis, DMP experienced liquidity problems
disenabling it from paying its loan on time.
For that reason, NB sought the extra judicial foreclosure of the said mortgage by
filing a petition for sale on June 30, 2003. On September 4, 2003, the mortgaged property
was sold at public auction, which was eventually awarded to NB as the highest bidder.
That same day, the Sheriff executed a Certificate of Sale in favor of NB. On October 21,
2003, DMP filed a Petition for Rehabilitation before the Regional Trial Court (RTC).
Pursuant to this, a Stay Order was issued by the RTC on October 27, 2003. On the other
hand, NB caused the recording of the Sheriff’s Certificate of Sale on December 3, 2003
with the Register of Deeds of Cabanatuan City. NB executed an Affidavit of Consolidation
of Ownership and had the same annotated on the title of DMP. Consequently, the
Register of Deeds cancelled DMP’s title and issued a new title in the name of NB on
December 10, 2003. NB also filed on March 17, 2004 an Ex-Parte Petition for Issuance
of Writ of Possession before the RTC of Cabanatuan City.
After hearing, the RTC issued on September 6, 2004 an Order directing the
Issuance of the Writ of Possession, which was issued on October 4, 2004. DMP claims
that all subsequent actions pertaining to the Cabanatuan property should have been held
in abeyance after the Stay Order was issued by the rehabilitation court. Is DMP correct?
(4%)
Question no. 3:
The ordinary course of business, or has insufficient realizable assets to meet its
liabilities, or cannot continue in business without probable losses to its depositors or
creditors; or has willfully violated a final cease and desist order, involving acts or
transactions amounting to fraud or a dissipation of the assets of the institution. The main
purpose of the Receiver is to recommend the rehabilitation or liquidation of the bank.
Banks; Diligence Required (1992) Placido, a bank depositor, left his checkbook on his
desk at his house. Unknown to him, a visitor at the time, noticing the same, took a check
therefrom, filled it up in the amount of P3,000.00 and succeeded in encashing the check
on the same day. Placido’s account was thereby debited in the same amount. Discovering
the erroneous debit, Placido demanded that the bank credit him with a like amount. The
bank refused on the ground that Placido was negligent in leaving his checkbook on his
desk so that he could not put up the defense of forgery or want of authority under the NIL.
The Facts disclose that even to the naked eye, there were marked differences between
Placido’s signature and the one in the check forged by the visitor. As between Placido
and the bank, who should bear the loss?
Question no. 4:
Law on Corporate Recovery (2003) X Corporation applied for its rehabilitation and
submitted a rehabilitation plan which called for the entry by it into a joint venture
agreement with Y Corporation. Under the agreement, Y Corporation was to lend to X
Corporation its credit facilities with certain banks to obtain funds not only to operate X
Corporation but also for a part thereof in the amount of P1 million as initial deposit in a
sinking fund to be augmented annually in amounts equivalent to 10% of the yearly income
from its operation of the business of X Corporation. From this fund the creditors of X
Corporation were to be paid annually, starting from the second year of operations, with
the entire indebtedness to be liquidated in 15 years. The creditors of X Corporation
objected to the plan because Y Corporation would be taking over the business and assets
of X Corporation. Could the court approve the plan despite the objections of the creditors
of X Corporation and could the creditors be compelled to follow the plan? Could Y
Corporation, in managing the business of X Corporation in the meantime, be deemed to
have taken-over X Corporation itself? (6%)
Question no. 5:
In suspension of payments, the debtor has sufficient property to cover all his debts
but foresees the impossibility of meeting them when they respectively fall due, whereas,
in insolvency, the debtor does not have sufficient property to pay all his debts in full;
In suspension of payments, the purpose is to suspend or delay payment of debts
which remain unaffected although a postponement of payment is declared, whereas, in
insolvency, the object is to obtain discharge from all debts and liability; In suspension of
payments, no limit for the amount of indebtedness is required, whereas, in insolvency,
the debts must exceed P1,000 in case of voluntary insolvency, or must not be less than
P1,000 in case of involuntary insolvency.
Suspension of Payments vs. Stay Order (2003) Distinguish the stay order in corporate
rehabilitation from a declaration in a state of suspension of payments? (4%)