Page 1 of 14 MOCK BAR WITH QUESTIONS AND SUGGESTED ANSWERS INSTRUCTIONS 4. This Questionnaire contains five (5) pages including these. Insteuctions pages. Check the number of pages and the page numbers at the upper right hand corner of each page of this. Questionnaire and make sure it has the correct number of pages and their proper numbers. There are 25 items (| to XV) to be answered within/our (4) hours. Read each question very carefully and write your answers in your Bar Examination Notebook in the same order the questions are posed. Write your answers only on the front, not the back, page of every sheet in your Notebook. Note well the allocated percentage points for each number, question, or sub- question. in your answers, use the numbering system in the questionnaire. if the sheets provided in your Examination Notebook are not sufficient for your answers, use the back page of every sheet of your Examination Notebook, starting at the back | e first sheet and the back of the succeeding sheets ther y 3. Answer the Essay questions legibly, clearly, and concisely. Start each number on a separate page. An answer to a sub- question under the same number may be written continuously on the same page and the immediately succeeding pages until completed. Your answer should demonstrate your ability to analyze the facts presented by the question, to select the material from the immaterial facts, and to discern the points upon which the question turns. It should show your knowledge and understanding of the pertinent principles and theories of law involved and their qualifications and limitations. It should demonstrate your ability to apply the law to the given facts, to reason logically in a lawyer-like manner, and to form a sound conclusion from the given premises. A mere "Yes" or "No" answer without any corresponding explanation or discussion will not be given any credit. Thus, always briefly but fully explain your answers although the question does not expressly ask for an explanation. At the same time, remember that a complete explanation does not require that you volunteer information or discuss tegal doctrines that are not necessary or pertinent to the solution to thePage 20114 problem: You do not need to re-write or repeat the question in your Notebook. 4. Make sure you do not write your nai note/s or distinctive marking/s on your as an identifying mark/s (such as names given questions, prayers, or private notes to the Writing, leaving or making any distinguishing or identify in the exam Notebook is considered cheating and can di you for the Bar examinations. You can use the questionnaire for notes you may wishine write during the examination. YOU CAN BRING HOME THIS QUESTIONNAIRE OR SUBMIT IT TOGETHER WITH YOUR NOTEBOOK |. Nadine has a checking account with Fair & Square Bank. One day, she lost her checkbook and the finder was able to forge her signature and encash the forged check. Will Nadine be able to recover the amount debited from her checking account from Fair & Square Bank? Justify your answer. (3%) Suggested Answer: In the case of Samsung Construction Company Philippines, Inc. v. Far Bast Bank and Trust Company and CA, G.R. No. 129015, Aug, 13, 2004, Section 23 of the Negotiable Instruments Law states: When a signarure 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 to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or 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 (Emphasis supplied) | rule is to the effect that a forged signarure is. "wholly “through or under such signature” is he instrument." If payment is made, the drawee cannot charge it 0 the dra unt. The traditional jets for the result is thar the drawee is in a superior posta © i a forgery because he has the maker's signature and is expected to know anc ones He ‘The rule has a healthy cautionary effect on banks by encouraging ae comparison of the signatures against those s the oe te file, Moreover, the very opportunity of the dames 10 The’ general inoperative,” and paymene made ineffectual or does not discharge WET'S ACCO'page 30014 che cost among, its customers who use checks makes the drawee an ideal party to spread the risk to insurances? 2" Bank of Phitippine islands v. Court of Appeats,, GR, No, 1022383, 26 November 1992, 216 SGRA 81, 85. Seach A Nogotiabie Instruments: Casos ond Materials, 28! ed, (1059), at 973 Il. Is a manager's check as goad as cash? Why or why not? (2%) ‘Suggested Answers: By its peculiar character and general use in commerce, manager's check is regarded as subscancally ro be as good as the money it epresents. Equitable PCI Bank v, Ong, G.R. No. 156207, September 15, 2006, 502 SCRA 119, 152; citing Tan ¥, Court of Appeals, G-R. No. 108555, December 20, 1994, 239 SCRA 310, 322. A manager's check is like a cashier's check which, in the commercial _world, is regarded substantially co be as good as the money i represents. BPI y. CA 326 SCRA 641 (200) I. When can you treat a bill of exchange as a promissory note? (3%) ‘Suggested Answer: Bill of exchange may be treated as promissory nove where: 1, The drawer and the drawee are the same; 2. The drawee is a fictitious persons 3. The drawee is a minor or incapacitated person, here presentment would be useless. Please refer to Sec. 130 NIL IV. Is Treasury Warrants negotiable instrument? (2%) Suggested Answer: ‘ora negotiable instrument. A treasury warrant bears nent out of a particular fund and is not ‘Abubakar v. Auditor General, No. A treasury warrant is 1 on its face an order for paym unconditional, Iris not a negotiable instrument. 460G 141 V. What is a “Jason Clause” in a charter pa! ty? (2%) Suggested Answer: A provision in a contract of carriage t general average even for an incident caused by hat requires cargo owners 10 co” eribute in carrier's negligence:page 4oft4 Vi. Is Bangko Sentral ng Pilipinas (BSP) as bank? (3%) Suggested Answers: No. BSP is not a bank or a non-bank financial intermediary; performing quasi- banking functions, BSP is a Government Insrumentality Organized as a Chartered Institution. BIR RMG No, 65-2008: Note: Article XII, Section 20 of the Gonsticution has mandated Congress to establish an independent centeal monetary authority that shall be responsible in providing policy directions in the areas of money, banking and credit. The authority shall exercise supervision over the operations of banks and, exercise such regulatory powers as may be provided by law over the operations of finance companies and other institutions performing similar functions. Sec. 2,E.O. 292 (Administrative Code of 1987) defines the following terms to wit (11) “Regulatory agency” refers to any agency expressly vested with jurisdiction to regulate , administer or adjudicate matters affecting substantial rights and interests of private persons, the principal powers of which are ‘exercised by collective body. such. as a commission, board or council: (12) “Chartered Institution” refers to any agency organized and operating, under a special charter, and vested by law with functions relating to specific constitutional policies or objectives. The term includes the state universities and colleges and the monetary authority. BSP cannot likewise be considered as a non-bank financial intermediary performing quasi-banking,functions. "Non-bank financial intermediates shall Fefer 1 petsons of enticies whose principal function include lending, investing or placement of funds or evidence of indebtedness or equity deposited vith them, acquired by them or otherwise coursed though them, either for hei ‘own account or for the account of others. . .cial intermediaries” the term “quasi-banking, fanctions” means the borrowing of funds from nwenty (20) oF more persons oF corporate lenders at any one times through the issuance, endorenan or acceptance of debe instrument of any kind, other than deposits, i i jignment oF borrower's own account of through the Isuance of cers of si Inasing receivables or other simi obligations. similar instruments or purd ow, hear later of the BSP. (5%) ‘Anent the term “non-bank finan Vil, Explain the doctrine of close M d Answers: SuggesteSee. 30 RA 7653 Regular courts do not have jurisdiction over actione filed by claimants an insolent bank; unles there isa clear shoring that he sefonilen By eke Be, through ths Monetary Board in the closure of financlal institutions was fo excess of jurisdiction, of with grave abuse. of dincretion, Miranda ¢4, PDIC, BSP and Prime Savings Bank G.R. No. 169334; Sept. 8, 2006, ln Central Bank of the Philippines v. De 1a Cras we held that the actions of the Monetary Board in proceedings on insolvency are explicitly declared by In to be “Binal and executory." They may not be set aside, oF restrained, or enjoined by the courts, except upon “convincing proof thatthe action is plainly arbitrary and iad in bad faith. GR No. $9957, November 12, 1990, 191 SCRA 346, 354 The issuance by the RTC of writs of préliminary injunction is an unwarranted interference with the powers of the MB. Secs. 29 and 30 of RA 765% refer to the appointment of a conservator or a receiver for a bank, which is a power of the MB for which they need the ROEs done by the supervising or eximining department. The writs of preliminary injunction isstied by the trial court hinder the MB from fulfilling its function under the law. The actions of the MB under Sees. 29 and 30 of RA 7653 “may not be restrained or set aside by the court except on petition for certiorari om the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to ick or excess. of jurisdiction.” The waits of preliminary injunction order are precisely what cannot be done under the law by preventing the MB from taking action under either Sec. 29 or See. 30.08 RA 7653. As to the third requirement, the respondent banks have shown no necessity for the writ of preliminary injunction to prevent serious damage. The serious damage contemplated by the trial court was the possibility of the imposition of sanctions upon. respondent banks, even the sanction of closure. Under the law, the sanction of closure could be imposed upon.a bank by the BSP even without notice and hearing. The apparent lack of procedural due process would not result in the invalidity of action by the MB. This was the ruling in Central Bank of the Philippines v, Court. of Appeals. ( GR. No, 76118, March 30, 199%, 220 SCRA 536) This “lose now, hear later” scheme is grounded on practical and legal considerations.to prevent unwartanted dissipation of the bank's assets and as a valid exercise of police power to protect the depositors, creditors, stockholders, andthe general publis.. The writ of preliminary: injunction cannot, thus, prevent the MB from taking action, by preventing the submission of the ROEs and worse, by preventing the MB from acting on such ROES. ‘The trial court required the MB to respect the respondent banks ight to due pense by allowing the respondent banks to view the ROEs and act upon = Sete sanctions the MB might impose. Such procedure has no ae eS violate the “close now, hear later” doctrine. We held in Rural Bas! ‘ y 16, 3007, 1 Monetary Board, Bangko Sentral ng Pilipinas (G.R No. 150886, Febraay 516 SCRA 154, 160): closure ofa bank may be considered as an etree of oe 4 i ter is final and executory. Such exere! wer. The action of the MB on this matter : mena oon ie be subject to judicial inquiry and can beset as de Hf mdiobe cma aa : with such grave abuse of discretion as 10 0 jurisdiction oF It is well-settled that theThe designation of a conservator under Section 49 of this Act or the a receiver under this section shall be vested exclusively with the Jee the designation of a conservator is not a precondition to the: ‘The power atid authority of the’ Monetary Board:te Close bane thereatter when public interest so requires is an exercise of the State. Police power, however, is subject to judicial inquiry. It arbitrarily or unreasonably and could be set aside if it is « discriminatory, whimsical, arbitrary, unjust, or 1 tantamount { process and equal protection clauses of the Constitution. Mortgage Bank v, Monetary Board, Central Bank of | 168878, 77255-58, 78766, 78767, 78894 81303, 81 SCRA 767, 798.) cited in the case of Miranda} GR.No. 169334. Vill. Is Blanket Mortgage Clause va Suggested Answers: ‘The stipulation extending than those already obtain Prudential Bank v. Alviar; such a clause as follows: A "blanket mortgage clause,” also known as a “dragnet clause” in American jurisprudence, is one which is specifically phrased to subsume all debts of past or future origins, Such clauses are "carefully scrutinized and strictly construed.” Mortgages of this character enable the parties to provide continuous dealings, the nature or extent-of which may not be known or anticipated ar the time, and they avoid the expense and inconvenience of executing a new security on each new transaction. A "dragnet clause” operates as a convenience and accommodation to the borrowers as it makes available additional funds without their having to execute additional security documents, thereby saving time, travel, loan closing costs, costs of extra legal services, recording fees, et cetera. xx.” (Citations omitted) in the nature ofa continuing le than an action to foreclose a ned in the mortgage contract. ‘Code and is not limited to & dealing, covering a series ‘A mortgage that provides for a dragnet clause is guaranty and consticutes an exception to the ral mortgage must be limiced to the amount mentione Its validity is anchored on Article 2053 of the Civil é single transaction, but contemplates a fucure course - ad les of transactions, generally for an infin die 8 ee pace a eee vn limits, and contemplates 2 f respect to future transactions witn iquarantor becomes fiable. succession of liabilities, with for which, as they accrue, thePage Tot14 In other words, a continuing guaranty is including those arising in the future, which gen contemplation of the contract of guanna, ct thereof.” ersall transactions, n iin the desc i Z iption or Storanty, until che expiration or tertninaton * Spouses Guyeo ¥. Spouwes Cuyes, $21 Ph a g Fe a eoats aa 521 BL 796 806 (0, tig Unio Ba Rion. coun * Traders Rojal Bank y Castaaes,G.R. No, 172020, December 6, 2 ee Dace 6, 2010, 636 SCRA $19.52, cing 502 Phil $95 (2005), Pid at 6, * Banc of Gomniercev: Flores, G.R No, 174006, Devens 8, 2010, 637 SCRA 868, 572-57 -¥, Cone of Appeals G.R: No, iovember 26, 1997 wee Union Bank v3. GA, GR. no, 164910 Sept. 30, on hearing or prior notice required before a bank can be closed? No, Under Sec. 30, RA 7653. Closuse of bank is summary and expeditious in order to protect the public. Rural Bank of San Miguel , Ine: vs. Monetary Board GR. No. 150806, Feb, 16, 2007 X. Under the ai parte application to inquire into of a government employee si of RA 3019 ( causing undue injury to the government by giving any person unwarranted benefits, advantage, or preference in the discharge of his official administrative functions through manifest partiality, evident bad faith, or gross inexcusable negligence) before the Regional Trial Court (RTC). Acting on the said application by the AMLG, the RTC issues the bank inquiry order. Is the action of the RTC not proper? (7%) Suggested Answers: No. The RTC has no jurisdiction. The jurisdiction is with the Court of ‘Appeals. Rule 11 of the Implementing Rules and Regulations (IRR) of Ra 9160, as amended by RA 9194, and 10167, partly provides that: Rule 11.a.] Notwithstanding the provisions of RA 1405, as amended; RA 6426, as amended by RA 8791, and other laws, the AMLC may fie intoor i parti it oF i including related accounts, examine any particular deposi or investment, including ceounts, i any banking insticution or non-bank financial institution and their subsidians and affiliates upon order of the Court of Appeals based on an ex-pats i folati is ithas been established that application in cases of violation of this Act, when it peace leg sx mrabable cause thae the deposits or investments involved. ins ae se unts, are related to an walawful activity as ised hereof or a money laundering offense under Rule 4 bercols provided under Rule 11-b % ENXI. Distinguish banks pursuant the Investigation and Exam It to its (6%) its charter PD 3591. ag ination Py Suggested Answers (CEBU), INC., G.R. No. 176438 PHILIPPINE DEPOSIT INSU January 24, 2011 Petitioner, RANCE CORPORATION (PDIC), Ws. PHILIPPINE COUNTRYSIDE RURAL BANK, INC. . -» RU) BANK OF CARMEN (CEBU), INC., BANK OF EAST si (MINGLANILLA, CEBU), INC., and PILIPINO RURAL BANK Respondents, Examination involves an evaluation of the current status of a bank and determines its compliance with the set standards regarding solvency, liquidity, asset valuation, operations, systems, management, and compliance with banking laws, rules and regulations. Investigation, on the other hand, is conducted based on specific findings of certain acts or omissions which are subject of a complaint ora Final Report of Examination. Clearly, investigation does not involve a general evaluation of the status of a bank, An investigation zeroes in,on specific acts and omissions uncovered via an examination, or which are cited in a complaint. An examination entails a review of essentially all the functions and facets of a. bank and its operation. It necessitates poring through voluminous documents, and requires a detailed evaluation thereof. Such a process then involves an intrusion into a bank's records. In contrast, although it also involves a detailed evaluation, an investigation centers on specific acts of omissions and, thus, requires @ less invasive assessment. ‘The practical justification for not requiring the Monier Boa ey conduct an investigation of banks is the sani ane ae e jt entails, and the correspondent time (© ore He ees ‘ i investigation, tim requirements. As in “other types of inet g oe is prudent (0 expedite the Le ee = are a investigation is only s e a, as an inves uh which such vibe. po because evidence, documentary ‘ _ documentary ae fungible. 4 PDIC investigationwhether the allegations in examination may properly arenes ot finding a be the subj a a Anal action.” In other words, an invetigaion tise nino and an examination is cond: d = : “no nduucted with pric Therefore, it would be unnecesary to se conduct of an investigation, Such would werly ee Provide unscrupulous individuals the op; Approval for the ong the process and portunity to cover their treks. Indeed, while in a literary sense, the two: terms may be used interchangeabl under the PDIC Charter, examination and investigation refet 10 two differs a To reiterate, an examination of banks requires the prior conser f ¢ Monetary Board, whereas an investigation based ee , 1 investigation based on an examination report, does nor. ge XII. ABC Corporation whose shares of stock are listed and traded in ‘the Philippine Stock Exchange scheduled its annual stockholders meeting on March 1, 2016. It set the deadline for submission of a) - February 14, 2016 and validation of proxies on February Mr. Rick Lamo a stockholder of record, objected to the validation of proxies issued to Mr. Kawa Tan. Despite the objection of Mr. Rick Lamo, the Committee on Election of ABC Corporation accepted and | declared the proxies of Mr. Kawa Tan as valid. Mr. Rick Lamo wants to invalidate the proxies issued to Mr. Kawa Tan and stop the annual stockholders. meeting and election of the members of the board. | Mr. Rick Lamo’s lawyer Atty. X explained to him that under Sec. 6 of | PD 902-A, the SEC has the power to pass upon the validity of proxies | and voting trust agreement, thus his complaint should be filed at the | SEC. Atty. RSB, another lawyer consulted by Mr. Rick Lamo on the other faa opined that since the eee ‘proxy bbe e Freee i itis an election cont k een jurisdiction is with the regular court and intra-corporate case, thus the not with the SEC. Rule on the contention of the lawyers of Mr. Rick Lamo (8%) Suggested Answers: . The opinion of Aty- RSB is correct: inasmuch as the issue proxy soliciarion NT a sue I related ig related ro election $B eer of Diet the uee page 10.0014 election controversy, which isan intra-corporate case, the is with the RTC and not the SEC, Thisis clear in the ease of ¢ Phil. 676 (2009) and SEC v, CA, Omico Corporation et al., G.R. Oct. 22, 2014. “This qualification allows fora useful distinction that gives due effect 10 the statutory right of the SEC to regulate proxy solicitation, and the statutory eA jurisdiction of regular courts over election contests or controversies. The power = ‘of the SEC to investigate violations of its rules on proxy solicitati unquestioned when proxies are obtained to vore on matters unrelated to the ases enumerated under Section 5 of Presidential Decree No. 902-A.. However resulting controversy, even if it ostensibly raised the violation of the SEC rules when proxies are solicited in relation to the election of corporate directors, the hin ‘on proxy solicitation, should be properly seen as an election controversy the ofiginal and exclusive jurisdiction of the trial courts by vircue of Section A> of the SRG in relation to Section 5 (¢) of Presidential Decree No. 902- Xill. What is a proxy? (2%) ‘A proxy is a special form of agency and governed by the Law on Agency. ‘Consequently, being strictly fiduciary relation, a proxy is essentially revocable in nature; and any attempt of stipulation to render it irrevocable would be to no avail. Generally, proxies, even thase with irrevocable terms, have always been considered as revocable, unless coupled wich interest, and their revocation may be by formal notice, orally, or by conduct as by the appearance of the stockholder or member giving the proxy, ot the issuance of a subsequent proxy, ‘or the sale of shares. ‘The SEC has appropriately observed that a person acting as proxy for a stockholder is in the eyes of the law the larter’s agent and as such, a mere fiduciary who has the duty of acting in strict accord with requirements of Aduciary relation; and that accordingly, the proxy holder must act in accordance with the instructions given to him/her by the stockholder and any violation of such fduciary duty shall be governed by the pertinent laws on Agency, not be the Corporation Code, SEC Opinion , 15 July 1997, XXXII SEC Quarterly Bulletin 4 (No.2, Dec. 1997) XIV. When does a contract of Carriage begin? (2%) Suggested answers: Tn British Airways v. CA 218 SCRA. 6991993), a cones aa i oe : carriage of passenger consists fees(b) Contract “of carriage” or * of common carrier” itsel asa real contract, for not until carrier is actually used ca already assumed obligations of a carrier. A cartier can be held liable for damages for failure to comply with the conira to carry, which is consensual in nature. ‘ F In Dangwa Transpo. Co., Inc. v. CA 202 SCRA 574, The victim herein, by stepping and standing on the plarform of the bus, is already considered a passenger and is entitled to all the rights and protection to a contract of carriage. XV. May there be a contract of carriage even without a ticket? (3%) Suggested answer: Yes. While the best evidence of a contract of carriage of passenger isthe ticket, the Statute of Frauds covers six (6) contracts, none of which isa contract of transportation, which means that a contract of carriage may be oral. XVI. When does a contract of carriage end? (5%) Suggested Answers: ‘The relation of carrier and passenger continues until the passenger has been landed at the port of destination and has left the vessel owner's dock or premises. Once created, the relationship will noc ordinarily terminate until the passenger has after reaching his destination, safely alighted from the carrier's conveyance or had a reasonable opportunity to leave the cartier’s premises. All persons who remain on the premises a reasonable time after leaving the | conveyance are to be deemed passengers, and what is reasonable time or a reasonable delay within this rule isto be determined from all the circumstances sand includes a reasonable time to see after his baggage and prepare for his | departure, Aboitiz Shipping v. CA 179 SCRA.95 (1989) XVII. What is double insurance? (2%) Suggested! Answers: Double insurance takes place where there is over-insurance with two of more ‘companies, covering the same property» same insurable interest and same risk, (Sec. 93) XVIII, What are the effects of double insurance (3%)