2022 Bar Examinations Trial Commercial Law PDF

2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER [email protected] 0942-949-9176 / 0917-894-5356 1. Christian Emphasis was kille...

2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER [email protected] 0942-949-9176 / 0917-894-5356 1. Christian Emphasis was killed during an accident, while he was riding a bicycle and was subsequently bumped by a taxicab owned by Davao Holiday Transport Services Corporation (“Davao Holiday”). The taxicab was being driven then by Davao Holiday’s driver, Orlando Tungal. Spouses Eulogio and Carmelita Emphasis, parents of Christian, claimed for damages against Davao Holiday. The Regional Trial Court (RTC) sided with the spouses and ordered Davao Holiday payment of damages. Alleging that it had practiced extraordinary diligence in the selection of drivers of its vehicles, Davao Holiday appealed before the Court of Appeals (CA), which reversed the RTC. Decide with reason. (5 points) SUGGESTED ANSWER: Davao Holiday is liable to Spouses Emphasis for damages. Article 2180 of the New Civil Code states that “an obligation for damages is demandable also for those of persons for whom he is responsible. Employers, in particular, shall be liable for the damages caused by their employees acting within the scope of their assigned tasks. Their responsibility shall only cease upon proof that they observed all the diligence of the good father of a family to prevent damage.” In the case at hand, Davao Holiday’s allegations that it had exercised extraordinary diligence was not substantiated with clear and convincing evidence thereof. It was not able to present the formulation of standard operating procedures, monitoring of the implementation, and imposition of disciplinary measures for breaches thereof. Thus, Spouses Emphasis is entitled to the payment of damages from Davao Holiday. (See Davao Holiday Transport Services Corporation vs. Sps. Eulogio and Carmelita Emphasis, G.R. No. 211424, November 26, 2014) 2. Loreta Yu was hit and run over by a bus owned by R Transport Corporation (“R Transport”) at the loading and unloading area in front of Robinson’s Galleria along the north-bound lane of Epifanio de los Santos Avenue (EDSA). She was rushed to Medical City Hospital, where she was pronounced dead on arrival. As indicated in the autopsy report, the deceased’s clothes were ripped off from her body and her brains spewed out from her skull and spilled over the road. Can R Transport be held liable for the death of Loreta? Decide with reason. (5 points) SUGGESTED ANSWER: R transport is liable to Luisito Yu for damages. Under Article 2180 of the New Civil Code, to avoid liability for the quasi-delict committed by an employee, his employer should present adequate and convincing proof that it exercised the care Page 1 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER and diligence of a good father of a family in the selection and supervision of its employees. Also, under Article 2176, a quasi-delict is an act or omission which causes damage to another, there being fault or negligence, and there is no pre-existing contractual relation between the parties. There is no contractual relation existing between Loreta Yu and the driver guilty of the incident. Thus, this incident is a quasi-delict. R Transport was not able to prove that it had exercised the required diligence in Article 2180 of the New Civil Code. Thus, R transport is liable in this case. (See R Transport Corporation vs. Luisito Yu, G.R. No. 174161, February 18, 2015) 3. If the proposed insured merely signed the application form for life insurance coverage and allowed his agent to fill up the form on his behalf, will the false answers of the agent be reflected as concealment on the part of the proposed insured? (5 points) SUGGESTED ANSWER: Yes. Where the insured merely signed the application form and made the agent of the insurer fill the same for him, it was held that by doing so, the insured made the agent of the insurer his own agent and he was responsible for his acts for that purpose. In one case, when the insured signed the pension plan application, he adopted as his own the written representations and declarations embodied in it. It is clear from these representations that he concealed his chronic heart ailment and diabetes from the insurance company. Since the insured signed the application without filling in the details regarding his continuing treatments for heart condition and diabetes, the assumption is that he has never been treated for the said illnesses in the last five years preceding his application. The insured cannot sign the application and disown the responsibility for having it filled up. If he furnished the agent the needed information and delegated to her the filling up of the application, then she acted on his instruction, not on the insurer’s instruction. In signing the pension plan application, the insured certified that he wrote all the information stated in it or had someone do it under his direction. Assuming that it was the agent who filled up the application form, the insured is still bound by what it contains since he certified that he authorized her action. Resultantly, the insurer had every right to act on the faith of that certification. (See Insular Life Assurance Co. v. Feliciano, 74 PHIL 469; Ma. Lourdes Florendo vs. PhilAm Plans, Inc., G.R. No. 186983, February 22, 2012) 4. Loadstar International Shipping, Inc. (“Loadstar Shipping”) entered into a contract of affreightment with Philippine Associated Smelting and Refining Corporation (PASAR) for domestic bulk transport of the latter’s copper concentrates. On one instance, Loadstar Shipping was to deliver a cargo from PASAR and insured by Malayan Insurance Company, Inc. (“Malayan”). The vessel’s deck, however, sustained a crack which caused seawater to enter and wet the cargo. Malayan insured PASAR with an amount equivalent to total loss due to this accident. Malayan then informed Loadstar Shipping of a prospective buyer of the copper concentrates. Malayan also informed Loadstar Shipping of PASAR’s proposal to buy back the said copper concentrates. PASAR then signed a subrogation receipt in favor Page 2 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER of Malayan, which allowed the latter to claim reimbursement from Loadstar Shipping for insurance claims made against it. Subsequently, Malayan filed a complaint for damages against Loadstar Shipping. Does Malayan have the right to recover the full amount of damages from Loadstar Shipping by virtue of subrogation. (5 points) SUGGESTED ANSWER: No. In awarding actual damages, Article 2199 of the New Civil Code states that “one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.” In the present case, Malayan paid PASAR insurance claims amounting to total loss of the copper concentrates. The fact of repurchase, however, concludes that there was no total loss of the thing; rather, there was only depreciation in value, and only to such depreciation shall be the amount demanded by Malayan from Loadstar Shipping, because it is only up to such extent that Loadstar Shipping had caused depreciation unto the thing being delivered. In fact, Malayan may opt to pay PASAR only up to the said amount because the latter had suffered damages only up to this extent. (Loadstar Shipping Company, Inc. vs. Malayan Insurance Company, Inc., G.R. No. 185565, November 24, 2014) 5. Del Monte Philippines, Inc. (Del Monte) contracted Mindanao Terminal and Brokerage Service, Inc. (Mindanao Terminal), a stevedoring company, to load and stow a shipment of 146,288 cartons of fresh green Philippine bananas and 15,202 cartons of fresh pineapples belonging to Del Monte Fresh Produce International, Inc. (Del Monte Produce) into the cargo hold of the vessel M/V Mistrau. The vessel was docked at the port of Davao City and the goods were to be transported by it to the port of Inchon, Korea in favor of consignee Taegu Industries, Inc. Del Monte Produce insured the shipment under an “open cargo policy” with private respondent Phoenix Assurance Company of New York (Phoenix), a non-life insurance company, and private respondent McGee & Co. Inc. (McGee), the underwriting manager/agent of Phoenix. Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea. It was then discovered upon discharge that some of the cargo was in bad condition. The Marine Cargo Damage Surveyor of Loss and Average Adjuster of Korea, through its representative Byeong Yong Ahn (Byeong), surveyed the extent of the damage of the shipment. In a survey report, it was stated that 16,069 cartons of the banana shipment and 2,185 cartons of the pineapple shipment were so damaged that they no longer had commercial value. Del Monte Produce subsequently filed a claim under the open cargo policy for the damages to its shipment. McGee’s Marine Claims Insurance Adjuster evaluated the claim and recommended that payment in the amount of $210,266.43 be made. A check for the recommended amount was sent to Del Monte Produce; the latter then issued a subrogation receipt to Phoenix and McGee. Is Mindanao Terminal, as a stevedoring company, under any obligation to observe the same extraordinary degree of diligence in the conduct of its business as required by law for common carriers and warehousemen? (5 points) Page 3 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER SUGGESTED ANSWER: No. Article 1173 of the Civil Code is very clear that if the law or contract does not state the degree of diligence which is to be observed in the performance of an obligation then that which is expected of a good father of a family or ordinary diligence shall be required. In the present case, Mindanao Terminal, as a stevedore, was only charged with the loading and stowing of the cargoes from the pier to the ship’s cargo hold; it was never the custodian of the shipment of Del Monte Produce. A stevedore is not a common carrier for it does not transport goods or passengers; it is not akin to a warehouseman for it does not store goods for profit. The public policy considerations in legally imposing upon a common carrier or a warehouseman a higher degree of diligence is not present in a stevedoring outfit which mainly provides labor in loading and stowing of cargoes for its clients. (Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance Company of New York/MCGEE & Co., Inc., G.R. No. 162467, May 8, 2009) 6. In one drinking spree, Diego, already drunk, took out his caliber.38 revolver pistol, took out six bullets and returned one in the chamber then challenged his drinking buddies Ryan and Joey to a deadly game of Russian roulette. Diego went first and placed the gun in his temple then pulled the trigger, the gun fired and Diego died. Assuming that Diego has a life insurance, can this incident be considered suicide or an accident as far as processing the insurance claims of Diego? (5 points) SUGGESTED ANSWER: The incident is treated as an accident. In one case, the mere act of the insured of pointing the gun to his temple believing that the gun was not loaded and the gun fired when the trigger was pulled resulting in death was held as an accident. In the case at hand, it is true that the deceased was negligent. However, an insurance is obtained precisely to cover such negligence. (See Sun Insurance vs. Court of Appeals, G.R. No. 92383, July 17, 1992) 7. XYZ Corporation is a duly registered domestic corporation having been issued a certification of incorporation by the Securities and Exchange Commission on January 15, 2017 and with an authorized capitalization of P50 million divided into 50 million shares at P1 per share par value. On March 1, 2021, Juan entered into a subscription agreement with XYZ Corporation for the purchase of 10 million shares for which he initially paid P5 million. The balance of P5 million is due on December 31, 2021 as provided for in the subscription contract. On April 1, 2021, can Juan compel XYZ Corporation to issue him the Page 4 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER stock certificate corresponding to the P5 million that he has already paid for or for 5 million shares? Explain your answer. (5 points) SUGGESTED ANSWER: No. The Revised Corporation Code (Sec. 63) provides that no certificate of stock shall be issued to a subscriber until the full amount of subscription together with interest and expenses (in case of delinquent shares), if any, has been paid. This provision sets forth the doctrine of indivisibility of subscription which espouses that the subscription is one, entire, indivisible and whole contract which cannot be divided into portions. Here, Juan subscribed to 10 million shares valued at P10 million but has only paid for half or P5 million on the date that Juan seeks to compel the corporation to issue him the stock certificates for the 10 million shares. Hence, applying Sec. 63 and the doctrine of indivisibility of subscription, Juan is not entitled to the issuance of a stock certificate until he has paid for his entire subscription. 8. XYZ Corporation engaged the services of ABC Construction Corp. for minor renovations in its office building. The renovation was completed six months after. Despite repeated demands for payment by ABC Construction Corp., XYZ Corporation failed to pay the balance of the cost of repainting amounting to P5 million. ABC Construction Corp. filed a collection suit against XYZ Corporation and Juan. According to ABC Construction Corp., Juan should be held solidarily liable because by virtue of the trust fund doctrine, Juan’s unpaid subscription forms part of the funds, which creditors like ABC Construction Corp. can resort to for the satisfaction of their claims. Assuming that Juan has not sold any his shares, is Juan solidarily liable with XYZ Corporation to pay for the unpaid services under the trust fund doctrine? Why or why not? (5 points) SUGGESTED ANSWER: No. Under the trust fund doctrine, subscription to the capital of a corporation constitute a fund to which creditors have a right to look for satisfaction of their claims. As explained by the Supreme Court, the doctrine is not limited to reaching the stockholder’s unpaid subscription, but also other property and assets generally regarded in equity as a trust fund for the payment of corporate debts. In the same case, the Court held that a creditor is allowed to maintain an action upon unpaid subscriptions and thereby steps into the shoes of the corporation for the satisfaction of its debt, only when the debtor corporation is insolvent or has been dissolved, or where the debtor corporation has released the subscriber from the obligation of paying for his shares. Here, XYZ Corporation is still a going concern and is neither insolvent nor dissolved. The corporation has likewise not released Juan from liability for his unpaid subscription. Page 5 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER Hence, Juan is not solidarily liable with XYZ Corp. for its debts to ABC, nor is ABC allowed to invoke the trust fund doctrine to proceeds against Juan’s unpaid subscription for the satisfaction of XYZ Corp.’s debts. (See Enano-Bote vs Alvarez, GR 223572, Nov. 10, 2020, J. Caguioa) 9. On January 15, 2022, Mabuhay Holdings Inc. needed a piece of land for the construction of its four- storey parking building. Ramon Bautista is a member of the board of directors of Mabuhay Holdings. Ramon has an unutilized piece real property located near the office building of Mabuhay Holdings Inc. which he offered to lease to the corporation for P100,000 a month for 10 years. The board of directors of Mabuhay Holdings Inc., during a meeting, approved Ramon’s offer. During the board meeting, only four (including Ramon) of the seven members were present. Three of those who were present approved the contract, including Ramon who voted yes to the contract. Subsequently, a lease contract was entered into between Mabuhay Holdings, Inc. and Ramon. Assuming that the contract is fair and reasonable and that the corporation is not one vested with public interest, is the lease contract valid? Why or why not? (5 points) SUGGESTED ANSWER: No. Sec. 31 of the Revised Corporation Code provides that a contract of the corporation with its directors is voidable, at the option of the corporation, unless all these conditions are present: (a) the presence of such director in the board meeting in which the contract was approved was not necessary to constitute a quorum for such meeting; (b) the vote of such director was not necessary for the approval of the contract; (c) the contract is fair and reasonable; (d) in the case of corporations vested with public interest, material contracts are approved by at least a majority of the independent directors. Provided that the contract is fair and reasonable and assuming the first two conditions are absent, such contract is susceptible of ratification by the stockholders. Here, the corporation entered into a contract with one of its directors. At least a majority or four out of the seven directors is necessary to constitute a quorum for the meeting, unless the articles of incorporation or the bylaws provides for a greater majority. To validly approve a corporate act, a vote of at least a majority or three of the four directors present in that meeting was necessary. Hence, the contract is voidable since Juan’s presence was necessary to constitute a quorum and his vote was necessary to approve the contract subject to ratification by the stockholders in the manner provided by law. 10. Jose delos Reyes is a stockholder of Mabuhay Holdings. Delos Reyes was not able to attend Mabuhay Holdings’ annual stockholders’ meeting. He however had a number of questions that he wanted to ask from the company’s board of directors and officers, including why his right to inspect corporate books and records has been denied. Earlier, he requested that he be allowed to look into a particular resolution approved by the board of directors on February 15, 2022 on the appointment of a new auditing firm for Mabuhay Holdings. Jose wrote the corporate secretary requesting for a copy of the said resolution, but his request was denied. No reason was given for the refusal. Jose now comes Page 6 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER to you, his lawyer, asking you whether he should file an individual suit or a derivative suit to compel the corporation to furnish him a copy of the resolution. What would be your advice and why? (5 points) SUGGESTED ANSWER: Jose should file an individual suit but not a derivative suit. As held by the Supreme Court, in derivative suits, it is the corporation that is the real party-in- interest and the victim of the wrong while the stockholder is merely a nominal party who may bring an action in the name of the corporation. Under Sec. 73 of the Revised Corporation Code, a stockholder has the right to inspect and request copies of corporate records, including record of board resolutions, subject to certain limitations. Refusal without a valid cause to allow the exercise of such right subjects the corporate officer or agent to liability. Here, Jose is enforcing a right that legally belongs to him. It was him personally and not the corporation who was wronged. Therefore, Jose cannot file a derivative suit. Instead, he should file an individual suit for mandamus to compel the corporation to furnish him a copy of the resolution and/or a criminal complaint for violation of his rights and/or ask for damages against the corporation or the responsible officer who refused the inspection. He can also file a complaint with the Securities and Exchange Commission which can issue an order directing the inspection or reproduction of the requested records (See Ago Realty vs Ago, GR 201906,Oct. 16, 2019, J. Reyes) 11. Solid Corporation is a domestic corporation with an authorized capital of P40 million consisting of 40 million shares at P1 par value per share of which 25 percent has been subscribed. Solid Corporation later obtained a loan from Z Bank amounting to P2 million. In connection with the loan, TP Corp. executed a guarantee agreement with the express conformity of Z Bank whereby TP Corp. agreed to guarantee and to be solidarily liable for the payment of 90 percent of the loan. Due to the COVID-19 pandemic, Solid Corporation’s business suffered from heavy losses as a result of which it became insolvent. Can Z Bank file a petition for involuntary rehabilitation under the Financial Rehabilitation and Insolvency Act? Explain. (5 points) SUGGESTED ANSWER: No. Sec. 13 of FRIA provides that in order for a creditor or group of creditors to avail of the remedy of involuntary rehabilitation against an insolvent debtor, the claim must be at least P1 million or at least 25 percent of the subscribed capital stock of the debtor corporation, whichever is higher. Here, the claim of Z Bank amounts to P2 million. Of Solid Corp.’s P40 million authorized capital, 25 percent or P10 million is subscribed. Twenty five percent of P10 million is P2.5 million. And between P2 million which is the creditor’s claim and P2.5 million which is 25 percent of Solid’s subscribed capital, the higher amount is P2.5 million. Page 7 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER Therefore, since Z Bank’s claim of P2 million is lower than the threshold amount of P2.5 million, then Z Bank cannot file for involuntary rehabilitation not having met the legal requirements. 12. Assuming the same set of facts as in the previous question, except that it was Solid Corporation, which filed a petition for voluntary rehabilitation with the Regional Trial Court of Quezon City, which is designated as a Special Commercial Court. The said court issued a commencement order which includes a stay or suspension order, which has the effect of suspending all actions for the enforcement of claims against Solid Corporation. Z Bank then proceeded to collect the portion of Solidbank’s debt covered by the guarantee agreement from TP Corp. However, TP Corp. refused to pay due to the stay or suspension order issued by the rehabilitation court. Is TP Corp.’s refusal valid? Explain (5 points) SUGGESTED ANSWER: No. Sec. 18(c) of FRIA provides that the stay or suspension order issued by the rehabilitation court shall not apply to the enforcement of claims against sureties and other persons solidarily liable with the debtor. The Supreme Court has held that the creditor can claim directly from the guarantor without the need of exhausting all the properties of and without need of prior recourse to the debtor. It said that a stay order has the effect of staying enforcement only with respect to claims made against the debtor and persons not solidarily liable with the debtor. Here, TP Corp. indubitably engaged to be solidarily liable with Solid Corp. under the guarantee agreement. Hence, Z Bank’s claim against TP Corp. is not covered by the stay or suspension order and TP Corp.’s refusal to pay is invalid and without basis under the law. (See Trade and Investment Development Corp. vs Phil. Veterans Bank, GR 233850, July 1, 2019, J Caguioa) 13. In 2014, Patrick began marketing a "waterless shampoo" for pets he developed called "Clean Fresh" in Laguna, his home province. It went into the market with limited success and is now regularly seen in smaller pharmacies and sari-sari stores in the Calabarzon Region. In 2022, Patrick was advised to register his "Clean Fresh" trademark by his friend who just passed the Bar Exam. Upon inquiry, Patrick discovered that Eryl, an entrepreneur in Bicol, had a pending application for registration for the "Clean Fresh" mark for his several budget motels and traveler's inns. Thus, Patrick filed an opposition to Eryl 's application on the ground that he was the prior user of the mark. Will the opposition prosper? (5 points) SUGGESTED ANSWER: No. Nowhere in Section 124 does the Intellectual Property Code require a "declaration of prior use" as a pre-requisite to registration. Instead, the law requires actual use after registration. In this jurisdiction, we follow the "first-to-file" rule. Page 8 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER Here, Eryl was the first to file the application to register the trademark, he is given priority regardless if Patrick was the "first user" of the trademark. Thus, the opposition will not prosper. 14. The company St. Ambrose Books Inc. (SAB) filed against Heaven on Earth Realty Development Corporation (HERD) before the IPO - Bureau of Legal Affairs an intellectual property violation case for unfair competition, false or fraudulent declaration, and damages arising from HERD's use of the marks "THE ST. AMBROSE STRIP" and "THE ST. AMBROSE MALL." HERD denied the charges, maintaining that they could use the marks because SAB is barred from claiming ownership and exclusive use of the mark "ST. AMBROSE". HERD pointed out that marks are merely geographically descriptive because both parties are located along the busy business strip called St. Ambrose Drive. Is HERD guilty of unfair competition? (5 points) SUGGESTED ANSWER: No. Unfair Competition is defined as the passing off (or palming off) or attempting to pass off upon the public of the goods or business of one person as the goods or business of another with the end and probable effect of deceiving the public. In other words, the defendant gives his goods the general appearance of the goods of his competitor with the intention of deceiving the public that the goods are those of his competitor. In this case, the element of fraud is not present. There is no showing that HERD intended to pass off its real estate developments as that of SAB. The "true test" of unfair competition has thus been "whether the acts of the defendant have the intent of deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions of the particular trade to which the controversy relates." Hence, there can be no unfair competition. (See Shang Properties Realty Corporation v. St. Francis Development Corporation, G.R. No. 190706, July 21, 2014). 15. Katherine Mae is a social media influencer whose primary mode of livelihood is the creation of "vlogs" regarding the unique local cuisine she encounters in her travels. During one of her trips, a strong undersea earthquake struck which caused a tsunami to hit the beach where Katherine was staying. She quickly took out her "GoPro" and began filming the tsunami making comments. She then uploaded the video on lnstagram. One of her followers, Jenny, works for a local news network. As the video was a "close up of what was happening on the ground, the news network aired Katherine's video using Jenny's access. Thus, Katherine filed a complaint for copyright infringement against Jenny and the news network. The news network, however, argued that under the Intellectual Property Code, "news of the date and other miscellaneous facts having the character of mere items of press information" was not copyrightable subject matter. Will the defense lie? (5 points) Page 9 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER SUGGESTED ANSWER: No. It has been settled by the Supreme Court that while the "news of the day itself is not copyrightable subject matter, a unique "expression” of the news event is distinct from the "idea" of the event. Thus, while no one can claim copyright to the mere statement of the happening of the tsunami, Katherine’s unique way of capturing the event and her accompanying commentaries on the experience are copyrightable subject matter. Hence the video is copyrightable. (See ABS-CBN Corp. v. Gozon, G.R. No. 195956, March 11, 2015). 16. Can a judge be held liable for quoting a portion of a published work in his decision without permission of the author of said book or any citation? (5 points) SUGGESTED ANSWER: No. Unlike academic institutions which value original scholarship, such that the citation of sources becomes part of the basic standards of scholarship, courts do not write to produce original scholarship. The judicial system is based on the doctrine of stare decisis which encourages the citation of historical legal data, precedents, and related studies in their decisions. Court decisions are not written to earn merit, accolade or prize as an original work of art or scholarship. Deciding disputes is a service rendered for the public good. The interest of society in judicial decision is not that they are originally crafted but that they are fair and correct in the context of the particular dispute involved. Thus, judges are exempt from a charge of plagiarism as they are free to use whatever sources they deem appropriate to resolve the matter before them. This rule should apply to practicing lawyers as well when they cite legal sources for their pleadings or in rendering advice to clients (See In the Matter of the Charges of Plagiarism, etc., against Associate Justice Mariano C. Del Castillo, AM. No. 10-7-17-SC, February 8, 2011) 17. From his first term in 2007, Congressman Desantis has been endorsing his pork barrel allocations to ACCSI in exchange for a commission of 40% of the face value of the allocation. ACCSI 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 falsified papers to support the encashment of the pork barrel checks, ACCSI does not appear to have done anything on the endorsed projects, and Congressman Desantis likewise does not appear to have bothered to monitor the progress of the project he endorsed. The Congressman 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- Page 10 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER supported tips given by a congressman from another political party, the Anti-Money Laundering Council sent BDP an order: (1) to confirm Congressman Desantis’ 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? (5 points) SUGGESTED ANSWER: I shall advise Banco de Plata not to comply with the order of the Anti-Money Laundering Council. It cannot inquire into the deposits of Congressman Desantis, regardless of currency, without a bank inquiry order from a competent court, because crimes involved are not kidnapping for ransom, violations of the Comprehensive Dangerous Drugs Act, hijacking and other violations of Republic Act No. 6235, destructive arson, murder, and terrorism and conspiracy to commit terrorism (Section 11 of Anti-Money Laundering Act). The Anti-Money Laundering Council cannot order Banco de Plata to hold all withdrawals and other transactions involving the accounts of Congressman Desantis. It is the Court of Appeals which has the power to issue a freeze order over the accounts upon petition of the Anti-Money Laundering Council (See Anti Money Laundering Act; Republic v. Cabrini Green Ross, 489 SCRA 644, 2006) 18. Malakas Industrial, a domestic corporation with office at Binondo, Manila, is engaged in the business of importing and wholesaling stainless steel products. One of its suppliers is the Leeminho Corporation, an international trading company with head office in South Korea and regional headquarters in Makati. The two corporations conducted business through telephone calls and facsimile or telecopy transmissions. Leeminho Corporation would send the pro forma invoices containing the details of the steel product order to Malakas Industrial; if the latter conforms thereto, its representative affixes his signature on the faxed copy and sends it back to Leeminho Corporation, again by fax. In one of its transactions, Leeminho Corporation forwarded to Malakas Industrial Pro Forma Invoice No. ST2-POSTSO401 containing the terms and conditions of the transaction. Malakas Industrial sent back by fax to Leeminho Corporation the invoice bearing the conformity signature of its representative, Mr. Dalisay. As stated in the pro forma invoice, payment for the ordered steel products would be made through an irrevocable letter of credit (L/C) at sight in favor of Leeminho Corporation. Following their usual practice, delivery of the goods was to be made after the L/C had been opened. Subsequently, Malakas Industrial failed to secure a L/C in favor of Leeminho Corporation which prompted the latter to file a case before the Regional Trial Court. In its complaint, Leeminho Corporation alleged that defendants breached their contract when they failed to open the L/C under Pro Forma Invoice No. ST2-POSTS0401. Leeminho Corporation presented facsimile printouts of the pro forma Invoice as its evidence. After Leeminho Corporation rested its case, Malakas Industrial filed a Demurrer to Evidence alleging that Leeminho Corporation failed to present the original copies of the pro forma invoices on which the civil action was based. Is a facsimile transmission considered an electronic data message under the Electronic Commerce Act of 2000? (5 points) SUGGESTED ANSWER: No. Page 11 of 12 2022 BAR EXAMINATIONS TRIAL COMMERCIAL LAW LEGAL EDGE BAR REVIEW CENTER The law's definition of "electronic data message," which, as aforesaid, is interchangeable with "electronic document," could not have included facsimile transmissions, which have an original paper-based copy as sent and a paper-based facsimile copy as received. These two copies are distinct from each other and have different legal effects. While Congress anticipated future developments in communications and computer technology when it drafted the law, it excluded the early forms of technology, like telegraph, telex and telecopy (except computer-generated faxes, which is a newer development as compared to the ordinary fax machine to fax machine transmission), when it defined the term "electronic data message.” -NOTHING FOLLOWS- Page 12 of 12