-I1. What is the doctrine of "piercing the veil of corporate entity?" Explain 2.

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Suggested Ans: Under the doctrine of piercing the veil of corporate entity, the corporations separate juridical personality may be disregarded. The courts will treat the corporation as a mere aggrupation of persons and the liability will directly attach to them. The legal fiction of a separate corporate personality in those cited instances, for reasons of public policy and in the interest of justice, will be justifiably set aside. In these circumstances,

2.

To what circumstances will the doctrine apply? 2.5%

Suggested ans: For example, when the corporate identity is used to defeat public convenience, justify wrong, protect fraud, or defend crime. Also, where the corporation is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation, then its distinct personality may be ignored. 3. What is the minimum and maximum number of incorporators required to incorporate a stock corporation? Is this also the same minimum and maximum number of dicrectors required in a stock corporation? 2.5%

Suggested Ans: Any number of natural persons not less than five (5) but not more than fifteen (15), all of legal age and a majority of whom are residents of the Philippines, may form a private corporation for any lawful purpose or purposes. Each of the incorporators of s stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation. (Sec 10 Corporation Code) Not the same in case of BOD, no provision as to minimum or maximum. The by corporate laws is controlling as to the number of directors. 4. Must all incorporators and directors be residents of the Philippines? 2.5%

My Answer: Incorporators shall be not less than five (5) but not more than fifteen (15), all of legal age and a majority of whom are residents of the Philippines. It is not necessary that all be residents of the Philippines. It is enough that majority of them are.

- II Discuss the legal consequences when a bank honors a forged check. 5% My Answer:

When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or 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. (Sec 23 NIL) Where a check is certified by the bank on which it is drawn, the certification is equivalent to an acceptance. (Sec. 187 NIL) Where the holder of a check procures it to be accepted or certified, the drawer and all indorsers are discharged from liability thereon. (Sec 188 NIL) - III Jun was about to leave for a business trip. As his usual practice, he signed several blank checks. He instructed Ruth, his secretary, to fill them as payment for his obligations. Ruth filled one check with her name as payee, placed P30,000.00 thereon, endorsed and delivered it to Marie. She accepted the check in good faith as payment for goods she delivered to Ruth. Eventually, Ruth regretted what she did and apologized to Jun. Immediately he directed the drawee bank to dishonor the check. When Marie encashed the check it was dishonored. 1. Is Jun liable to Marie? 5%

My Answer: Yes. Marie is a holder in due course. A holder in due course is a holder who has taken the instrument under the following conditions: (a) That it is complete and regular upon its face; (b) That he became the holder of it before it was overdue, and without notice that it has been previously dishonored, if such was the fact; (c) That he took it in good faith and for value; (d) That at the time it was negotiated to him, he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. (Sec 52 NIL) A holder in due course holds the instrument free from any defect of title of prior parties, and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon. (Sec 57 NIL) 2. Supposing the check was stolen while in Ruth's possession and a thief filled the blank check, endorsed and delivered it to Marie in payment for the goods he purchased from her, is Jun liable to Marie if the check is dishonored? 5% My Answer: No. Jun is not liable to Marie. Where an incomplete instrument has not been delivered, it will not, if completed and negotiated without authority, be a valid contract in the hands of any holder, as against any person whose signature was placed thereon before delivery. (Sec 15 NIL)

- IV Rudy is jobless but is reputed to be a jueteng operator. He has never been charged or convicted of any crime. He maintains several bank accounts and has purchased 5 houses and lots for his children from the Luansing Realty I Inc. Since he does not have any visible job, the company reported his purchases to the Anti-Money Laundering Council (AMLC). Thereafter, AMLC charged him with violation of the Anti-Money

Laundering Law. Upon request of the AMLC, the bank disclosed to it Rudy's bank deposits amounting to P100 Million. Subsequently, he was charged in court for violation of the Anti-Money Laundering Law. 1. 2. Can Rudy move to dismiss the case on the ground that he has no criminal record? 2.5% To raise funds for his defense, Rudy sold the houses and lots to a friend. Can Luansing Realty, Inc. be compelled to transfer to the buyer ownership of the houses and lots? 2.5% 3. 4. In disclosing Rudy's bank accout:)ts to the AMLC, did the bank violate any law? 2.5% Supposing the titles of the houses and lots are in possession of the Luansing Realty I Inc., is it under obligation to deliver the titles to Rudy? 2.5%

-VThe Peninsula Insurance Company offered to insure Francis' brand new car against all risks in the sum of P1 Million for 1 year. The policy was issued with the premium fixed at P60,000.00 payable in 6 months. Francis only paid the first two months installments. Despite demands, he failed to pay the subsequent installments. Five months after the issuance of the policy, the vehicle was carnapped. Francis filed with the insurance company a claim for its value. However, the company denied his claim on the ground that he failed to pay the premium resulting in the cancellation of the policy. Can Francis recover from the Peninsula Insurance Company? 5% My Answer: Yes. Francis can recover. No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on, among others, non-payment of premium. (Sec 64 Insurance Code) In this case there was no prior notice of the cancellation of the policy.

- VI 1. In several policy addresses extensively covered by media since his appointment on December 21, 2005, Chief Justice Artemio V. Panganiban vowed to leave a judiciary characterized by "four Ins" and to focus in solving the "four ACID" problems that corrode the administration of justice in our country. Explain this "four Ins" and "four ACID" problems. 2.5% 2. The Chief Justice also said that the judiciary must "safeguard the liberty" and "nurture the prosperity" of our people. Explain this philosophy. Cite Decisions of the Supreme Court implementing each of these twin beacons of the Chief Justice. 2.5% - VII 1. 2. What is a mutual insurance company or association? 2.5% Distinguish between the role of a conservator and that of a receiver of a bank. 2.5%

- VIII Pio is the president of Western Bank. His wife applied for a loan with the said bank to finance an internet cafe. The loan officer told her that her application will not be approved because the grant of loans to related interests of bank directors, officers, and stockholders is prohibited by the General Banking Law. Explain whether the loan officer is correct. 5% - IX The Blue Star Corporation filed with the Regional Trial Court a petition for rehabilitation on the ground that it foresaw the impossibility of paying its obligations as they fall due. Finding the petition sufficient in form and substance, the court issued an Order appointing a rehabilitation receiver and staying the enforcement of all claims against the corporation. What is the rationale for the Stay Order? 5% -X1. 2. What acts or omissions are penalized under the Trust Receipts Law? 2.5% Is lack of intent to defraud a bar to the prosecution of these acts or omissions? 2.5% - XI Under Republic Act No.1405 (The Bank Secrecy Law), bank deposits are considered absolutely confidential and may not be examined, inquired or looked into by any person, government official, bureau or office. What are the exceptions? 5% - XII 1. Is the Securities and Exchange Commission the venue for actions involving intra-corporate controversies? 2% - XIII Supposing Albert Einstein were alive today and he filed with the Intellectual Property Office (IPO) an application for patent for his theory of relativity expressed in the formula E=mc2. The IPO disapproved Einstein's application on the ground that his theory of relativity is not patentable. Is the IPO's action correct? 5% - XIV In a written legal opinion for a client on the difference between apprenticeship and learnership, Liza quoted without permission a labor law expert's comment appearing in his book entitled "Annotations on the Labor Code." Can the labor law expert hold Liza liable for infringement of copyright for quoting a portion of his book without his permission? 5% - XV A real estate mortgage may be foreclosed judicially or extrajudicially.

In what instance maya mortgagee extrajudicially foreclose a real estate mortgage? 5% - XVI Pursuant to a writ of execution issued by the Regional Trial Court in "Express Bank v. Don Rubio," the sheriff levied and sold at public auction 8 photocopying machines of Don Rubio. Is the sheriff's sale covered by the Bulk Sales Law? 5% NOTHING FOLLOWS.