CAGAYAN STATE UNIVERSITY

COLLEGE OF LAW
Andrews Campus, Tuguegarao City, Cagayan

COMMERCIAL LAW REVIEW

(SET 5 – SPECIAL LAWS)
CALLUENG, FRANZERIC B. 16-07324

V. SPECIAL LAWS

A. SECURED TRANSACTIONS
1. Personal Property Securities Act
a. Provide the definitions contained in Sec. 3 of R.A. No. 11057, and give the
scope of the law.
SECTION 3 of R.A. 11057
(1) Commodity contract - a commodity futures contract, an option on a
commodity futures contract, a commodity option, or another contract if the
contract or option is:
(1) Traded on or subject to the rules of a board of trade that has been
designated as a contract market for such a contract; or
(2) Traded on a foreign commodity board of trade, exchange, or market,
and is carried on the books of a commodity intermediary for a
commodity customer;
(2) Control agreement -
(1) With respect to securities, means an agreement in writing among
the issuer or the intermediary, the grantor and the secured creditor,
according to which the issuer or the intermediary agrees to follow
instructions from the secured creditor with respect to the security,
without further consent from the grantor;
(2) With respect to rights to deposit account, means an agreement in
writing among the deposit-taking institution, the grantor and the secured
creditor, according to which the deposit-taking institution agrees to
follow instructions from the secured creditor with respect to the
payment of funds credited to the deposit account without further
consent from the grantor;
(3) With respect to commodity contracts, means an agreement in writing
among the grantor, secured creditor, and intermediary, according to
which the commodity intermediary will apply any value distributed on
account of the commodity contract as directed by the secured creditor
without further consent by the commodity customer or grantor;
(3) Grantor -
(1) The person who grants a security interest in collateral to secure its
own obligation or that of another person;
(2) A buyer or other transferee of a collateral that acquires its right
subject to a security interest;
(3) A transferor in an outright transfer of an accounts receivable; or
(4) A lessee of goods;

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(4) Non-inter mediated securities - securities other than securities credited to a
securities account and rights in securities resulting from the credit of securities
to a securities account;
(5) Notice - a statement of information that is registered in the Registry relating
to a security interest or lien. The term includes an initial notice., amendment
notice, and termination notice;
(6) Proceeds - any property received upon sale, lease or other disposition of
collateral, or whatever is collected on or distributed with respect to collateral,
claims arising out of the loss or damage to the collateral, as well as a right to
insurance payment or other compensation for loss or damage of the collateral;
(7) Purchase money security interest - a security interest in goods taken by the
seller to secure the price or by a person who gives value to enable the grantor to
acquire the goods to the extent that the credit is used for that purpose;
(8) Registry - the centralized and nationwide electronic registry established in the
Land Registration Authority (LRA) where notice of a security interest and a lien in
personal property may be registered;
(9) Secured creditor - a person that has a security interest. For the purposes of
registration and priority only, it includes a buyer of account receivable and a
lessor of goods under an operating lease for not less than one (1) year;
(10) Security interest - a property right in collateral that secures payment or
other performance of an obligation, regardless of whether the parties have
denominated it as a security interest, and regardless of the type of asset, the
status of the grantor or secured creditor, or the nature of the secured obligation;
including the right of a buyer of accounts receivable and a lessor under an
operating lease for not less than one (1) year; and
(11) Writing - for the purpose of this Act includes electronic records.

Section 4. Scope of the Act. - This Act shall apply to all transactions of any form
that secure an obligation with movable collateral, except interests in aircrafts
subject to Republic Act No. 9497, or the "Civil Aviation Authority Act of 2008",
and interests in ships subject to Presidential Decree No. 1521, or the "Ship
Mortgage Decree of 1978".

b. Discuss the rule with respect to the following assets in a security agreement:
i. Future property
- a security agreement may provide for the creation of a security
interest in a future property, but the security interest in that property is
created only when the grantor acquires rights in it or the power to
encumber.
ii. Rights to proceeds and commingled funds
- A security interest in personal property shall extend to its
identifiable or traceable proceeds.
- Where proceeds in the form of funds credited to a deposit
account or money are commingled with other funds or money:
(1) The security interest shall extend to the commingled money or
funds, notwithstanding that the proceeds have ceased to be
identifiable to the extent they remain traceable:
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 (2) The security interest in the commingled funds or money shall
be limited to the amount of the proceeds immediately before
they were commingled: and
(3) If at any time after the commingling, the balance credited to
the deposit account or the amount of the commingled money is
less than the amount of the proceeds immediately before they
were commingled, the security interest against the commingled
funds or money shall be limited to the lowest amount of the
commingled funds or money between the time when the
proceeds were commingled and the time the security interest in
the proceeds is claimed.
iii. Tangible assets commingled in a mass
- A security interest in any tangible asset may be perfected by
registration or possession. A security interest in investment
property and deposit account may be perfected by registration or
control.
iv. Accounts receivables
- A security interest in an account receivable shall be effective
notwithstanding any agreement between the grantor and the
account debtor or any secured creditor limiting in any way the
grantor’s right to create a security interest.
c. How and when will the security interests over personal property be
perfected?
- A security interest shall be perfected when it has been created
and the secured creditor has taken one of the actions in accordance with
Section 12 provides that:
- A security interest may be perfected by:
(a) Registration of a notice with the Registry;
(b) Possession of the collateral by the secured creditor;
and
(c) Control of investment property and deposit account.
- On perfection, a security interest becomes effective against third
parties.
d. Briefly discuss the rules for the registration of security agreements.
- A security agreement must be contained in a written contract signed by
the parties. It may consist of one or more writings that, taken together,
establish the intent of the parties to create a security interest. The
security agreement shall likewise provide for the language to be used in
agreements and notices. The grantor shall be given the option to have
the agreement and notices in Filipino. The Department of Finance (DOF)
shall prepare model agreements in plain English and Filipino.
e. Briefly discuss the new set of rules for determining priority of security
interests.
- The priority of security interests and liens in the same collateral shall be
determined according to time of registration of a notice or perfection by other
means, without regard to the order of creation of the security interests and liens.
f. What are the rules regarding tangible assets and intangible assets?

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 - A security interest over a tangible asset that is transformed into a
product does not automatically extend to the product unless specifically
provided in the security agreement, since “products” are not referred to in
Section 8 of the PPSA (Right to Proceeds and Commingled Funds and Money) The
extension of security interests over products may occur instead pursuant to the
option to create security interests over future property
g. Explain the rule with regard to enforcement of security interests.
- In case that the collateral is disposed of under judicial authorization, it is
appropriate that the Supreme Court provide for the procedural guidelines for
such disposition. The guidelines for extra-judicial disposition imposes minimum
guidelines for the disposition of the collateral, guided by the principles of good
faith and the commercial reasonableness requirement imposed by the PPSA. The
sale shall be through public auction, and preceded by a mandatory notice that is
posted with the Registry. There is leeway granted as to the procedure to be
followed during the sale, with listing indicators that may be taken into account in
determining the good faith and commercial reasonableness requirements are
met. If the sale is conducted through an established procedure that have been
previously approved by the DOF, or through a method of disposition that has
been approved in any legal proceeding, then the disposition shall be conclusively
presumed to be commercially reasonable.
h. Discuss the rule on prior interests and the transitional period.
- Means a security interest created or provided for by an agreement or
other transaction that was made or entered into before the effectivity of this Act
and that had not been terminated before the effectivity of this Act, but excludes
a security interest that is renewed or extended by a security agreement or other
transaction made or entered into on or after the effectivity of this Act; and
- Transitional period - means the period from the date of effectivity of
this Act until the date when the Registry has been established and operational.
2. Real Estate Mortgage Law
a. Discuss briefly the following:
i. Obligations secured by real estate mortgage
- to secure the fulfillment of a principal obligation when it
becomes due, the thing mortgaged may be alienated to secure
payment.
ii. Object of real estate mortgage
- only the following property may be the object of real estate
mortgage:
- immovables
- alienable real rights in acoordance with the laws,
imposed upon immovables.
iii. Right to alienate mortgage credit
- the mortgage credit may be alienated or assigned to a third
persons, in whole or in part, the formalities required by law.
iv. Right to alienate collateral
- As a special type of contract, the validity of a mortgage
agreement is determined by the concurrence of the requisites provided
by law, to wit: 1) it must secure fulfillment of a principal obligation; 2) the

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 mortgagor must be the absolute owner of the property; 3) he must have
free disposal of the property; and 4) the mortgage must be recorded.
Nevertheless, an unrecorded mortgage is still binding between the
parties.
b. What are the essential requisites of a real estate mortgage?
- ESSENTIAL REQUISITES OF A MORTGAGE
- To secure the fulfillment of a principal obligation
- The mortgagor  should  be  the absolute owner of thing
mortgaged
- The mortgagor should have free disposal of the thing
- When  the  principal  obligation  becomes  due,  the  thing
mortgaged may be alienated to secure payment
- For a mortgage to  be validly  constituted  and to prejudice
third  persons,  the  mortgage  should  be  recorded  with 
the Registry of Property.
3. Guaranty
a. As to the nature and extent of guaranty,
i. what is meant by an obligation secured by guaranty?
- a contract whereby the guarantor binds himself to the creditor
to fulfill the obligation of the principal debtor.
ii. who are the parties to a guaranty?
- in a contract of guaranty, the parties are the guarantor and the
creditor.
iii. what is meant by “excussion”?
- it is the process whereby a creditor must proceed against a
surety or subsidiary debtor. This excussion shall not takes place; if
the guarantor has expressly renounced it, if he has bound
himself solidarily with the debtor; in case of insolvency of
the debtor; when he he has absconded, or cannot be sued within the
Philippines unless he has left a manager or representative; if it
may be presumed that an execution on the property of the
principal debtor would not result in the satisfaction of the
obligation.
iv. what is the right to protection?
- Under the law the guarantor may set up against the creditor all
the defenses which pertain to the principal debtor and are
inherent in the debt; but not those that are personal to the
debtor.
v. what is the right to indemnification?
- The guarantor who pays for a debtor must be indemnified by the
latter.
The indemnity comprises:
(1) The total amount of the debt;
(2) The legal interests thereon from the time the payment was
made known to the debtor, even though it did not earn interest
for the creditor;
(3) The expenses incurred by the guarantor after having notified

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 the debtor that payment had been demanded of him;
(4) Damages, if they are due. (1838a
vi. what is the right to subrogation?
- The guarantor who pays is subrogated by virtue thereof to all the
rights which the creditor had against the debtor.
- If the guarantor has compromised with the creditor, he cannot
demand of the debtor more than what he has really paid.
vii. what are the rights of co-guarantors?
- The guarantor may set up against the creditor all the defenses
which pertain to the principal debtor and are inherent in the debt;
but not those that are personal to the debtor.
b. Briefly explain the effects of guaranty.
- The guarantor cannot be compelled to pay the creditor unless the latter
has exhausted all the property of the debtor, and has resorted to all the
legal remedies against the debtor.
c. How is guaranty extinguished?
- The obligation of the guarantor is extinguished at the same time as that
of the debtor, and for the same causes as all other obligations, because
guaranty is an accessory and subsidiary contract, it is extinguished once
the principal obligation is extinguished.
d. What are legal and judicial bonds?
- Article 2082. The bondsman who is to be offered in virtue of a provision
of law or of a judicial order shall have the qualifications prescribed in
article 2056 and in special laws.
- Article 2083. If the person bound to give a bond in the cases of the
preceding article, should not be able to do so, a pledge or
mortgage considered sufficient to cover his obligation shall be admitted
in lieu thereof.
- Article 2084. A judicial bondsman cannot demand the exhaustion of the
property of the principal debtor.
A sub-surety in the same case, cannot demand the exhaustion of the
property of the debtor or of the surety.

- The only important thing in legal and judicial bonds is that it is a surety,
its is not entitled to the benefit of excussion.
4. Surety
a. Define surety.
- is a relation which one person (principal) has undertaken an obligation
and another person (surety) is also under a direct and primary obligation
or other duty to a third person (oblige), who is entitled to but one
performance and as between the two who are bound, the one rather
than the other should perform.
b. What is the form of surety?
-
c. What obligations could be secured?
- It covers obligations, different kinds of obligations, joint and solidary
obligation,

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 d. Distinguish surety from:
i. standby letter of credit
- a surety is a guarantee in which a third party often an insurance
company agrees to assume a defaulting party’s financial obligations while
standby letter of credit it is a bank issued option on loan involving 3
parties:  the bank issuing the credit, the party requesting for such
issuance (otherwise known as the account party) and the beneficiary.
ii. guaranty
- The distinction between guaranty and surety is that in guaranty
the guarantor assumes the liability of the principal debtor and pays the
debt in case only of default or failure to pay the monetary obligation by
the debtor. The guarantor is secondarily liable with the principal debtor.
It means that the guarantor can be held liable only after the creditor has
exhausted all the properties of the debtor before the debt can be
attached and accounted to the guarantor.  
On the other hand, the surety is liable to pay the monetary
obligation of the debtor if the latter refuse to pay his obligation. It is clear
that surety is primarily liable with the principal debtor; hence, the
creditor may proceed directly against the surety or to his property in case
of non-payment of the principal debtor without exhausting or applying all
the properties of the debtor for the payment of his debt.
iii. joint and solidary obligations
- The concurrence of two or more creditors or of two or more
debtors in one and the same obligation does not imply that each one of
the former has a right to demand, or that each one of the latter is bound
to render, entire compliance with the prestation. There is a solidary
liability only when the obligation expressly so states, or when the law or
the nature of the obligation requires solidarity.
5. Letters of credit
a. Define and give the purpose of letters of credit.
- A letter of credit, is a letter from a bank guaranteeing that a buyer's
payment to a seller will be received on time and for the correct amount. In the
event that the buyer is unable to make a payment on the purchase, the bank will
be required to cover the full or remaining amount of the purchase. It may be
offered as a facility. Due to the nature of international dealings, including factors
such as distance, differing laws in each country, and difficulty in knowing each
party personally, the use of letters of credit has become a very important aspect
of international trade.
b. What are the kinds of letters of credit?
- Common Letter of Credit - an instrument by which a bank, for the
account of a buyer of merchandise, gives formal evidence to a seller, of
its willingness to permit the seller to draw bills against it, and stipulates in
legal form that all such bills will be honored.
- Traveler’s Letter of Credit - a letter from a bank addressed to its
correspondents stating that drafts up to a certain sum drawn by the
beneficiary will be honored by the bank.
c. Explain the rule of strict compliance.

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 - The document tendered by the seller must strictly conform to the terms
of the Letters of Credit. The correspondent bank which departs from
what has been stipulated under the Letters of Credit, as when it accepts a
faulty tender, acts on his own risk and may not thereafter recover from
the buyer or issuing bank, the money paid to the beneficiary. In short, the
documents presented must comply with those stipulated on. In a Letters
of Credit, the banks only deals with documents and not with goods.
d. What is the so-called “independence principle”?
- The bank in determining compliance with the terms of the LC is required
only to examine the shipping document presented by the seller and is
precluded from determining whether the main contract is accomplished
or not.
B. TRUTH IN LENDING ACT
1. What is the purpose of the Truth in Lending Act?
- Under Section 2 of R.A. 3765 it is the policy of the State to protect its citizens
from a lack of awareness of the true cost of credit to the user by assuring a full
disclosure of such cost with a view of preventing the uninformed use of credit to the
detriment of the national economy.
2. What is the obligation of creditors to person to whom credit is extended?
- Any creditor shall furnish to each person to whom credit is extended, prior to
the consummation of the transaction, a clear statement in writing setting forth,
to the extent applicable and in accordance with rules and regulations prescribed
by the Board, the following information:
(1) the cash price or delivered price of the property or service to be
acquired;
(2) the amounts, if any, to be credited as down payment and/or trade-in;
(3) the difference between the amounts set forth under clauses 1 and 2;
(4) the charges, individually itemized, which are paid or to be paid by
such person in connection with the transaction but which are not
incident to the extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance bears to the total amount to be
financed expressed as a simple annual rate on the outstanding unpaid
balance of the obligation.
3. Under the law, what are the covered and excluded transactions?
- Any creditor who in connection with any credit transaction fails to disclose to
any person any information in violation of this Act or any regulation issued
thereunder shall be liable to such person in the amount of P100 or in an amount
equal to twice the finance charged required by such creditor in connection with
such transaction, whichever is the greater, except that such liability shall not
exceed P2,000 on any credit transaction. Action to recover such penalty may be
brought by such person within one year from the date of the occurrence of the
violation, in any court of competent jurisdiction.
4. What happens in case of non-compliance with obligation under the law?
- Any person who willfully violates any provision of this Act or any regulation
issued thereunder shall be fined by not less than P1,00 or more than P5,000 or

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 imprisonment for not less than 6 months, nor more than one year or both.
C. ANTI-MONEY LAUNDERING ACT
1. Discuss the policy of the AMLA.
- It is the policy of the State to protect and preserve the integrity and
confidentiality of bank accounts and to ensure that the Philippines shall not be
used as a money laundering site for the proceeds of any unlawful activity.
Consistent with its foreign policy, the State shall extend cooperation in
transnational investigations and prosecutions of persons involved in money
laundering activities wherever committed.
2. What are the covered institutions and their obligations under the law?
- Banks, offshore banking units, quasi-banks, trust entities, non-stock savings and
loan associations, pawnshops, and all other institutions, including their
subsidiaries and affiliates supervised and/or regulated by the Bangko Sentral ng
Pilipinas (BSP)
- Insurance companies, holding companies and all other institutions supervised
or regulated by the Insurance Commission (IC)
- Securities dealers, brokers, pre-need companies, foreign exchange
corporations, investment houses, trading advisers, as well as other entities supervised
or regulated by the Securities and Exchange Commission (SEC)
3. What are the covered and suspicious transactions as identified in the law?
- Covered transaction is a transaction in cash or other equivalent monetary
instrument involving a total amount in excess of Five hundred thousand pesos
(P500,000.00) within one (1) banking day.
- Suspicious transaction are transactions with covered institutions, regardless of
the amounts involved, where any of the following circumstances exist:
1. there is no underlying legal or trade obligation, purpose or economic
justification;
2. the client is not properly identified;
3. the amount involved is not commensurate with the business or
financial capacity of the client;
4. taking into account all known circumstances, it may be perceived that
the client’s transaction is structured in order to avoid being the subject of
reporting requirements under the Act;
5. any circumstance relating to the transaction which is observed to
deviate from the profile of the client and/or the client’s past transactions
with the covered institution;
6. the transaction is in any way related to an unlawful activity or offense
under this Act that is about to be, is being or has been committed; or
7. any transaction that is similar or analogous to any of the foregoing.
4. How is money laundering committed?
- It is committed by the following:
(a) Any person knowing that any monetary instrument or property represents,
involves, or relates to, the proceeds of any unlawful activity, transacts or
attempts to transact said monetary instrument or property.
(b) Any person knowing that any monetary instrument or property involves the
proceeds of any unlawful activity, performs or fails to perform any act as a result
of which he facilitates the offense of money laundering referred to in

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paragraph (a) above.
(c) Any person knowing that any monetary instrument or property is required
under this Act to be disclosed and filed with the Anti-Money Laundering Council
(AMLC), fails to do so.
5. What is the Anti-Money Laundering Council? What are its functions?
- The AMLC is the Philippines’ financial intelligence unit, which is tasked to
implement the AMLA. It is composed of the Governor of the Bangko Sentral ng
Pilipinas (BSP) as Chairman & the Commissioner of the Insurance
Commission (IC) and the Chairman of the Securities and Exchange Commission
(SEC) as members.
The AMLC is authorized to:
- Require and receive covered or suspicious transaction reports from
covered institutions.
- Issue orders to determine the true identity of the owner of any
monetary instrument or property that is the subject of a covered or
suspicious transaction report, and to request the assistance of a foreign
country if the Council believes it is necessary.
- Institute civil forfeiture and all other remedial proceedings through the
Office of the Solicitor General.
- Cause the filing of complaints with the Department of Justice or the
Ombudsman for the prosecution of money laundering offenses.
- Investigate suspicious transactions, covered transactions deemed
suspicious, money laundering activities and other violations of the AMLA.
- Secure the order of the Court of Appeals to freeze any monetary
instrument or property alleged to be the proceeds of unlawful activity.
- Implement such measures as may be necessary and justified to
counteract money laundering.
- Receive and take action on any request from foreign countries for
assistance in their own anti-money laundering operations.
- Develop educational programs to make the public aware of the
pernicious effects of money laundering and how they can participate in
bringing the offenders to the fold of the law.
- Enlist the assistance of any branch of government for the prevention,
detection and investigation of money laundering offenses and the
prosecution of offenders. In this connection, the AMLC can require
intelligence agencies of the government to divulge any information that
will facilitate the work of the Council in going after money launderers.
- Impose administrative sanctions on those who violate the law, and the
rules, regulations, orders and resolutions issued in connection with the
enforcement of the law.

6. Explain the safe harbor provision.

- A safe harbor is a provision in a law or regulation that affords protection from
liability or penalty under specific situations, or if certain conditions are met.
Sometimes a safe harbor reduces liability if "good faith" is demonstrated.
- No administrative, criminal or civil proceedings shall lie against any person for
having made a Credit Transaction Report or an Suspicious Transaction
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 Report in the regular performance of his duties and in good faith, whether
or not such reporting results in any criminal prosecution under the AMLA or any
other Philippine law.

7. Regarding application for freeze orders,

a. Who may apply?
- Upon verified ex parte petition by the AMLC and after determination
that probable cause exists that any monetary instrument or property is in any
way related to an unlawful activity, the Court of Appeals may issue a freeze
order, which shall be effective immediately, for a period of twenty (20) days,
directing the concerned covered persons and government agencies to desist
from allowing any transaction, withdrawal, deposit, transfer, removal,
conversion, other movement, concealment, or other disposition of the subject
monetary instrument or property.
b. When is the effectivity of the Order?
- The freeze order shall take effect immediately and shall remain effective
for a total period not exceeding six (6) months. This is without prejudice to an
asset preservation order that the regional trial court having jurisdiction over the
appropriate AMLC case or civil forfeiture case may issue on the same account
depending upon the circumstances of the case, where the Court of Appeals will
remand the case and its records.
c. What are the duties of covered institutions?
-
8. Regarding AMLC’s authority to inquire into bank deposits,
a. What are “forfeiture provisions” of the law?
- The following rules shall be observed in asset forfeiture proceedings:
(a) No prior criminal charge, pendency of a case, or conviction for
an unlawful activity or ML offense is necessary for the
commencement or the resolution of a petition for civil forfeiture.
(b) No asset shall be attached or forfeited to the prejudice of a
candidate for an electoral office during an election period.

b. How about the “mutual assistance among states”?

- Where a foreign State makes an MLA request in the investigation or
prosecution of a ML/TF offense, the AMLC may execute the request or refuse to
execute the same and inform the foreign State of any valid reason for not
executing the request or for delaying the execution thereof.
- The AMLC may refuse to comply with any MLA request where the
action sought in the request contravenes any provision of the Constitution or the
execution of the request is likely to prejudice the national interest of the
Philippines, unless there is a treaty between the Philippines and the requesting
State relating to the provision of assistance in relation to ML/TF or associated
unlawful activity.

D. FOREIGN INVESTMENTS ACT

1. What is the policy of the law?
- It is the policy of the State to attract, promote and welcome productive
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investments from foreign individuals, partnerships, corporations, and governments,
including their political subdivisions, in activities which significantly contribute to
national industrialization and socio-economic development to the extent that foreign
investment is allowed in such activity by the Constitution and relevant laws. Foreign
investments shall be encouraged in enterprises that significantly expand livelihood and
employment opportunities for Filipinos; enhance economic value of farm products;
promote the welfare of Filipino consumers; expand the scope, quality and volume of
exports and their access to foreign markets; and/or transfer relevant technologies in
agriculture, industry and support services. Foreign investments shall be welcome as a
supplement to Filipino capital and technology in those enterprises serving mainly the
domestic market.
As a general rule, there are no restrictions on extent of foreign ownership of
export enterprises. In domestic market enterprises, foreigners can invest as much as
one hundred percent (100%) equity except in areas included in the negative list. Foreign
owned firms catering mainly to the domestic market shall be encouraged to undertake
measures that will gradually increase Filipino participation in their businesses by taking
in Filipino partners, electing Filipinos to the board of directors, implementing transfer of
technology to Filipinos, generating more employment for the economy and enhancing
skills of Filipino workers.
2. Define the following terms:
a. Foreign investment
- shall mean an equity investment made by a non-Philippine national in
the form of foreign exchange and/or other assets actually transferred to the
Philippines and duly registered with the Central Bank which shall assess and
appraise the value of such assets other than foreign exchange
b. "Doing business" in the Philippines
- shall include soliciting orders, service contracts, opening offices,
whether called “liaison” offices or branches; appointing representatives or
distributors domiciled in the Philippines or who in any calendar year stay in the
country for a period or periods totaling one hundred eighty (180) days or more;
participating in the management, supervision or control of any domestic
business, firm, entity or corporation in the Philippines; and any other act or acts
that imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the exercise of
some of the functions normally incident to, and in progressive prosecution of,
commercial gain or of the purpose and object of the business organization:
Provided, however, That the phrase “doing business” shall not be deemed to
include mere investment as a shareholder by a foreign entity in domestic
corporations duly registered to do business, and/or the exercise of rights as such
investor; nor having a nominee director or officer to represent its interests in
such corporation; nor appointing a representative or distributor domiciled in the
Philippines which transacts business in its own name and for its own account
c. Export enterprise
- shall mean an enterprise wherein a manufacturer, processor or service
(including tourism) enterprise exports sixty percent (60%) or more of its output,
or wherein a trader purchases products domestically and exports sixty percent
(60%) or more of such purchases

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 d. Domestic market enterprise
- shall mean an enterprise which produces goods for sale, or renders
services to the domestic market entirely or if exporting a portion of its output
fails to consistently export at least sixty percent (60%) thereof
3. Briefly discuss the following:
a. Registration of investments of non-Philippine nationals.
- Without need of prior approval, a non-Philippine national, as that term
is defined in Section 3 a), and not otherwise disqualified by law may, upon
registration with the Securities and Exchange Commission (SEC), or with the
Bureau of Trade Regulation and Consumer Protection (BTRCP) of the
Department of Trade and Industry in the case of single proprietorships, do
business as defined in Section 3 d) of this Act or invest in a domestic enterprise
up to one hundred percent (100%) of its capital, unless participation of non-
Philippine nationals in the enterprise is prohibited or limited to a smaller
percentage by existing law and/or under the provisions of this Act. The SEC or
BTRCP, as the case may be, shall not impose any limitations on the extent of
foreign ownership in an enterprise additional to those provided in this Act:
Provided, however, That any enterprise seeking to avail of incentives under the
Omnibus Investment Code of 1987 must apply for registration with the Board of
Investments (BOI), which shall process such application for registration in
accordance with the criteria for evaluation prescribed in said Code: Provided,
finally, That a non-Philippine national intending to engage in the same line of
business as an existing joint venture, in which he or his majority shareholder is a
substantial partner, must disclose the fact and the names and addresses of the
partners in the existing joint venture in his application for registration with SEC.
During the transitory period as provided in Section 15 hereof, SEC shall disallow
registration of the applying non-Philippine national if the existing joint venture
enterprise, particularly the Filipino partners therein, can reasonably prove they
are capable to make the investment needed for the domestic market activities to
be undertaken by the competing applicant. Upon effectivity of this Act, SEC shall
effect registration of any enterprise applying under this Act within fifteen (15)
days upon submission of completed requirements
b. Foreign investments in export enterprises
- Foreign investment in export enterprises whose products and services
do not fall within Lists A and B of the Foreign Investment Negative List provided
under Section 8 hereof is allowed up to one hundred percent (100%) ownership.
Export enterprises which are non-Philippine nationals shall register with
BOI and submit the reports that may be required to ensure continuing
compliance of the export enterprise with its export requirement. BOI shall
advise SEC or BTRCP, as the case may be, of any export enterprise that fails to
meet the export ratio requirement. The SEC or BTRCP shall thereupon order the
non-complying export enterprise to reduce its sales to the domestic market to
not more than forty percent (40%) of its total production; failure to comply with
such SEC or BTRCP order, without justifiable reason, shall subject the enterprise
to cancellation of SEC or BTRCP registration, and/or the penalties provided in
Section 14 hereof
c. Foreign investments in domestic market enterprises

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 - Non-Philippine nationals may own up to one hundred percent (100%) of
domestic market enterprises unless foreign ownership therein is prohibited or
limited by the Constitution existing law or the Foreign Investment Negative List
under Section 8 hereof. (As amended by R.A. 8179)
d. Foreign Investment Negative List
- shall mean a list of areas of economic activity whose foreign ownership
is limited to a maximum of forty percent (40%) of the equity capital of the
enterprises engaged therein
E. INSOLVENCY LAWS
1. Regarding the rule on concurrence and preference of credits,
a. what is the meaning of concurrence and preference?
- concurrence of credit it implies by two or more creditors of equal right
or privileges over the same property of a debtor.
- preference of credits it is the right held by a creditor to be preferred in
the payment of his claim above other out of the debtor’s assets.
b. what are exempt properties?
- It shall be the duty of the court, upon petition and after hearing, to
exempt and set apart, for the use and benefit of the said insolvent, such real and
personal property as is by law exempt from execution, and also a homestead;
but no such petition shall be heard as aforesaid until it is first proved that notice
of the hearing of the application therefor has been duly given by the clerk, by
causing such notice to be posted in at least three (3) public places in the province
or city at least ten (10) days prior to the time of such hearing, which notice shall
set forth the name of the said insolvent debtor, and the time and place
appointed for the hearing of such application, and shall briefly indicate the
homestead sought to be exempted or the property sought to be set aside; and
the decree must show that such proof was made to the satisfaction of the court,
and shall be conclusive evidence of that fact.
c. what are the classifications of credits?
ARTICLE 2241 - With reference to specific movable property of the
debtor, the following claims or liens shall be preferred:

(1) Duties, taxes and fees due thereon to the State or any subdivision thereof;
(2) Claims arising from misappropriation, breach of trust, or malfeasance by
public officials committed in the performance of their duties, on the movables,
money or securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said movables, so long as
they are in the possession of the debtor, up to the value of the same; and if the
movable has been resold by the debtor and the price is still unpaid, the lien may
be enforced on the price; this right is not lost by the immobilization of the thing
by destination, provided it has not lost its form, substance and identity; neither is
the right lost by the sale of the thing together with other property for a lump
sum, when the price thereof can be determined proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged are in the
hands of the creditor, or those guaranteed by a chattel mortgage, upon the
things pledged or mortgaged, up to the value thereof;
(5) Credits for the making, repair, safekeeping or preservation of personal

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 property, on the movable thus made, repaired, kept or possessed;
(6) Claims for laborers' wages, on the goods manufactured or the work done;
(7) For expenses of salvage, upon the goods salvaged;
(8) Credits between the landlord and the tenant, arising from the contract of
tenancy on shares, on the share of each in the fruits or harvest;
(9) Credits for transportation, upon the goods carried, for the price of the
contract and incidental expenses, until their delivery and for thirty days
thereafter;
(10) Credits for lodging and supplies usually furnished to travellers by hotel
keepers, on the movables belonging to the guest as long as such movables are in
the hotel, but not for money loaned to the guests;
(11) Credits for seeds and expenses for cultivation and harvest advanced to the
debtor, upon the fruits harvested;
(12) Credits for rent for one year, upon the personal property of the lessee
existing on the immovable leased and on the fruits of the same, but not on
money or instruments of credit;
(13) Claims in favor of the depositor if the depositary has wrongfully sold the
thing deposited, upon the price of the sale.
In the foregoing cases, if the movables to which the lien or preference attaches
have been wrongfully taken, the creditor may demand them from any possessor,
within thirty days from the unlawful seizure.
d. what is the rule on the order of preference of credits?
- ART. 2246 Those credits which enjoy preference with respect to specific
movables, exclude all others to the extent of the value of the personal property
to which the preference refers.
- ART. 2247 If there are two or more credits with respect to the same
specific movable property, they shall be satisfied pro rata, after the payment of
duties, taxes, and fees due to the State or any subdivision thereof. The credits
over specific personal or movable properties are those enumerated in Article
2241 of the Civil Code.
2. Financial Rehabilitation and Insolvency Act of 2010
a. Define insolvency.
- Insolvency is the financial condition of a debtor that is generally unable
to pay its or his liabilities as they fall due in the ordinary course of business or
has liabilities that are greater than its or his assets.
b. Discuss the rule on suspension of payments.
- The purpose of a suspension of payments is to suspend or delay  the 
payment  of  debts  the  amount  of  which  isn’t affected although a
postponement is declared. The basis is the probability of the debtor’s inability to
meet his obligation  when they respectively fall due,  despite the fact that he has
sufficient assets to cover all his liabilities
c. Regarding provisions on rehabilitation, briefly explain the following:
i. types of rehabilitation
- Court-Supervised Rehabilitation
- it may be Voluntarily instituted, wherein the debtor
himself files the petition for rehabilitation, or involuntarily-
instituted, wherein the debtor’s creditor with an aggregate

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 claim of at least 25% of the subscribed capital stock or
partner contributions, whichever is higher files the
petition.
- Pre-Negotiated Rehabilitation
- the debtor by himself or jointly with creditors files the
petition for approval of pre-negotiated plan that has been
approved by creditors holding 2/3 of the total liabilities of the
debtor, including both creditors holding 50% of unsecured claims
and creditors holding 50% of secured claims against debtor.
- Out-of-Court or Informal Restructuring Agreements or
Rehabilitation Plans
- Under this type of rehabilitation the parties may agree
subject to publication requirement, on a standstill period that
affects even non-parties to the agreement.

ii. commencement order

- The commencement order in rehabilitation proceedings includes
a stay or suspension order that suspends all actions or proceedings, in
court or otherwise, for the enforcement of claims against the debtor and
suspends all actions to enforce any judgment, attachment or other
provisional remedies against the debtor (FRIA section 16(q)). Attempts to
seek legal or other recourse against the debtor outside the rehabilitation
proceedings shall be sufficient to support a finding of indirect contempt
of court.
iii. stay or suspension order
- The provisions of this Act concerning the effects of the
Commencement Order and the Stay or Suspension Order on the
suspension of rights to foreclose or otherwise pursue legal remedies shall
apply to government financial institutions, notwithstanding provisions in
their charters or other laws to the contrary.
iv. Rehabilitation receiver
- refer to the person or persons, natural or juridical, appointed as
such by the court pursuant to this Act and which shall be entrusted with
such powers and duties as set forth herein.
- Any qualified natural or juridical person may serve as a
rehabilitation receiver: Provided, That if the rehabilitation receiver is a
juridical entity, it must designate a natural person/s who possess/es all
the qualifications and none of the disqualifications as its representative, it
being understood that the juridical entity and the representative/s are
solidarily liable for all obligations and responsibilities of the rehabilitation
receiver.
v. Management committee
- the management committee shall take the place of the
management and the governing body of the debtor and assume their
rights and responsibilities. The specific powers and duties of the
management committee, whose members shall be considered as officers
of the court, shall be prescribed by the procedural rules.

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 vi. Rehabilitation plan
- shall refer to a plan by which the financial well-being and
viability of an insolvent debtor can be restored using various means
including, but not limited to, debt forgiveness, debt rescheduling,
reorganization or quasi-reorganization, dacion en pago, debt-equity
conversion and sale of the business (or parts of it) as a going concern, or
setting-up of new business entity as prescribed in Section 62 hereof, or
other similar arrangements as may be approved by the court or creditors.
vii. Cram down effect
- A restructuring/workout agreement or Rehabilitation Plan that
is approved pursuant to an informal workout framework referred to in
this chapter shall have the same legal effect as confirmation of a Plan
under Section 69 hereof. The notice of the Rehabilitation Plan or
restructuring agreement or Plan shall be published once a week for at
least three (3) consecutive weeks in a newspaper of general circulation in
the Philippines. The Rehabilitation Plan or restructuring agreement shall
take effect upon the lapse of fifteen (15) days from the date of the last
publication of the notice thereof.

d. As to liquidation, briefly explain the following:

i. Types
- Voluntary liquidation - is initiated by an insolvent debtor via a
verified petition, or a verified motion in a court-supervised or pre-
negotiated rehabilitation proceedings.
- Involuntary liquidation - Three or more creditors with an
aggregate claim of at least 1 million Philippine pesos or at least 25 per
cent of the subscribed capital stock or partners’ contributions, whichever
is higher, may initiate liquidation proceedings against an insolvent debtor
by filing a verified petition for liquidation with the court.
ii. Conversion of rehabilitation to liquidation proceedings
- Rehabilitation proceedings may also be converted into
liquidation proceedings:
- When the rehabilitation court finds that the debtor
is insolvent and there is no substantial likelihood for the
debtor to be successfully rehabilitated;
- when the rehabilitation plan is not confirmed by the
rehabilitation court within one year from filing of the
petition;
- when the rehabilitation proceedings is terminated
due to failure of rehabilitation or dismissal of the
rehabilitation petition for reasons other than technical
grounds; or
- at any time during the pendency of or after court
supervised or pre-negotiated rehabilitation proceedings,
upon motion of the debtor or of three or more creditors
whose claims are at least either 1 million Philippine pesos
or at least 25 per cent of the subscribed capital stock or of

17
 the debtor’s contribution in the partnership, whichever is
higher (FRIA section 91).
iii. Liquidation order
- If the petition or motion is meritorious, the court will issue a
liquidation order, which shall, among other things:
- declare the debtor insolvent;
- order the liquidationof the debtor and, in the case of a
juridical debtor, declare it as dissolved;
- order the sheriff to take possession and control of all the
property of the debtor, except those that may be exempt
from execution;
- direct payments of any claims and conveyance of any
property due the debtor to the liquidator;
- prohibit payments by the debtor and the transfer of any
property by the debtor;
- direct all creditors to file their claims with the liquidator
within the period set by the rules of procedure;
and
- set the case for hearing for the election and appointment
of the liquidator (FRIA section 112).
iv. Rights of secured creditors
- The Liquidation Order shall not affect the right of a secured
creditor to enforce his lien in accordance with the applicable contract or
law. A secured creditor may:
(a) waive his rights under the security or lien, prove his claim in
the liquidation proceedings and share in the distribution of the
assets of the debtor; or
(b) maintain his rights under his security or lien.
- If the secured creditor maintains his rights under the security or
lien:
(1) the value of the property may be fixed in a manner agreed
upon by the creditor and the liquidator. When the value of the property
is less than the claim it secures, the liquidator may convey the property
to the secured creditor and the latter will be admitted in the liquidation
proceedings as a creditor for the balance; if its value exceeds the claim
secured, the liquidator may convey the property to the creditor and
waive the debtor's right of redemption upon receiving the excess from
the creditor;
(2) the liquidator may sell the property and satisfy the secured
creditor's entire claim from the proceeds of the sale; or
(3) the secured creditor may enforce the lien or foreclose on the
property pursuant to applicable laws.
v. Liquidator
- Only creditors who have filed their claims within the period set
by the court, and whose claims are not barred by the statute of
limitations, will be allowed to vote in the election of the liquidator. A
secured creditor will not be allowed to vote, unless: (a) he waives his

18
 security or lien; or (b) has the value of the property subject of his security
or lien fixed by agreement with the liquidator, and is admitted for the
balance of his claim.
The creditors entitled to vote will elect the liquidator in open
court. The nominee receiving the highest number of votes cast in terms
of amount of claims, and who is qualified pursuant to Section 118 hereof,
shall be appointed as the liquidator
vi. Determination of claims
- Within twenty (20) days from his assumption into office, the
liquidator shall prepare a preliminary registry of claims of secured and
unsecured creditors. Secured creditors who have waived their security or
lien, or have fixed the value of the property subject of their security or
lien by agreement with the liquidator and is admitted as a creditor for the
balance, shall be considered as unsecured creditors. The liquidator shall
make the registry available for public inspection and provide publication
notice to creditors, individual debtors, owner/s of the sole
proprietorship-debtor, the partners of the partnership-debtor and
shareholders or members of the corporation-debtor, on where and when
they may inspect it. All claims must be duly proven before being paid.
vii. Liquidation of plan
- Within three (3) months from his assumption into office, the
Liquidator shall submit a Liquidation Plan to the court. The Liquidation
Plan shall, as a minimum, enumerate all the assets of the debtor, all the
claims against the debtor and a schedule of liquidation of the assets and
payment of the claims.

F. DATA PRIVACY ACT OF 2012

1. Discuss the definitions under the law and scope of the law.
- Definition of Terms. – Whenever used in this Act, the following terms shall have
the respective meanings hereafter set forth:
(a) Commission shall refer to the National Privacy Commission created by virtue
of this Act.
(b) Consent of the data subject refers to any freely given, specific, informed
indication of will, whereby the data subject agrees to the collection and
processing of personal information about and/or relating to him or her. Consent
shall be evidenced by written, electronic or recorded means. It may also be given
on behalf of the data subject by an agent specifically authorized by the data
subject to do so.
(c) Data subject refers to an individual whose personal information is processed.
(d) Direct marketing refers to communication by whatever means of any
advertising or marketing material which is directed to particular individuals.
(e) Filing system refers to any act of information relating to natural or juridical
persons to the extent that, although the information is not processed by
equipment operating automatically in response to instructions given for that
purpose, the set is structured, either by reference to individuals or by reference
to criteria relating to individuals, in such a way that specific information relating
to a particular person is readily accessible.

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 (f) Information and Communications System refers to a system for generating,
sending, receiving, storing or otherwise processing electronic data messages or
electronic documents and includes the computer system or other similar device
by or which data is recorded, transmitted or stored and any procedure related to
the recording, transmission or storage of electronic data, electronic message, or
electronic document.
(g) Personal information refers to any information whether recorded in a
material form or not, from which the identity of an individual is apparent or can
be reasonably and directly ascertained by the entity holding the information, or
when put together with other information would directly and certainly identify
an individual.
(h) Personal information controller refers to a person or organization who
controls the collection, holding, processing or use of personal information,
including a person or organization who instructs another person or organization
to collect, hold, process, use, transfer or disclose personal information on his or
her behalf. The term excludes:
(1) A person or organization who performs such functions as instructed
by another person or organization; and
(2) An individual who collects, holds, processes or uses personal
information in connection with the individual’s personal, family or
household affairs.
(i) Personal information processor refers to any natural or juridical person
qualified to act as such under this Act to whom a personal information controller
may outsource the processing of personal data pertaining to a data subject.
(j) Processing refers to any operation or any set of operations performed upon
personal information including, but not limited to, the collection, recording,
organization,
storage, updating or modification, retrieval, consultation, use, consolidation,
blocking, erasure or destruction of data.
(k) Privileged information refers to any and all forms of data which under the
Rules of Court and other pertinent laws constitute privileged communication.
(l) Sensitive personal information refers to personal information:
(1) About an individual’s race, ethnic origin, marital status, age, color, and
religious, philosophical or political affiliations;
(2) About an individual’s health, education, genetic or sexual life of a
person, or to any proceeding for any offense committed or alleged to
have been committed by such person, the disposal of such proceedings,
or the sentence of any court in such proceedings;
(3) Issued by government agencies peculiar to an individual which
includes, but not limited to, social security numbers, previous or cm-rent
health records, licenses or its denials, suspension or revocation, and tax
returns; and
(4) Specifically established by an executive order or an act of Congress to
be kept classified.
SEC. 4. Scope. – This Act applies to the processing of all types of personal
information and to any natural and juridical person involved in personal information
processing including those personal information controllers and processors who,

20
although not found or established in the Philippines, use equipment that are located in
the Philippines, or those who maintain an office, branch or agency in the Philippines
subject to the immediately succeeding paragraph: Provided,
That the requirements of Section 5 are complied with.
This Act does not apply to the following:
(a) Information about any individual who is or was an officer or employee of a
government institution that relates to the position or functions of the individual,
including:
(1) The fact that the individual is or was an officer or employee of the
government institution;
(2) The title, business address and office telephone number of the individual;
(3) The classification, salary range and responsibilities of the position held by
the individual; and
(4) The name of the individual on a document prepared by the individual in
the course of employment with the government;
(b) Information about an individual who is or was performing service under
contract for a government institution that relates to the services performed,
including the terms of the contract, and the name of the individual given
in the course of the performance of those services;
(c) Information relating to any discretionary benefit of a financial nature such as
the granting of a license or permit given by the government to an individual,
including the name of the individual and the exact nature of the benefit;
(d) Personal information processed for journalistic, artistic, literary or research
purposes;
(e) Information necessary in order to carry out the functions of public authority
which includes the processing of personal data for the performance by the
independent, central monetary authority and law enforcement and regulatory
agencies of their constitutionally and statutorily mandated
functions.
Nothing in this Act shall be construed as to have amended or repealed Republic Act No.
1405, otherwise known as the Secrecy of Bank Deposits Act; Republic Act No. 6426,
otherwise known as the Foreign Currency Deposit Act; and Republic Act No. 9510,
otherwise known as the Credit Information System Act (CISA);
(f) Information necessary for banks and other financial institutions under the
jurisdiction of the independent, central monetary authority or Bangko Sentral ng
Pilipinas to comply with Republic Act No. 9510, and Republic Act No. 9160, as
amended, otherwise known as the Anti-Money Laundering Act and other
applicable laws; and
(g) Personal information originally collected from residents of foreign
jurisdictions in accordance with the laws of those foreign jurisdictions, including
any applicable data privacy laws, which is being processed in the Philippines.
2. Explain the extraterritorial application of the law.
- This Act applies to an act done or practice engaged in and outside of the
Philippines by an entity if:
(a) The act, practice or processing relates to personal information about a
Philippine citizen or a resident;
(b) The entity has a link with the Philippines, and the entity is processing

21
 personal information in the Philippines or even if the processing is outside the
Philippines as long as it is about Philippine citizens or residents such as, but not
limited to, the following:
(1) A contract is entered in the Philippines;
(2) A juridical entity unincorporated in the Philippines but has central
management and control in the country; and
(3) An entity that has a branch, agency, office or subsidiary in the Philippines
and the parent or affiliate of the Philippine entity has access to personal
information; and
(c) The entity has other links in the Philippines such as, but not limited to:
(1) The entity carries on business in the Philippines; and
(2) The personal information was collected or held by an entity in the
Philippines.
3. As to the processing of personal information, briefly discuss the following:
a. General principles
- The processing of personal data shall be allowed, subject to compliance
with the requirements of the Act and other laws allowing disclosure of
information to the public, and adherence to the principles of transparency,
legitimate purpose, and proportionality.
b. Sensitive and privileged information
- The processing of sensitive personal and privileged information is
prohibited, except in any of the following cases:
a. Consent is given by data subject, or by the parties to the exchange of
privileged information, prior to the processing of the sensitive personal
information or privileged information, which shall be undertaken pursuant to a
declared, specified, and legitimate purpose;
b. The processing of the sensitive personal information or privileged
information is provided for by existing laws and regulations: Provided, that said
laws and regulations do not require the consent of the data subject for the
processing, and guarantee the protection of personal data;
c. The processing is necessary to protect the life and health of the data
subject or another person, and the data subject is not legally or physically able to
express his or her consent prior to the processing;
d. The processing is necessary to achieve the lawful and noncommercial
objectives of public organizations and their associations provided that:
1. Processing is confined and related to the bona fide members of
these organizations or their associations;
2. The sensitive personal information are not transferred to third
parties; and
3. Consent of the data subject was obtained prior to processing;
e. The processing is necessary for the purpose of medical treatment:
Provided, that it is carried out by a medical practitioner or a medical treatment
institution, and an adequate level of protection of personal data is ensured; or
f. The processing concerns sensitive personal information or privileged
information necessary for the protection of lawful rights and interests of natural
or legal persons in court proceedings, or the establishment, exercise, or defense
of legal claims, or when provided to government or public authority pursuant to

22
 a constitutional or statutory mandate.
c. Subcontracting
- A personal information controller may subcontract or outsource the
processing of personal data: Provided, that the personal information controller
shall use contractual or other reasonable means to ensure that proper
safeguards are in place, to ensure the confidentiality, integrity and availability of
the personal data processed, prevent its use for unauthorized purposes, and
generally, comply with the requirements of the Act, these Rules, other applicable
laws for processing of personal data, and other issuances of the Commission.
d. Privileged communication
- Personal information controllers may invoke the principle of privileged
communication over privileged information that they lawfully control or process.
Subject to existing laws and regulations, any evidence gathered on privileged
information is inadmissible.
4. What are the rights of the data subject? Exceptions/non-applicability?
- SEC. 16. Rights of the Data Subject. – The data subject is entitled to:
(a) Be informed whether personal information pertaining to him or her shall be,
are being or have been processed;
(b) Be furnished the information indicated hereunder before the entry of his or
her personal information into the processing system of the personal information
controller, or at the next practical opportunity:
(1) Description of the personal information to be entered into the system;
(2) Purposes for which they are being or are to be processed;
(3) Scope and method of the personal information processing;
(4) The recipients or classes of recipients to whom they are or may be
disclosed;
(5) Methods utilized for automated access, if the same is allowed by the
data subject, and the extent to which such access is authorized;
(6) The identity and contact details of the personal information controller
or its representative;
(7) The period for which the information will be stored; and (8) The
existence of their rights, i.e., to access, correction, as well as the right to lodge a
complaint before the Commission.
- Any information supplied or declaration made to the data subject on these
matters shall not be amended without prior notification of data subject: Provided, That
the notification under subsection (b) shall not apply should the personal information be
needed pursuant to a subpoena or when the collection and processing are for obvious
purposes, including when it is necessary for the performance of or in relation to a
contract or service or when necessary or desirable in the context of an employer-
employee relationship, between the collector and the data subject, or when the
information is being collected and processed as a result of legal obligation;
(c) Reasonable access to, upon demand, the following:
(1) Contents of his or her personal information that were processed;
(2) Sources from which personal information were obtained;
(3) Names and addresses of recipients of the personal information;
(4) Manner by which such data were processed;
(5) Reasons for the disclosure of the personal information to recipients;

23
 (6) Information on automated processes where the data will or likely to
be made as the sole basis for any decision significantly affecting or will
affect the data subject;
(7) Date when his or her personal information concerning the data
subject were last accessed and modified; and
(8) The designation, or name or identity and address of the personal
information controller;
(d) Dispute the inaccuracy or error in the personal information and have the
personal information controller correct it immediately and accordingly, unless the
request is vexatious or otherwise unreasonable. If the personal information have been
corrected, the personal information controller shall ensure the accessibility of both the
new and the retracted information and the simultaneous receipt of the new and the
retracted information by recipients thereof: Provided, That the third parties who have
previously received such processed personal information shall he informed of its
inaccuracy and its rectification upon reasonable request of the data subject;
(e) Suspend, withdraw or order the blocking, removal or destruction of his or her
personal information from the personal information controller’s filing system upon
discovery and substantial proof that the personal information are incomplete, outdated,
false, unlawfully obtained, used for unauthorized purposes or are no longer necessary
for the purposes for which they were collected. In this case, the personal information
controller may notify third parties who have previously received such processed
personal information; and
(f) Be indemnified for any damages sustained due to such inaccurate,
incomplete, outdated, false, unlawfully obtained or unauthorized use of personal
information.
This sections are not applicable if the processed personal information are used
only for the needs of scientific and statistical research and, on the basis of such, no
activities are carried out and no decisions are taken regarding the data subject:
Provided, That the personal information shall be held under strict confidentiality and
shall be used only for the declared purpose. Likewise, the immediately preceding
sections are not applicable to processing of personal information gathered for the
purpose of investigations in relation to any criminal, administrative or tax liabilities of a
data subject.
5. What are the duties and responsibilities of personal information controller?
- Personal information controller is responsible for personal information under
its control or custody, including information that have been transferred to a third
party for processing, whether domestically or internationally, subject to cross-
border arrangement and cooperation.
(a) The personal information controller is accountable for complying with
the requirements of this Act and shall use contractual or other
reasonable means to provide a comparable level of protection while the
information are being processed by a third party.
(b) The personal information controller shall designate an individual or
individuals who are accountable for the
organization’s compliance with this Act. The identity of the individuals
so designated shall be made known to any data subject upon request.

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G. PHILIPPINE COMPETITION ACT
1. Discuss the definitions under the law and scope of the application of the law.
- As used in this Act:
(a) Acquisition refers to the purchase of securities or assets, through contract or
other means, for the purpose of obtaining control by:
(1) One (1) entity of the whole or part of another;
(2) Two (2) or more entities over another; or
(3) One (1) or more entities over one (1) or more entities;
(b) Agreement refers to any type or form of contract, arrangement,
understanding, collective recommendation, or concerted action, whether formal
or informal, explicit or tacit, written or oral;
(c) Conduct refers to any type or form of undertaking, collective
recommendation, independent or concerted action or practice, whether formal
or informal;
(d) Commission refers to the Philippine Competition Commission created under
this Act;
(e) Confidential business information refers to information which concerns or
relates to the operations, production, sales, shipments, purchases, transfers,
identification of customers, inventories, or amount or source of any income,
profits, losses, expenditures;
(f) Control refers to the ability to substantially influence or direct the actions or
decisions of an entity, whether by contract, agency or otherwise;
(g) Dominant position refers to a position of economic strength that an entity or
entities hold which makes it capable of controlling the relevant market
independently from any or a combination of the following: competitors,
customers, suppliers, or consumers;
(h) Entity refers to any person, natural or juridical, sole proprietorship,
partnership, combination or association in any form, whether incorporated or
not, domestic or foreign, including those owned or controlled by the
government, engaged directly or indirectly in any economic activity;
(i) Market refers to the group of goods or services that are sufficiently
interchangeable or substitutable and the object of competition, and the
geographic area where said goods or services are offered;
(j) Merger refers to the joining of two (2) or more entities into an existing entity
or to form a new entity;
(k) Relevant market refers to the market in which a particular good or service is
sold and which is a combination of the relevant product market and the relevant
geographic market, defined as follows:
(1) A relevant product market comprises all those goods and/or services which
are regarded as interchangeable or substitutable by the consumer or the
customer, by reason of the goods and/or services’ characteristics, their prices
and their intended use; and
(2) The relevant geographic market comprises the area in which the entity
concerned is involved in the supply and demand of goods and services, in which
the conditions of competition are sufficiently homogenous and which can be
distinguished from neighboring areas because the conditions of competition are
different in those areas.

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- This Act shall be enforceable against any person or entity engaged in any trade,
industry and commerce in the Republic of the Philippines. It shall likewise be applicable
to international trade having direct, substantial, and reasonably foreseeable effects in
trade, industry, or commerce in the Republic of the Philippines, including those that
result from acts done outside the Republic of the Philippines.
- This Act shall not apply to the combinations or activities of workers or employees nor
to agreements or arrangements with their employers when such combinations,
activities, agreements, or arrangements are designed solely to facilitate collective
bargaining in respect of conditions of employment.
2. What are the powers and functions of the Philippine Competition Commission?
- To implement the national competition policy and attain the objectives and
purposes of this Act, an independent quasi-judicial body is hereby created, which shall
be known as the Philippine Competition Commission (PCC), hereinafter referred to as
the Commission, and which shall be organized within sixty (60) days after the effectivity
of this Act. Upon establishment of the Commission, Executive Order No. 45 designating
the Department of Justice as the Competition Authority is hereby amended. The Office
for Competition (OFC) under the Office of the Secretary of Justice shall however be
retained, with its powers and functions modified pursuant to Section 13 of this Chapter.
The Commission shall be an attached agency to the Office of the President.
3. Regarding prohibited acts,
a. what are considered anti-competitive agreements? Which are considered
“per se violations”, and which are considered “not per se violations”?
- The following agreements, between or among competitors, are per se
prohibited:
(1) Restricting competition as to price, or components thereof, or
other terms of trade;
(2) Fixing price at an auction or in any form of bidding including
cover bidding, bid suppression, bid rotation and market
allocation and other analogous practices of bid manipulation;
- The following agreements, between or among competitors which
have the object or effect of substantially preventing, restricting or
lessening competition shall be prohibited:
(1) Setting, limiting, or controlling production, markets, technical
development, or investment;
(2) Dividing or sharing the market, whether by volume of sales or
purchases, territory, type of goods or services, buyers or sellers or
any other means;
- Agreements other than those specified in (a) and (b) of this section
which have the object or effect of substantially preventing, restricting or
lessening competition shall also be prohibited: Provided, Those which
contribute to improving the production or distribution of goods and
services or to promoting technical or economic progress, while allowing
consumers a fair share of the resulting benefits, may not necessarily be
deemed a violation of this Act.
An entity that controls, is controlled by, or is under common control with
another entity or entities, have common economic interests, and are not
otherwise able to decide or act independently of each other, shall not be

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 considered competitors for purposes of this section.
b. what is meant by abuse of dominant position?
- The term abuse of dominant position refers to anticompetitive business
practices in which a dominant firm may engage in order to maintain or increase
its position in the market.
- There is abuse of dominant position when an entity with significant
degree of power in a market engages in conduct that substantially prevent,
restrict, or lessen competition.
c. what falls under prohibited mergers and acquisitions?
- Merger or acquisition agreements that substantially prevent, restrict or
lessen competition in the relevant market or in the market for goods or
services as may be determined by the Commission shall be prohibited.
d. What are the exceptions?
- Merger or acquisition agreement prohibited under Section 20 of this
Chapter may, nonetheless, be exempt from prohibition by the Commission when
the parties establish either of the following:
(a) The concentration has brought about or is likely to bring about gains
in efficiencies that are greater than the effects of any limitation on competition
that result or likely to result from the merger or acquisition agreement; or
(b) A party to the merger or acquisition agreement is faced with actual or
imminent financial failure, and the agreement represents the least anti-
competitive arrangement among the known alternative uses for the failing
entity’s assets:
Provided, That an entity shall not be prohibited from continuing to own
and hold the stock or other share capital or assets of another corporation which
it acquired prior to the approval of this Act or acquiring or maintaining its market
share in a relevant market through such means without violating the provisions
of this Act:
Provided, further, That the acquisition of the stock or other share capital
of one or more corporations solely for investment and not used for voting or
exercising control and not to otherwise bring about, or attempt to bring about
the prevention, restriction, or lessening of competition in the relevant market
shall not be prohibited.

4. Regarding the rule on covered transactions,

a. what are the thresholds for compulsory notification?
- Parties to the merger or acquisition agreement referred to in the
preceding section wherein the value of the transaction exceeds one billion pesos
(P1,000,000,000.00) are prohibited from consummating their agreement until
thirty (30) days after providing notification to the Commission in the form and
containing the information specified in the regulations issued by the
Commission: Provided, That the Commission shall promulgate other criteria,
such as increased market share in the relevant market in excess of minimum
thresholds, that may be applied specifically to a sector, or across some or all
sectors, in determining whether parties to a merger or acquisition shall notify
the Commission
b. who should be the notifying entity?

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 - When the above periods have expired and no decision has been
promulgated for whatever reason, the merger or acquisition shall be deemed
approved and the parties may proceed to implement or consummate it. All
notices, documents and information provided to or emanating from the
Commission under this section shall be subject to confidentiality rule under
Section 34 of this Act except when the release of information contained therein
is with the consent of the notifying entity or is mandatorily required to be
disclosed by law or by a valid order of a court of competent jurisdiction, or of a
government or regulatory agency, including an exchange.
c. Give exceptions to the foregoing rule?
-
5. How is a relevant market determined?
- For purposes of determining the relevant market, the following factors, among
others, affecting the substitutability among goods or services constituting such
market and the geographic area delineating the boundaries of the market shall
be considered:
(a) The possibilities of substituting the goods or services in question, with others
of domestic or foreign origin, considering the technological possibilities, extent
to which substitutes are available to consumers and time required for such
substitution;
(b) The cost of distribution of the good or service, its raw materials, its
supplements and substitutes from other areas and abroad, considering freight,
insurance, import duties and non-tariff restrictions; the restrictions imposed by
economic agents or by their associations; and the time required to supply the
market from those areas;
(c) The cost and probability of users or consumers seeking other markets; and
(d) National, local or international restrictions which limit access by users or
consumers to alternate sources of supply or the access of suppliers to alternate
consumers.
6. How is control or dominance of market determined?
- In determining whether an entity has market dominant position for purposes
of this Act, the Commission shall consider the following:
(a) The share of the entity in the relevant market and whether it is able to fix
prices unilaterally or to restrict supply in the relevant market;
(b) The existence of barriers to entry and the elements which could foreseeably
alter both said barriers and the supply from competitors;
(c) The existence and power of its competitors;
(d) The possibility of access by its competitors or other entities to its sources of
inputs;
(e) The power of its customers to switch to other goods or services;
(f) Its recent conducts; and
(g) Other criteria established by the regulations of this Act.
- There shall be a rebuttable presumption of market dominant position if the
market share of an entity in the relevant market is at least fifty percent (50%), unless a
new market share threshold is determined by the Commission for that particular sector.
- The Commission shall from time to time determine and publish the threshold
for dominant position or minimum level of share in the relevant market that could give

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rise to a presumption of dominant position. In such determination, the Commission
would consider the structure of the relevant market, degree of integration, access to
end-users, technology and financial resources, and other factors affecting the control of
a market, as provided in subsections (a) to (g) of this section.
- The Commission shall not consider the acquiring, maintaining and increasing of
market share through legitimate means not substantially preventing, restricting, or
lessening competition in the market such as but not limited to having superior skills,
rendering superior service, producing or distributing quality products, having business
acumen, and the enjoyment and use of protected intellectual property rights as violative
of this Act.
7. How is existence of anti-competitive conduct determined?
- In determining whether anti-competitive agreement or conduct has been
committed, the Commission shall:
(a) Define the relevant market allegedly affected by the anti-competitive
agreement or conduct, following the principles laid out in Section 24 of this
Chapter;
(b) Determine if there is actual or potential adverse impact on competition in the
relevant market caused by the alleged agreement or conduct, and if such impact
is substantial and outweighs the actual or potential efficiency gains that result
from the agreement or conduct;
(c) Adopt a broad and forward-looking perspective, recognizing future market
developments, any overriding need to make the goods or services available to
consumers, the requirements of large investments in infrastructure, the
requirements of law, and the need of our economy to respond to international
competition, but also taking account of past behavior of the parties involved and
prevailing market conditions;
(d) Balance the need to ensure that competition is not prevented or substantially
restricted and the risk that competition efficiency, productivity, innovation, or
development of priority areas or industries in the general interest of the country
may be deterred by overzealous or undue intervention; and
(e) Assess the totality of evidence on whether it is more likely than not that the
entity has engaged in anticompetitive agreement or conduct including whether
the entity’s conduct was done with a reasonable commercial purpose such as
but not limited to phasing out of a product or closure of a business, or as a
reasonable commercial response to the market entry or conduct of a
competitor.
8. What things or matters may the Philippine Competition Commission forebear?
- The Commission may forbear from applying the provisions of this Act, for a
limited time, in whole or in part, in all or specific cases, on an entity or group of
entities, if in its determination:
(a) Enforcement is not necessary to the attainment of the policy objectives of
this Act;
(b) Forbearance will neither impede competition in the market where the entity
or group of entities seeking exemption operates nor in related markets;
and
(c) Forbearance is consistent with public interest and the benefit and welfare of
the consumers.

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- A public hearing shall be held to assist the Commission in making this
determination.
- The Commission’s order exempting the relevant entity or group of entities
under this section shall be made public. Conditions may be attached to the
forbearance if the Commission deems it appropriate to ensure the long-term
interest of consumers.
- In the event that the basis for the issuance of the exemption order ceases to be
valid, the order may be withdrawn by the Commission.
-END-

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